Scottish Budget 2021 to 2022

Chapter 1 Strategic Overview - Protecting Scotland, Renewing Scotland

Introduction

Background

This Scottish Budget is like none before it, and is informed by the experiences and impacts of the past twelve months. The pandemic, and the necessary public health measures, have had a significant cost. It has taken a heavy toll on countless people, and we have lost too many lives, each one a personal tragedy. This health crisis has in turn brought devastating consequences for the economy, impacted on education, learning, and life opportunities, and taken a toll on our communities and individuals.

As we have since the start of the pandemic, the Scottish Government will respond quickly and decisively to tackle the continued threats of the virus, while doing all we can to secure social and economic recovery, and support our collective wellbeing. We are fully utilising every resource and lever at our disposal to achieve the greatest possible impact.

During 2020, our collective effort and sacrifices helped suppress the virus to low levels, and ensured we protected lives and our health and care services. Towards the end of 2020, however, there were two significant developments in Scotland's fight against this virus: the huge positive of the start of vaccine roll out which offers us the way out of the crisis, set against the devastating blow of a new, faster‑spreading variant of the virus, necessitating stronger protective measures.

In response to these challenges, the Scottish Government has made a range of significant interventions over the last twelve months and the Budget 2021‑22 is built on these foundations. We have committed to spending all £8.6 billion of COVID‑19 Barnett consequentials to support Scotland's response over the course of 2020‑21, and delivered significant support including:

• £3.2 billion for health and wider public health initiatives in response to COVID‑19.
• Providing over £500 million support for local community groups, the third sector, and social protection, supplemented with a further £100 million winter package of support.
• More than £200 million to support schools and families, particularly with the challenges of remote learning, including recruitment of additional staff, additional digital devices or to provide additional family support.
• Committed more than £1.2 billion to support our economic recovery, including a £230 million package for capital projects that will stimulate the economy and £100 million focused on protecting jobs and supporting people made redundant or whose jobs are at risk.
• Over £3 billion of direct business support, enabling them to close down safely and service the crisis, protecting jobs and livelihoods.
• Our bespoke economic response has enabled us to support sectors in Scotland that have missed out on funding through UK-wide schemes.

Fiscal and economic context

Scotland, in common with economies across the world, is experiencing one of the largest economic shocks in history. In turn, this economic shock will have a devastating impact on people's jobs and standards of living and on businesses.

In line with the UK as a whole, economic activity in Scotland shrank by almost a quarter in March and April 2020, during the first national lockdown. Six consecutive months of positive growth following the lockdown demonstrated that progress has been made in recovering from the initial economic impact. However, the pace of the recovery has slowed significantly from the summer months as underlying demand in the economy remains subdued. The short-term economic outlook has also deteriorated following the discovery of the faster spreading COVID‑19 variant which led to further protective measures towards the end of 2020.

Given these developments, Scottish Fiscal Commission (SFC) forecasts, published alongside this Budget, show a difficult outlook for the Scottish economy. The necessary protective measures introduced in January to suppress the spread of the new variant of COVID‑19 are expected to reverse some of the gains seen in the fragile economic recovery last summer, as GDP is forecast to fall by 5.2% in the first quarter of 2021. The roll‑out of a vaccine, and the gradual easing of restrictions this may allow, means that the economy is expected to return to growth across 2021‑22 as a whole. However, the SFC still expect a degree of longer-term damage to the economy and they do not expect GDP to return to pre‑pandemic levels until the beginning of 2024.

Scotland's economy has, to date, performed very similarly to the UK's during the pandemic, and the SFC is clear that they believe the outlook for Scottish and UK GDP is broadly similar. However, the latest SFC forecasts have been produced at a time when Scotland and the rest of the UK have tightened restrictions, reducing short-term economic growth. In contrast, the OBR in November 2020 forecast that GDP would continue to grow at the beginning of the year, with the UK remaining in restrictions broadly equivalent to the English tier 3. This timing difference results in the SFC forecast meeting the conditions for a "Scotland‑Specific Economic Shock" in 2021‑22, which occurs when Scottish GDP growth is forecast to be significantly weaker than the UK. The SFC note that the conditions for the shock may therefore no longer be met when the OBR publish their updated forecasts in March 2021, alongside the UK Budget, or once outturn data are available.

While the triggering of a "Scotland‑Specific Economic Shock" is primarily the result of a difference in timing between the SFC forecasts and those of the OBR, under the Fiscal Framework it automatically increases the Scottish Government's borrowing and reserve flexibilities. Scottish Ministers have made clear their view that the Scottish Government's restricted fiscal powers have been an impediment to our pandemic response. We have carefully considered how these additional flexibilities can be used to support Scotland's response and recovery from COVID‑19.

Despite the falls in economic activity, to date the labour market has been protected from the full impact of the pandemic, with changes in the headline unemployment rate in both Scotland and the UK as a whole being relatively small. This is primarily due to the UK Government's furlough scheme, which has helped firms continue to employ and pay staff even when they are not working. This highlights the importance of providing ongoing support to continue to mitigate the worst of the impacts on households until the vaccination programme allows the economy to fully reopen.

As a result of this support, the expected fall in tax receipts is also much smaller than the contraction in economic activity. In addition, the Fiscal Framework cushions the Scottish Budget against economic shocks that affect the UK as a whole, as the reduction in tax receipts in Scotland is broadly mirrored by a corresponding fall in the Block Grant Adjustment.

In line with current UK Government policy, SFC forecasts are based on an assumption that the Coronavirus Job Retention Scheme will end in April with no replacement. This is the prime driver behind the forecast that unemployment will reach 7.6% in the second quarter of 2021. Scottish Ministers have made clear to the UK Government the critical need for the Scheme to be extended beyond April.

The table below summarises the SFC's and OBR's latest economic forecasts.

Headline Economy Forecasts

	2018‑19*	2019‑20*	2020‑21	2021‑22
GDP Growth (%)
OBR (UK)	1.4	0.3	(12.9)	10.4
SFC (Scotland)	1.7	(0.4)	(12.4)	7.5
Employment Growth (%)
OBR (UK)	1.2	1.1	(1.1)	(2.2)
SFC (Scotland)	0.2	(0.4)	(2.8)	(0.7)
Unemployment Rate (%)
OBR (UK)	4.0	3.9	4.7	7.3
SFC (Scotland)	3.7	3.8	6.6	7.1
Nominal Average Earnings Growth (%)
OBR (UK)	2.8	2.9	0.9	2.2
SFC (Scotland)	2.8	4.2	2.1	2.5

*Outturn data, Source: SFC, OBR

While the economic and social shock has been severe, it has been felt most acutely and disproportionately across certain sectors, demographics and geographical areas. We also face the parallel threat of EU Exit, and the new trading relationship negotiated by the UK Government. The viability and competitiveness of Scottish exporters are being hampered by new trading regulations, particularly those sectors most exposed to the changes such as manufacturing, food and drink, agriculture, forestry and fisheries. These sectors have been faced with the introduction of customs controls, rules of origin and other non‑tariff barriers, and left with little time to prepare. We are already seeing delays in deliveries, causing significant damage to businesses, particularly those trading in high value, but perishable and short shelf‑life produce. This could, in turn, have a disproportionate impact on rural and coastal communities for which these businesses are vital.

The new and diminished trading relationship with the EU will also have a detrimental impact across the wider economy. Whether through lower levels of migration, increased barriers to trade, or detrimental impacts on future productivity and investment, there is substantial evidence that households and businesses across Scotland are likely to be worse off than if we had retained full membership in the EU. Scottish Government modelling estimates that, even with a deal of the kind that the UK has negotiated, Scotland's GDP could be around 6% lower by 2030 than it would have been had we retained full EU membership.^[1]

In responding to these significant economic risks, there is still uncertainty around the 2021‑22 financial settlement for Scotland, as a result of the UK Government's recent spending review. This only provided half the information we require. Scotland's devolved funding is contingent on information in the delayed UK Budget - including UK Government tax decisions, final block grant adjustments and potentially further consequentials. The spending review also indicates the potential for quickly winding down existing support mechanisms, including job support and rates relief schemes - with no replacement support, there would be risks to our response to the pandemic.

To a significant degree, our long‑term ambitions are put at risk by a worsening of the capital and financial transactions budget position as a result of the UK Spending Review, where we face a cash terms cut on the 2020‑21 baseline. This undermines our ability to make the level of investment we need to secure our long‑term recovery. In Scotland, our Capital Spending Review and Infrastructure Investment Plan will be published shortly after this Budget. They will set out our multi-year capital and infrastructure plans and will show a substantial pipeline of future investment, securing good jobs across Scotland.

Over the next Parliamentary term, to 2025‑26, our policy is to borrow between £250 million and £450 million annually to ensure sufficient capital investment to support economic growth, and deliver the National Infrastructure Mission, while retaining sufficient headroom for future years.

While additional pandemic‑related funding received to date from the UK Government has been welcome, it is clear that it falls short of what is required to tackle the scale of the challenge, and will make recovery far harder. Further funding and additional fiscal flexibilities are required. We will work to ensure that the forthcoming review of the Fiscal Framework delivers such progress.

Priorities for 2021‑22

The Scottish Budget 2021‑22 has been developed against the backdrop of the clear and significant threat still posed by the virus, but also the hope for better days ahead presented by the continued roll‑out of the vaccination programme. The Budget sets out the Scottish Government's tax and spending plans for the year ahead, focused on the economic response to COVID‑19 and the UK's exit from the EU, as well as longer-term recovery, resourcing public services for the challenges ahead, and supporting households and communities at a time of real uncertainty.

It provides the resources to deliver on the strategic approach set out in Programme for Government 2020‑21, to protect and renew Scotland, and reset progress towards our national outcomes, across three core priorities: a national mission to create new jobs, good jobs and green jobs; promoting lifelong health and wellbeing; and, promoting equality and helping our young people fulfil their potential.

We will use our devolved tax powers to support our spending commitments and Scotland's economic recovery in 2021‑22 and beyond. The revenues we raise from taxation will support the most comprehensive range of free to access public services in the UK, as well as ongoing COVID‑19 support. We are providing certainty and stability for Income Tax payers and home buyers, supporting a council tax freeze to protect households incomes, and continuing to offer unprecedented support for businesses, including targeted support for the Retail, Hospitality, Leisure and Aviation sectors.

The full detail of tax policies is set out in Chapter 2, and includes:

• Income Tax rates will remain unchanged and the starter and basic rate bands, as well as the higher rate threshold, will increase by CPI inflation (0.5%). The top rate threshold will remain frozen in cash terms at £150,000, as has been our policy since 2017‑18.
• All Scottish Income Tax payers will therefore pay slightly less in 2021‑22 than in 2020‑21, based on their current income, and a majority will continue to pay less tax than if they lived in other parts of the UK, based on our assumptions about the UK Budget on 3 March 2021.
• The ceiling of the nil rate band for residential Land and Buildings Transaction Tax (LBTT) will return to £145,000 from 1 April 2021, as intended when the temporary change was introduced. First‑time buyers will continue to be able to claim the first‑time buyer relief, which has the effect of raising the nil rate band to £175,000 and results in a reduction of tax of up to £600.
• An inflation-based increase will be applied to the standard and lower rate of Scottish Landfill Tax (SLfT), ensuring consistency with planned Landfill Tax charges in the rest of the UK.
• Our Non‑domestic rates regime will continue to be the most competitive regime anywhere in the UK, with the Basic Property Rate ('poundage') being reduced to 49 pence, saving Scottish ratepayers over £120 million compared with previously published plans. The 100% relief for Retail, Hospitality, Leisure and Aviation sectors will be extended for at least three months.
• We are providing an additional £90 million to compensate councils that choose to freeze their Council Tax at 2020‑21 levels, helping to protect household incomes.

Scottish Government Budget Control Limits 2019‑20 to 2021‑22

Cash Terms	2019‑20	2020‑21	2021‑22
	£m	£m	£m
UK Government Spending Review settlement - November 2015	30,870
UK Government Spending Round settlement - September 2019		35,728
UK Government Spending Review settlement - November 2020			37,249
Subsequent Barnett consequentials and other additions	2,384
Anticipated Barnett Consequentials		468
Total Budget Limit from HM Treasury (A)	33,254	36,196	37,249
Of which:
Fiscal Resource Budget Limit	27,633	29,711	30,923
Non‑cash Budget Limit	1,145	1,145	1,145
Capital Budget Limit	3,956	4,734	4,973
Financial Transactions	519	606	208
Block Grant Adjustment for Social Security (B)	290	3,203	3,310
Ring‑fenced and Non‑Barnett Funding (C)		472	756
Covid‑19 funding - Spending Review settlement - November 2020			1,328
Anticipated Covid‑19 Consequentials			500
Total Covid‑19 Funding (D)			1,828
Block Grant Adjustment for Taxes and Non‑Tax Income	(12,190)	(12,991)	(12,430)
Scottish revenues:
Scottish Income Tax	11,684	12,365	12,263
Land and Buildings Transaction Tax	643	641	586
Scottish Landfill Tax	104	116	88
Non‑Tax Income	25	25	25
Net Resource Budget Adjustment for Taxes and Non‑Tax Income (E)	265	156	532
Reconciliation to Outturn (F)	(3)	(207)	(319)
Resource Borrowing (G)		207	319
Capital Borrowing (H)	450	450	450
Total Scottish Government Funding (A+B+C+D+E+F+G+H)	34,256	40,477	44,125

Figures may not add due to rounding.

For full detail regarding this table and a full reconciliation to spending plans, see Annex A.

2021‑22 Proposed Portfolio Budgets

	Resource	Capital	Financial Transactions	Total	UK Funded AME	Total
	£m	£m	£m	£m	£m	£m
2021‑22 Scottish Budget
Health and Sport	16,406.9	529.0		16,935.9	100.4	17,036.3
Communities and Local Government	8,447.1	1,363.0	100.0	9,910.1	2,631.0	12,541.1
Finance	259.5	24.0	3.3	286.8	5,853.8	6,140.6
Education and Skills	3,371.3	398.0	22.1	3,791.4	416.3	4,207.7
Justice	2,861.2	166.5		3,027.7	‑	3,027.7
Transport, Infrastructure and Connectivity	1,671.9	2,246.8	54.6	3,973.3	‑	3,973.3
Environment, Climate Change and Land Reform	204.2	303.0	(0.6)	506.6	‑	506.6
Rural Economy and Tourism	978.7	163.2	28.6	1,170.5	‑	1,170.5
Economy, Fair Work and Culture	705.1	130.6	200.0	1,035.7	‑	1,035.7
Social Security and Older People	3,907.0	93.0		4,000.0	‑	4,000.0
Constitution, Europe and External Affairs	80.3	‑		80.3	‑	80.3
Crown Office and Procurator Fiscal Service	151.9	4.8		156.7	‑	156.7
Scottish Government	39,045.1	5,421.9	408.0	44,875.0	9,001.5	53,876.5
Scottish Parliament and Audit Scotland	132.3	1.3	‑	133.6	2.0	135.6
Total Scotland	39,177.4	5,423.2	408.0	45,008.6	9,003.5	54,012.1

Outcomes and Equality

The Scottish Budget is underpinned by Scotland's National Performance Framework. This sets out a vision for a more successful country, where all of Scotland has the opportunity to flourish through increased wellbeing, and sustainable and inclusive economic growth. Alongside this vision, the Scottish Budget delivers against our eleven national outcomes:

Figure description:

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

National Outcomes

• Children and Young People: We grow up loved, safe and respected so that we realise our full potential
• Communities: We live in communities that are inclusive, empowered, resilient and safe
• Culture: We are creative and our vibrant and diverse cultures are expressed and enjoyed widely
• Economy: We have a globally competitive, entrepreneurial, inclusive and sustainable economy
• Education: We are well educated, skilled and able to contribute to society
• Environment: We value, enjoy, protect and enhance our environment
• Fair Work and Business:We have thriving and innovative businesses, with quality jobs and fair work for everyone
• Health: We are healthy and active
• Human Rights: We respect, protect and fulfil human rights and live free from discrimination
• International: We are open, connected and make a positive contribution internationally
• Poverty: We tackle poverty by sharing opportunities, wealth and power more equally

Recognising the disproportionate impact on many sections of our population, we have published an Equality and Fairer Scotland Budget Statement. This provides a focus on the main challenges that are faced across different portfolios, on the basis of the protected characteristics in the Equality Act 2010, and on the realisation of human rights. This also sets out the main ways that these challenges are being addressed through our budget decisions.

A National Mission for New, Green and Good Jobs

The global pandemic has had a profound impact on the global economy - Scotland could never be immune to this. While that has required immediate action, it also requires us to consider the longer-term, and deliver a strong, fair and green economic recovery, across the National Outcomes.

While suppressing COVID‑19 and ensuring the safety of Scotland's people will remain a priority for as long as the virus poses a public health threat, we will sharpen our focus on rebuilding for the future. We will target resources towards protecting businesses and employees where public health measures require it, while stimulating a safe, swift and sustainable recovery.

We have adopted a national mission to create new, good and green jobs which will protect people from redundancy and unemployment, and invest in our Green New Deal, along with our continued delivery of the recommendations of the Advisory Group on Economic Recovery, including monitoring progress towards our National Outcomes.

Investing in jobs and opportunities

Given the scale of the unfolding economic crisis, the immediate challenge is to protect and increase the number of jobs, particularly in areas of high growth and economic opportunity, and where they meet our green ambitions. That in turn can provide businesses with the confidence to invest in a resilient, sustainable and net-zero future, including social enterprises, which often lead the way in their contribution to a Wellbeing economy and which we are committed to seeing become widely accepted as a more just, democratic and inclusive way of doing business.

Building on the significant package of support set out in Programme for Government, the Scottish Budget provides investment of around £1.1 billion for jobs and skills.

While the pandemic has impacted on all sectors, businesses and people, we know some have felt the impacts more acutely, particularly young people, who have seen opportunities suddenly taken away from them, and their futures made more uncertain, while being at risk from precarious work. In response to the pandemic, we established a package of support to help young people, including £60 million for the Young Person's Guarantee, and £15 million to establish the Apprenticeship Employer Grant. This has created up to 18,000 new opportunities for young people.

We will build on this in the coming year, with an initial additional investment of £125 million. This includes further development of the Young Person's Guarantee, helping achieve our ambition that within two years, every young person will have the opportunity to study; take up an apprenticeship, job or work experience; or participate in formal volunteering.

This investment will enhance existing support, and deliver a broader range of services and interventions to create more labour market opportunities, including more apprenticeships. We will continue to work with partners to ensure the Guarantee is working for all young people, helping them to prepare for and enter work as well as helping to create good, green and sustainable jobs.

This investment will also provide further funding for the National Transition Training Fund (NTTF), building on an initial £25 million already provided in 2020‑21. This provides support for individuals to retrain and upskill, and for at‑risk sectors to retain a skilled workforce, helping further boost the skilled working population to take advantage of new and emerging employment opportunities as part of a green economic recovery.

We will provide £5 million for Community Jobs Scotland (CJS), which works with voluntary sector employers to create job opportunities for unemployed people aged 16 to 29, particularly those most disadvantaged in the labour market. We will work with delivery partners to align this with our Young Persons Guarantee and the UK KickStart support programme, alongside future transition of CJS delivery into No One Left Behind in 2022‑23.

A key part of our skills funding, and driving forward our employability agenda, is funding for Skills Development Scotland (SDS) - increasing in 2021‑22 to £230 million - through the Education and Skills portfolio. This will deliver national training interventions, including apprenticeships, Individual Training Accounts, the national redundancy service (PACE), and local careers services. Together with broader employability support, it will help drive forward our national mission for jobs and ensure the future workforce is equipped with the right skills and training.

Across all our work to improve the skills and opportunities available to businesses and people in response to the pandemic, our economic recovery will be a green recovery - this is the right approach in the face of the climate and nature crisis, and provides opportunities for new work and growth in a challenging global market.

Over the next Parliament we will deliver a new £100 million Green Jobs Fund. This will invest £50 million through our enterprise agencies to help businesses which provide sustainable and/or low carbon products and services to develop, grow and create jobs. A further £50 million will support businesses and supply chains to take advantage of public and private investment in low carbon infrastructure, and the transition to a low carbon economy, boosting green employment. In 2021‑22, we will allocate an initial £14 million from the Green Jobs Fund, across the enterprise agencies and supporting supply chains.

To ensure everyone can capitalise on the significant opportunities presented by a green recovery, we developed the Climate Emergency Skills Action Plan, helping the people of Scotland retrain and reskill into good, green jobs. It underpins the strategic investment set out across the Programme for Government and Scottish Budget, focused around key sectors which will play a leading role in economic recovery and net‑zero: energy transition; construction; transport; manufacturing; and agriculture and land use management. This also underpins the work of the NTTF which places a focus on the provision of green skills to support Scotland's transition to net zero.

Using the experience of the NTTF, we will now work to establish a Green Jobs Workforce Academy. This will ensure our workforce has the right skills to meet the requirements of a just transition by supporting existing employees, and those who are facing redundancy, to assess their existing skills and undertake the necessary upskilling and reskilling they need to secure green job opportunities as they emerge.

Underpinning all of this activity, we remain committed to the principles of Fair Work. Through our Fair Work First approach we will extend Fair Work criteria to as many funding streams, business support grants and public contracts as we can, working with employers to commit to channels for effective voice, such as trade union recognition; investment in workforce development; no inappropriate use of zero hours contracts; action to tackle the gender pay gap and create a more diverse and inclusive workplace; and payment of the real Living Wage.

Our approach will ensure all of our infrastructure spend, but particularly our green investment, will not just provide business with the ability to grow and diversify, but in turn protect existing jobs and create new ones, in those sectors at the forefront of our net‑zero ambitions.

A green economic recovery

The impact of the crisis has reinforced the significant work ahead to meet our statutory commitment to be a net zero society by 2045 and to achieve the ambitions of our Environment Strategy, while also showing the opportunities it presents. As we look ahead to the COP26 summit, being hosted in Glasgow in November 2021, we will grasp those opportunities and ensure Scotland is a world-leader in green and renewable technologies, with a just transition and environmental sustainability at the heart of our economic recovery.

Programme for Government set out the initial tranche of £1.6 billion investment from the Low Carbon Fund with the final £400 million set out in the recent Climate Change Plan update. This update sets out a full range of emissions reduction policies to secure our net‑zero ambitions, including new policies and outlining where existing policies have been boosted or accelerated since the initial plan in 2018.

This additional £2 billion of low carbon investment across the next five years - starting with £165 million in 2021‑22 - together with wider capital investment will deliver a number of large-scale infrastructure projects, including:

• Investment of nearly £1.6 billion to transform heat and energy efficiency of buildings in Scotland, whilst directly supporting up to 5,000 jobs.
• £60 million to support the industrial and manufacturing sectors during a green economic recovery to overcome private sector investment and transition challenges, focused on decarbonisation.
• The £62 million Energy Transition Fund to provide a package of investment for the North East that will support the energy sector and help us make significant progress on energy transition, while promoting sustainable inclusive growth, as we move toward net zero by 2045.
• A £70 million fund to improve local authority recycling collection infrastructure, and develop a new route map to reduce waste and meet our waste and recycling targets for 2025, as part of growing a circular economy.
• Investing over £500 million in active travel over the next five years and a further £500 million in bus priority infrastructure.
• £150 million has been allocated for woodland and forestry through the low carbon fund, supporting an increase in tree planting and woodland creation, from 12,000 hectares in 2020‑21 up to 18,000 hectares in 2024‑25.
• Investing over £70 million to support a transformative shift to zero emission mobility, including in electric vehicle charging, hydrogen, research and innovation, and consumer loans.
• £120 million for Zero Emission Buses over the next five years, driving forward a fully decarbonised future for Scotland's bus fleet and supporting the Scottish supply chain.
• A new £180 million Emerging Energy Technologies Fund to support the development of hydrogen and Carbon Capture and Storage (CCS), and add impetus to the development of Negative Emissions Technologies.
• £50 million to create Active Freeways, providing sustainable transport infrastructure between settlements and major trip attractors.

Alongside our direct investment, we will continue to leverage private investment in new technologies and green sectors, boosting growth and employment opportunities. That means not just creating new jobs, but also protecting businesses and people in sectors which have been hit hard and providing opportunities to adapt. This includes hydrogen and CCS which present important opportunities for Scotland's mature oil and gas industry which the Scottish Government is supporting through our significant £180 million emerging energy technologies investment. This will bring forward projects for hydrogen, CCS, and negative emission technology as significant new components of our energy transition and critical emerging markets for the Scottish economy.

These new sectors can utilise existing skills in Scotland's oil and gas industry and supply chain to offer the workforce a just transition. Our storage potential can open up opportunities to import carbon dioxide from overseas, supporting international decarbonisation, and green hydrogen produced by utilising our offshore wind potential can open up new export markets in addition to supplying domestic ones - reflected in our £120 million investment in zero emission buses.

Capturing the cross‑cutting benefits of our policies and maximising our investments will ensure we harness the power of Scottish supply chains to drive sustainable growth and a just transition. A key example is our approach to low and zero transmissions heat, and we estimate our investment here will support as many as 24,000 jobs in Scotland. Developing a skilled workforce based on high‑quality jobs and successfully building strong and competitive Scottish supply chains will be critical to unlocking high‑volume delivery of heat decarbonisation and offers the potential to compete in markets outside Scotland.

There is also clear scientific evidence on the links between the twin crises of climate change and biodiversity loss, and we will continue to address these hand in hand, with investment in nature‑based solutions. Biodiversity sits at the heart of our green infrastructure investment, with significant investment in our natural economy through the Low Carbon Fund.

We will provide an extra £150 million for flood risk management, with an additional £10 million in 2021‑22. This is in addition to our ongoing commitment to provide £42 million annually to local authorities for flood risk management. In 2020 we set out ambitious plans to invest a cumulative £250 million in peatland restoration by 2030. This budget confirms that peatland restoration spend will increase by 10%, to £22 million in 2021‑22 as part of a multi‑year spending package. This will allow multi‑year and large‑scale projects to be implemented to boost restoration activity and deliver co‑benefits for biodiversity and flood mitigation.

This investment will directly tackle the twin crises of climate change and biodiversity loss while also providing good green jobs, particularly in many of our remote and rural communities. Funding for biodiversity projects also compensates, to some extent, for the UK Government's failure to provide clarity on a replacement for the EU LIFE scheme, and we will increase funding for biodiversity projects to £5 million in 2021‑22, complementing the wide range of Scottish Government‑funded activity that delivers positive outcomes for biodiversity.

2021 is a vital year for climate change action and COP26 in Glasgow puts Scotland at the centre of global commitment. The Budget includes over £8 million for outreach and engagement activities connected to COP26, enhancing our leadership and impact. We are also fully meeting our commitments to international climate justice, renewing our £3 million Climate Justice Fund, and to supporting change by local communities, with £10 million for the Climate Challenge Fund. This includes an element of capital spend, allowing communities to invest in vital infrastructure.

No one left behind

The National Performance Framework promotes greater equality in Scotland and ensures we put the needs of our most disadvantaged and marginalised communities are at the forefront of our action. We will ensure everyone can benefit from our economic recovery. The pandemic has shone a light on the disparity in employment for those most at risk of poverty and the barriers they can face, and the importance of access to good‑quality, fair work. Increasing family incomes from employment is also crucial to meet our statutory child poverty targets, which underpins our No One Left Behind Delivery Plan. Published at the end of 2020 this sets out how, together with local government and partners in the public, third and private sectors, we will secure transformational change in the delivery of employability services.

We will continue to invest in employability support that helps low‑income parents, focused on those family groups identified as being at greatest risk of experiencing poverty within the Tackling Child Poverty Delivery Plan. In 2021‑22, we will invest £5 million in the Parental Employability Support Fund (PESF), providing dedicated support for low‑income families. We will also continue our boost to PESF for Early Learning and Childcare and young parents support, which will work alongside ongoing employability support to disabled parents. We will provide funding of £27 million for our devolved employment service, Fair Start Scotland, part of a two‑year extension of the service, from which we expect to see support up to 29,000 people. It also provides £14.1 million for the Employability Fund, supporting up to 8,300 training places.

Recognising the importance of flexible working patterns, particularly people with caring responsibilities - often women - to be able to stay in paid work and develop their own careers, we will continue to fund support and advice for employers on flexible working, and will support women to return to the workplace through our Women Returners Programme. We are committed to tackling the gender pay gap and creating a more diverse and inclusive workplace to progress towards our vision for making Scotland a Fair Work Nation by 2025.

We will also continue to support the Workplace Equality Fund, supporting a range of fair work projects for disabled, women and minority ethnic workers, and work to at least halve the disability employment gap by 2038. This includes undertaking a review of supported employment provision in Scotland, providing support for disabled people on their employment rights and discrimination redress, and support to improve recruitment and retention of disabled people.

Supporting a sustainable recovery for business

Non‑domestic rates (NDR) relief formed a key part of our emergency package of measures to support business during the pandemic. We provided additional relief worth £965 million (as at 1 July 2020), including 100% relief to all retail, hospitality, leisure and aviation premises. This was on top of the most competitive relief package in the UK, worth over £700 million, including the Small Business Bonus Scheme which benefits more than 117,000 premises. This provided unprecedented support to businesses, and effectively underwrote almost £1.6 billion of NDR income for local government. Uniquely in the UK, we guaranteed all NDR income for local authorities.

Extensive engagement with businesses has made it clear that their overriding priority in 2021‑22 is continued certainty of NDR relief, and to avoid a cliff edge in support. While the lack of clarity from the UK Government has undermined our ability to provide this, we recognise the need to provide the greatest certainty and confidence for businesses that we can. The Scottish Budget commits to extending the current NDR relief available to properties in the retail, hospitality, leisure and aviation sectors for at least the first three months of the financial year. This relief - forecast by the Scottish Fiscal Commission to be worth £185 million - will be funded through the receipts received from businesses who have chosen to reimburse the NDR relief provided in 2020‑21, and will provide a degree of early certainty to the most directly affected sectors despite the lack of clarity from the UK Government.

This responds directly to the key ask from businesses within the fiscal limitations of the devolution settlement. It recognises business confidence is fragile, particularly in light of uncertainties over the UK Government's support measures such as the furlough scheme. Chiefly, it does not preclude further intervention following the UK Budget in March. Should the UK Government bring forward an extension to their equivalent RHL relief that generates consequential funding, the Scottish Government will match the extension period as part of a tailored package of business support measures.

Early confirmation of an extension to NDR relief will be welcome news for those sectors that directly benefit, but we recognise that COVID‑19 has had a broader impact on the Scottish economy and the commercial property market. Following two years of offering the lowest poundage in the UK, the Scottish Budget now delivers the unprecedented step of reducing the poundage mid‑revaluation. This decision will save Scottish businesses over £120 million compared with previously published plans.

The commercial property market is likely to evolve as we emerge from the pandemic and the Scottish Budget commits to an expansion of the Business Growth Accelerator and Fresh Start reliefs which are unique to Scotland. This will encourage changes in the use of existing assets as well as the reoccupation of long‑term empty properties.

The Budget maintains our commitment to a competitive rates regime. It delivers an unprecedented reduction in the poundage as well as the most generous reliefs in the UK for small businesses; for nurseries; for low carbon technologies; for new‑builds and building improvements; and for the sectors most directly affected by the current COVID‑19 pandemic. The Scottish Government is unable to replace the income lost by businesses due to COVID‑19, but these NDR measures, worth almost £1 billion, highlight the priority that the Scottish Government place on guiding the economy into recovery after the most challenging of years.

Investing for growth, jobs and prosperity

Making the right investments in the right places is crucial, to sustainable and inclusive growth, and our capital funding decisions matter just as much as our day‑to‑day spending - supporting employment and economic recovery through large‑scale infrastructure plans.

Our ability to do that has been severely impacted by the UK Government Spending Review which saw a cash terms cut to the Scottish Government's budget across capital and financial transactions. Despite this, we will take forward an ambitious programme of investment within the resources available to us. We will shortly publish our final Infrastructure Investment Plan (IIP) and Capital Spending Review (CSR), setting out a common, single vision for all infrastructure investment choices: that our infrastructure supports Scotland's resilience and enables inclusive, net‑zero and sustainable growth.

The IIP covers 2021‑22 to 2025‑26 and will set out a significant pipeline of projects and programmes to stimulate Scotland's economy. The CSR will set out budgets for the five years of the IIP, demonstrating the affordability of these programmes and projects, and confirming that we will deliver our National Infrastructure Mission to increase annual investment in infrastructure by £1.56 billion by 2025‑26 - a total investment value of over £33 billion pounds in the next five years.

The IIP will be key to the success of the National Mission for Jobs, offering a robust pipeline of work that will help stimulate a green recovery - providing good, green jobs, stimulating supply chains and building market confidence. It is estimated that just over £6 billion of investment in 2021‑22 set out in National Infrastructure Mission, rising to around £7.2 billion in 2025‑26, will support 45,000 full-time equivalent jobs across those years. This includes the jobs supported directly, mainly in the construction sector, but also the indirect jobs supported in the supply chain.

These efforts are enhanced by the Scottish National Investment Bank - the single biggest economic development in the history of the Scottish Parliament, and the UK's first development bank. We are capitalising the bank with £2 billion over the next ten years, and will provide £200 million fresh capital, alongside the Bank recycling its own receipts, for investment in 2021‑22.

The bank has a primary mission to provide the investment needed to put business at the forefront of driving forward our net‑zero ambitions. It will provide finance and catalyse private investment to achieve a step change in economic growth by powering innovation and accelerating the move to a net zero emissions, high‑tech, connected, globally competitive and inclusive economy.

Investing in a digital economy

Scotland's tech scene is one of the most innovative, high‑growth sectors we have and it will be critical to our economic recovery. As we continue to renew our economy that innovation is even more important. The Scottish Government commissioned the Scottish Technology Ecosystem Review (STER) to recommend how we can harness the enormous potential of the tech sector and how it can contribute to Scotland's economic recovery following the pandemic. That review attracted critical acclaim, and provided an industry‑led blueprint for the Scottish tech industry, outlining the actions necessary to elevate the sector to a world‑class level.

This budget provides £7 million to drive implementation. This will allow us to create a national network of 'tech scalers', world class startup development facilities delivering first rate commercial training to Scotland's most promising early stage businesses. We will also create a £500,000 Ecosystem Fund, which we will seek to top‑up with private investment. This fund will be used to invest in the strategic assets which underpin the world's best entrepreneurial ecosystems. We expect this network to be benefiting at least 300 startups by 2025. In addition, this budget will further support the recommendations in STER to improve the performance of university spinouts, an improved early stage investment market, and increasing the involvement of industry in supporting school age learners to develop as confident and creative coders.

To truly reap the economic rewards of technological advancement we must also support our SME businesses in more traditional sectors to adopt and successfully integrate new technologies. In January 2021 we provided a further £21.8 million of funding to help Scotland's businesses to realise their digital ambitions. We will monitor the progress of this new programme closely and, if appropriate, will look to build on it in the forthcoming year.

The pandemic has highlighted the benefits of a more digitally connected world, for health and care, for businesses and for social connection, but the crisis has also shone a stark spotlight on continued digital exclusion in Scotland. As we harness the potential of Scotland as a world‑class digital nation, we will also ensure the benefits are felt widely.

In 2021‑22, we will provide capital investment of £98.2 million in digital connectivity, helping bring more people into the digital world. This includes continued funding for our Reaching 100% (R100) programme, to ensure that all premises in Scotland can access superfast broadband. It also provides continued funding for improved mobile coverage through delivery of 4G and 5G infrastructure, including the Scottish 4G Infill programme and The Scotland 5G Centre. Mobile coverage will be enhanced by extensive commercial roll‑out of 5G and a new industry‑led programme, the Shared Rural Network, which will further improve 4G coverage in rural Scotland.

As part of our work to ensure digital inclusion for all, we will continue delivery of our Connecting Scotland programme which provides families with a device, 24 months' unlimited data as well as technical support to get online safely and securely. This builds on support we provided for the 'shielding' group during the first lockdown, to support families with children and young care leavers over the winter. It will bring the total number of digitally excluded households we have helped to get confidently online up to 55,000 by the end of 2021, backed by total investment of £45.6 million.

Promoting Scotland's place in the world economy

With the twin threats of the continuing economic impact of the pandemic, and the immense harm that will be caused by the UK's withdrawal from the EU, our work to promote Scotland's place in the world as a high‑performing economy, with a significant amount to offer our trade partners and inward investors, is vital. Scottish Government modelling suggests that the UK Government‑negotiated Trade and Cooperation Agreement (TCA) will remove around £9 billion from the Scottish economy by 2030 compared to continued EU membership. In contrast we will build a wellbeing economy that is global in outlook, providing funding to deliver our ambitions both for inward investment and outward trade and exports. Importantly, we will ensure our approach always aligns with our values of fair work, net zero and sustainable and inclusive growth.

Enterprise, Trade and Investment funding of £311.3 million will support work on the three pillars of internationalisation of our economy - inward investment, trade, and capital - all underpinned by our soon to be published, values‑led, trade policy vision.

The Budget also supports our work with Scottish Enterprise and others in delivering our commitment to create a more prosperous, innovative nation, with more jobs, fair work and a dynamic, sustainable and inclusive economy. It promotes Scotland's interests and enhances our external relationships through our GlobalScot network, our Trade Envoys and our work to promote Brand Scotland - building our international presence and development of trade policy. To achieve maximum impact we will promote Scottish businesses, products and investment opportunities to a global market, focusing on areas where engaging internationally will lead to economic growth.

Inward investment brings significant value to Scotland's economy, both in terms of the direct benefits that accrue from job creation, but also the wider economic benefits such as Scottish business access to global technology, markets, talent and finance. Inward investors constitute 3% of Scotland's businesses, yet are responsible for 34% of employment and 50% of turnover in Scotland. Through our Inward Investment Plan and 'A Trading Nation: A Plan For Growing Scotland's Exports', we aim to attract more foreign investment and help our exporters be more successful. We are working to support more strategic investments up to £20 million per annum, and grow exports from 20% of GDP to 25% by 2029. Our Capital Investment Plan will also provide a set of actions to improve performance in attracting internationally mobile private capital.

Underpinning Scotland's position as a responsible global partner, we will continue to deploy £10 million through the International Development Fund, supporting development programmes delivered by a range of organisations in Scotland, and working with partners overseas, clearly focused on the achievement of the UN Sustainable Development Goals.

Across the Constitution, Europe and External Affairs (CEEA) portfolio, we will invest to continue our engagement at home and internationally to enhance Scotland's reputation and increase sustainable economic growth, pursue our interests overseas, and promote Scotland as a great place to live, visit, work and do business. This delivers funding for our international and European relationships - supported by our external network of offices - ensuring Scotland remains a valued and well‑connected nation. We will work to protect the rights of EU citizens and ensure that those resident in Scotland are provided with information, support and practical advice on their rights as a result of the UK leaving the EU.

Ensuring economic prosperity across Scotland

The shock of the pandemic has exposed the fragility of some parts of our economy and our communities. Across all of our actions to deliver social and economic renewal, and secure a fairer, stronger recovery, we will deliver inclusive growth, felt in every area across Scotland.

We have catalysed local economic development in recent years through the expansion of our City Region and Growth Deals programme. Seven regional Deals are now in delivery (Glasgow, Aberdeen, Inverness and Highland, Edinburgh and South East Scotland, Stirling and Clackmannanshire, Ayrshire, and Tay Cities); Heads of Terms have been agreed for Borderlands and Moray; and, discussions are ongoing on reaching Heads of Terms for Falkirk, Argyll and Bute, and the Islands (Outer Hebrides, Orkney and Shetland).

Since 2014, the Scottish Government has committed over £1.9 billon to Deals and associated investments, with a further £2.2 billion committed by regional partners and £1.5 billion by UK Government. Each Deal represents a long‑term commitment that will help secure inclusive growth, delivering significant and lasting economic benefits for individuals, businesses and communities, creating thousands of jobs, and upskilling local labour markets.

In 2021‑22 we will invest £210 million in the City Region and Growth Deal programme, and related activity. This funding will enable key projects to be realised across the Deals in delivery, including:

• The Tay Cities Biomedical Cluster, which will build on the University of Dundee's international reputation by developing an innovation hub for new businesses.
• Inverness Castle, which will be opened to the public and be a focal point for tourism in the area and wider highlands, and revitalise Inverness city centre.
• The Great Harbour, Irvine Harbourside and the Ardeer project in Ayrshire, which will secure the Great Harbour as a major regional destination that will physically transform the wider location and create capacity to support community participation and commercial opportunities.

We will also continue our work with partners to progress all Deals that are not yet in delivery, with the aim of concluding full Deals for all regions by the end of 2022.

This also underpins our commitment to community wealth building. Building on success in places like Ayrshire, we are supporting five additional areas - Clackmannanshire, South of Scotland, Western Isles, Tay Cities and Glasgow City Region partners - to identify bespoke community wealth building solutions that will support local people and economies to thrive. Three of these areas (Clackmannanshire, Western Isles and Tay Cities Region) have finalised action plans for their areas and we expect to have all action plans by the end of March.

Our ambition is to ensure that no part of Scotland is left behind, but we know that across Scotland there are many communities who have faced significant damage from the impacts of COVID‑19, and are at even greater risk from the UK's exit from the EU. Particularly within our rural and island communities, the impacts have been severe and in 2021‑22, we will provide almost £1.2 billion of funding across the Rural Economy and Tourism portfolio.

An area of most marked risk for our rural economy is in agriculture, fishing, and seafood. Despite being only a few weeks since the end of the transition period, we have already seen significant impacts for rural and agricultural businesses, and know that more risk lies ahead. At present, Scottish farmers and crofters stand to lose out on equivalent Common Agricultural Policy Funding of £170 million through to 2025. It is absolutely vital that the UK Government maintains their promise to at least match EU funding.

In the year ahead, and as part of our £801 million investment in agricultural support, we will offer much needed stability to our farmers, crofters and land managers through CAP payments, and deliver and fund activities to ensure our agriculture sector plays a leading role in net‑zero through our work with sector‑led groups. We will also ensure that those farming and crofting in our most remote and fragile areas continue to be supported through the Less Favoured Areas scheme.

The Budget will also renew our work across the wider marine economy, guided by the new Blue Economy Action Plan. We will support fisheries and seafood sector priorities and potential realignment after EU Exit, delivering sustainable activity which will in turn support the economies of coastal communities. Wider support will also deliver investment in the seafood processing sectors, improving efficiency and reducing emission. However necessary, replacement funding for the European Maritime and Fisheries Fund is estimated to be £62 million - as such, a UK Spending Review allocation of just £14 million will severely limit the scope of aspirations.

We will continue to support agricultural transformation, assisting the sector to reduce greenhouse gas emissions, improve efficiency and enhance Scotland's natural environment, backed by the £40 million Agriculture Transformation Fund. We will also build on the pilot Sustainable Agricultural Capital Grants Scheme, and continue existing mechanisms such as the Farm Advisory Service, Knowledge Transfer and Innovation Fund; and, Farming for a Better Climate.

The Scottish Budget also maximises the contribution of Scotland's forests and land to the economy and net zero, and the wider social, health and environmental benefits they create. £150 million has been allocated for woodland and forestry through the low carbon fund, supporting an increase in tree planting and woodland creation, from 12,000 hectares in 2020‑21 up to 18,000 hectares in 2024‑25. This sits alongside total funding in the 2021‑22 Budget for Forestry and Land Scotland and Scottish Forestry of £121.2 million - an increase of £26.9 million on the previous year. Both organisations will double their youth employment offering, creating economic and employment opportunities across the country, particularly in rural areas; increase capability and capacity within the forestry sector, delivering economic and employment opportunities, particularly in rural communities; and make significant contribution to our net‑zero ambitions.

This will help drive forward our ambitions to strengthen our rural, island and coastal communities by helping to create a low carbon rural economy and encouraging more people to live and work in rural parts of Scotland.

Across many of our communities - but particularly in rural and island areas - there have also been significant economic benefits felt through European Structural Funds. These have been key to economic development, investing more than £5.6 billion into a wide range of projects. Following the UK's departure from the EU, the Scottish Government has been clear that we expect to receive our full share from the replacement funding programme, the UK Shared Prosperity Fund (UKSPF) - at least £1.3 billion for a replacement seven‑year programme - with Scotland having full say over how these funds are used. Recently, however, the UK Government have announced that they will bypass the Scottish Government, delivering the UKSPF directly. This is a clear incursion into a devolved policy area and overturns many years of established practice. Unlike the UK Government, we have published clear plans for how we would use this funding - which we are being prevented from rolling out. We will continue to press for full control of funding in Scotland.

Tourism also has a key role in bolstering Scotland's place in the world, showcasing our outstanding natural assets and providing an important economic contribution, particularly in rural areas - but the sector has been devastated by the impact of the pandemic. We have commissioned work in response to the recommendations to develop a five-year recovery and investment plan to set the tourism sector back on track to deliver the 2030 tourism strategy, working alongside VisitScotland, the Enterprise agencies, and sector stakeholders. This has already been supported in 2020‑21 by a package of £104.3 million.

In 2021‑22, we will provide £55.1 million for Tourism. Recognising the acute impact seen by our rural communities, we will double the Rural Tourism Infrastructure Fund, to £6.2 million, helping tourist attractions and their communities make improvements to cope with increased visitors, such as parking areas, visitor facilities and recycling points. This will support the resumption of domestic tourism when the time is right.

We will also provide £103.3 million funding for Highlands and Islands Enterprise and South of Scotland Enterprise - an increase of £17 million - whose work to retain existing jobs and deliver our national mission to create new, good and green jobs is critical to economic recovery. They will continue to provide front line support to businesses and communities in areas disproportionately impacted because of their rurality and their reliance on jobs in the hardest‑hit sectors.

Across Scotland we are working to ensure that our diverse and evolving cultural heritage is valued, nurtured, and celebrated, and protects jobs in the culture sector. The 2021‑22 budget of £176.7 million for culture and major events will support ongoing delivery of A Culture Strategy for Scotland, focused on three main ambitions: strengthening culture, transforming through culture and empowering through culture.

The Budget will invest in a diverse and resilient culture sector in Scotland, including:

• £63.2 million for our creative industries and the creative economy, including Screen Scotland and Creative Scotland.
• £77.7 million for the national collections, maintaining free access to the permanent collections.
• £22.9 million for the five National Performing Companies, ensuring Scotland's unique culture reaches a wide audience, both digitally and through live performances once safe to resume.
• £75.9 million for Historic Environment Scotland, caring for our heritage and communities, creating local training and employment and supporting the maintenance of traditional craft skills.

The Budget also provides £63.3 million for National Records of Scotland to provide statistics benefiting the public and other stakeholders , including the vital role of regular information and analysis to help monitor the impact of the COVID‑19 pandemic. Due to the impact of the pandemic Scottish Ministers also made the decision to move Scotland's Census to 2022 to ensure that it can deliver the benefits required by the people of Scotland.

Promoting Lifelong Health and Wellbeing

The response of our health and social care staff to the pandemic has been nothing short of heroic. We are hugely grateful for the extraordinary hard work, dedication, skill and commitment of all those working in health and social care during the COVID‑19 emergency. We are making a one‑off thank you payment of £500 for all full-time NHS and adult social care workers by March 2021, with part-time workers receiving a proportionate share. This investment of about £195 million will benefit over 300,000 staff, including nurses, porters, doctors, primary care staff, homecare workers, care home staff, hospice staff and residential child care staff.

In response to significant additional pressures caused by the pandemic, healthcare staff worked quickly to remobilise and reconfigure both physical and mental health services, with healthcare students stepping into front line care to provide additional support. Social care has played a crucial and critical role throughout, particularly in caring for some of those most at‑risk. We must now ensure the necessary investment to appropriately tackle the continued challenges presented by COVID‑19, and secure a sustainable renewal and recovery of services which is safe and person‑centred. In this, we start from a position of strength.

In 2020‑21, before the crisis, we had committed over £15 billion for the Health and Sport portfolio - a record amount and one that ensured we maintained our commitment to pass on all health resource consequentials in full, and put health and care on the strongest footing to face the crisis. A further £3.2 billion has been provided in‑year for health and wider public health initiatives in response to COVID‑19. In the year ahead, we will build on this investment, locking in positive developments, reforming services, and addressing underlying health and wellbeing inequalities.

In 2021‑22, investment in the Health and Sport Portfolio will increase to over £16 billion - an increase of over £800 million (5.4%) to the core Health and Sport budget, along with a further £869 million to continue to address COVID‑19. This additional funding builds on our record level of health spending in Scotland to ensure that our front line services receive the support that they need to respond to the unprecedented and ongoing challenges presented by COVID‑19. We will continue to assess the impact of COVID‑19 and its financial implications for our health service and expect the UK Government to deliver its commitment to provide the NHS with whatever it needs throughout this pandemic.

Investing in a world-class public health system

The reality is that COVID-19 is likely to be with us for some time to come. This means we will need to maintain and grow our COVID‑19 public health infrastructure including Test and Protect, outbreak management and vaccination programme throughout 2021‑22.

The COVID‑19 vaccination programme is the most significant logistical operation in Scotland's post‑war history, drawing on skills and expertise from across the public sector and beyond. It will help us significantly on the path back to greater normality and gives us real hope for the future. The current national vaccination programme will be offered to the entire adult population, but it is likely that we may need to undertake routine annual vaccinations. That is why we will ensure that the infrastructure we are putting in place is sufficiently robust to stand us in good stead in the future should this be required. This includes, for example, the development of a national vaccination scheduling system and digital platform to record vaccinations, which as well as being critical for the COVID‑19 programme, will be rolled out to other Scottish immunisation programmes.

Test and Protect remains a critical part of our response to the pandemic, and we are continuing to expand the use of testing within Scotland, including the more widespread use of asymptomatic testing.

Each and every health board across Scotland is playing a hugely significant role in managing the crisis, and ensuring the necessary capacity is available to prevent the system from being overwhelmed, while continuing to provide excellent care for the most seriously ill. As our initial efforts to suppress the virus made progress, increasingly more and more services were able to restart, with the efforts of healthcare professionals ensuring a safe and sustainable remobilisation where it was possible. In response to the unique challenges of the winter period, we have put in place robust and resilient winter preparedness plans, supported by additional investment of £37 million. While these plans were impacted by the development of the new strain of the virus that emerged towards the end of 2020, we have worked closely with health boards to ensure that as many routine functions are able to operate as is safe to do so.

Our health service remains on emergency footing and any change to this will need to be judged on the prevalence and risk of the virus. To ensure however that we put health boards on the strongest footing to secure recovery, in 2021‑22, we will provide £10.6 billion of baseline funding for NHS territorial boards. We will also provide £1.3 billion for our NHS national boards.

We have made significant progress in reducing waiting times over the last few years but we know that progress has been interrupted by the pandemic, with an attendant increase in the numbers of patients waiting for routine appointments and treatments. NHS Boards paused all non-urgent elective surgery during the first wave of the pandemic in March 2020. Over the summer period, NHS Boards developed new processes for admissions for elective surgery in line with infection control measures, and in September 2020 elective surgery activity was at around 65% of the level in the previous year. We will fully pass on £869 million of health COVID‑19 consequentials, which amongst other areas of critical focus, will enable boards to start to address the pandemic induced backlog and improve access to hospital‑based services.

We are taking forward substantial capital investment in the NHS estate, backed by £550 million capital funding for territorial and national boards, delivering the construction of new Elective Care Centres, plus the Baird Family Hospital and Anchor Centre in Aberdeen.

We will also continue to use the NHS Louisa Jordan, which has played a significant role in providing additional capacity over the winter period. The latest available data shows that, since July 2020, over 21,000 patients have been seen at the hospital across 14 specialties. In addition, over 39,000 NHS staff have been vaccinated and over 5,500 individuals from NHS Boards, the Royal College, Universities and Colleges have been trained using the healthcare facilities and simulations on site.

As we continue to learn and respond to the pandemic, there is emerging evidence that a significant number of people who have suffered from COVID‑19 are experiencing long‑term physical and mental health issues. We know that rehabilitation, clinical input and research are all critical to understanding and supporting recovery - it is crucial decisions about treatment are based on the latest available evidence. The Scottish Government is already investing over £2 million in a portfolio of nine Scottish‑led research projects that will greatly increase the clinically relevant knowledge base on the longer-term effects of COVID‑19 infection. As our understanding of people's treatment and support needs develop, further investment will be provided and the final Respiratory Care Action Plan will play a key role in responding to the implications and consequences of COVID‑19 for many aspects of respiratory care.

In light of the benefits seen from the use of genomic medicine in improving prevention, diagnosis and treatment for patients with a range of conditions, we are increasing our investment in this area to £2.3 million. The investment will support our implementation plan, which will be published in response to the UK Government's Genome UK: the future of healthcare Strategy. The plan will set out actions in line with the three pillars in the strategy - Diagnosis and personalised medicine, Prevention and Research. We will work closely with the NHS Scotland Laboratory Genetic Services to continue our approach to embedding genomics in routine healthcare.

We will continue to fund the NHS Scotland National Planning Board to support strategic planning of NHS Scotland services in the medium- to long-term, part of which involves taking account of new and emerging areas of health technology and innovation. This investment of £0.5 million will support health boards in shaping their services to meet the needs of the population.

Investing in the right care, in the right place, at the right time

Primary care is the cornerstone of the NHS with the vast majority of healthcare delivered in primary care settings. It is vital in promoting good health self‑care, providing care and support in communities for those with long‑term health needs (including co‑ordination of care for those with co‑morbidities), and reducing demands on the rest of the health and social care system. This has arguably never been as important as over the last year, as the system has flexed and worked together to tackle the pandemic.

Our mission now is to lock‑in the investment in primary care and build upon it. To do this, in 2021‑22 we will invest over £1.9 billion in Primary Care. We will further increase our Primary Care Fund from £195 million to £250 million in 2021‑22, which includes support for delivery of the new GP contract and for wider Primary Care reform.

The pandemic has provided an opportunity to rethink how people access quick advice and, in cases where there isn't a life threatening illness or an emergency, help them to get support when and how they need it.

In July 2020, we rolled out our new NHS Pharmacy First service - backed by £7.5 million investment in 2021‑22, and due to rise to £10 million by 2022‑23. This enables community pharmacies to give people expert help for more minor ailments and common clinical conditions, offering advice, treatment or referral to other healthcare teams if required.

In response to the pandemic, we also set up and delivered COVID‑19 Community Pathway to triage and treat COVID‑19 cases in the community - keeping the virus out of General Practice. We've invested over £30 million in Community hubs in 2020‑21 and will maintain this service while it is still required. This is alongside our continued support for multi‑disciplinary teams, which are supporting GPs to fulfil their role as expert medical generalists in the community.

Backed by £20 million, we have introduced a new route through the NHS24 line, providing a remote consultation, avoiding unnecessary waits in crowded waiting areas and offering care much closer to home whenever possible. If A&E is the most appropriate place to provide the right care, patients will either be directly referred to it by NHS24 or through a telephone or video consultation with a senior clinical decision maker. Funding will continue in 2021‑22 to support the next phase of implementation, which will include enhancing interfaces with GP in hours, mental health hubs, community pharmacists and the Scottish Ambulance Service.

We also continue to invest in digital health and care, increasing digital capabilities and putting a greater emphasis on digital access to care for the public. Over the last year, we have scaled up the 'Near Me' video consulting service, with over 20,000 consultations per week now being held. With further funding of £2 million in 2021, the Near Me service is now being offered to all public service organisations across Scotland. We will build upon work to support more self‑management at home, drive greater collaboration through increased digital infrastructure and take forward work addressing digital inclusion, including a £1 million commitment to support care homes.

From 1 November, dentists have been able to provide a full range of care to their NHS patients, but we recognise that the impact of lockdown has brought financial difficulties. Remobilisation came with additional financial support to NHS dental services, with emergency payments of £12 million per month to support dental incomes and an additional £2.75 million per month as specific sectoral support. In 2021‑22, we will provide £431 million for general dental services, helping to support their recovery, accelerate the reform programme for NHS dental services, and take forward a new model of preventive oral health care for NHS patients.

Through the General Ophthalmic Services budget, we provided a substantial package of financial support measures to the community optometry sector during the pandemic. Patients have been supported safely throughout, helped by additional Scottish Government investment in the establishment of Emergency Eyecare Treatment Centres in the early stages of the pandemic, free provision of PPE to practitioners, remote consultations, roll-out of tele‑ophthalmology technology and the shared care of hospital patients. In 2021‑22, as well as continuing to support existing services through the £111.7 million General Ophthalmic Services budget, the Scottish Government will continue to deliver the recommendations of the Community Eyecare Services Review.

Social care

Those within the care sector - both social care staff and people providing unpaid care - have responded heroically to the challenges of the pandemic, continuing to provide excellent care and support for some of those most at‑risk in our society. We will continue to invest in them and the sector, raising its status and excellence as a profession, and ensuring that people using social care support can live independently, be active citizens, and maintain dignity and human rights.

While the impact of the pandemic has been experienced across all of our health and social care services, we recognise that at times it has been most keenly felt in social care, including in care homes. In response, we put in place a number of measures to assist the social care and support system, including provision of funding for PPE and for costs associated with the additional administration required by care homes as a result of COVID‑19. We initially allocated an additional £150 million for social care, and in response to the unique challenges of winter, developed an Adult Social Care Winter Preparedness Plan, backed by an additional £112 million in funding. We introduced the Social Care Staff Support Fund to ensure social care workers receive their expected income, should they be off ill or self‑isolating due to coronavirus, and put in place the social care death in service benefit to provide financial assistance for the next of kin of social care workers who have died in service as a result of, or the suspected result of, contracting COVID‑19 at work.

Whilst we acted at all times to ensure the protection of staff and residents, and ensure high standards of care, we know that there have been particular challenges and lessons that must be learnt. The pandemic has required us to reconsider our current model of adult social care support, and how this could be improved for the future, to ensure the very highest standards of support for the independence and wellbeing of people who use adult social care support.

In September 2020, we established an independent review of adult social care, to work quickly to recommend improvements to adult social care in Scotland, primarily in terms of the outcomes achieved by and with people who use services, their carers and families, and the experience of people who work in it. This includes consideration of a national care service. We will take careful account of the review's recommendations when it is published.

Ahead of the independent review reporting, it is vital that we continue to invest in a high quality social care system and provide the very best standards for staff and social care providers, and those who use or require social care support, and their families, friends and support networks. In 2021‑22, an additional £72.6 million will be transferred from the health portfolio to local authorities for investment in social care to support delivery of the Living Wage (£34 million), continued implementation of the Carers Act (£28.5 million) and uprating of free personal care (£10.1 million).

In total, this will take our investment in social care in excess of £883 million in 2021‑22.

The integration of health and social care has played an invaluable role in our response to the pandemic - ensuring people can receive the care they need, in a setting that is right for them. In 2021‑22, integration authorities will manage nearly £10 billion of funding previously managed separately by health boards and local authorities. This ensures that resources are spent effectively, improving the health and wellbeing of their local communities.

The pandemic has highlighted issues of fairness in employment practice and opportunities for social care workers. Through the Fair Work in Social Care group we are urgently developing proposals to embed the fair work principles, which will lead to better terms and conditions, as well as more rewarding roles for the social care workforce.

Alongside social care, there is an immense and invaluable role played by unpaid carers, a role which came under even greater strain as a result of lockdown. Quite simply, the pressures on health and social care would be unsustainable without the support provided by unpaid carers.

In 2021‑22, additional investment of £28.5 million will ensure the ongoing implementation of carers rights under the Carers (Scotland) Act. This includes funding to enable health and social care partnerships to expand their provision of adult carer support plans, young carer statements and support for carers in order to meet projected increases in demand. We will continue to support those who work in the third sector, health and social care and education so that they have the skills, knowledge and confidence to identify, support and involve carers as equal partners and are included in relevant conversations and decision-making.

Improving population health

While much focus has been given to the direct health impacts of COVID‑19, it is imperative that attention is given to its wider implications: the virus has exacerbated existing health inequalities and heightened awareness of the need to protect those at risk.

Interlinked with issues of social inequality, one of the greatest health inequalities Scotland faces is the disproportionate harm caused by drugs and alcohol in some communities. The number of drug‑related deaths in Scotland is far too high and is a public health emergency - these deaths are tragic and avoidable. Reducing them is a national mission for Scottish Government and for our country as a whole. While it is a complex challenge, that cannot be an excuse and we recognise the need to take action quickly to support people, their families, and their communities. Across government and our public services we will act decisively to support and save the lives of those with problem drug use. We will do so by reducing harm and promoting recovery in communities and in residential rehabilitation settings.

Since 2008, the Scottish Government has invested over £930 million to tackle problem drug and alcohol abuse - but we recognise that our progress on drugs deaths has not been good enough, and we must do more to ensure people do not fall through cracks in support systems.

In 2021‑22, we will provide £145.3 million funding for action on alcohol and drugs - an increase of £50 million on 2020‑21, targeted towards reducing drugs deaths:

• £79.7 million for drug and alcohol services, delivered through joint decision-making by Integration Authorities and Alcohol and Drug Partnerships;
• £4.6 million for mental health workers who will provide support to those experiencing problem drug use; and
• £61 million of additional funding specifically to support reducing drug deaths.

This life saving work cannot be done by government alone or just by one part of government. It requires genuine partnership‑working with people with lived experience, working with services in the public and third sectors. The Drug Deaths Taskforce, established in 2019, plays a key role in advising government on emergency actions that will save lives. The actions we are now taking include an immediate increase in the distribution of naloxone kits. Getting naloxone to someone who is experiencing opiate overdose can save their life and the Police and Ambulance Service have started to make kits available to their staff. We will work to significantly increase the number of paramedics and police officers carrying naloxone kits in 2021‑22.

The additional funding next year - part of a total of £250 million over the next five years - will support further investment in a range of community‑based interventions, including primary prevention and expansion of residential rehabilitation. Given the scale of the emergency, we will be constantly monitoring the impact of investment and will ensure we get resources to where they are most needed. We will also commit additional funding, if required, to improve toxicology services and to enhance public health surveillance of drugs issues, which is essential to ensuring effective and timely interventions. It is expected that much of the funding will flow to grass‑roots organisations, which do so much vital work in our communities.

Mental health and wellbeing

The experience of COVID‑19 has taken its toll on all of us, and for many this will have been an especially difficult time, with significant impacts on mental health and wellbeing. Lockdown and the continued restrictions have impacted many people in terms of health consequences, economic impacts and financial insecurity. This is on top of the effects of social isolation and the anxiety that will inevitably arise from a difficult and uncertain time. Throughout the pandemic, mental health has continued to be an absolute priority. We have invested an additional £6 million on a new support service and seen significant innovations in how this is delivered. Our mission now must be to lock in these positive developments, and drive forward new innovations to improve mental health and wellbeing across the population.

In 2021‑22, Scottish Government direct investment in mental health will increase to £139 million and will support overall spending on mental health in excess of £1.1 billion. This funding will underpin our continued approach to improving mental health services and support for children, young people and adults. We know that the COVID‑19 pandemic will have a substantial impact on the mental health of the population for a long period of time, and the Mental Health Transition and Recovery plan, published in October 2020, set out over 100 actions we are taking forward with partners to improve mental health and wellbeing.

The plan builds on innovations and new service designs that have emerged in response to the pandemic, such as the 'Clear Your Head' campaign and continued expansion of digital services. We worked quickly with health boards to scale up digital therapies, with the potential to support 30,000 people to access therapy. We recognise the importance of these services, which are particularly suited for use in remote and rural areas.

As well as promoting good mental health and wellbeing, the plan prioritises rapid and easily accessible support for those in distress and ensures safe, effective treatment and care of people living with mental illness. A tailored programme of work will help individual health boards recognise, learn from, and respond effectively to the challenges of COVID-19. It delivers continued support for Mental Health Assessment Services, which have helped ease the pressure on front line health services, particularly A&E, and ensured people receive the right support.

We will make £15 million available to support the continued establishment of new Community Mental Health and Wellbeing Services. While the pandemic has had an impact on the planning and development of those services, we are working with local authorities to ensure they are ready to start supporting children, young people and their families as soon as possible, with support available across all 32 local authorities in 2021.

Given the added pressures on students in the last few months, we have provided £1.32 million of additional funding to support student welfare, building upon the £3.6 million invested as part of our commitment to provide more than 80 additional counsellors in colleges and universities in Scotland. In 2021‑22, we will also continue to transfer £16 million to local government for school counselling services.

In 2021‑22, we will invest £10 million in relation to childhood obesity and adult weight management, recognising that for people living with obesity, diabetes and respiratory and cardiovascular disease, new vulnerabilities have been exposed by COVID‑19. 2021‑22 represents the fourth year of our programme to improve weight management services for people with, or at risk of developing type 2 diabetes or prediabetes. We will continue to expand access to weight management services for those at such risk and extend access to weight management services to everyone living with obesity. This presents opportunities to focus on people at risk of severe COVID‑19 outcomes, including as a result of their ethnicity, and to work with minority ethnic groups to develop culturally competent interventions. We will also continue to invest to help meet our ambitions to halve childhood obesity by 2030 and significantly reduce diet‑related health inequalities, including by supporting a targeted approach to improve healthier eating for people with low incomes.

As we look to respond to the pandemic, and renew and recover as a society, we will ensure the necessary resource is directed at addressing health inequalities. Importantly this will be focused on tackling the leading determinants of poor health through efforts to eradicate poverty and also through direct health interventions to create a Scotland where we can all live longer, healthier lives.

Promoting Equality and Helping Young People Grasp their Potential

In response to the heavy toll the pandemic has had on our society, communities and lives, we have worked tirelessly to support those affected. More than £500 million has been provided in 2020-21 for social protection, including over £350 million through a communities funding package, and £100 million Winter Plan. While this has provided immediate support for those who need it most, the drive to tackle the damaging impacts of inequalities in our communities has come into even sharper focus.

As we renew our society, the Scottish Budget will build on both the challenges we have faced, but also the positive changes we have seen. We will ensure no one is left behind. We seek to provide the best start in life for everyone, and to renew our efforts to improve the spaces we live in. The Social Renewal Advisory Board was set up by Scottish Ministers to make proposals that can renew Scotland. The final report, If not now, when?, published on 21 January, sets out 20 Calls to Action which have the power to transform Scotland, focusing on the people most affected.

Increasing household incomes

The pandemic has reinforced the urgent need to tackle inequality, and drive progress towards our statutory targets to reduce, and ultimately eradicate, child poverty, by 2030. We are continuing with a direct programme of action to meet those targets across 2018‑2022, backed by a £50 million Tackling Child Poverty Fund which this Budget confirms we will invest in full. Reducing poverty and inequality also sits at the heart of our investment across all portfolios. In 2019‑20, we invested around £2 billion in support targeted at low income households, including over £672 million to support children in low income families, including our priority groups. We expect 2021‑22 investment to be at a similar level.

We know that one of the key drivers to tackling child poverty is increasing family incomes, including through social security. Since being established in 2018, Social Security Scotland has delivered 10 benefits, seven of which are new, and the others more generous than the UK benefits they have replaced. We will deliver more benefits in the years ahead, supporting people in need, and helping to mitigate the damaging impact of UK Government welfare reforms.

In the coming year, social security assistance will reach almost £3.6 billion, funding devolved Scottish social security, along with wider social support delivered via local government.

Social Security Assistance Spending Plans

Assistance	2021‑22 Budget
	(£m)
Devolved benefit spend:
Best Start Foods*	12
Best Start Grant	19
Carer's Allowance Supplement	42
Child Disability Payment	231
Child Winter Heating Assistance	3
Funeral Support Payment	11
Scottish Child Payment	68
Young Carer Grant	1
Job Start Payment	2
Attendance Allowance	550
Carer's Allowance	306
Disability Living Allowance Adult	465
Industrial Injuries Disablement Scheme	80
Personal Independence Payment	1,669
Severe Disablement Allowance	7
Spend via local authorities and other bodies:
Discretionary Housing Payments**	82
Scottish Welfare Fund	36
Self‑Isolation Support Grant	6
Total spending	3,590

* In Health and Sport portfolio

** In Communities and Local Government portfolio

All of the benefits administered by Social Security Scotland are demand‑led, with budget allocations based on forecasts produced by the Scottish Fiscal Commission. This means that the actual amount spent can vary, depending on how many people become eligible and apply for them. As the long‑term challenges of the pandemic continue, we anticipate that more people will become eligible for social security - maximising take‑up is a moral imperative and a fundamental priority. We published our first Benefit Take‑up Strategy in October 2019, and continue to work to increase awareness of and access to Scottish benefits, actively promoting each benefit.

The ambitious use of our new social security powers to tackle child poverty includes significant investment in our Scottish Child Payment. We will begin these payments from February 2021, with expected investment in 2021‑22 of £68 million. We have introduced the payment first for families with children under six, recognising the particular risk of poverty for younger children. Our ambition is to then deliver this for children under 16 by the end of 2022, subject to the Department for Work and Pensions (DWP) supplying the data that we need, with up to 252,000 households eligible. Upon, full roll-out, we expect total investment to reach £184 million. Reflecting our desire to ensure that every child has the best start in life, Social Security Scotland are also expected to pay out £31 million across Best Start Grants - three distinct payments to help families, across pregnancy, early years, and school - and Best Start Foods which provides payments for healthy food.

Taken together, these payments provide over £5,200 of financial support for low income families by the time their first child turns six, and over £4,900 for second and subsequent children.

The benefits which Social Security Scotland has delivered thus far are focused on providing financial support to people on low incomes. In 2021‑22, we will move into delivery of the first of the more complex disability assistance payments. The first disability benefit will be the Child Disability Payment, which provides support for some of the additional costs that children and young people with long‑term health conditions or disabilities, and their families, are likely to face. Social Security Scotland will start taking applications from summer 2021 as part of a pilot, ahead of a full roll‑out across the country from autumn 2021, with expected spending of £231 million.

Our system of disability assistance will be centred on the needs of our clients, from the initial application onwards, ensuring people are treated fairly at every stage, and there will be no DWP‑style assessments.

In addition to funding for new and devolved benefit payments, we will also provide £118 million for local authorities to support low income families and those who may be impacted by UK Government welfare cuts, through the Scottish Welfare Fund and Discretionary Housing Payments. This includes £71 million to mitigate the UK Government's bedroom tax.

Our wider investment through local authorities also provides much needed support to families on low incomes. Together with local authority partners we will invest at least £6 million each to deliver a School Clothing Grant worth at least £100 to every eligible child. At least £53 million is available for the provision of universal Free School Meals to all Primary 1 and Primary 3 children in school. We will also continue to build on the local partnership working in place between local authorities and third sector groups to make sure people are able to access wraparound support in a crisis.

Improving life chances through education

Alongside our immediate efforts to lift more families out of poverty, the single greatest way to break deep and long-standing structural inequality is through education, and improving life chances and opportunities for all. In 2021‑22, we will provide £2.7 billion across the Education and Skills budget to deliver on this ambition, alongside significant funding for education delivered through the local government settlement.

We have been clear throughout the pandemic that education is an enduring priority, ensuring that 'in‑person' learning could continue where it was safe to do so. We have seen a heroic effort from local government, providers and staff, and families and young people themselves, to adapt and respond to the challenges presented, and to ensure that high quality learning - whether in‑person, online, or blended - continues. One of the most difficult decisions taken early in the crisis, and again in response to the spike in cases and new strain which developed towards the end of 2020, was to restrict in‑person learning and access to childcare.

While remote learning poses challenges, we worked quickly to ensure greater access to digital devices - investing £25 million to support digital inclusion amongst school‑aged children, expected to support up to 70,000 children from lower income households - and significantly enhanced online and remote learning options for pupils. Local authorities have also been able to use their share of an additional £45 million, as they provide remote learning during lockdown, including for the provision of additional digital devices and connectivity solutions for disadvantaged children and young people. The publication of the Scottish Budget is coming ahead of the expected return of schools and early learning and childcare, but our priority will always be ensuring settings can open again for all pupils as quickly as possible, and then to keep them open.

The majority of schools funding is delivered from the core local government settlement, but the Scottish Government provides additional ring‑fenced funding for specific priorities. In 2021‑22, our priority remains closing the poverty-related attainment gap.

As part of our response to the pandemic, Pupil Equity Fund allocations of over £250 million were confirmed for two years (2020‑21 and 2021‑22), with almost £128 million in 2021‑22. This will give headteachers assistance in their planning and decision-making, and provides a firm guarantee of our ambition to give every child the best start in life. It takes total investment in the Scottish Attainment Challenge to over £750 million over the last five years, and extends the programme for a further year. This provides invaluable support for schools and the young people who need it most, allowing headteachers to direct it towards those areas where it will have the greatest impact.

Since the start of the pandemic additional funding of £80 million has led to the recruitment of an additional 1,400 teachers and over 200 support staff for the 2020‑21 school year. In 2021‑22, we will provide over £29 million for teacher training.

We recognise that excellence in education requires excellence in the estate. Since 2009, our £1.8 billion Scotland's Schools for the Future programme has delivered 116 new or refurbished learning estate projects, with the final project in the programme due to open in April 2021. This programme will have benefited around 78,000 pupils since it was established in 2009. We are now taking forward a second phase of new schools projects as part of the £2 billion Learning Estate Investment Programme. The first of these projects is due to start construction in 2021‑22. In total this programme will deliver 36 new schools and campuses and provide modern, state of the art learning facilities for a further 21,000 pupils.

The wider education portfolio budget aims to ensure all children and young people grow up loved, safe and respected, so that they realise their full potential. We will be the first country in the UK to incorporate the UN Convention on the Rights of the Child into law, enhancing the rights‑based approach of Getting It Right for Every Child, and helping ensure children, young people and families, including pregnant women, have the right support at the right time, particularly those who are or may otherwise become looked after. This will be at the heart of our collective work to Keep The Promise, changing the focus of Scotland's 'care system' from protecting against harm to protecting safe, loving and respectful relationships. Our commitments to deliver these significant initiatives for children, young people and families are backed by £62 million, which includes providing financial redress for abuse survivors.

We will continue to support children, young people and families (including pregnant women) in the most vulnerable situations, and who may have been significantly affected by the detrimental impact of the pandemic on inequalities. We will strengthen our approach to child protection through an increased focus on prevention and early support before issues escalate and statutory measures are needed.

Providing the best start in life forms a central part of our ambition to invest in high‑quality early learning and childcare, with our commitment to deliver the most ambitious childcare offer anywhere in the UK - 1,140 funded hours for all three and four year olds and eligible two year olds.

When the scale of the crisis became clear, we took the difficult decision to temporarily pause the statutory roll‑out to allow local authorities to focus on responding to the pandemic and providing critical childcare, which was crucial to supporting key workers. Following a joint assessment with local government, we now expect full implementation to be achieved by August 2021.

Despite the pandemic, Councils have continued to develop their offer, and in many parts of the country, they are able to provide 1,140 hours to eligible children - the most recent statistics show that 61% of those receiving funded ELC are already receiving 1,140 hours. To support reaching full implementation, in 2021‑22 we will provide £567 million revenue grant funding for Early Learning and Childcare to local authorities.

As we look ahead to our recovery and renewal, and ensuring we have the right skills and people to secure a fairer and stronger economy, investment in further and higher education becomes ever more important. But we recognise the significant risks posed by the UK's exit from the EU - taking away Scotland's full participation in Erasmus Plus, threatening the ability for collaborative research activity, removing vital opportunities for our youth work and adult learning providers to work collaboratively across Europe, and risking the ability of our institutions to attract a globally diverse staff and student population.

Our universities and colleges are a significant strength of our economic and social offering - promoting Scotland's place in the world, playing a leading role in economic recovery, providing the highly skilled workforce of the future and offering a route out of poverty. Through our efforts on widening access, at least 20% of university entrants will come from our 20% most deprived communities by 2030.

In 2021‑22, we will provide over £1.9 billion to the Scottish Funding Council, to fund our university and college sector, including £700 million for colleges and £1.1 billion for universities.

This investment will maintain tertiary education as a central part of Scotland's recovery and help support and grow the economy. For universities it provides the necessary funding to continue to deliver a high quality learning experience for their students and ensures considerable investment in world‑class university research. We are increasing funding to our colleges to ensure they can continue to produce a highly skilled population, and be a key delivery partner in our wider employability and skills agenda, particularly through the Young Persons' Guarantee. We will prioritise a further £30 million to support the continuation of Foundation and Graduate Apprenticeships, and support in our colleges digital learning and mental health programmes for staff and students.

To ensure that students are provided with the financial support they need to succeed, we will invest in increased levels of student support, including over £328 million for higher education student support. The Budget ensures we maintain our commitment to free education and the lowest debt levels in the UK, provides an enhanced care experienced bursary in both further and higher education, and delivers the most generous bursary support in the UK for college students.

Supporting our communities

Even before the pandemic, we recognised the power of local government as a key partner in driving inclusive economic growth, delivering vital services, and improving the lives of people across all of our communities. That was further established through their response to the crisis, quickly remobilising their efforts to deliver vital support for people and businesses, all while retaining a high quality of service and keeping important every day services running.

We know that there has been significant pressure on local government finances this year, and have committed over £382 million of additional funding to local authorities to support them during the pandemic. Recognising the longer-term pressures, we have also agreed a package of financial flexibilities and extra funding for councils which could be worth up to £750 million over 2020‑21 and 2021‑22. We have also agreed additional financial support through a Lost Income Scheme, initially worth an estimated £90 million but now increased to £200 million for 2020‑21. Taken together with the £49 million committed previously, for top up support for trusts delivering services on behalf of councils, this brings the total additional funding to £249 million to support councils losses due to the pandemic in 2020‑21.

In arriving at the local government settlement for 2021‑22, the financial risks have been fully recognised by Scottish Government. We will make available to local government a total funding package amounting to £11.6 billion. This figure includes both general and specific revenue and capital grants as well as the 2021‑22 distributable amount of non‑domestic rate income. Our package of support includes specific funding to deliver on shared priorities, including:

• £59 million revenue to support the final tranche of increased funding for the expansion in funded Early Learning and Childcare (ELC) entitlement to 1,140 hours.
• A further £72.6 million - in addition to the £100 million already available in‑year - for investment in health and social care, and mental health services. This includes a contribution towards continued delivery of the real Living Wage (£34.1 million), uprating of free personal and nursing care payments (£10.1 million), and implementation of the Carers Act (£28.5 million).
• Funding to maintain the pupil : teacher ratio nationally, and secure places for all probationers who require one under the teacher induction scheme.
• Continued support for Teachers Pay (£156 million) and Pensions (£97 million).
• An increase of £7.7 million in grant support for inter‑island ferries.
• A capital uplift of £10 million in provision for flood risk schemes.

Council tax is a significant source of income to local government whilst also ensuring councils are accountable to voters for local tax and spending choices. However, in recognition of the unique pressures created by the pandemic the settlement also includes an additional £90 million available to compensate councils who choose to freeze their council tax at 2020‑21 levels, helping to protect household incomes. This additional allocation provides compensation to support services and equates to an increase in council tax of around 3%. The settlement continues to include provision to fund the Council Tax Reduction Scheme which protects around 500,000 low income households from local tax liabilities they would not be able to meet.

It is important to note that this does not represent the totality of funding that local authorities will benefit from. In addition to the core local government finance settlement, the Scottish Government provides local authorities with other funding streams for individual key government priorities - in 2021‑22 these total £631 million.

Alongside local government, Scotland's third sector proved the crucial role they play, and their ability to act swiftly to deliver vital support for people at a significant scale. Over £37 million was invested through the Wellbeing Fund which helped organisations to pivot quickly to provide emergency community support. Our £22 million Third Sector Resilience Fund also provided grants to 1,323 organisations, safeguarding over 14,000 jobs. Looking forward, we will provide over £26.1 million in third sector support in 2021‑22. This will provide investment in the local and national third sector infrastructure, support the capacity and growth of social enterprises, and ensure the third sector can help people and communities recover from the impact of the pandemic.

Ensuring vibrant, healthy and safe places

The experience of the pandemic has shown us the need to rethink how we live, work, learn and shop, and ensure local spaces are green, vibrant and safe. Underpinning this is our commitment to the concept of the 20 minute neighbourhood - where people can meet their needs within a 20 minute walk from their house - bringing together a number of priority policies and investments, including active travel, regeneration, town centres, air quality, infrastructure investment, climate change, Community Wealth Building, access to greenspace and local services.

Supporting these ambitions, we will establish a new Place Based Investment Programme which will be backed with initial investment of £55 million in 2021‑22. This is included in an overall commitment to invest over £275 million over the next five years in support of community-led regeneration, town centres, and 20 minute neighbourhoods ambitions, as well as our ongoing sponsorship of the Clyde Gateway.

This programme will provide a framework to ensure that our investment in places to deliver national priorities is framed by local characteristics, needs and opportunities. It will support our ongoing commitment to revitalise our town centres and to take forward the recommendations of the Town Centre Action Plan Review Group. It will also play a vital role in helping secure our net‑zero commitments and delivering a green recovery.

As we witnessed during the pandemic, decisions on how to tackle disadvantage and bring about regeneration in our communities are often best taken by the people who live in those communities. In 2021‑22, we will provide £81.6 million for regeneration programmes, including our Empowering Communities Programme which funds communities to undertake projects which tackle poverty and inequality on their own terms, in turn supporting community regeneration and inclusive growth.

We will continue to take action to tackle vacant and derelict land which can have negative environmental and health impacts, and affect how we view our communities. We will begin a five‑year £50 million programme of investment to regenerate Scotland's vacant and derelict land as part of a green recovery. It will help bring persistent vacant and derelict land back into appropriate uses - for example, creating community gardens, providing a local food supply, improving biodiversity or by creating space for community renewables projects, low carbon affordable housing, urban farms, woodland and green spaces.

Underpinning our ambitions for Place we will take forward Scotland's Fourth National Planning Framework, ensuring we can better understand how wellbeing, place and economic disadvantage vary across Scotland and provide a clear picture of priorities, supported by investment in powerful new Digital tools. We have now launched Transforming Places Together: Scotland's Digital Strategy for Planning, and in 2021‑22 will start investing in our £35 million commitment to a five‑year transformation programme for planning.

As we rethink how we live, and the communities we live in, housing will be central to our ambitions for a strong recovery and fairer Scotland - creating jobs, tackling social and health inequalities, and ensuring strong, sustainable communities. At the start of this Parliamentary term we embarked on the single biggest investment and delivery of affordable housing since devolution, backed by investment of over £3.5 billion. While the pandemic impacted on the construction industry, the most recent statistics show that by end September 2020 we had delivered 36,046 affordable homes, with over 24,000 of these for social rent.

As we reach the end of our existing commitments, and with the need to think differently about housing and its place within our communities, we have undertaken detailed engagement across Scotland on how our homes and communities should look and feel in 2040. Housing to 2040 will be published later in 2021, and will set out a 20 year plan to deliver good quality, energy efficient, net zero carbon housing with access to outdoor space, transport links, digital connectivity and community services. Ahead of this, the Scottish Budget provides capital grant funding of £667.6 million for affordable housebuilding in 2021‑22, including £575.4 million through the Affordable Housing Supply Programme, and £92.2 million through local government.

Alongside this grant funding, we will also utilise £142 million of financial transactions - capital funding that must be used in the form of loans outwith the public sector - to support housing, including shared equity schemes. However, our ability to fully fund these programmes has been significantly hampered by the UK Spending Review in November. This resulted in a significant reduction to the Scottish Government's FT budget of £412 million, compared with 2020‑21, almost all of this relating to UK Government FT spending on housing. We have called on the UK Government to reinstate this funding in the March Budget.

Our housing investment will make a vital contribution to Scotland's recovery, leveraging significant economic output, supporting over 10,000 jobs a year, and producing social and environmental benefits. It also complements our wider multi‑billion commitment to invest in new and green technologies. We will issue guidance this year to ensure our investment delivers social housing that: achieves net zero carbon standards as soon as possible, through greater use of offsite construction; offers private or communal outdoor space, and space for home working or study; and is digitally enabled. We will work with partners to review grant subsidy benchmark levels and ensure that these homes are delivered as efficiently as possible. We will also act on the recommendations of the Parliamentary Working Group for Tenement Maintenance, to help owners work together to invest in their buildings, keep them in good condition, and make them safer and greener.

We have taken significant action to tackle fuel poverty head on - and by the end of 2021 expect to have allocated over £1 billion since 2009 to tackling fuel poverty and improving energy efficiency - but the pandemic has renewed our urgency to ensure everyone can afford to keep their homes warm, particularly those most vulnerable to the health impacts of a cold home.

As part of our transformational £1.6 billion investment in energy efficiency and heat decarbonisation over the next Parliament, we will invest significantly to remove poor energy efficiency as a driver of fuel poverty. With around 20% of Scotland's emissions coming from heating buildings, making homes greener will make a significant contribution towards net zero, and we will ensure we do this in a way that supports progress towards our fuel poverty targets. In 2021‑22, we will invest over £150 million in fuel poverty and energy efficiency measures. This includes Warm Homes Scotland, our national service to deliver energy efficiency improvements to individual properties, and Area Based Schemes, funding local councils to deliver energy efficiency improvement projects to whole streets, flats, and estates.

Our vision is to ensure everyone has access to a safe, warm place to call home - but we know that too many are still at great risk of homelessness. The experience of the pandemic has shown us what is possible when we work collectively, and has increased our determination to end homelessness. Drawing on what we have learned from the crisis, we and our partners in local authorities and the third sector will build on this momentum.

With COSLA, we have refreshed our Ending Homelessness Together action plan, backed by £50 million across 2018‑2023. In 2021‑22, we will provide over £12 million to support this, with an emphasis on the prevention of homelessness and specific actions to scale up Housing First more rapidly; end the use of communal night shelters; advance legislative protections for people experiencing domestic abuse; and explore alternative routes to reduce migrant homelessness.

A greener, connected transport system

As part of our work to develop our communities, the transport budget will deliver significant investment to ensure we meet the necessary balance between increasing social and economic opportunities and delivering inclusive growth through connected communities, while driving progress towards our net‑zero ambitions. In 2021‑22, we will invest almost £3.2 billion across all modes of transport, underpinning our National Transport Strategy and the second Strategic Transport Review. This will ensure future transport investment decisions make Scotland more accessible for residents, visitors and business, create better connectivity with sustainable, smart and cleaner transport options, and contribute to Scotland's inclusive economic growth.

A key positive we saw across many of our communities during the pandemic was the growth of active travel, contributing to healthy, active communities, and helping meet our net‑zero commitments. We will support transformational change to our streetscapes with a five year commitment to maintain the active travel budget at a record high of £100.5 million per year. This will help fund measures to lock in positive changes and promote active travel as a healthier, greener alternative. This includes building high quality, attractive infrastructure, reallocating road space in favour of active travel, access to bikes, and behaviour change initiatives.

Public transport will play an important role here, backed by investment of over £1.6 billion across bus and rail services. This will ensure it can provide a viable alternative to private transport for more people, further reducing our reliance on cars and providing a cleaner form of mass transport, and promoting the wide benefits of our 20 minute neighbourhood ambitions.

This includes renewing our commitment to take forward our £500 million long-term capital investment in bus priority measures, to tackle the impacts of congestion on bus services and raise bus usage. While this needed to be paused during the pandemic, in the interim we launched the £10 million Bus Priority Rapid Deployment Fund for temporary bus priority measures, and the Bus Partnership Fund in November 2020, which invites local authorities to work with bus operators to submit ambitious proposals for permanent bus priority infrastructure. Funding for that, and work on reallocation of road space on Glasgow motorways to buses, is provided in 2021‑22. As part of our £2 billion Low Carbon Fund, we will also invest £120 million, over five years, in Zero Emission Buses, putting Scotland on track to a fully decarbonised bus fleet.

We remain committed to delivering a national concessionary travel scheme for free bus travel for under‑19s, subject to Parliamentary approval with draft legislation laid on 21 January. We are working with delivery partners with a view to implementation as soon as practicable in the coming financial year and have budgeted £15 million in 2021‑22.

Supporting our ambitions for rail, we will provide total rail services investment of £1.3 billion in 2021‑22. Our Rail Enhancements and Capital Investment Strategy (RECIS, published March 2018), sets out an investment framework and approach for the next 10‑15 years to better connect our communities and support sustainable economic growth and jobs across the country. The Decarbonisation Action Plan (DAP), sets out how we will decarbonise domestic passenger services in Scotland by 2035. Schemes emanating from both are being progressed via a Projects Pipeline which includes reopening the line to Levenmouth by 2024, with associated stations at Cameron Bridge and Leven, as well as providing new stations across the network at Dalcross (Inverness Airport), East Linton (East Lothian) and Reston (eastern Borders).

Our significant investment in public transport will ensure it can be a viable and greener alternative for many more people - however, in a country as geographically diverse as Scotland, we recognise that roads policy must remain a central part of our transport infrastructure. This supports freight, bus and private car use, providing the only viable route for many remote and rural communities to stay connected, receive goods, and access to our world‑leading tourist offering and economic benefits for countless communities. We remain committed to ensuring more communities can be connected, and addressing road infrastructure where it is in the local and national interest, for example the dualling of the A9. Alongside that commitment, we will continue to take bold action to reduce both car usage and the emissions of road vehicles.

Our Climate Change Plan update set a new policy outcome to reduce car kilometres by 20% by 2030 - a world‑leading commitment, demonstrating our level of ambition in meeting Scotland's statutory carbon reduction targets. We will continue taking action to phase out the need for new petrol and diesel cars and vans by 2030, work with public bodies to lead the way by phasing out the need for new petrol and diesel light commercial vehicles by 2025, and with the freight industry to remove the need for new petrol and diesel heavy vehicles by 2035. We will provide over £30 million for the Low Carbon Transport Loan Fund to support loans for electric vehicles and e‑bikes.

Ensuring safer communities

Across our justice and emergency response sector, Police Scotland and Scottish Fire and Rescue; the courts and tribunals system; the Scottish Prison Service; victims services; community justice organisations; and legal profession have all provided a significant response through the pandemic in keeping our communities safe. In the year ahead, we want to ensure they are supported to renew their core priorities and transform for the future, with a total justice portfolio investment of over £3 billion.

We will continue to support a modern and effective police service to ensure the safety and security of Scotland's people and communities. The publication of Police Scotland's Strategic Workforce Plan is an important step and means that Police Scotland and the Scottish Police Authority can ensure the police workforce is shaped around the needs of citizens and communities by having the right people with the right skills, in the right places.

Police Scotland has been at the front and centre of the response to COVID-19 in Scotland, and continues to work closely with all partners including in local authorities and health to support the collective effort to combat COVID-19. Throughout the COVID-19 crisis their 4Es approach to policing - Engaging, Explaining, Encouraging and only as a last resort Enforcing - has been central in ensuring our collective approach to the unprecedented but necessary public health measures put in place.

We have committed to protecting Police Scotland's revenue budget during this current Parliament, and have surpassed our commitment to deliver a £100 million boost by 2021. In 2021‑22, we will provide a total funding settlement of £1.3 billion for the Scottish Police Authority, including an uplift of £60 million in the resource budget that will wipe out Police Scotland's structural deficit and deliver a sustainable policing budget. An additional £15 million will be provided to the Scottish Police Authority to mitigate the impacts of COVID on the policing budget. We have provided one‑off capital funding to support the use of Body Worn Video in a limited capacity.

In addition we will continue to provide reform funding to support a range of transformation activities across policing, to support the delivery of the Joint Strategy on Policing; and will work with the Scottish Police Authority, Police Scotland and other partners in Scotland, as well as the UK Government to support the delivery of a safe and secure COP26 summit. We will also support a statutory public inquiry under the Inquiries Act 2005 into the circumstances leading up to and following the death of Sheku Bayoh.

In 2021‑22, we will help our partners support people across Scotland to be, and to feel, safe within their communities, and to support our ongoing response to COVID‑19. This includes supporting local community safety partners, the delivery of information, advice and prevention activities to improve safety, including fire safety, and reduce violence and harm to improve lives for our most vulnerable people and communities.

We will increase the Scottish Fire and Rescue Service (SFRS) budget to £343.2 million, to enhance the safety and wellbeing of communities across Scotland. This will allow SFRS to proceed with its ambitions to modernise the service it provides, to better match the risks faced by individual communities with the resources needed to tackle those risks. Investment will allow SFRS to support the Scottish Government's Out of Hospital Cardiac Arrest Strategy (OHCA) and to recover from the impact of Covid for example through providing additional training for firefighters and recommencing the programme of home fire safety visits to vulnerable people.

Capital funding for SFRS has been maintained at £32.5 million to allow the Service to invest in fire‑fighting vehicles and equipment and to maintain its estate of fire stations across Scotland.

Across the wider justice system, we recognise the pandemic has had considerable impacts - not least within the courts system, with a backlog in cases waiting to come to court, impacting those accused of crime, victims and witnesses. In response we have provided additional funding for investment in greater digital solutions including remote juries across Scotland. We have also ensured additional support through the Third Sector Resilience Fund for front line victim support organisations and increased direct financial assistance for victims of crime.

We established a Recover, Renew, Transform Programme, to consider proposals for the reform of the justice system, including greater use of digital tools, support for victims and witnesses, and ways to prevent repeat offending and manage the prison population, through more effective community-based interventions. This year we will make an additional £50 million available to this programme and to begin to address the backlogs that have built up.

Our commitment to investing in reducing reoffending is helping bring down recorded crime, making our streets safer, and reducing the number of victims of crime. Our sustained and long‑term programmes to promote community safety, crime prevention, and the rehabilitation of offenders have meant less crime and fewer victims than a decade ago - key indicators of what works. To support our priorities for justice reform we intend to continue to invest in reducing reoffending, which can be the direct result of multiple inequalities and risk factors, including deprivation, adverse childhood experiences, and health problems. Community Justice Scotland supports this holistic approach to prevent and reduce further offending and reports against local Community Justice Outcome Improvement Plans annually.

We will increase by £1.5 million our support to victims, including to organisations which provide crucial emotional, financial and practical assistance to victims and survivors of crime, recognising the value of a gendered approach. This will take account of the significant challenges posed by the pandemic and the associated impacts for victims and witnesses and the organisations supporting them. We also recognised the particular impact of the pandemic on women involved in prostitution and created a bespoke fund to provide immediate crisis funding as well as offering advice and guidance in navigating mainstream services. We will continue our work with key stakeholders to build on the learning, overcome the challenges and enhance capacity within the sector to respond to the varied needs of individuals.

We will build on the work of the Victims Taskforce, focusing on a victim‑centred approach, trauma informed practice and key aspects of our response to gender‑based violence. This will include an evaluation of the first commencement provisions for the Vulnerable Witnesses (Criminal Evidence) (Scotland) Act 2019 to help inform the next stage of the implementation plan. We will also continue our work with partners exploring how Barnahus could operate in Scotland, noting that the child protection landscape has changed in terms of redesigning children's systems for children in care and on the edge of care, with an increased focus on prevention and early intervention for child victims and for children who are suspected of causing harm. We will build on learning from COVID‑19 and the current Children and Families, Health, and Justice policy landscape to support the continued co‑design of the draft standards for consultation.

Our approach to justice is to ensure a sustained reduction in offending, and in turn imprisonment - but we recognise that we face significant challenges with the current prison population. While far fewer people now receive custodial sentences each year, those that do on average receive longer sentences and are increasingly complex to manage.

The impact of COVID‑19 on the operation of the prison service has been unique. The Scottish Prison Service will continue to prioritise its response to this to ensure the safety and wellbeing of the prison population for the duration of the pandemic. In 2021‑22, we will provide £460.2 million for the Scottish Prison Service. This includes £72.8 million to modernise Scotland's prison estate to ensure it is fit for the future and able to meet the changing demands and complexities of the prison population who often face multiple disadvantages. Key priorities for investment are the new female custodial estate and progressing the work to replace HMP Barlinnie and HMP Inverness. This also includes continuing the infrastructure improvements at HMP Barlinnie with upgrades to the reception area and healthcare facilities which are currently underway.

We know that women in the justice system often have a range of complex needs including experience of trauma and abuse. The Scottish Prison Service and other agencies will continue to take forward our progressive plans to transform the female custodial estate to address the specific needs of women. This includes progressing the construction of two innovative community‑ased custody units in Glasgow and Dundee, to be operational in 2022, as well as a national facility at HMP Cornton Vale. These facilities and support services will help women in custody to overcome issues such as alcohol and drug abuse, mental health and trauma, which evidence shows can drive offending behaviour.

Scotland's prison population is ageing with the proportion of people in prison aged 55 or older more than doubling in the past ten years. Work will continue with health and social care partnerships to improve the provision of integrated social care and support service in prisons.

The use of new methods of maintaining family contact has been vital in order to mitigate the impact of social harms such as parental imprisonment and social isolation for families and prisoners throughout the pandemic.

Conclusion

The spending priorities set out in Scottish Budget 2021-22 represent the Scottish Government's contract with the people of Scotland. It sets out our continuing commitment to protect Scotland against the impacts of the virus - on our health, but also on our economy and communities. It also shows how we will renew Scotland, and ensure a strong, fair, and green recovery.

Across all of our commitments, we are ambitious for the future while being informed by the experiences of the pandemic. We do not propose a return to the status quo, but instead targeting investment at where it will help secure a brighter future, while learning from and building upon the significant innovations that were put in place in response to the pandemic, and harnessing the potential for further reforms.

In arriving at the Budget, we are committed to delivering the strongest possible recovery across the National Outcomes. We know the scale of the challenge ahead is immense. We will use all the levers possible to maximise our resources, while continuing to work with the UK Government to make clear the need for a fairer fiscally sustainable package, now and in the future.

Footnotes

1. Scotland's Place in Europe: People, Jobs and Investment