KATE Forbes has blamed Chancellor Rishi Sunak’s delayed Budget for the limited extension of the Scotland’s business rates holiday.

In Thursday’s Budget, the Scottish Finance Secretary announced a three-month extension of the business rates holiday for hospitality, tourism and aviation.

However, Labour and the Tories, and a number of business groups have said that it needs to be a full year.

Speaking to the BBC’s Good Morning Scotland, Forbes said: “Well, I would love to commit to longer and it’s the number one ask from businesses.

“The challenge that we face is that last year in rolling out that 100% relief, it came from consequential funding from the UK Government. Now it costs about £715 million.

“Because we’ve got ahead of the UK Government’s Budget, they’ve allocated £1.3 billion in Covid consequentials. That money is to cover the health service, local government, as well as businesses.

“So if I were to do what Labour and the Tories want me to do right now, my question to them would be, where would you take it from? Would you take it from the health service, local government, or from the transport system?”

She said if Sunak announces a year long freeze she would “be the first in line to match the UK Government’s extension and give that support to business”.

“But in giving three months extension to business out of our own resources I have ensured that there isn’t a cliff edge at the end of this financial year, which is what businesses were expecting,” she added.

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Sunak’s delayed Budget – it was expected last autumn – means Forbes had to make assumptions about what money will flow to the Scottish Government from the Treasury’s coffers.

She said “There might be additional money, there might be less money. So there’s a lot of shifting parts, and I will work with other parties in good faith, because I think the public are expecting us to act like grown ups, come to an agreement and get the Budget through.”

The Finance Secretary also defended the Scottish Government’s decision to increase public sector pay by just 3%.

Trade unions have been critical of the measure in Thursday’s Budget, saying that it is effectively nothing more than a pay freeze.

Public sector workers earning up to £25,000 a year will get a hike of at least 3%, capped at £850. Those on a higher salary will get a 1% rise, capped at £800.

GMB Scotland said it “would not amount to more than a tenner a week for most”.

Forbes said it was fair and affordable.

She told the BBC she would “love to go further” but was constrained by the legal requirement to balance the Budget.

“I cannot overspend. I can’t borrow more. So therefore we have to balance the many competing demands. On public sector pay, we do believe, I strongly believe, in commending, recognising and reflecting our gratitude in the form of this pay deal, but also realising that it’s got to be affordable.”

Meanwhile, the Scottish Fiscal Commission has confirmed that the Scottish Government has been handed new temporary borrowing powers after economic forecasts permitted the move for the first time due to a “Scotland-specific economic shock”.

The move allows the Government to borrow a maximum of £300m for each of the next three years.

However the measure – part of the fiscal framework agreed between ministers in London and Edinburgh – only permits the Scottish Government to borrow to cover forecast errors.