Scottish Budget: 2024 to 2025

Chapter 1 Equality, Opportunity, Community Our Strategic Budget Priorities

Introduction

Public finances continue to face significant challenges. At the global level, the impacts of inflation, the war in Ukraine, and the after‑effects of the pandemic combine to create an extremely turbulent economic and fiscal operating environment.

At the UK level, the combined effects of decades of stagnation and low growth, the effects of Brexit, and the economic policies of the UK Government mean that we are uniquely vulnerable to these international shocks.

Recent research by the Resolution Foundation has set this out in stark terms, finding that the UK has the highest income inequality of any major European economy. Real wages grew by 33 per cent a decade from 1970 to 2007, but have flatlined since, costing the average worker £10,700 per year in lost wage growth – the UK is now defined by the ‘toxic combination of low growth and high inequality’.

This is all the more concerning when we look at neighbouring countries in Europe which are similar to Scotland. Belgium, Denmark, Finland, Iceland, Ireland, the Netherlands, Norway, Sweden and Switzerland outperform the UK in critical areas. They are wealthier, income inequality is lower, productivity is higher, and fewer children live in poverty.

The reality is that the amount Scotland has available to spend is still largely driven by the block grant set by successive UK Governments whose constraint of public expenditure prolongs the austerity felt by public services. As the Institute for Fiscal Studies has noted, the tax cuts announced by the Chancellor in November will be paid for by real terms cuts in public service spending. The Autumn Statement and this latest funding settlement fall far short of what is required.

Scotland and the rest of the UK required more money for infrastructure, public services and fair pay deals. The UK Government did not deliver for Scotland, resulting in a real‑terms reduction in the total block grant.

Where Scotland can choose a different path, we have done so. The Scottish Fiscal Commission estimate that the different course and decisions we have made on Income Tax since 2017‑18, including decisions made for this Budget, will add around £1.5 billion of revenue in 2024‑25, compared to implementing the rates and bands in place elsewhere in the UK. The Scottish Fiscal Commission’s report highlights that Scottish Income Tax receipts have outperformed expectations, and they are forecasting Income Tax to make a record contribution to Scottish Government funding in 2024‑25, with tax receipts forecast to increase by £ 1.5 billion over the past year driven primarily by strong wage growth.

We pride ourselves on our progressive Income Tax system which asks those who are best able to contribute to pay more, and so support the enhanced social contract in Scotland.

As the cost of living crisis has continued to impact families across Scotland and the impact of further UK Government austerity bites, the Scottish Government will be introducing a new Income Tax band from April 2024 for those earning over £75,000 and adding 1p to the Top rate. Together this is forecast to raise an additional £82 million in 2024‑25. In addition, the Scottish Government estimate that maintaining the Higher rate threshold in 2024‑25 will add an additional £307 million to the Income Tax forecast, relative to it increasing in line with CPI inflation, due to wage growth. These decisions are focused on those earning the most in Scotland and maintaining our progressive approach to tax, with the majority of taxpayers in Scotland continuing to pay less tax than they would in other parts of the UK.

This ensures that the people of Scotland can enjoy a range of support not available elsewhere in these islands – from a baby box containing the essential items parents will need in the first six months through to free prescriptions and free access to higher education.

Social Security Scotland now administers 14 benefits – 7 of which are completely new and unique within the UK, such as the Scottish Child Payment which underpins our fight against inequality, lifting an estimated 50,000 children out of relative poverty in 2023‑24.

Our continued investment of nearly £1 billion per year in early learning and childcare (ELC) is helping to ensure every child and young person has the opportunity to fulfil their potential.

Our economy performs better than most parts of the UK on various measures. Unemployment is lower and average earnings are growing faster than the UK. The historic productivity gap between Scotland and the rest of the UK has narrowed, and we are home to world class sectors like financial services, space, energy and life sciences.

We are continuing to take forward our National Strategy for Economic Transformation, which contains bold and ambitious actions to deliver a wellbeing economy that is fair, green and growing. Similarly, our New Deal for Business is creating an environment that helps businesses thrive through a more proportionate approach to regulation and by working in partnership.

We are committed to seizing the economic opportunities from net zero transition and will set out our plans in a Green Industrial Strategy in the summer of 2024. Our strategic investment in offshore wind will catalyse private investment in the infrastructure and manufacturing facilities critical to the growth of the sector. It supports market certainty and helps to create a highly productive, competitive economy – providing thousands of new jobs, embedding innovation and boosting skills.

We remain committed to putting our climate ambition into action, investing in decarbonising our most polluting sectors and helping people in Scotland reduce their emissions. For example, our investment in energy efficiency and heating makes homes easier and greener to heat. We are also providing viable alternatives to car use by investing nearly £2.5 billion in public transport, including free bus travel for under-22s and older and disabled people, while continuing to increase our investment in active travel.

We have continued to support public services and delivered fair pay deals for our public sector workers. Scotland’s nurses, police officers, and other many other public sector workers are the best paid in the UK. This would not be possible without our Trade Union partners, who have worked collaboratively with this Government to minimise the impact of industrial action and disruption to our public services. We have been proud to support pay deals for public sector workers that reflects the vital jobs that they do.

However, expenditure on public sector pay increases in the past two years is now greater than the growth in our resource Block Grant funding from the UK government. As a result of the ongoing fiscal challenges and uncertainty over UK Government funding and inflation levels the next phase of this work will focus on working with our Trade Union partners to deliver reforms to put our public sector workforce on a sustainable footing. We intend to set out the pay metrics for 2024‑25 following the Spring UK Budget.

Responsible finances

In responding to these economic and fiscal challenges we will continue to be guided by the three missions set by the First Minister.

We have taken decisive steps to ensure our public finances remain on a sustainable trajectory, prioritising our spending to support our key missions. We are also a Government committed to being open with the people of Scotland and we will leave no stone unturned as we support essential services, which has required us to take often painful decisions.

We are publishing single-year spending plans for 2024‑25 only in this Budget. While we recognise the merit of multi‑year budgets, the nature of the Autumn Statement and the Office for Budget Responsibility’s forecasts make future prospects more volatile and it could be misleading to plan too far ahead across the board. We will revisit the multi‑year outlook in our next Medium‑Term Financial Strategy, due for publication in May 2024. Often in‑year budget management across Whitehall Departments generate consequential changes in our allocation towards the year‑end. The Scottish Government’s allocation can go down as well as up, and switches can take place between resource and capital funding which sometimes makes projecting the funding for the year much less predictable.

In the spring the UK Government has an opportunity to change course. An opportunity to invest in public services, reverse their real terms cut to NHS England, and fund the renewal of infrastructure. These steps would give much needed certainty for services and the people who rely on them, and would allow the Scottish Government to plan more clearly for the medium term.

Our budget decisions mark progress on the reform and efficiency measures set out in our Resource and Capital Spending Reviews, and are guided by our Medium‑Term Financial Strategy (MTFS), and the pillars that underpin our approach to managing the public finances. In the MTFS the Government committed to focusing public spending on the Government’s three missions and within this, to taking tough choices and targeting, with necessary reform undertaken.

The decisions we have taken in this Budget are:

• values ‑ based. In setting this Budget we have chosen to prioritise delivering on our equality, opportunity and community missions and investing in our public services, and protecting people, as far as we can, from the harm of the UK Government’s cost of living crisis. This will mean taking a relentless approach to ensuring that spending represents value for money to the taxpayer and delivers maximum impact.
• targeted. In certain areas in the forthcoming financial year a more targeted approach to the implementation of new policies will ensure the maximum possible value for money. This includes supporting the expansion of free school meals to Primary 6 and 7 pupils to support families in receipt of the Scottish Child Payment first and investing in targeted device and connectivity provision for our most disadvantaged households with children.
• reform-focused. Our public sector has expanded as it has dealt with the Brexit crisis, new powers in Social Security and the ongoing response to the COVID‑19 pandemic. It is imperative that we reform our public services to ensure they remain fiscally sustainable, outcomes improve and they support the people and communities who need them most – underpinned by our continued commitment to a policy of no compulsory redundancies. We will address the issues raised in Audit Scotland’s report on ‘The Scottish Government’s workforce challenges’. The public sector workforce is vital for the delivery of a range of services across the country, often in challenging circumstances. Their importance is reflected by the paybill for these staff now exceeding £25 billion annually. Our work on efficiency levers will include a review of grant models in operation, guided by our commitments to Fairer Funding for the Third Sector.

Reform of our public services was central to the strategy we set out in the Resource Spending Review (RSR) in May 2022. We will continue to implement the priority actions identified across the four RSR workstreams in our latest Medium‑Term Financial Strategy: public bodies and public service reform; efficiency levers across digital, estates, procurement shared services and grant management; revenue raising; and pay sustainability.

All parts of the public sector need to respond to the challenges brought about by the fiscal climate and drive forward reform plans that correspond to these workstreams.

These principles inform our investment decisions in 2024‑25 as the Scottish Government allocates its £ 47.4 billion resource budget.

Our £6.25 billion capital budget will continue to be invested across a range of high‑priority areas to help maintain high‑quality public services and achieve a just transition to a net zero economy. Delivering on our medium‑term capital ambitions will not be easy. The UK Government has persistently chosen to underinvest in infrastructure. SFC analysis shows that by 2028‑29 our total capital funding is set to fall by 20 per cent in real terms in comparison to 2023‑24. We lose a fifth of our spending power. This is a bigger cut than we were modelling at the time of our Infrastructure Investment Plan in 2021 and also when we reset the Capital Spending Review in May 2022, and means that it will take longer to deliver all our planned capital projects and programmes – unless the UK Government changes course and increases its investment in capital programmes.

We are therefore utilising the increased capital borrowing limits secured through the Fiscal Framework Review to support the 2024‑25 Budget. Looking ahead the Scottish Government will consider access to alternative sources of capital borrowing. Diversification through bond issuances may provide options for infrastructure financing to be structured more effectively, subject to the necessary due diligence.

Additional supporting material informing this Budget is available online.

Equalities

Equality is about ensuring everyone has equal status, rights and opportunity. It is also the belief that no one should have fewer or poorer chances in life due to:

• protected characteristics; or
• the resources they or their family have.

We know in Scotland this is not always the case and we want to use the money allocated in the Budget to address inequality. Published alongside the Budget, the Equality and Fairer Scotland Budget Statement looks at the impact the Scottish Budget will have on people in Scotland. It provides a detailed assessment from each portfolio, of the equality and socioeconomic issues and how the Budget tackles them. It also summarises that information by characteristic.

This year we have also highlighted a number of case studies where we set out in detail how equality, fairness and human rights have featured as part of the budget process, using six key questions developed in collaboration with the Equality and Human Rights Budget Advisory Group.

Alongside the Budget, the Scottish Government has published a distributional analysis of the impact that tax and social security measures included in the 2024‑25 Scottish Budget had on households of different income levels and characteristics. This shows the Scottish tax and social security system to be progressive, more so than the system in the rest of the UK.

A values‑based approach – delivering Equality, Opportunity, Community

Equality: tackling poverty and protecting people from harm

Our anti‑poverty strategy

Ensuring that the Scottish Government tackles poverty and protect people from harm is even more important given the impact of over a decade of UK Government austerity. One child or household in poverty is one too many in Scotland today. Whilst we know that there is still much more to do this is a Budget which pulls as many levers as it can to prioritise support for low‑income households across Scotland’s communities – centred around a cash‑first approach. As we have been clear, it is only with the full powers of government that we can reduce poverty in our society and truly deliver equality.

Despite the tough choices we have had to make we have sustained, through Scotland’s Social Security system, our values as a Government delivering dignity, fairness and respect. Whilst the majority of social security spend remains reserved to the UK Government we are limited in the support that we can offer.

This is a values‑based budget and as such we are investing just over £1 billion more than the level of funding we are forecast to receive from the UK Government through block grant adjustments for devolved benefits in this budget year alone. We are uprating all Scottish benefits by 6.7 per cent in line with CPI inflation at September 2023. This includes uprating the Scottish Child Payment with inflation, increasing the weekly payment to £26.70 from April 2024, which will benefit over 323,000 under-16s.

Scottish Government modelling suggests that the Scottish Child Payment will reduce the relative child poverty rate by around five percentage points in 2023‑24, lifting around 50,000 children out of poverty. We are also ensuring that Social Security Scotland is resourced to deliver the benefits due to be devolved in 2024‑25.

Finally, our fully funded council tax freeze will keep much needed money in the pockets of struggling families as we know there are few households not feeling the impact of the cost of living crisis. Taking the council tax freeze and our Income Tax policy together, around 79 per cent of Scottish households will pay no more tax as a result.

In this Budget we will:

• commit £6.3 billion in social security benefits and payments, just over £1 billion more than in 2023 ‑24 – delivering our national mission to tackle inequality, enabling disabled people to live full and independent lives, supporting older people to heat their homes in winter, and helping low‑income families with their living costs, in total, supporting over 1.2 million people.
• maintain our commitment to invest £1 billion over the course of this parliament to tackle the poverty-related attainment gap, with £200 million to be distributed in 2024 ‑25 – providing long ‑term targeted investment to improve outcomes for children and young people and help break the cycle of poverty .
• continue to deliver free school meals for all children in Primary 1 – 5 and special schools; invest £43 million of capital funding in estate upgrades to support anti child poverty measures, including funding towards the roll out of Free School Meals for P6 and P7 children in receipt of the Scottish Child Payment from February 2025.
• fund Local Authorities with £1.5 million to cancel school meal debt, with the expectation that all Local Authorities follow the COSLA guidance on school meal debt thereafter.
• invest £10 million capital in targeted device and connectivity provision for our most disadvantaged households with children, bringing a range of benefits for families struggling with the cost of living crisis while also tackling digital exclusion amongst our most deprived learners.
• deliver an inflationary increase to the school clothing grant.
• expand the innovative childminder recruitment and retention pilots to grow this essential part of the workforce by 1,000 more by 2026‑27.
• keep The Promise to Scotland’s care‑experienced children and young people, continuing to delivery of the Whole Family Wellbeing programme – providing £50 million in investment in holistic family support across Children’s Services Planning Partnerships and working with The Promise Scotland, other partners and potential investors to identify options for investment and disinvestment that support better outcomes.
• invest up to £90 million in devolved employability services in 2024‑25 with a commitment to future multi‑year funding to provide much needed certainty to the sector and for the people accessing our services, with services targeted at supporting those facing structural barriers to entering employment – including parents, disabled people, those with long term health conditions and ethnic minorities.
• invest £556 million in the Affordable Housing Supply Programme, enabling affordable housing providers to deliver homes for social rent, mid‑market rent, and low‑cost home ownership in communities across Scotland, and invest over £90 million in Discretionary Housing Payments.
• invest £35 million in specific action to end homelessness and reduce the number of households living in temporary accommodation, in addition to homelessness funding provided through the local government settlement.

Opportunity: Building a fair, green and growing economy

Tackling the climate emergency head on

The twin crises of climate change and biodiversity loss represent the existential threat of our times. We are already witnessing the devastating impacts across the world, often disproportionately affecting the poorest and those who have contributed the least to causing them.

We must reduce our emissions to limit these future impacts, deal with the consequences of global climate change here and now and restore our natural environment.

Despite the difficult financial times, this Budget supports our commitment to scale up renewable energy, restore Scotland’s natural environment, expand our public transport and active travel networks, and support a step change in how we heat our homes. Not only are investments in these areas vital to our net zero transition, but they will support doing this in a just and equitable way, unlocking other benefits for business and society – like supporting the creation of new jobs and industries, and improving health outcomes through warmer homes.

We cannot achieve net zero targets using public funding alone. As we made clear in our response to the recommendations of First Minister’s Investor Panel, achieving our net zero targets will require public and private investment on an unprecedented scale. We are committed to acting on the Panel’s recommendations to attract the scale of capital required to achieve our ambition, and to working with public and private partners to make Scotland more investor friendly. Our Green Industrial Strategy will set out our approach to working with businesses, investors and workers to realise the enormous economic opportunities of the global transition to net zero.

Alongside investing in adapting those areas in Scotland most vulnerable to the changing climate, such as our water and sewerage services, roads and railways and flood resilience, we continue to call on other nations to join us in supporting communities in the Global South who continue to pay the price for the impacts of climate change.

Sustainability remains central to this approach, working to transform future farming activity, deliver our Blue Economy Vision, Fisheries Management Strategy and Vision for Sustainable Aquaculture, and invest in peatland restoration, woodland creation and forest management.

By putting people at the heart of climate change policy, we can achieve net zero more quickly, more effectively and more fairly – but we have to go faster and we have to go further and that is precisely what this Budget does.

Delivering Growth with a purpose

Businesses are critical to creating good jobs, delivering fair wages, expanding Scotland’s tax base and providing the revenue for us to tackle poverty and improve our public services.

This Budget and the New Deal for Business support delivery of our National Strategy for Economic Transformation which aims to deliver fairer, greener prosperity for all of Scotland’s people and places, and to make our economy more sustainable and resilient in

the longer term. Significant progress has been made including the roll out of Techscalers, green energy funding and 44,000 connections delivered to date through the R100 broadband programme.

We will complete a full evaluation of the impact of Fair Work criteria applied to Scottish Government funding, building on our commitment to further extend Fair Work conditionality, with clear standards and minimum requirements to cover all forms of Scottish Government support. We are committed to exploring all steps that can be taken to strengthen our Fair Work agenda. This will include exploring whether there is potential, within the bounds of the current devolved settlement to prohibit the allocation of Scottish Government funding to, or procurement from, organisations with poor employment practises, such as unpaid trial shifts.

The transformational power of our culture is immense. It makes Scotland a more desirable, diverse, and dynamic place to live. It supports businesses across our economy by creating highly skilled jobs and it draws people from all of the world who want to come and experience our rich culture first hand. Continuing to harness this potential is essential if we are to deliver for the people of Scotland and achieve the Government’s key objectives in this Budget. The First Minister has shown the Scottish Government’s confidence in the culture sector by pledging to increase funding for arts and culture so that it is at least £100 million more in five years’ time.

In this Budget we will:

• spend nearly £2.5 billion on public transport to support our bus, rail and ferry networks, ensuring there is a viable alternative to car use for those who need it and for people to made sustainable choices, including investing more than £425 million in bus services via our Network Support Grant and our under-22 and Older and Disabled Persons concessionary travel schemes.
• as part of the £2.5 billion, invest £434 million in supporting our Island communities via provision of Ferry, Port and Harbour services and investment, and £1.6 billion on rail to support the ScotRail and Caledonian Sleeper passenger rail services as well as operate, maintain, renew and enhance our rail infrastructure.
• invest £220 million in Active Travel to continue increasing our investment in walking, wheeling and cycling.
• boost investment in digital connectivity from £93 million to £140 million, delivering critical infrastructure for a green and growing economy. This includes connecting over 114,000 more homes and businesses through the R100 broadband programmes, extending the fibre backbone that will enable Scotland’s businesses to grow and support our ambitions for Scotland to become a green data hosting location.
• provide £358 million to continue to accelerate energy efficiency upgrades and installation of clean heating systems.
• help protect and maintain peatlands and increase woodland creation, supported by an investment of £129 million, and continue to protect our natural environment and halt habitat and biodiversity loss through £29 million for nature restoration.
• invest £49 million to make progress in Scotland’s transition to a circular economy and programmes to promote re‑use of our resources and reduce consumption modernise recycling and decarbonise the disposal of waste.
• support resourcing of the planning service, recognising its importance in enabling quality development and infrastructure delivery. We will work in partnership with local authorities and the development sector to find sustainable solutions. To inform this, a consultation paper, setting out options to accelerate planning, will be published in early 2024.
• progress the next phase of the A9 dualling programme, including work on the Tomatin to Moy section to commence in 2024‑25, and continue critical work on the A83 Rest and Be Thankful medium‑term solution.
• invest nearly £67 million, through the Scottish Government, our enterprise agencies and the Scottish National Investment Bank, to kickstart our commitment of up to £500 million over five years to leverage private investment in ports, manufacturing and assembly work to support a thriving offshore wind supply chain and associated jobs.
• provide the Scottish National Investment Bank with £177 million so that it can continue to invest in Scottish businesses, projects and communities across all three of the missions set for it by Scottish Ministers: Net Zero, place and innovation – building on the £246 million allocated by the Scottish Government in the previous financial year.
• place entrepreneurship at the heart of our economic strategy by investing £9 million to expand our Techscaler programme, supporting Scotland’s best start‑ups with world‑class mentoring and commercial education.
• continue to maintain our budget commitment to the long term £1.9 billion City Region and Regional Growth Deals programme by committing over £80 million this year for investment in, for example, commercial development, housing, active travel, transport and digital improvements, as well as projects to support innovation, skills and tourism. With the final two deals in Falkirk and Argyll and Bute moving into delivery in 2024 the programme is now achieving for people right across Scotland.
• maintaining a competitive non‑domestic rates regime by ensuring that over 95 per cent continue to be liable for the lowest non‑domestic rate in the UK and that over 100,000 properties are taken out of rates altogether.
• offer 100 per cent relief in 2024‑25 for hospitality businesses located on islands – as defined by the Islands (Scotland) Act 2018 and capped at £110,000 per business.
• maintaining the Small Business Bonus Scheme – the most generous small business rates relief in the UK.
• provide the same level of support through direct payments to farmers and crofters that was available pre‑Brexit and additional funding to support farmers, crofters and land managers to transition to a new future support framework, the most generous package of support in the UK – recognising the vital role agriculture plays in the rural economy, while also creating the opportunity to become more productive and sustainable.
• fund activities in Scotland’s most fragile rural, coastal, and island communities, which have a direct and critical role in supporting them to thrive, preventing depopulation by encouraging and supporting people to continue to live and work on the land and at sea – including supporting young people to stay in rural and island communities, to gain skills and employment in rural industries.
• increase funding for culture and heritage this year by £15.8 million, the first step on the route to investing at least £100 million more in arts and culture by 2028‑29 – restoring £6.6m to Creative Scotland for their utilisation of reserves and providing a further £6.6 million to offset their shortfall in National Lottery funding. In addition, we are delivering a 3 per cent inflationary increase for our National Performing Companies and £0.8 million to sustain the V&A Dundee.
• subject to due diligence, consider the options for a Scottish Government bond issuance in the latter half of 2025‑26.

Community: Delivering efficient and effective public services

Healthier Communities

While the UK Government have chosen to prioritise tax cuts at the expense of the NHS and Public Services, our values and therefore our choices are very different. That is why we are choosing to invest more than £19.5 billion in Health and Social Care in 2024-25, giving our NHS the protection of an uplift above real terms in the face of UK Government austerity by investing over half a billion in our frontline boards – taking total investment to £13.2 billion in the year ahead.

The Autumn Statement delivered a worst‑case scenario for our National Health Service. The UK Government’s spending plans delivers a real terms cut to NHS England’s budget in 2024‑25, and has not provided any funding whatsoever to meet the costs of their 2023‑24 NHS pay deals. Due to the nature of the devolved settlement the UK Government’s decisions towards the Health budget in England have a direct consequence for available funding for Scotland.

The £10.8 million of health consequentials from the Autumn Statement is sufficient to operate NHS Scotland for around five hours in a year. Simply, we will not follow the UK Government approach of cutting NHS spending in real terms. The consequence of this is that we are unable to provide as much support to the business sector as we may otherwise have chosen to do, but investing Scotland’s NHS is a non‑negotiable for this government.

That’s why we are delivering an increase of over £550 million to NHS frontline Boards - a 4.3 per cent uplift, taking total investment to over £13.2 billion. Against the challenging economic and financial context, we are taking the difficult and necessary decisions to ensure continued investment in health and social care services.

We are also focussing on how we deliver best for our communities with a continued awareness of the importance of prevention, and an approach designed to respond effectively and rapidly to known population health challenges.

We continue to deliver on our objectives to improve the health of Scotland’s nation, providing increased investment for NHS Boards, and remain committed to maximising resources and productivity to improve waiting times, alongside a continued focus to improve population health and outcomes through investment in quality community services, vaccination and screening. We are also working towards the introduction of a National Care Service so that everyone has access to consistently high‑quality social care, whenever they need it. Getting this right will remove barriers, tackle inequalities and allow people choice, easing the pressure on our NHS and continue the integration of community health and social care support.

Building a healthier nation, however, does not solely rest with health and social care services and our continued focus on reform activity, particularly prevention, must therefore be complemented by collective action across government, public agencies and the third and private sector to tackle the social determinants of health – including employment, income, housing and the environment.

Locally Empowered Communities

Partnership working, particularly with Local Government, is central to how we will deliver efficient and effective public services that meet the needs of everyone in Scotland. The Verity House Agreement, our agreement with Local Government, is helping to redefine the relationship between the Scottish Government and Local Government, setting out our shared priorities, how we will work together, and the principles which underpin our relationship.

This Budget is the next step in that process and displays our commitment to that partnership by reducing levels of ringfenced and directed expenditure by baselining almost £1 billion of funding across Health, Education, Justice, Net Zero and Social Justice, giving authority and autonomy to local partners to achieve the outcomes we share in a way that best meets the needs of local communities.

We have taken this step as a demonstration of the Scottish Government’s commitment to the Verity House Agreement in advance of reaching agreement to an assurance and accountability framework. We will continue to work with local government to develop the necessary assurance and accountability arrangements to go further on this commitment and provide greater flexibility to councils in future years.

This Budget delivers record funding of almost £13.9 billion to local authorities. Through our partnership with Local Government under the Verity House Agreement, we will work with COSLA to empower Councils through a new fiscal framework which also increases discretion to determine and set fees and charges locally. In the coming year this will include joint work to agree next steps following the recently closed consultation on building warrant and verification fees, and a consultation on planning fees to launch in early 2024. We are also allocating £144 million of funding to councils, who agree, to fully fund a council tax freeze in 2024-25 – combined with the other support being provided to local government this will increase their overall funding by six per cent since the last budget.

Our fully funded council tax freeze will help struggling households as we know there are few not dealing with the impact of the cost of living crisis – and taking the council tax freeze and our Income Tax policy together, around 79 per cent of Scottish households will pay no more tax as a result.

We have also successfully passed legislation to introduce new powers enabling councils to charge up to double the full rate of council tax on second homes. Councils will be able to increase the charges from 1 April 2024 that will enable up to an extra £35 million to be raised across all Local Authorities – subject to uptake and behaviour change.

We will also explore options in respect of other fees and charges which are currently levied locally but set nationally, with a view to further empowering councils in these areas.

Educated Communities

Delivering excellence and equity in Scottish education remains a top priority for the Scottish Government. This requires strong leadership and meaningful engagement with the students, teachers, families, support staff and communities that rely on our education system. It must be delivered in collaboration with our partners – parents and carers, Local Government and the third sector – in delivering an education system that works for all of Scotland’s young people and adult learners.

We remain committed to investing £1 billion over the course of this parliament to tackle the poverty-related attainment gap. This long term targeted investment improves outcomes for children and young people and helps break the cycle of poverty. As part of this, £130 million Pupil Equity Funding will continue to empower 97 per cent of headteachers across Scotland to invest in the best approaches to improving literacy, numeracy and health and wellbeing of the children and young people in their schools.

We are taking action to support our colleges, universities and skills system with over £2.4 billion of investment, including protecting free tuition and driving forward our commitment to Widening Access. This will maintain Scotland’s reputation for world‑leading research; provide opportunities for people to learn and develop their skills through further and higher education and apprenticeships; and provide vital financial support to students to support them in completing their studies in the face of significant cost of living pressures.

Safer Communities

Genuine equality and opportunity are dependent on ensuring we live in a just, safe, and resilient Scotland where everyone can reach their potential and contribute fully to society.

The Budget will deliver increased funding to frontline justice organisations, including Police Scotland and Scottish Fire and Rescue service, ensuring the safety and security of the public. The additional investment in Police Scotland will allow them to maintain Officer numbers at levels higher than when we took office in 2007, employing more Police Officers per head than other parts of the UK.

This Budget provides a stable basis from which to improve the delivery of justice public services, ensuring greater efficiency through our Blue Lights Collaboration and Digital Evidence Sharing Capability project.

It will support the justice sector to deliver person‑centred and trauma ‑informed justice services for Victims and Witnesses and support the continuation of the Court Recovery Programme to reduce waiting times for justice.

We will continue to invest in our prisons, with increased capital investment to respond to the challenges of the inflationary environment, and in our Community Justice Services to continue our shift to use of more community sentences.

In this Budget we will:

• give our NHS the protection of an uplift above real terms in the face of UK Government austerity by investing over half a billion in our frontline boards – taking total investment to £13.2 billion in the year ahead.
• provide over £200 million additional funding in social care to raise pay to £12 per hour for adult social care workers in commissioned services from April 2024 – this means a rise of £2,000 for workers over the course of the financial year, based on a 37.5 hours week.
• reopen the Independent Living Fund to enable up to 1,000 disabled people in Scotland who face the greatest barriers to independent living to access the support they need and deserve to live independent lives.
• invest record funding of almost £13.9 billion in the Local Government Settlement and increase councils’ share of the discretionary budget this year.
• make available an additional £144 million of funding to councils who agree to freeze council tax (equivalent to a five per cent increase), protecting households from the cost of living crisis.
• continue to provide £145.5 million to local authorities to maintain teachers in the system and enable councils to offer permanent contracts to our education workforce.
• maintain our commitment to invest £1 billion over the course of this parliament to tackle the poverty related attainment gap, distributing £200 million in 2024‑25.
• invest over £2.4 billion in our colleges, universities and skills system.
• invest £1.55 billion in policing in 2024‑25, increasing the Scottish Police Authority resource budget by 5.6 per cent – an additional £75.7 million, and providing the resources needed to support frontline service delivery – including key investment priorities including body-worn video.
• increase police core capital funding to £64.6 million, a rise of 12.5 per cent, for investment in the police asset base including its estate, technology and fleet.
• commit an additional £38.6 million to the Scottish Prison Service resource budget, an additional 10 per cent, to meet rising costs linked to the rising prison population, inflation and pay increases.
• invest in the modernisation of the prison estate, providing £167 million in capital funding, progressing much‑needed replacements for HMP Inverness and HMP Barlinnie.
• support Scottish Fire and Rescue Service (SFRS) deliver with a resource uplift of £13.6 million and increasing capital investment by £10.3 million to £43 million, an uplift of 32 per cent – allowing the SFRS to address priorities around decontamination, dignified facilities and bring its estate up to modern standards.