Meeting of the Parliament (Hybrid)

Meeting date: Tuesday, February 16, 2021

Official Report 933KB pdf

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Budget Update

The next item of business is a statement by Kate Forbes on a budget update. The cabinet secretary will take questions at the end of her statement, so there should be no interventions or interruptions.

15:28  

My objectives in this budget statement are to give as much early clarity to businesses, public bodies and communities as I can and to be as transparent as possible.

This is a budget for the nation. It reflects the challenges that face each family and business. However, to deliver certainty, the Parliament must pass the budget. I have met every party, individually and collectively, to help reach an agreement on the 2021-22 Scottish budget. We are still in the throes of a national emergency, and it is important that the Parliament works together to respond to it.

In advance of final allocations in the spring budget revision on 25 February, I can confirm that further 2020-21 non-recurring Covid support will be made available.

There will be £275 million for local government for support that is needed due to pressures from Covid, including in relation to lost income. Councils will have the freedom and flexibility to decide how that money is deployed to support the range of Covid-related pressures that they face, ensuring continuity for the critical services that they provide

There will be £40 million for local government to support the on-going deployment of safety mitigations in our schools. That builds on the £50 million that we previously committed and provides certainty to local government as we proceed with the phased reopening of schools and early learning and childcare settings.

There will be £60 million for further and higher education, which includes £40 million of resource funding to help colleges and universities maintain research activity, protect jobs and help students, and £20 million of additional capital to boost research and knowledge exchange.

There will be £25 million to tackle poverty and inequality. Taken together with projected underspends on wider measures, that will enable us to make two key investments. First, there will be a further £100 Covid hardship payment for children and young people who receive free school meals on the basis of low income. The funding offered will also be extended to children who receive free lunches in early learning and childcare settings.

We know, however, that families with children are not the only people who are struggling financially. Therefore, we will increase by an additional £20 million the funding that is available to councils to tackle financial insecurity in their local areas.

Last but not least, there will be £5.7 million to relieve Covid pressures on forestry.

The United Kingdom Government confirmed this week that we will be provided with a further £873 million in resource, £236 million in capital and £41 million in financial transactions for the financial year 2020-21. Those sums are on top of the previously guaranteed £8.6 billion. That is welcome. Due to our being at a late stage in the financial year, that money can and will be carried over into 2021-22.

The following funding proposals are subject to parliamentary approval of the budget and will be taken forward in the event that our 2021-22 budget assumption of an additional £500 million of Covid consequentials is realised and that requisite funds are available via the Scotland reserve. The fact that the funding is likely to be non-recurring constrains what it can be used for.

When I presented the budget last month, I made it clear that, if resources allowed, I would extend 100 per cent non-domestic rates relief for properties in the retail, hospitality, leisure and aviation sectors to cover all of 2021-22. I am now in a position to provide businesses with that certainty. That meets the number 1 ask of the business community and demonstrates our commitment to supporting the economy. So that resources can be targeted at those who need them most, we are working with councils to ensure that the application process will be live before bills are issued.

In addition to extending 100 per cent rates relief for those sectors, we will continue to give newspaper publishing 100 per cent non-domestic rates relief in 2021-22, with careful consideration of the conditions set out by the National Union of Journalists. We will also defer the removal of charitable rates relief from mainstream independent schools to 1 April 2022.

The impacts of Covid will continue beyond this academic year and we must continue to support a longer-term programme to enable children to catch up on missed education. Therefore, we will provide a further £60 million to support and accelerate that process. That money will be available for purposes that include ensuring that schools have sufficient teaching and support staff to meet the needs of children and young people across Scotland.

We are aware of the financial impact that the pandemic has had on households and want to provide support during this time. I confirm that we will invest an additional £100 million in 2021-22 to help low-income households. We will announce more details of that investment after it has been fully discussed with the Convention of Scottish Local Authorities.

I want to ensure that the UK Government does not claw back any of the support that we provide, for example through reduced benefit payments, and will therefore ask UK ministers to help us help people in hardship during this difficult time.

We know that the mental health impacts of the pandemic will be significant and that the past year has been tough for those with pre-existing mental health conditions. I am today announcing £120 million for a mental health recovery and renewal fund, which takes our total spend on mental health in 2021-22 to in excess of £1.2 billion.

The fund will ensure the delivery of our mental health transition and recovery plan. It includes a headline focus on improving specialist child and adolescent mental health services, addressing long waits and clearing waiting list backlogs. Nearly £10 million will be allocated to speed up waiting lists for adults for psychological therapies. We also recognise the need to focus on supporting people at the earliest possible stage, so we will invest in enhanced community support. We will also provide significant additional support for mental health in primary care settings.

Over the summer period, national health service boards developed new processes for admissions for elective surgery, in line with infection control measures, and in September 2020, elective surgery activity was at around 65 per cent of the level in the previous year. Today, I am also announcing a further £60 million of investment in waiting times recovery to enable NHS boards to start to address the pandemic-induced backlog, remobilise our services and improve access to hospital-based services.

Moving on to capital, I was unable to go as far as I would have liked in supporting the provision of affordable housing, due to cuts in our capital funding from the United Kingdom Government. However, I can now confirm that I will allocate a further £100 million grant and £20 million in financial transactions for affordable housing next year. That means that we will now invest more than £3.5 billion in housing over the next five years, with more than £3.4 billion of that delivering more social and affordable homes in communities across Scotland.

To support a green recovery and help us meet our climate ambitions, I am also allocating today an additional £45 million of capital to heat decarbonisation, energy efficiency and fuel poverty for 2021-22, bringing the total for heat and energy efficiency in the budget to more than £258 million of capital.

I have two further points to make. To support a sustainable economic recovery, I am now proposing an additional £50 million in capital for town centres and 20-minute neighbourhoods. That will bring this year’s investment for the place-based investment programme to £105 million and will support regeneration in local communities.

We know that the tourism sector has suffered deeply due to the pandemic, and we want to support its strong return so that, when the time is right, we can all enjoy the world-class offerings that Scotland has to offer. I am therefore pleased to be able to provide a further £10 million in capital funding specifically for tourism infrastructure in our rural communities next year. That is separate from the doubling of the rural tourism infrastructure fund, as already published in the budget.

Finally, I am also proposing an additional £32 million for local bridges maintenance, on which we will set out further detail shortly, to rebuild and maintain key lifeline bridges such as the Great Bernera bridge, which has been raised with me by Alasdair Allan and Comhairle nan Eilean Siar on several occasions.

In the interests of transparency, I have set out the additional funding at my disposal for next year’s budget and how I wish to deploy it to support our national recovery. I am sure that each party in the chamber will recognise something in my statement today that it has called for. I will continue to work with all parties in the chamber to help deliver a budget for the nation that is fit for these times.

The cabinet secretary will now take questions on the issues raised in her statement. I intend to allow around 20 minutes for questions, after which we will move on to the next item of business.

I thank the cabinet secretary for advance sight of her statement. As she outlined, we have seen additional funding of £1.1 billion coming from the United Kingdom this week, which demonstrates how the broad shoulders of the UK are helping to support Scottish public services, businesses and individuals in these difficult times.

I welcome the various announcements today—in particular, the extension of 100 per cent rates relief for businesses in the retail, hospitality and leisure sectors for the next 12 months, and the extension of rates relief to newspapers. The Scottish Conservatives have been calling for both those issues to be addressed.

I also welcome the additional funds for education, although I fear that they might fall short of what is required, if we are to close the attainment gap and redress some of the damage that has been done over the past year.

Today, I want to ask the finance secretary about business support. Every day I am, like most MSPs, contacted by businesses that are fearful about the future and are running out of cash fast because they are not eligible for existing support funds, which is perhaps because they are still legally permitted to trade, but nevertheless have lost a large amount of their business. Those businesses are being pointed towards the local council discretionary fund, but the payments that are available to them from that source fall far short of recompensing them for the losses that they have suffered, and of giving them the resources that they need in order to survive. Will the finance secretary look again at how direct business support can be provided to businesses that are teetering on the edge and are falling through the gaps in the existing support and funds that are available?

The fact that I am updating the budget just two weeks after publishing the Budget (Scotland) (No 5) Bill illustrates the difficulty of setting a budget while waiting on dribs and drabs of funding from the UK Government, so I gently push back on the notion of the “broad shoulders” of the union. However, I repeat my gratitude for the funding to help us to respond to the pandemic.

I am also appreciative of Murdo Fraser’s welcoming of my statement. As he said, the Tories have publicly asked me to extend non-domestic rates relief, to defer non-domestic rates for independent schools and to increase funding for housing and local government. All that, of course, has been delivered and done in today’s statement. Our having comprehensively met the Conservatives’ asks, all eyes will now be on them. I hope that they will consider passing on that good will to the businesses and households of Scotland by enabling passage of the Budget (Scotland) (No 5) Bill, which provides for on-going support and clarity, which are what the nation needs, right now.

On business support, I agree that we need to keep the support continually under review; that is what I do. The discretionary fund is, of course, by its very nature, discretionary, so it is up to local authorities to decide what they distribute, at what quantum, at what value and how.

On the funding that is available, 94 per cent of business support is live. The grant schemes—bar one—are up and running, and the sectoral schemes are specifically designed to fill gaps in the furlough scheme, the self-employment income support scheme and the strategic fund. We will keep that under review, but we can say quite categorically that we are trying to reach as many as possible of those who have been excluded. I am always willing to go further, where that is possible.

I, too, thank the cabinet secretary for the advance copy of her statement. I whole-heartedly welcome the extension of non-domestic rates relief for many businesses for all of the next financial year—that was a key ask in Labour’s budget priorities—which provides certainty for businesses in the period ahead.

However, the eligibility criteria for business support are too tight and not all the existing money is being spent. For example, 57 per cent of the coronavirus restrictions fund was allocated, but 4,000 applications were rejected. Will the cabinet secretary urgently review the criteria for business support funds, so that more businesses get help?

I also welcome the additional funding for health services, particularly the funding for mental health. However, it falls well short of what is required. In England and Wales, mental health spending is more than 11 per cent of the overall health budget; by comparison, in Scotland it is about 8 per cent of the health budget.

In the light of the increased demand for mental health services for people with existing conditions, never mind those with new mental health problems, will the cabinet secretary commit to a greater percentage share of NHS funding being allocated to such services, as the Royal College of Psychiatrists has called for?

I appreciate the member’s welcoming of a number of points in the budget. Of course, if businesses are to enjoy non-domestic rates relief we will need to get the budget through Parliament. I therefore hope that Scottish Labour will consider very carefully how it can enable that process, so that clarity and certainty can be provided to the very businesses on whose behalf Jackie Baillie has just asked those questions.

We have set out three main ways in which businesses can obtain support. The main one is the strategic framework business fund, which paid out approximately £250 million in January.

Secondly, by establishing sectoral schemes we have tried to reach those who have been excluded from other forms of support. I am always open to reviewing such schemes but, of course, every new one requires additional support—particularly from local government, which distributes it—so it is important that we target it well.

Lastly, the discretionary fund, which has now been quadrupled to £120 million, specifically endeavours to fill all the remaining gaps. Where eligibility criteria can be changed or tweaked, we will do so. However, it is important that we continue to get funding to those who have not yet had any, rather than build on what has already been provided.

Jackie Baillie referred to the additional funding for mental health services, which I heard her welcome. She knows that, if she believes that those services should have a greater percentage share, I am open to hearing all and any proposals. However, Labour will need to prioritise its proposals on matters that currently range from the pay gap to local government, and now mental health. However, I will be more than happy to work with her on those.

I am grateful for advance sight of the cabinet secretary’s statement. In particular, I welcome the additional funding for energy efficiency, which will ensure that a green recovery can be carried out in a way that will save people money in their household budgets.

However, there is a need to go further on achieving such savings much sooner—especially given that there have been fewer than half as many applications for the Scottish child payment as there are eligible children. Is the cabinet secretary continuing to examine other ways in which we can expand eligibility for universal benefits, such as free bus travel and free school meals?

I have appreciated the constructive and on-going discussions that we have had with Patrick Harvie and the Scottish Greens on where the budget could go further. My statement certainly reflects a number of points that he has made. Budget negotiations are normally conducted behind closed doors, but I think that it is important to update Parliament on these matters. I look forward to continued discussions with the Greens on their priorities, particularly on anti-poverty and energy efficiency measures.

I say unequivocally that I am absolutely happy to continue our discussions on universal benefits, including free bus travel. Patrick Harvie will know that the relevant instrument has already been laid to give effect to the proposal that was made in last year’s budget negotiations to secure free bus travel for under-19s. I want to continue to negotiate and to work constructively on where we might go further.

I am pleased that the finance secretary has returned to the chamber to make a further statement, following the allocation of additional resources from the UK Treasury.

The cabinet secretary knows that Scottish Liberal Democrats will negotiate on the budget proposals and will work constructively and seriously to reach an agreement. We must cut waiting times for mental health services and improve their delivery, which is why members will debate that very subject tomorrow. The new funding for mental health services that she has announced today will help to meet that challenge.

We also welcome the additional allocations for business, newspapers, the NHS, energy efficiency and our hard-pressed councils and education services. However, will the cabinet secretary say whether the amount of council funding that she has just announced matches the shortfall that COSLA identified?

I thank Willie Rennie for his commitment to working constructively. He asked for three matters to be addressed in the budget bill, and all three have been reflected in the statement that I have just made. They are: an additional £100 million for mental health services, more money for education to help young people, and further support for business.

On his specific question on local government, I say that the £275 million that I have announced has no strings attached: it is entirely for local authorities to determine how they will spend it.

The caveat that I would make is that it is non-recurring funding; it is to help with Covid-related pressures. In terms of working with local government, I am sure that local government—a bit like the Scottish Government—can always identify additional pressures and additional ways that it would like to help communities and households. However, I think that it was already a fair settlement and a substantial increase of £275 million will really help and will go a long way.

Thank you very much. Can I encourage succinct questions and answers to allow as many questioners in as possible?

I welcome the announcement of an additional £100 million for low-income households, which I know many of my constituents in Renfrewshire South stand to benefit from. However, I am concerned that there is a risk of a clawback from the Treasury via the benefits system. Will the cabinet secretary urge the UK Government to make sure that all that money goes into the pockets of those who need it most and is not clawed back via the benefits system?

We have previously received reassurances from Her Majesty’s Revenue and Customs and the Department for Work and Pensions with regard to the exceptional steps that have been taken to support people who have been impacted by Covid this year. On that basis, I understand that the funding that is provided through the Covid spring hardship payment and through support offered by local authorities to tackle financial insecurity will not be taken into account for benefit or tax purposes—a point that is also covered by the fiscal framework. As we develop proposals for the £100 million of support next year, we ask the UK Government to extend those reassurances to ensure that the money is not given with one hand and then taken away by the other. We will engage with our counterparts in the UK Government to seek that assurance.

The cabinet secretary has just announced funds for tourism recovery. That is welcome, but any benefit will be hampered by the Scottish National Party’s plans for heavy-handed new regulations on short-term lets. The Scottish Guest House and B&B Alliance has said that the plans are the

“final straw in what has been the most depressing of years”.

Does the cabinet secretary recognise that the best way to help Scotland’s bed and breakfast sector recover is to scrap plans to introduce these cumbersome regulations?

I am not sure that that is related to the capital that I have just announced but, on the specific point, the member will know that Kevin Stewart has announced a working group with sector representatives to look at the concerns that have been raised and to actively work on solutions, including amending legislation where that is required.

However, I will make two further points. First, the funding for tourism infrastructure reflects the challenges that have been faced by a number of local communities, particularly in rural areas, that were overwhelmed in some cases by campers and camper vans, and the capital will go a long way to ensuring that there is sufficient infrastructure in place. Secondly, I would have expected Maurice Golden to welcome the fact that we have just launched funding for B and Bs that pay council tax. They will get the equivalent of the strategic framework business fund, which I am not sure is replicated to the same extent elsewhere in the UK.

As we all know, children’s education has been significantly impacted as a result of the coronavirus pandemic, so can the cabinet secretary provide any further detail at this stage on how the very welcome additional funding that she has announced will be used to help children in my Cowdenbeath constituency—and, indeed, children across Scotland—catch up with their missed education?

I think that the funding will certainly help Annabelle Ewing’s Cowdenbeath constituents. Clearly, the impact on young people has been substantial. The £60 million of funding will support local authorities and schools to take action, including on issues such as learning loss, and health and wellbeing. As I set out in my statement, the funding will be available for purposes that include ensuring that all levels of teaching and support staff in schools can continue to meet the needs of children, including those in Cowdenbeath. We will work alongside local government to ensure that the investment delivers maximum impact and we will update Parliament on the detail in due course.

Today’s additional money for councils does not address the additional Covid spend and the loss of income reported to us by COSLA, nor the fact that councils have already been hit by £937 million of cuts to non-core services over the past few years—services that will be crucial to community and economic recovery from Covid. Will the Scottish Government use its underspend and UK consequentials to deliver the investment that is needed and will it make sure that the council tax freeze on offer is baked into next year’s budget?

I am unaware of the underspend that Sarah Boyack is referring to, but the funding that I have announced will contribute significantly to meeting the challenges that local government is facing. Certainly, from the figures that we have seen for loss of income, the funding will go a long way. A few weeks ago, when I announced the budget, I indicated that there would be an increase in the funding for loss of income. The funding that has been announced today more than doubles the funding that is available for loss of income, so it will go a long way.

For many local authorities, next year’s budget is more challenging, because of the on-going impact of the pandemic. We will work with COSLA to ensure that we understand the impact and provide funding where it is required.

I welcome the cabinet secretary’s responsiveness to the arguments that I have, perhaps rather unsubtly, been making about the need to replace the bridge to Bernera, which is an island off an island. Can she provide information on the likely timescales for when we will get further details on the funding for bridges more generally, which she has mentioned?

I will update Parliament as soon as possible with the specifics. Alasdair Allan has been active in raising concerns about that bridge, and I have met Comhairle nan Eilean Siar on the matter. I hope that the fund will provide essential support for maintaining lifeline services such as that bridge in the Western Isles and bridges elsewhere.

On 9 December, the Parliament voted by a majority—with 59 votes in favour—for free school meals for primary pupils to commence in the new financial year. Will the cabinet secretary confirm that the Government is respecting that decision? Now that the funding is available, will today’s announcement deliver that measure, in line with the Parliament’s wishes?

I always think that it is fascinating that the Tories here can vote for free school meals when the Tories south of the border vote against them.

I refer the member to two particular funds in the funding that I have announced today. One is to provide additional support to families who are in need, while maintaining our commitment to free school meals. Secondly, there is support to help young people with regard to education, which is also a Tory ask.

I was pleased to hear that the finance secretary will invest £100 million in low-income households in the year ahead, including in my Greenock and Inverclyde constituency. Can she provide further detail on whether that support is intended to apply more widely than to low-income families who are also being helped through an additional hardship payment?

Stuart McMillan has regularly raised concerns on behalf of his constituency about low-income families and the impact of deprivation with Covid on top of it. We anticipate that we will use the council tax reduction scheme to identify individuals who could benefit from the additional support, and we will work closely with local authorities and COSLA to deliver that support. As with all these things, I will provide the specific details in due course, but I hope that that goes some way to helping Stuart McMillan to answer questions from his constituents in light of the huge impacts of the economic crisis and the health pandemic.

I note the increase of £45 million of capital for heat decarbonisation, energy efficiency and fuel poverty. Although today’s announcement is a welcome and good step, will the cabinet secretary consider extending the specific energy efficiency budget to £244 million in order to make significant inroads into fuel poverty, bring local jobs across Scotland and lower our emissions, as Scottish Labour and a number of non-governmental organisations and charities called for in the budget?

That is another request from Labour to add to its long list of requests for changes in the budget. I am of course open to many requests from Labour, but they all need to be costed and then prioritised.

We recognise that energy efficiency is a way of not only reaching our statutory fuel poverty and climate change targets but revitalising the economy. We have already committed to allocating £1.6 billion of capital to heat and energy efficiency over the next five years. The additional £45 million will go a long way to help with next year’s budget and ensure that there is sufficient capital in place to deliver on schemes, including energy efficient Scotland and the low-carbon infrastructure transition programme.

Additional consequential funding is always welcome. However, does the cabinet secretary agree that this Parliament should not have to find out about consequentials weeks or even months after the UK Government’s associated policy decisions have been made? Does she therefore agree that it is now urgent that further fiscal flexibilities are provided to Scotland to enable us to respond more effectively to this crisis?

The principle there is sound. In developing and building this budget, I was quite clear that I did not have all the information available to me. We built a budget that was fair to households and businesses and ensured our response to the on-going pandemic. However, the fact that I am standing here a matter of weeks after that process and in advance of stage 1 of the Budget (Scotland) (No 5) Bill demonstrates that getting information in dribs and drabs does the people of Scotland no service, never mind this Parliament and this Government. I am always grateful for additional money, because it can help us to meet some of the needs that are out there. Some additional flexibilities that had cross-party support would go a long way in helping us to smooth over some of those risks, but in the absence of any flexibilities, we just have to deal with the situation as we find it.

That concludes questions on the statement. My apologies to late bidders whose questions could not be called due to lack of time.