Chancellor urged to prioritise investment in public services

The Chancellor’s Spring Budget must provide Scotland with the increased funding needed for public services, infrastructure and cost of living support, Ministers have urged.

The UK Government should also heed the recent advice from the International Monetary Fund (IMF) against further tax cuts, Ministers added.

Deputy First Minister Shona Robison has written to the Chancellor ahead of the Spring Budget on 6 March, urging him to:

• provide increased funding for public services and capital investment
• increase cost of living support, including by ending the two-child limit, benefits cap, young parent penalty in Universal Credit, bedroom tax and Local Housing Allowance freeze
• legislate for an essentials guarantee giving basic necessities and a social tariff for energy bills for those who need them most
• transfer National Insurance powers so the Scottish Government can design a tax system fully suited to Scotland’s needs
• urgently review the support needed for businesses that are continuing to struggle with bills which are too high, including through use of VAT powers
• support measures to reduce carbon emissions, including by making it easier for existing buildings to be retrofitted with energy-saving materials

Separately, Public Finance Minister Tom Arthur wrote to Chief Secretary to the Treasury Laura Trott arguing that tax cuts funded by cuts to public spending would “further damage the services our most vulnerable rely on”.

The Deputy First Minister said:

“When I presented our draft Budget for 2024-25 in December, I set out that the UK Government’s Autumn Statement had been a worst case scenario for Scotland’s finances. Our Block Grant has fallen by 1.2% in real terms since 2022-23 and the UK Treasury is slashing our capital funding by almost 10% in real terms between 2023-24 and 2027-28. Similar pressures are faced by the other devolved governments in Wales and Northern Ireland.

“With the UK Government’s Spring Budget it is vital that they change course. There is a clear need for increased investment by the UK Government in public services and infrastructure, as has been recognised by the IMF. I would urge the Chancellor to use whatever headroom may be available to prioritise investment in public services and infrastructure over tax cuts.

“The Scottish Budget has prioritised funding for social security and public services in line with our three missions. Yet our spending remains constrained by the decisions of the UK Government.

“The UK Spring Budget is a key opportunity to increase funding for our vital public services and the infrastructure that supports our economy and communities, as well as supporting people with the cost of living and investing in our net zero future. I urge the UKG to rise to this challenge.”

Background

Letter from the Deputy First Minister Shona Robison to the Chancellor of the Exchequer Jeremy Hunt

Letter from Public Finance Minister Tom Arthur to the Chief Secretary to the Treasury Laura Trott

IMF warns UK government against further tax cuts - BBC News