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A Consequential Budget: £8bn of Extra Choice

After 18 months where millions of people have had their wages paid by the chancellor, nobody in Scotland needs any reminder of how important THE BUDGET is to our day to day lives. After an extraordinary year we still collectively face extraordinary challenges. From the cost of living crisis, or funding our public services to saving the planet, now is the time for government action. Many people will be asking how this budget is going to impact them, their family and their job or business.

There are things to like within this budget. The direct and indirect investments in R&D, pivotal to our future economic development as we move towards a leading green economy, is to be welcomed, and will apply to Scotland as much as the rest of the UK. The abandonment of a decade of austerity is also a sign of a government that at least understands it can’t cut its way to growth.  As always, we would like this to go further, but it is a start.

However, there is plenty of room for disappointment. Low economic growth forecast in outer years remains a worry. Inflation looms despite the breezy assurances. The question of fairness only grows in relevance with each opportunity missed to make tax reflect the importance of asset-based wealth – and the £1bn tax cut for banks and continued over-reliance on National Insurance to fund the NHS is certainly not how we would do it. It remains to be seen whether the proposed investments in “levelling up” and in decarbonizing the economy are anything like big enough to bring about those essential changes.

However, with the economic scarring of the pandemic not as bad as initially feared, there is a break in the storm clouds to begin creating the fairer, energised and greener economy necessary for our future.

£8bn Of Choice For The Scottish Government

What this budget does deliver is a big increase in the Scottish government’s funding, which grows from 3.3% of total UK public sector current expenditure to 4.0% over the next 5 years, and with that funding there is opportunity for Scotland to build that fairer economy and society – right now. In his speech, Rishi Sunak boasted of the £4.1bn additional spending the Scottish Government will get from its share of UK spending.  A smaller – but in many ways more important number is the c.£2bn p.a. of additional money Holyrood will get vs what it would have expected earlier this year in the March budget. This reflects the increased funding of the English NHS and Local Authorities in particular, and over the course of this Scottish Parliament represents £8bn in total additional spending for the Scottish government.

This is money that the Scottish people and their government can choose to use as they wishes.   It could follow the English model and invest in health and social care, and in addressing the historic underfunding of local authorities (where the current situation in Glasgow might jolt some action).  But with this greater certainty of funding it could also pursue some more policies that are unique to Scotland – for example investing £400m per annum that it would cost to ‘double and double again’ the £10 a week Scottish Child payment and in doing so end 80% of Child Poverty, or investing in more funded university places to eliminate the class gap in free tuition.

The Need For Better Co-Operation

The budget was heavy on the government’s “levelling up” agenda. Again welcome in principle, but more could be done, and it could be done better: this time in cooperation. Scotland is maybe getting slightly more than its fair share at £172m, but where it will be spent – with projects highlighted in Aberdeen, Falkirk and Inverness – should be a decision taken in partnership with the Scottish government, not as a political fight (most people don’t care who spends the money, only that it gets spent). Rather than competing with each other for popularity, the two governments should be working together to ensure all the relevant public money is spent in the most efficient way possible. As has sadly too often been the case, the Scottish and UK governments have passed each other like ships in the night when thinking about investing in economic growth, when the best outcome for everyone would be to join forces and really focus on the best projects available. 

Ask any Scot their top priorities and you will hear the NHS, the economy and schools. It’s time the Scottish government’s priorities matched the people’s priorities and with Scotland’s increased share of funding, new money is there. Now we just need the political will.

It’s time to get started. Over to you, Nicola.

Professor Jim Gallagher, Chair of Our Scottish Future said:

“The first budget as we look like emerging from the Covid crisis, was always going to be critical. There are things to welcome. This chancellor has finally learned that you cannot cut your way to success, but whether he plans anything like enough investment to level up the British economy and decarbonize it at the same time remains to be seen.

Nevertheless, an extra £8 billion for the Scottish Government to spend presents very big opportunities and choices. Health and social care must obviously be a priority, but the Scottish Government has scope to do other things to – reverse its shameful neglect of local government over the last 15 years, and, if it really wants to, to make a huge impact on poverty: it could likely afford to cut child poverty by 80%.

The budget also shows the crying need for better cooperation between the UK and Scottish governments. Rather than competing with each other to hand out money to projects, they should be cooperating to make the most impact with the funds which each of them has. The message to them both is ‘Don’t stand on your dignity, sit down together.’” 

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