Budget Bill: Finance Secretary’s statement - 9 March 2021

Presiding Officer,

It is essential that we come together as a Parliament today to agree the 2021-22 Scottish Budget and deliver the certainty and stability that Scotland, its people and its businesses and communities deserve.

Throughout this Budget I have worked with all parties across this chamber to build consensus, and deliver a Budget which supports Scotland’s recovery from the COVID-19 pandemic.

I would like to thank the Finance and Constitution Committee for their Stage 1 report on the Budget which I responded to on 2 March.

In particular, I would like to recognise the outstanding contribution of Bruce Crawford, both as a Committee Convener and as a Member of this Parliament.  I am sure that all members across the Chamber will join with me today to thank Bruce for all his service to this Parliament and to offer our grateful thanks and best wishes.

The Committee’s report recognises that this Budget has been published in a challenging period of continued economic and fiscal uncertainty.

In a year like no other the passage of this Budget Bill will have a profound effect on our economy and public services.

Since I introduced this Budget on 28 January, I have engaged with Members openly and transparently on the funding available and the Budget challenges that we face.

I would like to thank all parties for their constructive contributions to these discussions.

I am pleased that the Scottish Government has reached agreements with both the Scottish Green Party and the Scottish Liberal Democrats, which will secure the passage of this vital Budget.

In addition to delivering on the spending measures I have previously outlined to Parliament, as part of the agreement with the Scottish Greens the 2021-22 Budget will deliver :

• an additional £49.7 million for the phased roll-out of free school meals, including:
  • from July 2021 the provision of free school meal holiday support to all children and young people currently eligible for free school meals on the basis of low income; and
  • by August 2022, the provision of universal free school meals for all children in primary schools
• further recognition of the remarkable contribution of public sector workers through this pandemic, with revisions to the 2021-22 public sector pay policy
  • this will increase the cash underpin from £750 to £800 for those earning up to £25,000 (matching the cash cap for high earners)
  • and for those earning over £25,000 and up to £40,000, the pay rise increases (from 1%) to 2%.
• I am also committing to fund a greater extension to the concessionary travel scheme, ensuring free travel for those aged up to 21 (beyond the previous plan to extend to under-19s) – costing an additional £17 million in 2021-22
  • we will work to deliver this as quickly as we can in the coming months, subject to the necessary legislative and operational processes, the continuing impacts of Covid, and engagement with delivery partners

To further help lower-income households we will make:

• a targeted pandemic support payment of £130, to households in receipt of council tax reduction; and
• two £100 payments for families with children who qualify for free school meals

This means that low-income families receiving reduced council tax bills and qualifying for free school meals will receive support payments worth £330.

As part of my agreement with the Scottish Liberal Democrats I have agreed that the Scottish Government will:

• further support education recovery efforts for children and young people from disadvantaged backgrounds with a £20 million Pupil Equity Fund premium in 2021-22
• in recognition of the twin impacts of the pandemic and the downturn in the oil and gas sector, provide £15 million of financial support for re-training and re-skilling, to support the economic recovery in the North East of Scotland, based on the principles of a just transition
• provide certainty to Local Government for the 2022-23 budget, by baselining the £90 million provided this year to support a national Council Tax freeze

This is in addition to the earlier commitments I have made to the Liberal Democrats by providing an additional £120 million for mental health services and £60 million for education recovery next year.

Finally, in light of calls for a replacement to the Princess Alexandria eye pavilion in Edinburgh, we have asked NHS Lothian to carry out a review of its eye care services and to reconsider how they should be delivered.

I can commit to working with the health board to implement its recommendations and protect specialised eye services for the city and the wider region

Presiding Officer, understandably I have focused today on the efforts I have made to reach an agreement to secure passage of the Budget Bill.

These changes are significant and they will help secure our recovery from COVID-19.

But they also build on the firm foundations of a Budget that already delivers:

• a £11.6 billion settlement for our local government, fair and affordable, a settlement that will allow councils to freeze council tax for 2021-22 while still providing funding for vital day-to-day services
  • a settlement that includes a £335.6 million increase in core revenue funding, and an additional £259 million of non-recurring Covid funding
• record funding of £16 billion to our NHS, an increase of over £800 million to the core budget – funding that will support recovery, and our continued response to COVID-19
  • this includes an investment in excess of £1.2 billion in mental health, underpinning our continued approach to improving mental health services;
• 100% rates relief for retail, hospitality, leisure, aviation and the newspaper industry for the whole of 2021-22, something that has been widely called for and vital to the sector. Something which all parties in this chamber agreed to implement and yet we do not see the same policies being implemented south of the border
  • our budget will deliver the lowest poundage rate available anywhere in the UK – saving ratepayers over £120 million, compared with previously published plans
• a tax policy that delivers on our commitment to a fair and progressive tax system
• ambitious use of our new welfare powers so that we can help tackle child poverty, including significant investment in our game changing Scottish Child Payment of an expected £68 million in 2021-22
• almost £1.9 billion for the Scottish Funding Council to fund our university and college sector, including £700 million for colleges and over £1.1 billion for universities
• £1.3 billion for the Scottish Police Authority, including elimination of the deficit in the police budget
• an investment of over £1.6 billion across bus and rail services, ensuring we keep public transport open and supporting our recovery
• £1.1 billion total investment in employability and skills support, which builds on the significant package of labour market interventions

On a final point of substance, I would like to acknowledge Labour Members’ focus on pay for social care workers during our Budget discussions.

Of course, our public sector pay policy continues our action to address low pay – with a further cash underpin and continuing adherence to the increased real Living Wage.

And while the policy is not directly applicable to the social care workforce, it nonetheless sets a benchmark.

I am clear that social care workers should have fair levels of pay for all that they do, and equally clear that I will only promise what can be afforded.

With the limited and non-recurring funding that has flowed from the UK Budget, I have not been able to accede to Labour’s position of an initial £12 per hour, leading to £15 per hour.

An immediate increase to £12 per hour would provide a 26% uplift in pay from the 2021-22 real Living Wage of £9.50 per hour, at an estimated cost of around £470 million.

Moving to £15 per hour equates to an increase of 58% with an annual salary of over £29,000, and would cost over £2 billion if the impact on the wider Agenda for Change workforce was taken into account.

We have recognised the efforts of social care workers already with a £500 thank you and promised to pay the real Living Wage.

That does not, however, mean this is my final word.

My position is this: we will respect the process and the outcome of collective bargaining, we will look to build on the progress made by the Health Secretary in recent months.

We will duly consider the work of the Fair Work in Social Care group, which is set to report in May with recommendations on key areas for the social care workforce, including pay and terms and conditions.

And I will be very open to further discussions on social care pay, with any and all interested voices.

Presiding Officer, the ground I have covered demonstrates how this Budget provides stability and certainty for our taxpayers, and delivers for our economy.

These are truly unprecedented times that require an unprecedented response.

This Budget delivers that and with cross-party support for it tonight, its passage will help put Scotland on the road to recovery.