Scottish Budget 2018/19 - The Implications for Public Services

Briefing Paper

The Scottish Government’s Budget for 2018/19 was announced by Derek Mackay, Finance Secretary on 14th December 2017. It includes proposals to:

  • Increase spending on the National Health Service by over £400million - £200million more than inflation.
  • Provide £120million - over and above core education funding - direct to head teachers to help ensure all young people can fulfil their potential
  • Lift the 1% public sector pay cap and provide for up to a 3% pay rise for National Health Service staff, police, teachers and others earning up £30,000
  • Invest £243million towards the expansion of free nursery education and childcare
  • Protect funding for Police and Fire services including retaining VAT refunds in full
  • Deliver a local government finance settlement worth more than £10.5billion
  • Contribute £756million towards investment of more than £3billion by 2021 to deliver 50,000 affordable homes
  • Allocate over £4billion of funding for infrastructure
  • Deliver £600million to ensure every home and business will have access to superfast broadband by 2021
  • Deliver the first £70million of a new £150million Building Scotland Fund
  • Set aside £340million for initial capitalisation of the Scottish National Investment Bank
  • Invest nearly £2.4billion in colleges, universities, enterprise and skills bodies – including a real term increase for both college and Higher Education budgets

This draft Scottish Budget is significant for several reasons:

  • It is part of an evolving budgetary process that has seen the date of the budget shifted this year and that will see the introduction of a new annual budgetary process for 2019/20.
  • It is the first time that the Scottish Government has used its tax varying powers and it has used them to introduce a more progressive system of direct taxation and to increase its revenue.
  • The use of tax varying powers has created a direct link for the first time between the tax that people pay and the expenditure of the Scottish Government.
  • While the Scottish Government has ‘headlined’ its intention to protect National Health Service budgets, in practice the increased provision for the National Health Service may prove to be modest when compared with increased needs and service pressures.
  • Increases in funding for Local Government are below the level of inflation giving rise to concern that local authorities may not be able to continue to deliver and protect good quality local government services.
  • Increases in funding for housing are significant.
  • Increases in funding for welfare are significant in relation to existing budgets but not in relation to the total amount claimed in Scotland.

I have written a briefing paper that summarises the implications for public services in Scotland and the response of the sector and to provide some commentary. It includes sections on: Taxation, Local Government Funding Settlement, Housing, Welfare, National Health Service and the Scottish Government's future budgetary process.

Your copy may be freely downloaded from HERE

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