Scottish Budget 2024-25

Shona Robison presented her first budget to parliament setting out the tax and spending plans for 2024-25.

Targeted funding for people and public services

A £6.3 billion investment in social security and more than £19.5 billion for health and social care form the heart of the Scottish Budget for next year, alongside record funding for local authorities and frontline police and fire services.

With targeted funding to invest in public services and protect the most vulnerable, the Budget underpins the social contract with the people of Scotland, Deputy First Minister and Finance Secretary Shona Robison told Parliament. She also outlined policies to grow the economy and progress the commitment to deliver a just transition to net zero.

Difficult decisions have been required to prioritise funding for the services people rely on in the face of a deeply challenging financial situation, Ms Robison added.

The 2024-25 Scottish Budget includes:

• £6.3 billion for social security benefits, which will all be increased in line with inflation. This is £1.1 billion more than the funding received from the UK Government for devolved benefits in 2024-25
• £13.2 billion for frontline NHS boards, with additional investment of more than half a billion – an uplift of over 4%
• record funding of more than £14 billion for local government, including £144 million to enable local authorities to freeze Council Tax rates at their current levels
• more than £1.5 billion for policing to support frontline services and key priorities such as body-worn cameras
• almost £400 million to support the fire service
• £200 million to help tackle the poverty-related attainment gap, almost £390 million to protect teacher numbers and fund the teacher pay deal, and up to £1.5 million to cancel school meal debt
• almost £2.5 billion for public transport to provide viable alternatives to car use, and increased investment of £220 million in active travel to promote walking, wheeling and cycling

Sarah Medcraf, CE of Moray Chamber said: "The new rate of income tax makes Scotland a less attractive place to work. We need to retain and attract talent and this will have the adverse affect. The commitment for the A9 is positive but without a clear delivery plan business will have very little confidence. Our biggest ask was to replicate the 75% business rates for retail, hospitality and leisure that England has had. This not being passed on is a huge blow to the sector at a time where it needed it most. These sectors will be feeling very unloved by the government after the budget"

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Read the full budget here

1. Income Tax Bands and Thresholds Clarification: The Deputy First Minister (DFM) announced an inflationary uplift in Starter and Basic rate bands. However, it's crucial to note that the term "band" refers to the size of income tax bands above the personal allowance. The actual thresholds have seen a modest increase, leading to potential implications for individuals receiving inflation-linked pay rises. The statement could be seen as misleading due to the inclusion of band sizes in the announcement.

2. Council Tax Freeze Funding Uncertainty: The claim of 'fully funding' the Council Tax freeze for the next year by the Scottish Government might not settle well with councils. While £140 million was allocated based on a 5% increase, some councils planning higher rate hikes may not receive full compensation. Moreover, there's no provision for compensating the increase in multipliers for higher band properties, adding further uncertainty for Scottish Councils.

3. Business Rates Update: In the non-domestic rates sector, the Cabinet Secretary resisted replicating the 75% relief seen in England for the Retail, Hospitality, and Leisure sector. The freeze in basic poundage was announced, costing £199 million, but an increase in poundage for higher properties offset this with an extra £170 million. Targeted hospitality relief was specified for the Scottish Islands at a cost of £4 million. The overall cost to the Government was £34 million, constituting around 40% of the additional revenue from income tax changes.

4. Spending Constraints and Cuts: The budget reveals a tough spending outlook, with an overall funding increase of 2.6%. However, two-thirds of this increase is allocated to social security spending, leaving limited resources for other sectors. Local government capital grants face a 21% real terms cut, and the Affordable Housing Supply Programme sees a 37% reduction in the past two years. Even significant commitments like the Just Transition Fund are impacted, facing a 75% cut for 2024-25. The detailed tables released alongside the budget provide insight into where funding cuts are likely to be felt.