Scottish budget welcomed by small businesses but faces criticism from poverty campaigners

Derek Mackay’s draft budget has been welcomed by small business representatives for recognising struggling town centres, but has faced criticism from trade unions and poverty campaigners.

The 2019/20 Scottish Budget saw income tax rates frozen by the Finance Secretary, while health and care services will see an uplift of £730m thanks to increased funding of the NHS south of the border.

Trade unions criticised the fact public sector workers will only get a three per cent pay rise.

Mackay said the budget was delivered in the context of continuing austerity politics at Westminster and Brexit.

The plans would have to be revisited if the UK crashes out without a deal, he said.

The Federation of Small Businesses in Scotland welcomed a new £50m Town Centre Fund to support the future of Scotland’s high streets and a promise that business rates would increase below the rate of inflation.

Andrew McRae, FSB’s Scotland policy chair, welcomed the lack of “gimmicks” in the budget statement.

“Like smaller firms across Scotland, Derek Mackay today showed that he’s getting on with business despite the Brexit backdrop. This is a mostly savvy budget proposal that should give smaller firms some much needed stability.

“Over the last few years, independent businesses have been leading a fightback on our high streets. But local traders can’t prop up our town centres on their own. That’s why we’re pleased to see Derek Mackay back the FSB’s idea for a new Scottish town centre diversification fund. Similarly, a below inflation increase to business rates will give many smaller firms outside existing help much needed breathing space.”

However, the Child Poverty Action Group in Scotland said cash raised by freezing the top rate of tax could have been spent on topping up child benefit.

Director John Dickie said: “The Scottish Government's commitment to a new income supplement by 2022 is very welcome, but hard up families really can’t wait that long. MSPs must now work together to ensure that final budget plans boost family incomes and fulfils its potential to lift tens of thousands of children out of poverty.”

STUC general secretary Grahame Smith said: “We are deeply disappointed that Mr McKay’s public sector pay policy does nothing to make amends for a decade of pay cuts for public workers.  Better pay means better services and more demand to boost local economies. The Scottish Government has failed to recognise the urgency of this issue.”

The budget also included almost £500m to expand funded early learning and childcare, and initial funding of £130m towards the establishment of a Scottish National Investment Bank.

But on Brexit, Mackay said: “Our spending plans for 2019-20 include a commitment to mitigate the risks of Brexit as best we can, to enable our economy to thrive in any circumstances, now and in the future.

“It is disappointing that we are facing the prospect of having to revisit these plans in the event of a chaotic no-deal outcome. If leaving the EU can be avoided, those resources currently being directed towards essential preparations can be reinvested into our public services and economy.”