Scottish Budget 2020-2021

Chapter 1: Strategic Overview for the Scottish Budget 2020‑21

The Scottish Government is committed to the creation of a more successful country, with opportunities for all of Scotland to flourish through increased wellbeing and sustainable and inclusive economic growth.

This national purpose is underpinned by the National Performance Framework and our efforts to build a Wellbeing Economy, where improvements in living standards and our environment are as important as, and fundamental to, improvements in our economy.

The Scottish Government's tax and spending plans for 2020‑21 reflect this vision and commitment. This budget of nearly £50 billion seeks to strengthen our economy and support the path to net‑zero carbon emissions, while tackling inequality through the delivery of first‑class public services and providing support for those who need it most. This approach, supported by a commitment to progressive taxation, forms a strong social contract between the Scottish Government and the people of Scotland.

This Budget builds on the current Programme for Government, the National Performance Framework and the Medium Term Financial Strategy, which made clear that our plans would be focused on supporting our public services, building national wellbeing, boosting inclusive economic growth, building sustainable places, responding to the global climate emergency and tackling child poverty.

The Scottish Budget in 2020‑21 will improve Scotland's national wellbeing

The Scottish Budget is guided by the vision of wellbeing in the National Performance Framework. To be a more successful country we need to make progress across a range of environmental, social and economic factors captured in the National Outcomes. Taking a wellbeing approach to the budget prioritises investment in areas that will have the greatest impact on both improving lives across Scotland now and creating the conditions to ensure wellbeing for future generations.

The Scottish Budget does this through our investments in ending Scotland's contribution to climate change, through our inclusive economy, our support for public services and by tackling deep-rooted inequalities including child poverty. Taken together, these endeavours will substantially improve our success as a nation. This approach recognises that economic growth is hugely important, but it must be matched by improvements in our environment, quality of life, in the opportunities available to everyone and the public services that support us.

In particular, the Scottish Budget supports priorities that will deliver across multiple outcomes, including:

• investing around £645 million in the revolutionary expansion of early learning and childcare, improving the life chances of our children, delivering better opportunities for parents and carers to balance work and family life, and setting fair work standards for those that will deliver the expansion;
• ensuring a strong start for the Scottish National Investment Bank and its mission to drive the transition to a net-zero economy with £220 million of fresh seed funding from the Scottish Government in 2020‑21 as part of our £2 billion capitalisation pledge;
• increasing investment in health and care services by more than £1 billion, with the total health portfolio budget exceeding £15 billion for the first time;
• funding to establish the 'game‑changing' Scottish Child Payment which when fully rolled out in 2022 will help an estimated 30,000 children out of poverty;
• keeping our communities safe, with an above real‑terms increase to the police budget, an increase to the budget of the fire service, and £6.5 million of additional investment in support for community justice, to reduce re-offending;
• investing more than £180 million in raising attainment in schools, including £120 million delivered to headteachers to spend on closing the attainment gap;
• increased investment of £16 million in concessionary fares and bus services, taking total investment in 2020‑21 to nearly £290 million, as part of our commitment to encouraging greater use of public transport and tackling social isolation;
• increased investment of £5.5 million in active travel, improving connectivity, our physical and mental health and encouraging the step‑change needed for our net‑zero climate targets;
• investment of £117 million in mental health for all ages and stages of life, recognising the impact on individuals, families, communities and our economy;
• increased targeted funding by 59 per cent to support the urgent action needed to reduce the harm associated with using alcohol and illicit drugs and halt the rising number of drugs deaths, which have a devastating impact beyond individuals and families;
• £1.8 billion of investment in low emission infrastructure, including a package of over £500 million of investment specifically designed to increase our efforts to respond to the global climate emergency;
• expected spend, based on previous estimates, of at least £1.4 billion on supporting low‑income households;
• a progressive income tax system with 56 per cent of income tax payers in Scotland paying less than if they lived elsewhere in the UK, while raising the revenue needed to support investment in the Scottish economy and public services;
• promoting the wellbeing of our public sector workers and their families through the delivery of a progressive, restorative pay award for the public sector, with a pay uplift of 3 per cent for those earning up to £80,000, and protection for the lower paid, with a guaranteed cash underpin of £750 for those earning less than £25,000; and
• supporting our diverse and evolving culture in line with our culture strategy, our collections, heritage, tourism and major events, and the 2021 Census which underpins our public services.

The Scottish Budget in 2020‑21 will respond to the global climate emergency and accelerate Scotland's transition to a net‑zero economy

Scotland's world‑leading climate change legislation sets a target date for net‑zero emissions of all greenhouse gases by 2045. Ending Scotland's contribution to climate change is a truly national endeavour, and changes are needed across the whole of society - the way we manufacture goods, the way energy is generated, how we heat our homes and businesses, the way we travel, and how we use our land.

In 2019 the Scottish Parliament passed the world-leading Climate Change (Emissions Reduction Targets) (Scotland) Act. The UN Climate Summit, COP26, takes place in Glasgow this November. Our action on climate change in this budget not only builds on existing commitments, it supports our work with partners across the world - nations, civil society, business, states and regions - to deliver global climate action. It also solidifies Scotland's role at the forefront of international efforts to tackle the global climate emergency.

This budget proposes an ambitious new package of measures that are intended to pivot the focus of the Scottish Government, and by extension key players in industry, onto a trajectory towards net‑zero emissions. Following our commitments in the Programme for Government 2019-20, this package is further evidence of our commitment to swift and decisive action on climate change, expanding schemes that work, developing new ones, and responding to expert opinion such as from the Climate Emergency Response Group.

We will continue to develop the Green New Deal as a national endeavour, with actions in this budget including:

• a commitment to invest over £250 million in peatland restoration over 10 years, starting with £20 million in 2020‑21, enabling large‑scale projects to be developed and demonstrating Scotland's commitment to nature‑based solutions to the climate crisis;
• total low carbon capital investment of around £1.8 billion in 2020‑21, an additional £500 million compared with 2019‑20, which meets our commitment to boost the percentage share of green investments in our budgets;
• this includes continuing, new and expanded schemes to decarbonise heat, transport and agriculture such as:
  • a £120 million Heat Transition Deal which recognises the need to boost the scale and pace of growth in decarbonising our homes and buildings - including a £50 million Heat Networks Early Adopter Challenge Fund for local authorities and a £10 million fund to support hydrogen heat demonstrator projects;
  • an £83 million Future Transport Fund, investing in low-carbon and transformational initiatives including low emission and electric buses, bus prioritisation, electric vehicle charging points infrastructure and the Switched on Towns and Cities programme;
  • increasing our active travel investment in 2020‑21 to over £85 million;
  • new electric vehicle funding of £5 million to support the transition to a decarbonised police fleet and increasing to £35 million the Low Carbon transport loan fund supporting those who need to drive to transition to low emission vehicles;
  • an initial £40 million investment in the Agricultural Transformation Programme, supporting those who manage our land to take the actions required to deliver the Scottish Government's net-zero target;
  • additional funding for energy efficiency, bringing total spending in 2020‑21 to £151 million ahead of setting out a wider programme of work on heat, energy and energy efficiency in the summer;
  • responding to the Committee on Climate Change's call that our ambition to plan 12,000 hectares a year of new forestry should climb to 15,000 each year by the mid-2020s, we will expand investment in forestry by around £6 million in 2020-21 to over £64 million; and
  • delivering a 150 per cent increase for the Biodiversity Challenge Fund, increasing total resource and capital investment to £5 million.

We will further support sustainable public transport with £270 million of increased investment in rail services and an additional £16 million in support for concessionary travel and bus services, taking total investment in rail and bus services to around £1.55 billion in 2020‑21.

We will also begin work on:

• a new commitment to further, multi‑year investment of around £200 million to be delivered in partnership with local authorities through the Green Growth Accelerator; and
• in addition to the investment set out in the Budget, we confirm a forward commitment to make available a new additional £2 billion of infrastructure investment over the next parliamentary term for measures to support the delivery of the Climate Change Plan, building on the recommendations of the Infrastructure Commission and with further detail to be provided in the Infrastructure Investment Plan later this year.

The Scottish Budget in 2020‑21 will drive inclusive economic growth in Scotland

The Scottish Government is committed to delivering a successful economy that works for all of Scotland - our businesses, our places, and our people. Our approach to inclusive growth means that we are proactively investing to improve our prospects for longer‑term transformational change, underpinned by a strong competitive economy alongside reduced levels of inequality and poverty.

Our agenda for inclusive growth will help us achieve our vision of an economy where success translates into improved health, better living standards, quality of environment, and security of employment.

The creation of high quality jobs and a strong inclusive labour market sits at the heart of our approach to inclusive growth. To enable us to create the right conditions for this, we are making a number of commitments in the Budget to improve our competitiveness, boost investment across Scotland's regions and places, and support our commitment to fair work, enabling access to quality jobs and decent incomes. We are committing to:

• support the Scottish National Investment Bank with £220 million of direct investment, in addition to funding through the existing Building Scotland Fund;
• maintain the UK's most competitive business rates regime with the lowest poundage and a relief regime, including the Small Business Bonus and the Business Growth Accelerator, estimated by the Scottish Fiscal Commission to be worth £744 million. Ninety-five per cent of properties in Scotland will pay a lower poundage than they would in other parts of the UK;
• increase the International Trade and Investment budget by more than 25 per cent as part of our ambitious growth plan to increase the value of exports from 20 per cent to 25 per cent of Scotland's GDP over the next 10 years and to mitigate against the impact of the UK's exit from the EU;
• invest around £28 million in South of Scotland Enterprise in 2020‑21;
• invest an additional £16 million in support for innovation and increasing the productivity of Scotland's manufacturing industry through total investment of around £26.5 million in the National Manufacturing Institute for Scotland;
• increase our investment in Skills Development Scotland to £224.8 million, continuing to ensure that apprenticeship opportunities are open to all and supporting the delivery of our new Careers Strategy;
• boost investment in our colleges with a real‑terms increase in resource funding rising to £640 million, raising their ability to support our economy and delivering a well‑educated, skilled workforce; and
• strengthen our universities with a real terms increase in funding, providing £1.14 billion to reinforce the sector's global reputation and commitment to widening access.

The Scottish Budget in 2020‑21 delivers significantly increased investment in infrastructure

The importance of infrastructure drove the 2018 decision to launch the National Infrastructure Mission which will increase annual investment by 1 per cent of then GDP between 2019‑20 and the end of the next parliament in 2025‑26. This will boost annual infrastructure investment by £1.56 billion by 2025‑26 and will see around £7 billion of additional infrastructure investment delivered over the course of the Mission.

This Budget marks significant progress towards our target, with benefits to Scotland's economy, people and places. In particular, the Budget will:

• boost the economy through over £6 billion of capital spending to grow and modernise Scotland's infrastructure, including increased funding for low carbon technologies and infrastructure;
• support our delivery of the R100 broadband programme;
• deliver targeted investment in City Region and Growth Deals;
• complete the expansion of early learning and childcare facilities;
• continue to invest in new schools through the £1.8 billion Scotland's Schools for the Future programme, which will see all 117 projects delivered by the summer of 2020, benefiting a total of 60,000 pupils;
• continue the expansion of elective care centres; and
• commit over £800 million as part of our total investment of over £3 billion to deliver 50,000 affordable homes over the course of the parliament.

The Scottish Budget in 2020‑21 will support strong, quality public services

Our commitment to support strong, quality public services, responsive to the needs of current and future generations, is a vital part of our efforts to improve national wellbeing and deliver inclusive economic growth.

This Budget protects key services, within the powers at our disposal, from the shadow of UK Government austerity. It delivers a real‑terms increase in resource funding to local government to support delivery of improved outcomes. It also continues our record investments in our vital health and care services and supports our focus on improving mental health and closing the attainment gap. To ensure we have safe, strong communities, the Budget also invests in policing with an above-inflation increase in front‑line spending and supports action to tackle drug and alcohol addiction. Our investment in public services includes:

• providing local government with a real‑terms increase in resource funding, with total overall support given through the settlement of £11.3 billion;
• increasing investment in health and care services by over £1 billion to more than £15 billion for the first time, including allocating more than £100 million over and above Barnett consequentials to support front line spending;
• increasing investment in Health and Social Care Partnerships to over £9.4 billion for delivery of primary and community health and care services;
• supporting better mental health, with investment by the Scottish Government increasing to £117 million in 2020‑21, and total investment, including by NHS Scotland, expected to exceed £5 billion over the life of this parliament;
• increasing our direct funding to address harm from alcohol and drugs by 59 per cent - this additional spending will support the work of our new Drugs Deaths Taskforce to deliver innovative projects, test new approaches and develop a national pathway for Opiate Substitute Therapy;
• investing more than £180 million in raising attainment in schools, including £120 million delivered to headteachers to spend on closing the attainment gap;
• providing an additional £15 million for front-line staff for additional support for learning;
• investing over £310 million in student support, with additional funding to deliver our enhanced student support offer assisting the most disadvantaged to fairly access further and higher education;
• continuing to provide the care‑experienced bursary at £8,100 for eligible students and to expand eligibility to those aged over 26; as well as providing a minimum income guarantee of £7,750 per year in bursaries and loans to support the most disadvantaged higher education students;
• delivering a £37 million uplift to the Scottish Police Authority resource budget, exceeding by £12 million our commitment to protect the police budget in real terms in 2020‑21;
• increasing investment in our prisons and prison estate, with £30 million in additional revenue and £67.8 million in total capital funding, including for the new female estate and towards a replacement for HMP Barlinnie;
• increasing investment in community justice services by over £6.5 million (18 per cent) in 2020‑21, to help bolster the effectiveness and capacity of community‑based interventions, including diversion from prosecution and alternatives to custody and remand; and
• maintaining our commitment to the victims of crime, including funding for the costs of new legislation to allow vulnerable victims to give their evidence by pre‑recorded video.

The Scottish Budget in 2020‑21 will tackle child poverty in Scotland

Our ground-breaking statutory target to reduce levels of child poverty by 2030 is backed by a multi‑billion package of investment. The Scottish Budget supports the 'game‑changing' new Scottish Child Payment of £10 per week, which will start payments to eligible households with a child under 6 by the end of 2020, an intervention that at full roll-out in 2022 is expected to lift 30,000 children out of poverty.

Through interventions across government, we are investing in measures to help households increase their earnings from employment, reduce household costs and to enhance support through social security. Our approach will help mitigate the negative impacts of poverty, including child poverty, and improve lifelong outcomes for children and families.

Our commitments in health, education and early learning and childcare, and our progressive approach to taxation and public sector pay all seek to make progress on the targets we have set. This budget includes plans to:

• invest around £645 million in the revolutionary expansion of early learning and childcare, improving the life chances of our children, delivering better opportunities for parents and carers to balance work and family life, saving households up to £4,500 a year per child, and setting fair work standards for those that will deliver the expansion;
• provide an estimated £21 million this year for families through the new Scottish Child Payment with initial roll-out commencing later in 2020;
• invest £361 million in a new and improved Social Security system based on dignity and respect, which will make available an estimated £3.4 billion of financial support to people across Scotland;
• pay and promote the real Living Wage of £9.30 per hour through public sector pay policy;
• continue to invest from the £50 million Tackling Child Poverty Fund, including in new intensive parental employment support, the Access to Childcare Fund and Children's Neighbourhoods Scotland;
• increase funding for the Scottish Welfare Fund in 2020‑21 by £3 million, including £0.5 million for administration, to reflect our continuing efforts to mitigate UK Government welfare cuts and to ensure that the Fund continues to provide assistance to people in crisis, and provide Community Care Grants; and
• continue to invest in the £50 million Ending Homelessness Together Fund.

Economic and Fiscal Outlook

Growth has weakened in both the Scottish and UK economies over the past year, as EU exit uncertainty has dampened investment, confidence, and output. However, despite these headwinds, the Scottish economy has continued to grow, and the labour market is performing strongly compared to historical standards, with high levels of employment, low levels of unemployment and stronger‑than‑forecast wage growth.

Forecasts for the Scottish economy, although positive, are modest due to ongoing EU exit uncertainty. Although the immediate prospect of a disorderly exit risk has been removed, uncertainty over the UK's future trading arrangements will persist. This will continue to affect confidence, and ultimately the decisions that businesses and consumers make to spend and invest. As a result, the weaker economic outlook could persist for longer.

Compared to their last budget forecast in December 2018, the Scottish Fiscal Commission now expect unemployment to be lower and earnings growth to be higher in every year of their forecast. Over the next five years, employment will rise further, unemployment will remain low, and earnings growth will pick up. Table 1.01 sets out their headline economic forecast.

Table 1.01: Headline Economy Forecasts (Calendar Year Basis)

	2019	2020	2021	2022	2023	2024
GDP (per cent growth)	0.9	1.0	1.1	1.2	1.2	1.2
Employment (millions)	2.68	2.67	2.67	2.68	2.68	2.69
Unemployment (per cent)	3.7	4.0	4.0	4.0	4.0	4.0
Nominal Average Annual Earnings (per cent growth)	2.8	3.0	3.1	3.2	3.3	3.3

Despite these positive signs, Scotland's economy still faces significant challenges. The Scottish Fiscal Commission's report, published alongside the Scottish Budget, highlights that EU exit is a key factor that is expected to lead to slower growth in productivity, population and trade.

The SFC also highlights that, partly as a result of EU exit, Scotland's working-age population is set to decline, which will feed through to lower GDP growth. The Scottish Government has called for immigration powers to be devolved through a Scottish Visa, which would allow Scotland to attract and retain people with a contribution to make in our economy.

Implications of EU Exit for Scottish Government Funding

The people of Scotland voted decisively in 2016 to remain within the EU, and the Scottish Government remains of the view that EU membership is the best option for Scotland. 'Scotland's Right to Choose', published on 19 December 2019, sets out the case for the people of Scotland to determine their own future.

Following the UK's exit from the EU and entry to the transition period on 31 January, the Scottish Government will continue to seek to protect the interests of Scotland and has made clear the vital importance of devolved governments having a full and meaningful role in shaping the UK's future relationship with the EU.

Our priority on the future relationship must be to press the UK Government to do it right, not just to do it quickly. The UK Government's position of ruling out extending the transition period creates a cliff‑edge at the end of 2020, thus increasing the potential likelihood of a different form of no deal or 'crash out' outcome on 31 December 2020.

This budget and the forecasts that underpin it are presented on the assumption that an agreement will be reached between the UK and the EU. Should that not be the case, we may be forced to reconsider spending plans across all portfolios in order to mitigate, as much as possible, the harm that would be caused.

Significant long-term uncertainty remains around the form of EU exit at the end of 2020. A no-deal outcome - which continues to be a possibility - would lead to a major dislocation to the economy, potentially pushing Scotland into a recession and affecting the long-term outlook for Scotland's public finances.

As a responsible government, we have put a great deal of care and effort into our preparations for EU exit and we must continue to prepare for all potential scenarios, including those that may arise at the end of the transition period. We have repeatedly set out our concerns that a no-deal outcome would cause significant disruption to citizens and businesses in Scotland and the UK, and we will continue to press the UK Government to ensure that an effective no-deal outcome to negotiations on the future relationship with the EU at the end of 2020 is avoided.

As part of our preparations, we are prioritising activity in areas that will be heavily impacted by EU exit - the economy, transport, food and drink, medicines, agriculture, fisheries and the rural economy. Activities to date have included legislative preparations and supporting stakeholders including businesses, cultural bodies, higher education institutes, local government and the third sector.

The Scottish Budget 2020‑21 is prepared on the assumption that there must be no detriment to the Scottish Budget as a result of the UK's exit from the EU; this includes full replacement of lost EU funding.

EU funding is expected to benefit Scotland by over £5 billion over the life of the current EU Budget Round (2014‑20). Participation in EU programmes for the remainder of the 2014‑20 round up to 31 December 2020 will be covered by the Withdrawal Agreement, with the exception of Direct Payments for the 2020 Scheme Year which will be funded by the UK Government.^[1] It is our understanding that future arrangements for replacing EU funding will be part of the UK Government's 2020 Comprehensive Spending Review and budgets from 2021 onwards. Our approach to EU funding in this budget is prepared on that basis.

We remain concerned about the lack of certainty regarding arrangements beyond December 2020 and the impact this could have in Scotland. We will continue to press the UK Government for clarity and to ensure our views are fully considered. In line with our overall position on EU membership, the Scottish Government wants to remain in as many EU‑funded programmes on the same terms as at present to maintain and deepen the economic, academic, scientific and cultural ties with our partners across Europe.

These considerations only serve to highlight why it is so important that the people of Scotland are given a choice regarding the future of their country. The uncertainty that has been injected into both this budget and the wider economy by a Brexit that Scotland did not vote for is completely unacceptable. We must be able to choose a different path, where we become an independent member of the European Union, securing a prosperous and sustainable future for our country.

Scottish Government Spending Limits

The Scottish Budget for any given year is determined by the combined impact of:

• block grant funding allocated by HM Treasury at a Spending Review, Autumn Budget or Spring Statement, adjusted to reflect taxes devolved to Scotland through the Scotland Act 2012 and the Scotland Act 2016;
• independent forecasts of receipts generated by those taxes and devolved social security expenditure; and
• planned use of the available devolved borrowing powers and use of the Scotland Reserve.

Fiscal Uncertainty and the Impact on the Scottish Budget

This budget is set against the backdrop of heightened uncertainty, risk and concern created by the UK Government - with continued uncertainty arising from the UK's exit from the EU on 31 January compounded by the added uncertainty around what impact a delayed UK Budget and 2020 Spending Review will have for Scotland's finances.

This uncertainty and delay is unacceptable, forcing the Scottish Government to take unprecedented action in order to deliver certainty for local authorities and other public services. For this reason, the Scottish Government is proceeding with the publication of the Scottish Budget 2020‑21 in February before the delayed UK Budget is announced on 11 March.

Following a decade of austerity, the UK Chancellor recently signalled a relaxing of fiscal policy by proposing a new set of fiscal rules that should allow greater scope for investment in infrastructure by the UK Government.

The Scottish Government has repeatedly called for an end to the UK Government's austerity agenda as it disproportionately hurts the poorest and most vulnerable in society. While additional investment is welcome, the UK Spending Round 2019 has not ended a decade of austerity for front-line services, with spending on public services, other than health, set to remain close to flat after this year. For Scotland it does not reverse the cuts imposed since 2010 which to date have seen our discretionary resource budget (day‑to‑day spending) fall by 2.8 per cent in real terms to date. Beyond 2020‑21, budgets will not be known until the outcome of the UK Government's 2020 Spending Review, which may result in further cuts in some areas.

Despite the forecast increase in the Scottish Budget between 2019‑20 and 2020‑21, this legacy of budget reductions leaves a very challenging overall financial position for the Scottish Government to manage.

The delayed UK Budget has meant that the Scottish Government has had to estimate the Barnett consequentials that could be forthcoming for Scotland at the UK Budget in March. This estimate is based on the commitments made in the Conservative party manifesto for the December 2019 General Election and further information is provided in Annex A.

In the event that there are material positive or negative differences between these estimates and assumptions and the outcomes of the UK Budget, the Scottish Government will have the opportunity to revisit these plans during the financial year.

The Scottish Government will also continue to make the case to the UK Government for enhancements to the Fiscal Framework to help manage pressures and volatility in Scotland's financial position, including more proportionate powers over borrowing and the operation of the Scotland Reserve.

A full reconciliation of forecast revenues to planned expenditure is provided at Annex A. Tables 1.02, 1.03 and 1.04 set out the cash and real terms spending limits for the Scottish Budget.

Table 1.02: Scottish Government Budget Control Limits 2015-16 to 2020-21

SG Spending Limits - Cash Terms	2010-11 £m	2015-16 £m	2016-17 £m	2017-18 £m	2018-19 £m	2019-20 £m	2020-21 £m
UK Government Spending Review settlement - November 2015			30,286	30,520	30,620	30,870
UK Government Spending Round settlement - September 2019							35,728*
Subsequent Barnett consequentials and other additions			(12)	1,049	1,682	3,498
Anticipated Barnett consequentials							468
Total Budget Limit from HM Treasury (A)	29,600	30,141	30,274	31,569	32,302	34,368	36,196
Of which:
Fiscal Resource Budget Limit	25,624	25,991	26,088	27,027	27,200	28,770	29,711
Non-cash Budget Limit	642	1,030	967	907	1,105	1,145	1,145
Capital Budget Limit	3,335	2,734	2,891	3,189	3,596	4,106	4,734
Financial Transactions	-	386	329	446	401	347	606
Block Grant Adjustment for Social Security (B)						290	3,203
Farm Payments (C)							472
Net Block Grant Adjustment for Taxes and Non-Tax Income			(5,500)	(12,450)	(12,472)	(12,193)	(12,991)
Scottish Revenues:
Scottish Income Tax			4,900	11,829	12,115	11,684	12,365
Land and Buildings Transaction Tax			538	507	588	643	641
Scottish Landfill Tax			133	149	106	104	116
Non-Tax Income**				36	25	25	25
Reconciliation to Outturn							(207)
Net Resource Budget Adjustment for Taxes and Non-Tax Income (D)			71	71	362	262	(51)
Resource Borrowing (E)							207
Capital Borrowing (F)		306	316	450	450	450	450
Total Scottish Government Funding (A+B+C+D+E+F)	29,600	30,447	30,661	32,090	33,114	35,370	40,477

2010-11 Figures are adjusted to include Council Tax Benefit for comparison purposes
* Figures agreed with HM Treasury
** Non-tax income is from Fines, Forfeitures and Fixed Penalties and Proceeds of Crime.
(A) Total Block Grant from HM Treasury
(B) Details of devolved benefits covered by the Block Grant Adjustment are set out in the Social Security chapter.
(C) From 2020-21 Farm Subsidy direct payments will be funded by HM Treasury (previously funding came from the EU).
(D) Net Resource Budget Adjustment is the impact of Scottish Government decisions on taxes against the Block Grant Adjustment and impact of the reconciliation to outturn.
(E) Resource borrowing undertaken to offset the fiscal framework reconciliation impact for previous years.
(F) Capital borrowing up to the annual maximum.

Table 1.03: Real Terms Changes to HM Treasury Spending Limits

HMT Spending Limits - Real Terms (2019-20 prices)	2010-11 £m	2015-16 £m	2016-17 £m	2017-18 £m	2018-19 £m	2019-20 £m	2020-21 £m
Fiscal Resource Budget	30,007	28,179	27,629	28,136	27,744	28,770	29,168
Capital Budget	3,906	2,964	3,062	3,320	3,668	4,106	4,647
Total	33,913	31,143	30,691	31,456	31,412	32,876	33,815
Real-Terms Change against prior year			(1.5%)	2.5%	(0.1%)	4.7%	2.9%
Real Terms Change on 2010-11		(8.2%)	(9.5%)	(7.2%)	(7.4%)	(3.1%)	(0.3%)

Excludes Financial Transactions

Table 1.04: Real Terms Changes to Scottish Government Funding

SG adjusted spending limits - Real Terms (2019-20 prices)	2010-11 £m	2015-16 £m	2016-17 £m	2017-18 £m	2018-19 £m	2019-20 £m	2020-21 £m
Fiscal Resource Budget	30,007	28,179	27,704	28,210	28,113	29,032	29,118
Capital Budget + Capital Borrowing	3,906	3,296	3,396	3,788	4,127	4,556	5,089
Total	33,913	31,475	31,101	31,998	32,240	33,588	34,207
Real-Terms Change against prior year			(1.2%)	2.9%	0.8%	4.2%	1.8%
Real Terms Change on 2010-11		(7.2%)	(8.3%)	(5.6%)	(4.9%)	(1.0%)	0.9%

Excludes Financial Transactions

2020‑21 Proposed Portfolio Budgets

Scotland's devolved Total Managed Expenditure, a mix of discretionary and ring‑fenced funding, amounts to £49.3 billion, including a control total of £40.6 billion for Scottish Government portfolios.

Table 1.05 provides the portfolio detail which will form the basis of the Budget Bill which will be introduced in the Scottish Parliament. The capital figures include both capital and Financial Transactions funding.

Table 1.05: Total Proposed Budget for 2020-21

	Resource £m	Capital £m	Financial Transactions £m	Total £m	UK Funded AME £m	Total £m
Health and Sport	14,805.5	428.0	10.0	15,243.5	100.4	15,343.9
Communities and Local Government	7,552.3	1,473.5	338.5	9,364.3	2,790.0	12,154.3
Finance, Economy and Fair Work	471.4	105.0	310.1	886.5	5,385.1	6,271.6
Education and Skills	2,727.5	395.5	55.0	3,178.0	392.5	3,570.5
Justice	2,673.5	158.0	-	2,831.5	-	2,831.5
Transport , Infrastructure and Connectivity	1,219.2	2,166.1	60.4	3,445.7	-	3,445.7
Environment, Climate Change and Land Reform	191.8	274.0	(4.0)	461.8	-	461.8
Rural Economy	839.8	109.5	(160.3)	789.0	-	789.0
Culture, Tourism and External Affairs	335.9	28.5	1.1	365.5	-	365.5
Social Security and Older People	3,719.0	60.0	9.2	3,788.2	-	3,788.2
Government Business and Constitutional Relations	16.1	-	-	16.1	-	16.1
Crown Office and Procurator Fiscal Service	129.5	4.3	-	133.8	-	133.8
Scottish Government	34,681.5	5,202.4	620.0	40,503.9	8,668.0	49,171.9
Scottish Parliament and Audit Scotland	113.0	1.1	-	114.1	2.0	116.1
Total Scotland	34,794.5	5,203.5	620.0	40,618.0	8,670.0	49,288.0

Efficiency Savings

The Scottish Government expects every public body to deliver efficiency savings of at least 3 per cent during the course of 2020‑21 and to report publicly on the action undertaken and the results achieved. All efficiency savings are available to be reinvested in the body that generates the saving.

Delivering the National Outcomes

The Scottish Budget is driven by our commitment to contributing to the delivery of the 11 National Outcomes set out in the National Performance Framework (NPF). These National Outcomes support the focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth.

Progress in delivering the National Outcomes is reported at: https://nationalperformance.gov.scot/measuring‑progress

Figure 1.01 National Performance Framework

Infographic:

Infographic text:

Our Purpose: To focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth
Our Values: We are a society which treats all our people with kindness, dignity and compassion, respects the rule of law, and acts in an open and transparent way
We have a globally competitive, entrepreneurial, inclusive and sustainable economy
We are open, connected and make a positive contribution internationally
We tackle poverty by sharing opportunities, wealth and power more equally
We live in communities that are inclusive, empowered, resilient and safe
We grow up loved, safe and respected so that we realise our full potential
We are well educated, skilled and able to contribute to society
We have thriving and innovative businesses, with quality jobs and fair work for everyone
We are healthy and active
We value, enjoy, protect and enhance our environment
We are creative and our vibrant and diverse cultures are expressed and enjoyed widely
We respect, protect and fulfil human rights and live free from discrimination

To maximise impact across the National Outcomes, our priorities do not look to only one outcome in isolation. The Scottish Budget shows, as detailed in the portfolio chapters, the key primary and secondary National Outcomes supported by the Government's planned investment. At individual programme level, and locally, there will be other relevant outcomes and impacts.

Footnotes

1. https://www.gov.uk/government/news/farmers‑3‑billion‑support‑confirmed‑in‑time‑for‑2020