Budget for hope and recovery: First Minister's speech - 6 January 2025

Thank you for coming, and I wish everyone a very happy New Year.

I hope you had the opportunity, as I did, over the last couple of weeks to spend some peaceful time with family and with friends.

Many people of course sacrificed some of that precious time in order to keep lifeline services running over the holiday period, so the very first thing I want to do today is to place on record my sincere thanks to frontline workers and to their families for the sacrifices that they made over the holiday period.

The beginning of January is always an opportunity for reflection.

We remember the highs and lows of the year just ended.

Hopefully, we are able to appreciate the many things in our own lives for which we can be grateful, but perhaps pass us by in the bustle of the twenty-first century.

But we also look forward, to the year ahead, and to consider how we can learn and how we can grow.

What is true for us as individuals is also true for us as a nation, and as First Minister, I am fully focused on ensuring that we grasp the opportunities and confront head-on the barriers facing Scotland.

This morning I want to share with you some of my hopes and ambitions for Scotland in the next twelve months.

What is already clear is that, sadly, 2025 will see many of the challenges facing the world that it did in 2024 – be that war in Europe and in the Middle East, the accelerating threat of climate change, the rise of populism, and global institutions challenged in a way that none of us would have anticipated even a decade ago.

I have described this combination of challenges, and their impact on people’s day to day lives, as a long dark economic winter – but of course, no winter lasts forever.

In this land that is used to many a long, cold winter night, it should not surprise us that many of our New Year traditions involve fire.

The light and the warmth not only ward off the darkness of the winter but they herald the return of the sun, they herald also the coming of the Spring. 

Longer, brighter days may still be a distance away, but they are coming, of that I have no doubt.  It is why I look forward today, with a degree of hope, to the future.

I say a degree of hope, because I know that for many of us, challenges remain acute.

The lingering effects of austerity, inflation, the pandemic, and the economic fallout of Brexit continue to cast shadows.

Shadows over tight family finances, and over under-pressure public services.

But I am hopeful. Hopeful because, despite the difficulties, Scotland's economy has shown much resilience, with low unemployment rates, and strong job growth.

But we must be in no doubt, that growth remains too low and quality of life and living standards are not good enough for far too many people.

Right now, I know many will be worrying not only about the financial challenges that they face, from the cost of Christmas and energy bills – rising again this month – rents and mortgages, food and fuel costs.

Since I became First Minister in May of last year, I have spent a great deal of my time out and about, meeting people and listening to people.

I have heard both their fears, and their hopes. And also their realism.

People know that when we have collectively experienced an unprecedented series of shocks, as individuals, communities, and as a nation.

In response, some will pretend there are easy answers. They will offer soundbite solutions. But if we are going to recover and renew as a nation, then we have to come together as a nation. We have to be willing to put in the hard yards.

And as Scotland’s First Minister, I offer the leadership to do just that. To bring people together and to put in the hard graft to deliver real solutions for Scotland

I am not going to sugar-coat our reality, but there is one thing that I believe with absolute confidence.

There is nothing wrong in Scotland that can’t be fixed by what is right in Scotland.

Yes, we’ve had a tough few years - but we’ve got what it takes to build our nation and transform our prospects, step-by-step, if we are willing to put our collective shoulder to the wheel.

Over these past months, we have been listening, and we have been hearing. We understand the reality of what people are facing.

That is why my Government’s programme is so firmly focused on the issues that matter to people in Scotland today :

• Boosting economic growth to create new job opportunities and enable us to invest in our future.

• Eradicating child poverty and making sure the next generation have the very best opportunities.

• Ensuring Scotland capitalises on the new Greener technologies, leaving nobody behind as our economy changes.

• Improving public services – especially our NHS – to meet the changing needs of a modern nation.

We know what needs to be done to make progress for Scotland.

And we took a massive step forward in delivering that progress with the Budget, published last month.

It was a foundation - a platform on which to build a Scotland - fit not just for the coming year, but for the coming decades.

It is a Budget that marks a turning point.

With this Budget, I want the people of Scotland to hear loud and clear my twin commitment to delivery and hope.

Delivery in the present, hope for the future.

That includes delivery on sharing the wealth of our nation more fairly.

Some argue that investment in social security is the wrong choice for us to make. But we know that inequality is bad for our health, bad for our communities and bad for our economy.

Our decision to invest in Scotland’s social security safety net – with £1.3 billion extra directed towards the very poorest in our society – reflects the values that I think are fundamental to who we are as a nation.

We do not walk by on the other side of street. Instead, and as much as we can, we extend a helping hand.

All the more, for the still too many children in our land living in poverty.

We are one of the richest, most blessed nations on the planet and it is a scandal that one in four children still live in poverty – children who are part of our collective future, essential to our future success, children whose potential should be nourished not stifled.

Eradicating child poverty is my top priority because I do not wish to condemn any young Scot to a life of disadvantage simply because of where they were born.

And while it is morally the right thing to do, it is also in Scotland’s economic interests – for we will never reach our full potential as a country unless every one of our citizens grows up to reach their own individual potential.

Think of the vast sums of money rightly spent tackling the symptoms of poverty such as crime and ill health.

Think of the economic growth and innovation we have forfeited for decades because poverty leads to lower achievement at school.

Tackling poverty is an investment in our economic prosperity.

That is why we made the choices we did in this Budget – on the cruel two-child cap, on more affordable homes, on breakfast clubs, on additional support needs and on investment in regeneration and economic growth.

And have no doubt, the direct investment we have chosen to make to tackle poverty contributes, in its own right, to a stronger economy, providing a boost to Scotland’s GDP, in the short-term, of as much as £330 million. It is investment in our people and investment also in the wealth of our land.

And delivery, also, on revitalised public services fit for the challenges of this new age. None more so than the NHS. The NHS has served us well for eighty years, but it has been left bruised by an unprecedented series of shocks. Its fundamental strengths remain, but its weaknesses have also been exposed. Quite simply, the NHS must be renewed if it is, once again, to thrive.

We’ve made the choice to deliver record funding for health and social care because, after 14 years of austerity, investment now is essential if our health service is to turn the corner. The issue is not the quality of our NHS, but access to the NHS and the world-class healthcare provided by its staff. Too many people wait too long for that first diagnosis, they have problems accessing their GP or A&E, and waiting times for some remain unacceptably long.

We understand the problem, and we have a solution. And, if the Budget passes, we will deliver the money we need to deliver that solution.

It is a solution that delivers more operations, new hospitals, easier access to your GP and more dental trainees - for all this, the NHS needs this Budget to pass.

That’s what I mean when I talk about delivery and hope.

On Energy, Scotland has unrivalled potential , in technology, in innovation.

The actions we take today will determine the extent to which we maximise the economic and social impact of this opportunity in the future.

Scotland is an energy rich nation, but my ambition is for Scots to also become energy rich people – with our energy wealth delivering more jobs, new economic opportunities, real community benefit and lower energy bills.

Our Budget delivers additional money to support the expansion of our offshore wind capacity, and to enable the creation of a Scottish-based manufacturing supply chain. Money to deliver a green reindustrialisation of our economy.

It contains investment in technologies of the future, from robotics to AI, as well as funding for Scotland’s world-leading Techscaler initiative to help small, innovative companies to grow and thrive.

All of it is essential to deliver growth in our economy. And for that to happen, the Scottish Budget has to pass.

It is the first major step to ensuring that 2025 is a year of improvement and progress for Scotland.

That’s what I mean when I talk about delivery and hope.

There is, of course, an alternative prospect for 2025 – and that is one in which MSPs do not pass the Budget.

And given that the government does not command a Parliamentary majority, it’s a scenario that we all have to contemplate.

It is important for me to set out the consequences of that outcome.

The architects of devolution made sure the reality of any failure by Parliament to pass a Budget was pretty straightforward.

Their intention was to avoid a US-style government shutdown. The impact however of a Budget failing to pass is severe and I need everyone to be aware of the damage that will be done if that were to happen.

If the Budget fails to pass, the prospect of progress in tackling the issues this country urgently needs to address will be lost.

For example, without a tax resolution passed by the Scottish Parliament or a UK Government Treasury Order in the House of Commons, at least £1.7 billion of tax revenues could disappear, money that is already built into the budgets of our hospitals, GPs, police service, transport system and schools.

And even if Parliament resolves the tax issue, without a Budget Act, emergency arrangements come into effect.

These are strict and have severe consequences.

First of all, it means money can only be legally spent for purposes already agreed in the previous year’s Budget.

That means we cannot spend a single penny on a purpose that does not appear in the 2024/25 Budget.

Even more restricting is the fact that spending is limited to individual calendar months.

Each portfolio cannot spend more than the larger of one-twelfth of any amount authorised in the previous year’s Budget or the amount actually spent for that purpose in the same calendar month of the previous year.

What does that mean?

Well as an example, it might mean that we cannot spend any more money on health and social care in April 2025 than we did in April 2024.

Think about what that might mean for pay.

If the pay rate is higher next year – and it is contractually meant to be - but the budget is frozen every month, how can pay increases be met?

Think about what it might mean for paying the bills.

If the electricity or gas bill on a public building rises next year – and we know it is going to – how can the lights be kept on when the budget is frozen every month?

If party-politicking results in the Budget failing to pass, there will be real damage done.

Ministers across government would, of course, have to assess options and consider mitigations. And Ministers will always seek to avoid the worst impacts.

But let’s look at what might become a reality.

It would put at risk £2 billion of additional investment in the NHS, causing a catastrophic reduction in service delivery.

Operations would likely have to be cancelled. Nurses’ and doctors’ pay rises would be under threat. Medicines might have to be rationed.

It could mean no universal winter heating payments for pensioners.

The record increase in arts and culture funding halted.

Fewer teachers,  and no new money for additional support needs.

Increased funding for affordable housing lost.

Real damage to the very fabric of our public services.

Real damage inflicted on some of the most vulnerable in our land.

For the good of Scotland, I want to make sure that none of this comes to pass, which is why my Government and I have done and are doing the work to avoid this disastrous scenario. And I remain confident that we can secure the passage of the Budget.

Why? Because we have brought forward a Budget that is set in the mainstream of Scottish public opinion.

Measures to protect business from a challenging trading environment.

A real terms increase in local government funding to better support local services.

Investment to reform and improve the National Health Service.

A significant boost to housing investment and capital projects that will stimulate growth.

Further steps to eradicate child poverty and create the best foundations for our next generation.

Investment in the clean, green opportunities of a Just Transition.

My Ministers have engaged in discussions with other political parties and many stakeholders and have set out a Budget designed to weave our priorities together with those we have heard from other parties and from stakeholders into a cohesive and unifying programme that works for all of Scotland.

We have tried to bring political parties together and we stand ready to do more to complete the task.

So my invitation to you all today is to join with us – businesses, third sector organisations, think tanks, universities, unions – I would invite all of you in this room to play your part in helping to secure the passage of the Budget.

Because the NHS needs this Budget to pass.

Our economy needs this Budget to pass.

Scotland needs this Budget to pass.

I say that not because the Budget gives any one group or party or individual everything they want, but because it is a Budget that delivers progress, a Budget that will enable us to bring renewal to our public services and to make the most of our country’s many opportunities – whether in energy or in the arts.

I want to do what is best for Scotland – we all do – and that is why I care so much about getting it right for our NHS, getting it right for the most vulnerable in our community, getting it right for our future economic success.

I began today by reflecting on the experience of so many of our citizens as they enter this new year. They do not have the luxury of posturing when faced with the day-to-day struggles of making ends meet.

They have to make their Budgets work, they have to get on with the reality of life as they find it. And they will be unforgiving of any politicians who would rather play political games.

If we are to meet the challenge of this age, we have to make sure that our politics works for the people we serve and that means, ultimately, doing the hard work that ensures Scotland has a Budget.

If the Budget falls, the impact will not be felt primarily, directly, by the MSPs who choose to vote ‘no’. It will be felt by the people in this room and the people you serve.  

Voters will rightly struggle to understand why politicians, despite being in agreement with probably more than 95% of the Budget’s contents, choose to block it from passing to prove some nebulous – and ultimately highly damaging - political point.

We do not have to look far beyond Scotland’s shores to see what happens when politicians and political parties pursue stalemates instead of progress.

So be in no doubt. If people do not see Scotland’s Parliament delivering progress for Scotland’s people – if instead it embarks down a path of political posturing and intransigence - then we run a real risk of feeding the forces of anti-politics and of populism.

And that is not something I am prepared to countenance in Scotland. Because in that circumstance, nobody wins.

My ask of you today, therefore, is a simple one: make your voices heard.

The better days we crave won’t just happen.

We either add to Scotland’s problems or we choose to be part of the solution.

Thwarting a Budget may make some politicians feel good, but it will be at the expense of Scotland’s NHS.

It will be at the expense of Scotland’s pensioners.

It will keep more children in poverty.

It will be a political wrecking ball when what Scotland needs is recovery.

It is as simple as that.

So friends, in these opening days of 2025, let us resolve that it be a year of progress for Scotland.

The first step is for Parliament to come together and to pass a Budget that enables us to get on with delivering.

So let’s choose progress.

Let’s choose renewal.

At the start of 2025, let’s choose hope.

Thank you very much.