News

Budget stage 1

Published: 31 Jan 2018 15:14

NHS, economy and the low paid to benefit

Scotland’s NHS, the economy, public sector workers and the low paid will benefit from the Scottish budget, Finance Secretary Derek Mackay said today as he confirmed he had reached an agreement that will see the financial plan passed at all stages by the Scottish Parliament.

The budget takes steps to mitigate UK Government cuts, increases funding for the NHS by £400 million, invests in the expansion of early learning and childcare, delivers on our commitments to broadband, supports the building of 50,000 new homes, backs small businesses and innovation and provides essential funding for our frontline police and fire services.

The Finance Secretary also confirmed he will extend the Scottish Government’s commitments on public sector pay to ensure all public sector employees earning up to £36,500 receive a minimum 3% pay increase - meaning 75% of public sector workers, including NHS staff, will benefit from an inflationary pay rise.

As part of an agreement with the Scottish Green Party, the budget will now include a real terms increase in revenue investment for local authorities with local services benefitting from an additional £159.5 million of resource funding, and following discussions with Shetland and Orkney Island Councils, funding of £10.5 million will be made available to support inter-island ferry services in 2018-19 - with talks continuing on a long term solution.

Investment in Low Carbon infrastructure – which is already increasing from 21% of planned infrastructure investment in 2017-18 to 29% in 2018-19 – will continue to increase in each year of the parliament, with additional support made available this year for home energy efficiency, the exploration of new local rail services and the delivery of marine protected areas.

In addition, Mr Mackay confirmed that, following publication of the Scottish Government’s tax proposals in December, he would take steps to remove an anomaly that meant some higher rate tax payers saw their bills fall while others on slightly lower incomes saw a rise, due in part to changes in the personal allowance. 

As a result, while 70% of taxpayers will continue to pay less next year than they currently do, 55% will pay less than they would elsewhere in the UK. All those earning above the new Higher Rate Threshold of £43,430, a 1% increase on the 2017-18 threshold, will see a modest increase in income tax. This distinct income tax policy will raise around £55 million and support an additional £420 million of investment in the Scottish budget.

Confirming the changes during the Stage 1 of the budget debate, Mr Mackay said:

“As a parliament of minorities, we must work across the chamber to find compromise and consensus in order to give support, sustainability and stimulus to our economy and to our public services.

“This budget invests record amounts in our NHS, supports our efforts to improve attainment in our schools, invests in our economy with support for infrastructure, for broadband and for innovation, and supports our ambitions to tackle climate change.

“We are lifting the pay cap with a real terms increase in pay for the majority of public sector workers and we are supporting local services with a real terms increase for day to day spending and for long term investment, with an additional £170 million going into local services, on top of the £10.5 billion already proposed.

“Our changes to tax ensure Scotland has a progressive tax system - with 70% of taxpayers paying less next year than they do currently and 55% paying less than they would across the rest of the UK - while businesses benefit from support for investment.

“The changes I have announced ensure that people in Scotland will benefit from the best deal for taxpayers in the whole of the UK.”

Background

The updated income tax proposals: Fact Sheet 

The Draft Budget proposals have now been updated to reflect a 1% increase in the Higher Rate threshold:

 

Budget Bill 2018-19

Income Bands

Rate

Starter Rate

£11,850* - £13,850

19%

Basic Rate

Over £13,851 - £24,000

20%

Intermediate Rate

Over £24,001 - £43,430

21%

Higher rate

Over £43,431 - £150,000*

41%

Top Rate

Above £150,000 **

46%

* Assumes individuals receive the standard UK Personal Allowance.

** Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000

ADDITIONAL LOCAL GOVERNMENT FUNDING ALLOCATIONS

 

Local Authority

 

2018-19 Shares of GAE plus SINA

2017-18 Additional Funding

2018-19 Additional Funding

Total General Revenue Grant

 

Support for Ferries

(Specific Grant)

Total Additional

   

%

£m

£m

   

£m

£m

Aberdeen City

 

3.51

1.211

4.388

5.599

 

0.000

5.599

Aberdeenshire

 

4.86

1.676

6.071

7.747

 

0.000

7.747

Angus

 

2.18

0.751

2.723

3.474

 

0.000

3.474

Argyll & Bute

 

1.81

0.624

2.260

2.884

 

0.000

2.884

Clackmannanshire

 

0.94

0.325

1.177

1.502

 

0.000

1.502

Dumfries & Galloway

 

2.99

1.031

3.736

4.767

 

0.000

4.767

Dundee City

 

2.78

0.961

3.481

4.442

 

0.000

4.442

East Ayrshire

 

2.26

0.780

2.825

3.605

 

0.000

3.605

East Dunbartonshire

 

2.07

0.715

2.591

3.306

 

0.000

3.306

East Lothian

 

1.90

0.654

2.369

3.023

 

0.000

3.023

East Renfrewshire

 

1.97

0.681

2.468

3.149

 

0.000

3.149

Edinburgh, City of

 

7.77

2.682

9.717

12.399

 

0.000

12.399

Eilean Siar

 

0.76

0.262

0.948

1.210

 

0.000

1.210

Falkirk

 

2.91

1.004

3.637

4.641

 

0.000

4.641

Fife

 

6.83

2.357

8.540

10.897

 

0.000

10.897

Glasgow City

 

11.07

3.818

13.833

17.651

 

0.000

17.651

Highland

 

4.71

1.626

5.890

7.516

 

0.000

7.516

Inverclyde

 

1.52

0.523

1.897

2.420

 

0.000

2.420

Midlothian

 

1.65

0.569

2.061

2.630

 

0.000

2.630

Moray

 

1.73

0.595

2.157

2.752

 

0.000

2.752

North Ayrshire

 

2.68

0.925

3.353

4.278

 

0.000

4.278

North Lanarkshire

 

6.38

2.202

7.978

10.180

 

0.000

10.180

Orkney

 

0.71

0.245

0.889

1.134

 

5.500

6.634

Perth & Kinross

 

2.73

0.942

3.412

4.354

 

0.000

4.354

Renfrewshire

 

3.28

1.132

4.101

5.233

 

0.000

5.233

Scottish Borders

 

2.22

0.767

2.780

3.547

 

0.000

3.547

Shetland

 

0.80

0.275

0.995

1.270

 

5.000

6.270

South Ayrshire

 

2.11

0.728

2.638

3.366

 

0.000

3.366

South Lanarkshire

 

5.95

2.053

7.440

9.493

 

0.000

9.493

Stirling

 

1.77

0.609

2.208

2.817

 

0.000

2.817

West Dunbartonshire

 

1.77

0.610

2.208

2.818

 

0.000

2.818

West Lothian

 

3.38

1.167

4.229

5.396

 

0.000

5.396

               

 

Scotland

 

100.00

34.500

125.000

159.500

 

10.500

170.000