Scotland budget announcement 2020-21

Posted On: 7th February 2020

The Scottish Government has announced its budget for the year 2020/21, with a live announcement by Kate Forbes MSP, Minister of Public Finance and the Digital Economy, to the Scottish Parliament on 6 February 2020.

This Budget comes over a month earlier than the UK budget announcement, set to be delivered by the Chancellor of the Exchequer, Sajid Javid, on 11 March. This is unusual. The Scottish government usually waits for the UK Budget to announce UK funding for Scotland before finalising its own spending plans. However, it was decided that 11 March fell too close to the start of the new financial year for this to be practicable. UK funding for Scotland is expected to be increased from last year, with the Conservative party stating there will be an extra £1.1 billion allocated to Scotland.

Kate Forbes described the Budget as setting out a “bold and ambitious programme” with “wellbeing and fairness at its very heart.” The main figures in the Scotland Budget are highlighted below, with climate change, public services and income tax forming key areas of spending and investment.

Scotland budget – facts and figures

Climate emergency

The Budget focused heavily on measures to tackle climate change and transform Scotland to implement new greener initiatives. As expected, the climate emergency formed perhaps the largest topic in the Budget announcement speech, with key spending figures in the following areas:

  • £1.8 billion of capital investment in specific products to reduce carbon emissions. This is an increase of £500 million compared with last year.
  • The Scottish Government committed to over a quarter of a billion (£250 million) dedicated to peatland restoration over the next ten years, to spend on large restoration projects which will enhance biodiversity in some of the most important habitats in Europe and generate more jobs in rural communities. This includes £20 million in 2020.
  • £200 million of revenue-financed investment to local authorities to provide an incentive to use the assets available to reduce emissions and boost the Scottish economy through the green growth accelerator.
  • Investment of more than £64 million to support the commitment to plant 12,000 hectares of forestry, with the aim to reach 15,000 hectares by the mid-2020s
  • £120 million for a heat transition deal, to recognise the need to reduce the carbon use in our buildings. This will allow Scotland to seize the huge economic opportunity renewable heat will present – delivering thousands of new green jobs.
  • £2 billion ring-fenced for transformational infrastructure investment for measures to support the delivery of the Climate Change plan during the next Scottish parliamentary term.

It is worth noting the figures above are not the only investment allocated to tackle climate change. However, they are the highlights of spending in an increasingly important area which the Scottish government has clearly prioritised. This view is expressed by Kate Forbes MSP during her Budget speech:

“These measures alone represent a substantial plan of action for the year ahead, but we must, and we will, go further. The climate emergency demands immediate action, but it also requires genuine long term commitment if we are to deliver against our statutory emissions reduction targets.”

Public services

Forming another much anticipated area of the budget, the Scottish government has pledged, for the first time ever, funding of more than £15 billion for health and care services as well as increased funding to support other key public service areas. This budget will protect and improve these services. Among the principal announcements were:

  • Investment of £9.4 billion in health and social care partnerships
  • £117 million investment in mental health services for all ages and stages of life
  • A real‑terms increase in resource funding for local government, with total overall support given through the settlement of £11.3 billion
  • Delivering an increase of nearly 60% in targeted funding to reduce harm from alcohol and drugs
  • £72 million investment for Police Scotland, which is above the increase the Scottish Government had promised, in order to effectively maintain officer numbers
  • An above real-terms increase of £37 million to the police budget and an additional £6.5 million to support community justice to reduce re-offending
  • An increase in overall funding for rail and bus services by £286 million. This will mean a total of £1.55 billion worth of investment in 2020/21. Investment in active travel will also increase to over £85 million promoting cycle, walking and more sustainable transport.
  • A 3% pay uplift for public sector workers earning up to £80,000.

Income tax

In her speech, Kate Forbes passionately stated that Scotland will continue to remain the lowest taxed part of the UK for income tax, with no increases to income tax this year. However, the Public Finance Minister did state that if there were increases, this would only be in response to the UK Government cutting taxes for higher earners.

  • Scottish income tax is expected to drive £12 billion investment
  • 56% of Scottish taxpayers will pay less than they would if they lived elsewhere the UK in 2020-21.
  • No Scottish taxpayer will pay more income tax than they did last year.

Other areas of investment

  • Infrastructure investment will boost to nearly £1 billion in the first year of the National Infrastructure Mission.
  • £800 million investment in affordable housing to help the Scottish government continue to progress towards the target of 50,000 affordable homes by 2021.
  • £220 million of seed funding for the Scottish National Investment Bank to support its mission to drive the transition to a net-zero carbon economy
  • An estimated £1.4 billion investment to support low-income households, with increased effort to bring 30,000 children out of child poverty.

Grahame Steed, Content, Research and Communications Director at BiP Solutions has recognised the importance of the Scotland budget, in his statement:

“BiP Solutions welcomes the increased investment into public services and infrastructure set out in the Budget – this should not only improve this lives of citizens in Scotland, but also create a significant economic opportunity for all types of business within this diverse supply chain.”

More information on the Scottish Budget can be found on the Scottish Government website.

The UK Budget announcement is coming on 11 March.

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