Scottish Budget 2019-20

The Scottish Parliament has approved the 2019-20 Scottish Budget which provides £42.5 billion of investment in Scotland’s public services and economy.

Finance Secretary Derek Mackay said the budget provides essential funding for health and care services, education, local government and economic investment, while ensuring that 55% of income taxpayers in Scotland pay less tax than those earning the same income in the rest of the UK.

The passage of the Budget comes on the same day as the Scottish Government’s Chief Economist published a report showing that a ‘No Deal’ Brexit would lead to a major dislocation to the Scottish economy, with the potential for national Gross Domestic Product (GDP) to fall by up to 7% and up to 100,000 jobs put at risk.

Mr Mackay said:

“The passage of the budget provides £42.5 billion of investment in our public services and economy delivering for the people of Scotland today, whilst building for our future. This is a budget that ensures stability, sustainability and economic stimulus.

“Scotland’s economy continues to grow and unemployment is at the lowest on record but our prosperity is being put at risk by the increasing Brexit uncertainty, and in particular the ‘No Deal’ scenario.

“Today’s Chief Economist report shows that a ‘No Deal’ Brexit would be expected to push the Scottish economy into recession during 2019, with the potential for the economy to contract by between 2.5% and 7% by the end of 2019.

“Such an economic slowdown would risk a rise in unemployment from its current record low, with up to 100,000 more people in Scotland made unemployed.

“This would be an economic shock on the scale of the 2008 financial crisis, and this cannot be allowed to happen.

“We will continue to call on the UK Government to immediately rule out the possibility of a ‘No Deal’ Brexit and extend the Article 50 process. As a responsible government we are also continuing - and indeed intensifying - our work to prepare for all outcomes as best we can. However, while we will do everything we can to prepare, we will not be able to mitigate all of the impacts of the UK Government’s Brexit approach.

“This budget safeguards Scotland as best we can, using all the powers and resources at our disposal with a clear focus on our priorities as a nation.”

Background

You can read the ‘No Deal’ Brexit – Economic Implications for Scotland’ paper here.

The 2019-20 Scottish Budget:

• Provides more than £180 million in raising attainment in schools, including £120 million through the Pupil Equity Fund to close the attainment gap
• Continues to deliver a progressive income tax system
• Includes a public sector pay deal that continues the journey of restoring pay levels and provides an above inflation pay uplift of 3% for those earning up to £36,500
• Provides the most generous package of business rates reliefs in the UK, and ensures more than 90% of properties in Scotland will be charged a lower tax rate than other parts of the UK
• Allocates more than £600 million for colleges and maintains investment at more than £1 billion for universities
• Increases direct investment in mental health by £27 million, taking overall funding to £1.1 billion, including improving mental health services for young people, and providing support in schools, colleges and universities
• Increases investment in Health and Social Care Partnerships to more than £9 billion for delivery of primary and community health services
• Delivers new and improved social security benefits based on dignity and respect
• Provides local government with a real terms increase in both revenue and capital funding, and a real terms increase in total overall support, through a £11.2 billion settlement
• Prioritises £500 million to expand funded early learning and childcare, supporting the recruitment and training of staff and investment in building, refurbishment and extension of around 750 nurseries and family centres
• Includes initial funding of £130 million towards the establishment of a Scottish National Investment Bank
• Protects the police resource budget in real terms
• Provides more than £20 million for zero waste, supporting the transition towards a more resource-efficient, circular economy, including design and implementation of a deposit return scheme
• Allocates £80 million for Active Travel to help build an Active Nation
• Invests more than £825 million, as part of our total investment in excess of £3 billion to deliver 50,000 affordable homes over the course of the Parliament
• Continues to invest in the £50 million Ending Homelessness Together fund
• Provides more than £70 million in 2019-20 to drive forward sustainable and inclusive growth in the rural economy