Scottish budget: income taxes to remain the same with investment in health and social care

Kate Forbes presented the budget after the resignation of finance secretary Derek Mackay hours before

Scottish income tax rates will remain the same next year, the Scottish Government has confirmed in its budget for 2020-21.

The budget also included increased funding for health and social care as well as for programmes to cut climate emissions.

It was presented by minister for public finance and digital economy Kate Forbes, after the resignation of finance secretary Derek Mackay hours before.

She described the budget as one that has “wellbeing and fairness at its very heart” and offers “vision and leadership, at a crucial moment for our country”.

Forbes announced investment of £15bn for health and care services, including a £121m funding increase for frontline services to cut waiting times and boost primary care. 

She said that Scotland would continue to have “the fairest and most progressive income tax system in the UK”, with no changes to tax levels at any threshold in 2020-21. 

The only changes to income tax would be an increase to the basic and intermediate rate thresholds by inflation which will “protect our lowest and middle earning taxpayers” she said.

Forbes said that it will ensure that 56 per cent of Scottish taxpayers pay less than they would if they lived elsewhere in the UK.

She predicted that the Scottish Government would raise over £12bn from income tax that will be used to “support our vital public services”.

Of the £15bn investment in healthcare, Forbes said £9.4bn would go to health and social care partnerships, with £117m earmarked for increasing mental health.

There would be an increase of £50m for primary care, £30m for cutting waiting times, £28m for mental health and CAMHS and a further £13m for trauma networks, she said. 

She also said the government would provide a 60 per cent increase in funding to reduce harm from alcohol and drugs. 

On meeting climate change targets, Forbes said the move to net-zero “will have many impacts, including on our economy”. 

She announced £1.8bn in capital investment for low-carbon infrastructure projects to reduce emissions, a £500m increase on last year.

There will also be increases in investment in transport, agriculture, heat and energy, Forbes said.

This includes an increase in overall funding for bus and rail transport by £286m, a total of £85m for ‘active travel’ such as cycling and walking, and an £83 million Future Transport Fund for electric vehicle infrastructure. 

In agriculture, Forbes said the government would invest an “initial” £40m in an Agricultural Transformation Programme to develop more environmentally farming practices and an increase in forestry funding to plant more trees. 

To cut emissions from home and industrial heating, Forbes announced a £120m Heat Transition Deal. 

It would include £50m to encourage councils to adopt heat networks and £10m to for hydrogen heat demonstrator projects. 

Forbes also committed to ring-fence an additional £2bn over the next parliamentary term for measures to support the delivery of the Climate Change Plan.

In order for the budget to now pass in parliament, the SNP government will need the support of at least one of the opposition parties.

The Scottish Conservatives said that they would be open to working with the government to pass the budget, but that it currently “falls well short” of where it ought to be.

The Scottish Greens described the budget as being “timid” on climate change, and suggested going further to cut transport emissions by introducing free public transport.

Responding to Forbes’ statement, Scottish Conservative shadow finance secretary Murdo Fraser said: “As it stands, this budget falls well short of where we need it to be.

“The SNP has to go back to the drawing board and make improvements if it wants to win our support.

“Not enough money is being handed to police, the tax gap between Scotland and the rest of the UK will widen again, and there’s no commitment on hospital parking charges.

 “The demands we made were not unreasonable, and we’ll be happy to speak to the Scottish Government about how to introduce these changes.”

The Scottish Greens co-convener Patrick Harvie MSP said: “Despite the Scottish Government’s world leading rhetoric, this budget is timid, not transformative. 

“It lacks the necessary action on the climate emergency and is an abdication of responsibility. The Finance Minister must change tack if she wishes to secure our support for her budget.

“In recent years Scottish Greens have engaged constructively with the Scottish Government to protect vital local services across the country.

“This year, in addition to protecting important services, we have prioritised action to tackle the climate emergency. The lack of an emergency response in today’s budget reflects the lack of constructive engagement from the government this year.

“This is extremely disappointing, but there is still time to strike a deal. 

“Nobody expected Kate Forbes to have to take over the budget in these circumstances, but it does give her the opportunity to try and build the political agreement that has been missing so far. 

“If that includes a willingness to change tack on climate, then the Scottish Greens are ready to be constructive.

“Our proposals include expanding the concessionary bus fare scheme to young people. 

“This popular policy would not only encourage more people to use public transport, helping to tackle the climate crisis, it would make using buses more convenient and affordable for families and provide huge social and economic boosts to communities across the country."

Scottish Labour Finance, Jobs and Fair Work Spokesperson, Rhoda Grant MSP, said: “Despite the additional powers that have come to the Scottish Parliament over the last decade the SNP Government have failed to maximise their use, leaving our economy, our people and our essential services worse off. 

“They have endeavoured to hide this through smoke and mirrors but they must come clean with the Scottish people.

“Scottish Labour wants transformational change, we want investment for the future. We know that we cannot reverse 13 years of mismanagement in one budget. 

“So we have asked of the Scottish Government in this year’s budget to take a step in the right direction, to take a step towards real change.”

Scottish Liberal Democrat leader Willie Rennie said: “This is a budget that is going to need substantial revisions.

“We need to see serious efforts to support local government, the police, mental health, nursery education and the environment.

“In particular, councils are buckling under pressure. The services they manage have been scraped back and back by years of underfunding and this budget doesn’t deliver a fraction of the funding they need to get things back on track.

“The budget also needs to remove any spending on work on independence at a time when we need stability and public services need as much funding as possible.

“Liberal Democrats will work constructively with others to ensure that these key areas are properly funded but this is not a budget we can support in its present form.”