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Covid funding plea - UK Government urged to provide clarity on consequentials

23rd May 2020

Finance Secretary Kate Forbes has urged the UK Government to provide certainty when announcing funding for Scotland to tackle the Covid crisis.

On May 2 the UK Government announced a £617 million extension to business grants, which it advised would generate £60 million of funding consequentials under the Barnett Formula. This was then duly committed to the Scottish Government's Covid business response.

However, the UK Government informed the Scottish Government this week that this additional funding would not now materialise, increasing the pressure on the Scottish budget.

Additionally, last month £35 million of consequentials was earmarked to the Scottish Government in respect of charity support direct grant, but this was amended by the Treasury to £25 million at a later date.

In a letter to Stephen Barclay, Chief Secretary to the Treasury, Ms Forbes said:

"I welcome the close and constructive dialogue that we are generally having with the Treasury at ministerial and officials level. I appreciate and value that productive working relationship in these exceptional circumstances.

"However, it is deeply problematic when we are given mixed messages and the funding position changes. Consequently we have committed to spending £70 million that we have now been told we will no longer receive. This is hugely frustrating and undermines the Scottish budget.

“My counterparts from Wales and Northern Ireland share this concern. We have made clear to the Treasury the risk of late budget reductions unwinding the funding pledged so far. That is why we are seeking assurances that no in-year reductions will be applied to our budget.

“I endeavour to be fully transparent with the Scottish Parliament about updates to the funding position, and am consistently pressed by respective sectors and parties to act quickly in passing on Barnett consequentials to the areas in question.

“Therefore I am seeking reassurance from the Treasury that funding announcements will be robust and reliable enough to act upon without creating unnecessary financial risks. As well as certainty on funding we now, more than ever, urgently need the Scottish Parliament to be given greater financial powers to ensure that we can continue to meet the challenges caused by the pandemic."

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