Budget Update

Part of the debate – in the Scottish Parliament on 9th December 2020.

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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.