Scottish Government Claims Budget Will Be Focused On Protecting People And Public Services

18th December 2023

The 2024-25 Scottish Budget will set out targeted funding for the Government's key missions of equality, community and opportunity amid a profoundly challenging financial situation, Deputy First Minister and Finance Secretary Shona Robison has said.

Tomorrow (Tuesday 19th December) Ms Robison, who is also Finance Secretary, will outline the Scottish Government's financial priorities for 2024-25. The budget will include the difficult choices that have had to be made as a result of last month's Autumn Statement. The Deputy First Minister has described that Statement as a "worst case scenario" for Scotland, telling Parliament that it failed to provide the investment needed in services and infrastructure, reflecting the UK's economic circumstances after Brexit.

The Budget will provide the funding to protect people and public services from the worst effects of these economic circumstances, Ms Robison said.

The Finance Secretary added, "In the face of a deeply challenging financial situation, this Budget will reaffirm our social contract with the people of Scotland.

"The Autumn Statement was devastating for Scottish finances. The Institute for Fiscal Studies has acknowledged that it will lead to planned real terms cuts in public service spending. Scotland is facing a 9.8% cut to our capital budget for infrastructure between this year and 2027-28.

"The £10.8 million additional health consequentials we received from the Autumn Statement for next year are enough to run NHS Scotland for just five hours, and UK Government funding for justice, housing and communities, net zero, energy, and environment are all being cut in real terms. All this comes on top of more than a decade of UK Government underinvestment that has left our public services with very little resilience.

"We refuse to follow UK Government spending decisions - indeed, we are doing all we can to mitigate them. We are proud that Scotland has a social contract which ensures people are protected by a safety net should they fall on hard times. And this contract underpins this Budget, with targeted funding to protect people and public services.

"We are unashamedly targeting resources at those most in need to support them through the cost of living crisis. We are providing funding to deliver the services that people rely on most, along with a ten-year programme of public service reform. And we are using all the powers we have to create a thriving economy while providing funding to achieve our ambitious net zero targets."

The 2024-25 Scottish Budget will be presented to the Scottish Parliament on Tuesday 19 December 2023.

Summary of UK Economic and Fiscal Outlook from Office of the Chief Economic Adviser

UK fiscal outlook
At the Autumn Statement, the Chancellor inherited an improved fiscal position of £27 billion by 2027 to 2028 largely due to inflation leading to higher than expected tax receipts. He chose to spend virtually all of this (£22 billion) on National Insurance tax cuts and full capital expensing.

As a result, departmental spending is largely unchanged meaning that the real value of departmental spending is £19.1 billion lower by 2027 to 2028 than was forecast in March.

The Institute for Fiscal Studies has highlighted that many aspects of day-to-day public service spending will be cut.

Most departments have already seen a real terms cut in their budgets since 2022 to 2023. In particular, Health and Social Care has seen a £8.1 billion real terms reduction in its budget, whilst there have also been significant reductions in funding for Transport, the Home Office, and Levelling Up, Housing and Communities.

Furthermore, there were no detailed spending plans for 2025 to 2026 onwards. The chart below shows that 4 out of the 5 years of the OBR forecast are not based on any detailed departmental plans from the UK Government.

The UK Autumn Statement and fiscal outlook have major implications for Scotland's budget.

The Autumn Statement provided the Scottish Government with resource consequentials of £310 million in 2024 to 2025, largely from business rates policy. There was additional capital funding of £10 million in 2024 to 2025.

Of the resource, there was £10.8 million of additional funding for NHS in 2024 to 2025 - an increase of less than 0.06% to Scotland's health budget in 2023 to 2024 of £19.138 billion.

The UK Government’s decision to freeze capital budgets in cash terms means that Scotland may see a 9.8% real terms cut in capital funding for infrastructure between 2023 to 2024 and 2027 to 2028.