Budget Update

– in the Scottish Parliament on 9th December 2020.

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Photo of Christine Grahame Christine Grahame Scottish National Party

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

Photo of Kate Forbes Kate Forbes Scottish National Party

I apologise at the outset for the late advanced sharing of the statement with Opposition members. I have great confidence in them still being able to ask intelligent questions.

I welcome the opportunity to provide a further update on the budget, continuing my commitment to engage with Parliament on the funding that is being provided to support the Covid-19 response following the unprecedented summer and autumn budget revisions. I will also take the opportunity to outline further support for business that will be available in January for hard-pressed companies across a range of sectors.

Since the autumn budget revision, consequential support provided now stands at £8.2 billion. We have drawn down and allocated that funding during the year in response to what has been an exceptional and dynamic set of circumstances. In budget revisions so far, more than £6 billion of funding has been formally allocated, the largest elements being provided to health and business, reflecting the fact that Covid-19 most directly impacts health and the economy.

In line with a letter that I sent to the Finance and Constitution Committee yesterday, I can confirm that we now expect to allocate the remaining £2.2 billion. I must remind Parliament that this, of course, remains a snapshot of a dynamic funding position, with formal allocations planned to be set out in February in the spring budget revision. Taking account of announcements that have been made so far this year, as well as expected requirements to the end of the year, I can confirm that the expected allocations will be as follows.

Around £600 million is to be allocated to health and social care, wider public health initiatives and welfare support. That includes vaccinations, test and trace and the £500 bonus for health and social care workers, plus the winter plan for social protection that helps people to pay for food, heating, warm clothing and shelter.

Second is the support for business and the wider economy totalling £570 million, including funding for the strategic framework, local business support packages, the newly self-employed hardship fund and local authority discretionary business funding. It also includes a new and targeted business support package that I am announcing today.

An estimated £139 million of previously announced funding is to be allocated to local government, bringing the overall support package to councils to more than £1 billion.

Last, but not least, approximately £500 million is to be allocated to support transport services and cover pandemic-related income shortfalls within organisations such as Police Scotland, the Scottish Funding Council and the Scottish Courts and Tribunals Service.

That leaves just over £300 million of Covid-19 resource consequentials formally unallocated. The nature of the Covid-19 outbreak and potential asks for further demand-led spend mean that it is crucial that that funding is held as contingency. We must also consider any further funding requirements relating to the end of the European Union exit transition period on 31 December, with costs being wholly dependent on the final deal to be negotiated by the United Kingdom Government. Allocating that funding as contingency is consistent with the terms of the funding guarantee that was provided by HM Treasury to the devolved Governments, which specified that the funding was to cover the period until March 2021. Of course, with our limited borrowing powers, we do not have the flexibility to increase spend and therefore must manage demand-led expenditure risks within the consequentials provided.

The Scottish Government remains focused on responding concurrently to the public health emergency and the economic emergency that have been caused by the virus. Many businesses that have been affected by pandemic restrictions have been able to access Scottish Government support grants totalling more than £2.3 billion, including the strategic framework business fund’s four-weekly payments, the £15 million second phase of the newly self-employed hardship fund and the £30 million local authority discretionary fund. I know that businesses need and want more support, and we will continue to review and refine our Covid support offer, within available resources.

Today, I am pleased to confirm an allocation of £185 million for new and additional business support in the new year, providing support on a sector-by-sector basis so that it is appropriately targeted. We listen, and have listened, to the voice of business. With a range of partners including local authorities, we are developing grant schemes for hospitality, the events sector, live music and cultural venues, the arts and indoor football centres, and to support our food and drink sector, including £1.8 million for brewers. We will be supporting recovery plans developed in partnership with the construction sector and with the tourism sector, including self-catering, bed and breakfasts and guest houses.

Doing that on a sector-by-sector basis can add complexity, but it ensures that we tailor the support so that it is as effective as possible. The finer detail of each of the schemes will be provided soon, including how to apply in January. Today, I want to highlight a few examples of the types of business that we will support.

I am pleased to say that we will give £1.5 million to travelling showpeople who are ineligible for other support. I pay tribute to Richard Lyle, in particular, for his advocacy for and representation of that sector.

We have allocated £15 million for the wedding sector and supply chain, including wedding photographers, and we will seek to ensure that those who have had little or no support since March are targeted. I am pleased to say that, in developing that approach, we have been working closely with a newly established group that has been formed in the past few weeks to lobby for and represent that important and diverse sector and its supply chain. That collaboration will continue and it is typical of the way in which we work with a range of business bodies to understand and shape the support that best meets the needs of their members within the available resources. They are trusted partners.

There is also £5 million for travel agents, £1.5 million for visitor attractions and almost £6 million for coach companies and tour operators. We will help to support taxi drivers’ fixed costs with a new £19 million fund and a one-off grant that builds on the support that is already available. We will similarly support mobile close-contact services such as hairdressers with one-off grants from a £15 million budget.

Tourism is one of the hardest-hit sectors and I can announce that further support of more than £60 million will be provided. The detail of that package of support is being developed in consultation with the industry and the full details will be announced by Fergus Ewing.

Today’s announcement will help local authorities to begin to make their individual decisions about how they will use the £30 million discretionary fund that I referenced earlier, taking account of the sectors that we are supporting and making considered local determinations on where to target their new resources.

The distribution of the discretionary fund will be a decision for each local authority—that is the whole purpose of it. We have allocated the money and agreed high-level guidance; it is now over to local authority leaders to determine how to spend it on local needs. I am grateful to local authorities across the country that have been working with us as key design and delivery partners, with a shared determination to do all that we can to support businesses, jobs and communities.

Before I conclude, I want to make one further comment. The first month of any new year is always challenging for the hospitality sector. Demand tends to be low following the festive season. In recognition of that, additional one-off payments will be available to the hospitality businesses that have played such a significant role in the fight against the virus and have been impacted so severely. The grants will be of £2,000 or £3,000, based on rateable values, and that support, which is valued at £30 million, will also extend to our hotels and be on top of any payment that is due in January as part of the strategic framework business fund, in recognition of the challenges that many are facing at this time.

Budget revisions to date, as well as today’s statement, illustrate my continued transparent engagement with Parliament regarding our fiscal response to Covid-19. Within our available budgetary envelope, we have looked to mitigate the impact of Covid as far as possible and provided support based on need in Scotland in areas such as health and wider public health initiatives, welfare support, continued provision of transport and the economy.

Today, we continue to illustrate our support for the economy and our hard-hit businesses with further support of £185 million across impacted sectors. A statement such as this is not the place to get into minute detail on each of the funds available, but I encourage businesses to keep an eye on the findbusinesssupport.gov.scot website for details in the coming days—and in January, in particular.

Photo of Murdo Fraser Murdo Fraser Conservative

I thank the cabinet secretary for advance sight of her statement—albeit on a rather shorter timescale than what we are used to, but nevertheless we received it—and for the statement itself.

The UK Treasury has guaranteed an additional £8.2 billion—an unprecedented sum—to support public services, businesses and individuals in Scotland that have been impacted by the Covid-19 pandemic. That money does no one any good while it is sitting in the Scottish Government’s bank accounts, and we have consistently called for it to be paid out and for an accounting, so I welcome the breakdown that we have heard today. I welcome the commitments that have been made, specifically the sum of £15 million for the wedding sector, which we had called for, and the money for the travel and tourism sector, taxi companies and all the other initiatives.

I have three specific questions in relation to what has been announced today. First, can the cabinet secretary confirm that the tourism money will be available to support providers of self-catering holiday accommodation? She said that details will be announced in due course by Fergus Ewing. When can we expect that announcement? Many people are waiting for confirmation of when those funds might be available.

Secondly, the cabinet secretary referred to the £30 million discretionary fund for local councils. I know that local councils have now been waiting for three weeks to get details of how the fund will operate. How much discretion will they have in how the money is allocated? If tourism is a major part of the local economy, for example, will a council be able to allocate funds to that sector, notwithstanding the fact that a dedicated sum for tourism is already accounted for—

The Deputy Presiding Officer:

Please ask your question quickly, Mr Fraser.

Photo of Murdo Fraser Murdo Fraser Conservative

Thirdly—and quickly, Presiding Officer—we have, in the past few days, heard welcome commitments from large retailers such as Tesco and Morrisons to hand back some of the non-domestic rates refunds that they have received this year. That is a good example of responsible capitalism. Does the cabinet secretary have a figure for the amount of money that is expected to be recouped? Has that money been allocated as yet?

Photo of Kate Forbes Kate Forbes Scottish National Party

I thank the member for that series of questions; I will answer them as quickly as I can.

On the tourism money, our approach to date has always been to design those schemes in partnership with the individual sectors. For example, the hotel recovery group was set up in conjunction with the Scottish Tourism Alliance, and on self-catering, we have worked in conjunction with the Association of Scotland’s Self-Caterers. We intend to take the same approach now. I referred to self-catering because we intend to provide funding to self-catering as part of the money that was announced.

With regard to the discretionary fund, one of the reasons for making an announcement today was to give councils an indication of where we will provide sector-based support so that they can use their discretionary funding for other purposes. That money needs to be targeted to their local area. For example, business need on the Isle of Skye will be different from business need in the middle of Glasgow, so we want to allow maximum discretion. During the past three weeks, the Convention of Scottish Local Authorities has agreed internally how it wants to distribute the fund, and we have then agreed the general guidance, which is as high level as possible.

On the non-domestic rates relief money that will be returned to us, I wrote today to the Chief Secretary to the Treasury to seek urgent clarity. If those funds are to be collected centrally by the Treasury, we need clarity on how they will be redistributed to the devolved Governments. In the past few days, there have been a lot of calls with the Treasury to understand what is happening. Not all devolved Governments can actually receive the money—it is essentially a donation, and donations are not normally made to Governments, so clarity is required on how those refunds will be made.

As I have done in the past and will do again, I encourage anyone who is in a similarly resilient position to that of Tesco and other supermarkets to consider whether they can contribute to those funds.

Photo of Jackie Baillie Jackie Baillie Labour

A month ago, Scottish Labour demanded additional resource for the hospitality and tourism sector, and last week we asked for support for small businesses, so I am pleased that the Scottish Government has now acted.

However, many businesses have received no help from the coronavirus restrictions fund or the hardship fund, and no support from the strategic framework business fund, because the criteria are too tight. Most supply-chain businesses, and those without premises, have been excluded, so I welcome the flexibility on criteria.

How much has been spent on those funds so far? Why do businesses have to wait until January to get support when many of them are struggling and going to the wall now? Does the cabinet secretary believe that that support will be enough to help businesses to survive?

Photo of Kate Forbes Kate Forbes Scottish National Party

I will start with the last question first. As I have said repeatedly, I recognise that those funds and grants will never replace 100 per cent of lost income. The challenge now is to try and get the economy back open, running and trading by suppressing the virus. That is our objective.

Members from across the chamber have made calls on additional support for business, so I am pleased to hear Labour welcoming today’s announcement.

Regarding the funds that have been paid, local authorities are working almost night and day to get those funds out to businesses that need them. The funding that I have announced is over and above the strategic framework of recurring grants, and some of the announcements have already started to be made. The member mentioned supply chains, and she may recall the announcement on Friday of additional support for wholesalers, who can apply for specific support where their income has been reduced.

The other funds will be available as quickly as possible. There have been many calls to replicate what the Welsh Government is doing—it is making most of its funding available in January, too. That allows the strategic framework businesses to receive funding from local authorities while we ensure that any additional designing that needs to go into the schemes, in conjunction with business organisations, can be done, and that the schemes are ready to go. January is indeed well known as one of the hardest months for hospitality.

The Deputy Presiding Officer:

Twelve members wish to ask questions. They should be succinct, because we must finish this item of business at 3.20.

Photo of Patrick Harvie Patrick Harvie Green

On 18 November, Parliament voted for a motion that called on the Government to deliver funding for the purpose of recruiting at least an additional 2,000 full-time teachers. Given teachers’ additional workload, that is clearly urgent. The cabinet secretary’s statement did not include that funding. Does that mean that the decision has been taken not to comply with the will of Parliament on that, or is an announcement imminent on providing the funding that has been clearly called for?

The Deputy Presiding Officer:

I am not sure whether that is a question for you, cabinet secretary, but it is up to you.

Photo of Kate Forbes Kate Forbes Scottish National Party

I am happy to answer, in so far as I believe that the Deputy First Minister, who is sitting next to me, is taking part in a debate next.

The funding breakdown that I have provided to date includes not just funding for businesses but, under the terms of the letter that was sent yesterday to the Finance and Constitution Committee, funding for other areas. Additional funding has already been made available to the education sector to try and deal with the additional challenges that it faces.

Photo of Willie Rennie Willie Rennie Liberal Democrat

We have worked constructively with the finance secretary on additional support for businesses, and I am glad that she has listened to many of the specific pleas, including on travel agencies and self-catering, and also regarding taxi companies. What is not so clear is the real value of that support per business. I know that the cabinet secretary will probably not go into the fine detail, but could we have a rough estimate of how much each business could expect to receive? Given that many businesses are already on their knees, can she guarantee or give some kind of commitment that the money will get out the door pretty quickly?

Photo of Kate Forbes Kate Forbes Scottish National Party

On that last point, I can confirm that we will get that money out as quickly as is humanly possible, so as to provide that support.

As I said in my statement, one of the challenges with acting on a sectoral basis is that it is more complex, although it allows us to use every penny on the hardest-hit businesses, rather than having any funding used in ways that are not necessary right now.

Willie Rennie spoke about travel agents, and that funding is part of a general fund for coach operators, brewers, visitor attractions, visitor accommodation, hostels and indoor football. That funding will be distributed by local authorities. We will be determining what the grant amounts are, but they would probably be in the region of a £10,000 grant to those businesses that are in need.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

Will the finance secretary consider additional resources for communities that have been hit the hardest by Covid-19 to help them and their local economies return to a trading position that is more recognisable?

Photo of Kate Forbes Kate Forbes Scottish National Party

Throughout the pandemic we have tried to take decisions based not only on assessment of the public health issues that are presented by Covid-19, but on judgments around the social and economic harms, too.

That is reflected in a number of our interventions so far, which have included packages of support for business and welfare. One of the first announcements that we made, as soon as a case of Covid was found, was the £350 million for welfare support through local authorities.

I can assure Stuart McMillan that I will take that line of thinking into the budget, including in my dialogue with partners in local government. A range of uncertainties, challenges and financial constraints exist and will impact on the budget, but we will do all that we can to help businesses through those exceptional, difficult times and try and provide as much support as we can. If any member, including Stuart McMillan, has specific ideas that they want me to consider, I am always happy to meet them.

Photo of Maurice Golden Maurice Golden Conservative

Support for the wedding sector supply chain and taxi drivers is welcome, but many of those businesses have faced severe restrictions since 9 October, are on their knees and will struggle to survive. Will the cabinet secretary confirm that new support schemes will be backdated to the beginning of the autumn?

Photo of Kate Forbes Kate Forbes Scottish National Party

With regard to that date, the funding that I have announced today is obviously built on the basis of additional financial consequentials that came from the UK Government that were announced only in the first week of November.

I said in my statement that I want to design the schemes with the business organisations that are most impacted. That work has already started; we are halfway through it. The wedding sector is a good example of a sector wherein a group represents its different interests and will ensure that funding goes to those who need it. Some hotels, for example, have already received funding; other businesses will have received funding through other schemes. It is important that the funding goes to the businesses that are most impacted, so we will design the schemes with the businesses themselves.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I am pleased that the cabinet secretary has announced the enhanced financial support package today, particularly because the tourism and hospitality sectors are of such huge importance in my constituency.

Is the cabinet secretary aware, however, that I have pushed the Scottish Government to announce what additional support will be forthcoming for spectator sports to help them to survive the winter period? The situation is critical for some smaller clubs in the Scottish Professional Football League, in particular. When will the Scottish Government announce such support?

Photo of Kate Forbes Kate Forbes Scottish National Party

I recognise that Bruce Crawford has been representing sports clubs and has made the case for additional funding for them. I also recognise the impact that Covid has had on the sport sector—especially on clubs and other parts of sport that rely on spectator income. We have developed a support package for Scottish spectator sports; Joe Fitzpatrick, the Minister for Public Health, Sport and Wellbeing, will set out the details thereof in Parliament tomorrow.

Photo of Sarah Boyack Sarah Boyack Labour

Does the £600 million for health and social care include funding for council-provided social care? What certainty can the cabinet secretary offer around the unallocated funding that she has mentioned, given that councils are already having to access reserves and plan for cuts in jobs and services? The City of Edinburgh Council alone has a £60 million financial shortfall.

Photo of Kate Forbes Kate Forbes Scottish National Party

I have already set out that the health and welfare funds include funding for vaccinations, the bonus for health and social care workers, the winter social plan, free school meals, self-isolation payments and so on.

Separately, I have also confirmed additional funding for local government that was previously announced and is now here, but had not been included in budget revisions to date. We will consider the additional needs of local government. As I said, the contingency fund is to meet needs that are currently uncertain but will probably fall in the new year. I am prepared to use that funding for all eventualities.

Photo of John Mason John Mason Scottish National Party

Can the cabinet secretary assure us that she will take a cautious approach, and that she will not spend in December or January money that we might need in February or March?

Photo of Kate Forbes Kate Forbes Scottish National Party

There are no guarantees that we will get additional funding from the UK Government. By law, I cannot overspend on my budget, so I have to be sure that funding is available, should crises and emergencies happen, with unknown impacts on our society and economy, from Brexit and other things. It is for that purpose that I have transparently allocated £332 million in contingency funding.

Photo of Mark McDonald Mark McDonald Independent

The cabinet secretary is aware that businesses in Aberdeen pay higher business rates than businesses of equivalent size in many other local authorities, due to historical economic conditions that perhaps do not currently exist. A number of businesses have therefore missed out on business support because of nationally applied thresholds.

When she considers local delivery, will the cabinet secretary also consider local flexibility around rateable values to ensure that businesses in my constituency do not miss out on support?

Photo of Kate Forbes Kate Forbes Scottish National Party

Mark McDonald raises an important point. Local economies differ across the country, which is why the discretionary funding is so important. Central Government will try to target support at the sectors that are hardest hit, but it is important that local authorities are able to tailor their own schemes in response to economic conditions. I hope that Aberdeen City Council will be able to use the discretionary funding for the particular challenges in Aberdeen city.

With regard to the tourism package, one of the things that is being worked on right now is provision of support to bigger businesses that missed out on the original support because their rateable value is more than £51,000. Therefore, particular consideration is being given to those larger businesses.

Photo of Alexander Burnett Alexander Burnett Conservative

I refer members to my entry in the register of members’ interests.

Given the additional payroll and accounting issues over the festive period, and the fact that January might be too late for many businesses, will the Cabinet Secretary for Finance set a date by which the cash that has been promised today will reach businesses?

Photo of Kate Forbes Kate Forbes Scottish National Party

There are several deadlines for the cash that has been promised today, because there are various schemes. As I said, some schemes have opened in December—the wholesaler scheme, for example, opened last Friday—and others, including the grants for showpeople, will also open earlier. Our intention is to get the money out as quickly as possible. Obviously, the recurring grants will continue to be paid every four weeks to businesses that are in need, for as long as the businesses need them.

Photo of Gillian Martin Gillian Martin Scottish National Party

I thank the cabinet secretary for listening to the sectors that we have all worked so hard to advocate for. The Government has enabled 100 per cent rates relief for the especially affected sectors of retail, hospitality and leisure. However, other businesses with premises are struggling, but are not eligible. I appreciate and listened to what the cabinet secretary said in response to Mark McDonald, but will she consider expanding rates relief?

Photo of Kate Forbes Kate Forbes Scottish National Party

Publicly, I have been clear that, with regard to next year’s budget, I am keen to extend some form of rates relief, subject to there being an equivalent policy in England that generates consequential funding, because it is not affordable to do so within the Scottish Government’s fixed budget. Our desire is urgently to set out a plan to support businesses, through non-domestic rates, but that requires early notice from the UK Government of its intentions.

Photo of James Kelly James Kelly Labour

The Institute for Public Policy Research forecast that youth unemployment could rise to 140,000. What portion of the £570 million business support moneys will be available to cities including Glasgow, where, sadly, many face the prospect of being blighted by youth unemployment?

Photo of Kate Forbes Kate Forbes Scottish National Party

James Kelly makes a good point, which is similar to the one that was raised by Mark McDonald: different parts of the country will be hit in different ways, as they depend on different sectors. That is why some form of discretionary funding is so important.

Glasgow will get its fair share of all the schemes that have been announced today. More sectors will be represented in Glasgow than is the case in other parts of the country, so it will get a fair share. Over and above that, Glasgow will get its share of the discretionary fund that has been agreed with COSLA. My understanding is that there is an additional top-up for areas that have been in level 4, which includes Glasgow.

Photo of James Dornan James Dornan Scottish National Party

While the Chancellor of the Exchequer was announcing a £27 billion increase in UK capital expenditure, he was cutting the Scottish Government’s capital budget by 5 per cent. What impact will that have on Scotland’s need for an infrastructure-led economic recovery to deliver new jobs and speed up the transition to net zero?

Photo of Kate Forbes Kate Forbes Scottish National Party

As James Dornan said, the Chancellor of the Exchequer has set out his spending review, which was accompanied by figures from the Office for Budget Responsibility that demonstrate just how hard hit the economy will be in terms of unemployment and gross domestic product.

It is important that we invest in infrastructure in order to try to support economic recovery. That is why it is deeply unfortunate that, as we go into next year’s budget, and start setting our budget, the Scottish Government’s capital budget is being cut by 5 per cent.

I will set out, alongside our budget, our capital spending review, which will give not just a one-year outlook on what our spending will be, but a five-year outlook, so that there is a pipeline of work, which will give confidence to the construction sector and will, I hope, ensure faster economic recovery.

The Deputy Presiding Officer:

That concludes questions on the budget update. I thank the cabinet secretary and members. Because of swift questions and answers, we got through all the questions.