Budget (Scotland) (No. 3) Bill - stage 1 debate: Deputy First Minister speech

Presiding Officer, I am pleased to open today’s Stage 1 debate on the 2024-25 Scottish Budget.

Last week’s Committees debate demonstrated the pivotal role of the Scottish Budget and I welcomed members constructive contributions. I will respond to the Finance and Public Administration Committee’s Budget report ahead of Stage 2.

I expect we will hear more today about areas where we should spend more – all members who call for additional spending are welcome to provide those propositions to me, but they also need to be clear where funding would be reduced in order to make those changes.

Before we begin, I would also like to reference the IFS question on how we present the Scottish Budget and its prior year comparisons. The Scottish Government has been consistent in how we compare the new Budget with the past years.  

In year budgets do change and are in still in flux when we introduce the new Budget each year, something that is recognised by the IFS - we are always transparent about this through our Budget revision process.

I do recognise the interest in this, which is why we published additional information at the end of January to offer comparisons between the most up to date current year total and the planned budget for next year.

I am pleased that the report also recognises that, taken together, our planned changes to income tax and the council tax freeze will be progressive. 

The 2024-25 Scottish Budget is introduced against a backdrop of a stagnating UK economy that has been seriously damaged by Brexit, and a UK Government that is failing to deliver the investment needed in public services and infrastructure.

The price Scotland has paid for years of UK Government economic mismanagement is plain for everyone to see.

A real-terms fall in our block grant since 2022/23 with a 10% real terms cut in our capital budget over five years. That’s around £1.6 billion in total – equivalent to the cost of building a large hospital.

The Autumn Statement prioritised tax cuts over public spending and will result in real-terms spending cuts for UK Government departments.

And astonishingly, real terms cuts for NHS England – and not a single penny for the cost of 2023/24 pay deals in the coming financial year.

That lack of investment in services in England impacts our funding through the Barnett funding arrangements.

That’s why the Welsh Finance Minister Rebecca Evans said last month:  

“Over the last 13 years, successive UK Governments have given us more than a decade of austerity, a botched Brexit, and a disastrous mini budget that almost crashed the economy. Despite our best efforts to shield public services, businesses and the Welsh population from the worst impacts of these policies, each has, individually and collectively, had a significant and lasting impact on Wales.” And I agree.

I urge the Chancellor on the 6^th of March to reverse his real terms cuts to the NHS, fund pay deals, and properly invest in our services and infrastructure.  Unfortunately, I suspect we may be disappointed.

People are suffering the consequences in their pockets because of mortgage interest rates and the cost of living hikes that can be largely attributed to the disastrous mini Budget.  

Just last week the IMF warned the UK Government against further tax cuts, calling for it to invest in public services and reduce debt. The Office for Budget Responsibility has also highlighted the lack of detail in these plans – suggesting it would be “generous” to call them “a work of fiction”. Those are powerful words.

We are doing all that we can to mitigate the UK Government’s damaging policies, but so long as our funding is tied to UK Government spending plans, our freedom to take a different path is constrained.

Despite this extremely challenging situation, driven by a succession of poor decisions by the UK Government, this Scottish Budget targets spending where it will have the most impact:

• to help tackle poverty,
• to support the growth of a green, fair economy and
• to protect our vital public services.

This Government is determined to deliver a better approach for Scotland.

We will use our tax powers in a proportionate way to deliver additional funding for the Scottish Budget. Funding to support our front-line public services in the face of a real-terms reduction in the Block Grant.

The changes we propose to Scottish income tax in this Budget are targeted so that we are asking those with the broadest shoulders to pay a little more.

This means that in 2024/25, we will have an estimated £1.5 billion of additional revenues to support Scotland – money that would not be available to support our health and local government services, and our social security benefits if we simply followed UK Government tax policies.

This is funding our largest single investment of £6.3 billion in social security benefits - £1.1 billion more than we receive from the UK Government for social security.

This is an investment in Scotland’s future and it takes forward our Equality mission – tackling poverty and protecting people from harm. We estimate that 90,000 fewer children will live in poverty this year as a result of our actions. This includes lifting an estimated 50,000 children out of relative poverty through our Scottish Child Payment.

We all rely on local authorities for vital public services.

This budget provides a record £14 billion for local government, including £144 million to fund the Council Tax freeze. This is a 6% increase on the current year, and as the Accounts Commission has confirmed, our local government revenue funding is now 2.6% higher in real terms than in 2013/14.

We are also using this Budget to deliver on our mission of Opportunity – to support our ambition of a fair, green and growing economy.

Offshore wind presents massive opportunities for Scotland and we are investing nearly £67 million in 2024/25.

We are also providing over £307 million to our enterprise agencies to support job creation and business growth.

I recognise the pressures faced by the hospitality sector and in addition to the freezing of the poundage, we will provide 100% relief for hospitality businesses in our islands and we are committed to continuing to work with the sector on longer term solutions.

We heard today that, for the first time, global warming has exceeded 1.5 degrees for a whole year. More than ever, we are reminded of why it is important to tackle the climate emergency for future generations.

That is why this government is committing £4.7 billion in this budget to activities that will have a positive impact on our climate change goals. An investment supported by the revenue from ScotWind.

Presiding Officer, I will come to other areas in my conclusion. I urge all members, for the reason that we are putting our investment into frontline services, to support the Budget Bill today and I move that the Parliament agree to the general principles of the Budget (Scotland) (No. 3) Bill.