OPPOSITION parties are being urged to work “constructively” with the Scottish Government to pass the Budget.
Kate Forbes, the public finance minister, made the plea ahead of negotiations to ensure the Government can get its tax and spending plans for 2020-21 through Holyrood.
She has also called for the UK Government to ensure budget funding does not fall below estimates which have been used for the basis of spending in Scotland.
The Scottish Government took the unusual step of setting its budget ahead of Westminster, with Chancellor Sajid Javid delaying the announcing of his proposals until March 11 because of Brexit and the General Election.
Ministers now need to win the backing of at least one of their rival parties to get the budget passed at Holyrood.
The Scottish Greens have backed the previous three budgets, but the Scottish Tories had also set out its terms for support ahead of Thursday’s statement.
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Forbes, who became the first woman to present a Holyrood Budget when she stepped in at the last minute after Derek Mackay quit as finance secretary, said the Government’s proposals are aimed at “protecting family budgets”.
The Budget includes a 3% pay rise for public sector workers earning up to £80,000 and also sets out a £645 million investment as part of the commitment to double free nursery provision for children.
A total of £21m is allocated for the Scottish Child Payment, a new £10-a-week benefit to help low-income families that will start being paid before the end of the year.
Forbes said: “Wellbeing and fairness are at the heart of this year’s Budget. An important part of that is protecting incomes, tackling inequalities and providing high-quality public services.
“Our spending plans will also support low-income households which are being hit the hardest by the UK Government’s benefit cuts.
“Based on previous estimates, we expect to spend at least £1.4 billion to mitigate the worst effects of these cuts and tackle child poverty head on. Our Scottish Child Payment will also help lift 30,000 children out of poverty when it is fully rolled out in 2022.
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“Our tax policies are the fairest and most progressive in the UK, with more than half of taxpayers paying less income tax in Scotland than if they lived elsewhere in the UK.”
She added: “We are prioritising actions that have the greatest impact on improving lives across Scotland now, and creating the conditions that are required to ensure wellbeing for future generations.
“I hope Parliament recognises the importance of protecting family budgets in uncertain times and will work constructively with us to pass this Budget in the national interest.”
In her statement on Thursday, Forbes said the UK budget will still present a “significant risk” to the Scottish budget.
She told the Sunday National Brexit remains the biggest threat to Scotland’s economy – with the risk of a no-deal Brexit still on the table.
She added: “We have set out our Budget this week to give clarity for local government and public services.
“We have, and continue to, call on the UK Government to ensure that their budget funding does not fall below the estimates that we have used – which were based on the commitments that were made in the General Election campaign.”
However Dr David Eiser, from Strathclyde University’s Fraser of Allander Institute, said the risk of the Scottish Government having to revise its spending plans was likely to be low.
He said: “The probability the resources available to the Scottish Budget will fall after March 11 is pretty low – partly because the UK Government is pretty unlikely to set out spending plans which are somehow less than it indicated in the spending round in September.
“It is also very unlikely to increase rates of income tax because it said in its manifesto it wouldn’t do that.
“If it does increase income tax rates, the Scottish Government has got an option to not have to deal with the financial consequences of that in the 2021 financial year.
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“There is very little risk that something will happen on March 11 that would cause the Scottish Government to have to re-look at its spending plans and make cuts.”
However leading economists have warned the Scottish Government should start planning for a looming “half-a-billion-pound hit” to its budget because of incorrect tax forecasts.
The Scottish Fiscal Commission (SFC) said previous income tax forecasts, which are used to set the annual budget and determine how much money Scotland receives in the block grant, led to the Government receiving more funding than it should have done.
An estimated £555 million of income tax reconciliation is therefore expected to come out of the budget in 2021-22 – which is more than the Government’s anticipated reserves and borrowing can cover.
SFC chief executive John Ireland said the reconciliations are needed because the UK Office for Budget Responsibility “was under-predicting income tax growth a couple of years back”.
The Scottish Government said it would manage any variance in a “fiscally responsible way”.
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