SECTION 3: Financial Decisions
43. In the face of a decade of UK Government austerity and real terms decreases in our budgets, resourcing any form of EU exit will pose a significant challenge for the Scottish public finances. As leaving the EU was not Scotland’s choice, these costs must be met in full by the UK Government; we should not have to cut public services in order to fund EU exit. It remains our view that no devolved government could fully mitigate all of the impacts of EU exit. Despite repeated calls to the UK Government we have no assurances that further funding will be provided.
44. The money we have received so far is in no way sufficient to meet the costs of a No Deal scenario. Before the outcome of EU exit has been determined, we have already had to spend or commit £98.25 million of the £98.7 million EU exit consequentials received between 2017-18 and 2019-20. Ministers have had to make difficult choices in prioritising this funding, balancing the need for staffing operational activity including negotiations and legislative preparations with supporting stakeholders including businesses, cultural bodies, universities and colleges, local governments and the third sector. Furthermore, we have funded the Prepare for Brexit campaign and provided an additional £1.5m in funding to Fareshare to deal with food insecurity as a direct result of EU exit.
45. The Scottish Government is working with COSLA to ensure that Local Authorities are as prepared as possible. To date, all £1.6 million of funding initially asked for by COSLA, £50,000 per Local Authority, has been agreed.
46. The below table shows spend that the Scottish Government has approved between April 2017 and September 2019, including £98.25 million in resource and capital spend and £350 million in loans to farmers.
|Activity||Approved spend April 2017 – September 2019*||Description|
|Loans to farmers||£350.0m||The National Basic Payment Scheme are Financial Transactions (loans) to farmers to help manage EU exit uncertainty. These will be fully offset by receipt of external grant via the EU or the UK Government.|
|EU Exit related operational and readiness costs||£70.9m||Scottish Government and public body costs on legislation, policy and organisational readiness activity.|
|Police numbers||£17.0m|| The Chief Constable is maintaining circa
400 officers in 2019-20 so that the service has capacity to respond to EU exit-related issues such as protests and civil unrest, should this be required.
|Prepare for Brexit campaign||£2.2m||Scottish Enterprise led campaign to help Scottish businesses prepare for EU exit.|
|Local Authority Co-ordination funding||£1.6m|| £50k per local authority for on-going local
co-ordination work on EU exit preparedness arrangements.
|Brexit Support Grant for SME||£1.5m||£2000 to £4000 grant to help small to medium-sized enterprises in Scotland manage a wide range of EU exit impacts.|
|Supporting community food initiatives||£1.5m||Providing funds to the charity FareShare to increase the help that they give organisations that are responding to food insecurity.|
|Promoting Scotland internationally||£1.4m||Scotland is Now global marketing campaign (£1m), combined with a range of other activity, to promote Scotland as a place to visit, study, work and invest.|
|Health and Social Care||£1.1m||International recruitment Unit (£0.64m), contribution to UK Government response arrangements for medical devices and clinical consumables, wider recruitment efforts, and support to the social care sector.|
|Advice Service and community based support for EU citizens||£0.75m||Establish an advice service (£0.5m) and a ‘Stay in Scotland’ campaign, both aimed at EU citizens currently living in Scotland (£0.25m).|
|Rural industry and marine readiness||£0.3m||Scotland’s Rural College policy development and stakeholder analysis to boost rural industry readiness.|
* actual spend on EU exit preparations in financial years 2017-18 and 2018-19, plus spend approved by Ministers at end September 2019 for the whole of financial year 2019-20.
47. On 1 August the UK Government announced further funding of £2.1 billion
for ‘No Deal’ exit preparations for 2019-20. The Scottish Government will receive £40.7 million in consequentials from the circa £900 million already allocated to individual UK departments. These additional consequentials will partly fund preparation activity set out in this plan, however they will fall a long way short of the total cost.
48. £7 million of this £40.7 million has already been approved to enable local authorities to respond to anticipated increased demand for poverty mitigation measures in the event of a No Deal EU exit on 31 October. This will help address increased pressure on household income and expenditure as the six month period from 31 October will see a rise in household heating costs and covers the Christmas period, when demand for additional support is traditionally high.
49. We have bid for a further £52 million from the UK Government which is the minimum required for preparation activity before 31 October. This request includes funding to support:
- the disproportionate effect of ‘no deal’ on rural communities including ensuring medical support reaches these areas
- increased demand on Marine Scotland compliance activities around Scotland’s coastline
- additional communications to EU citizens living in Scotland
- increased demands on Police Scotland.
50. Without further funding, we will be faced with difficult decisions on the allocation of the limited resources we do have at our disposal. As a responsible government we will direct funding to the priorities most in need. However, to undertake the full range of actions set out in this plan would require significant savings and reprioritisation in 2019-20 and beyond. The 2019-20 budget was prepared on the assumption of the UK leaving the EU with a deal, while the Government does not propose to rebase budget allocations at this stage in the financial year, some reprioritisation within existing resources will be necessary as and when decisions are necessary to activate individual elements of this plan
51. The simplest way to avoid these difficult choices would be for the UK Government to take No Deal off the table immediately/remain within the EU.