Scottish Government secures support for budget

Thursday 31th January 2019

What’s in it & how did the Scottish Green party deal change things?

In the final hours before the Budget debate, the Scottish Government secured the support of Green MSPs to ensure its Budget Bill comes to fruition for 2019-20. Thursday’s vote saw the Bill pass stage 1 and it is expected complete its passage through Parliament by the 21st February.

While no new money has been allocated to the NHS as a result of the Green-Scottish Government negotiations, increased commitments have been made to local government funding to help deliver social care and mental health support.

Prior to stage 1 proceedings in Parliament, the Cabinet Secretary for Finance, Economy & Fair Work, Derek Mackay, urged MSPs to support a Budget that “provided stability” and “investment in essential services”.

He said: “Our spending plans for the coming year contain additional money for schools and hospitals, protecting vital public services and investing in our economy, while also providing stability amid the ongoing uncertainty caused by Brexit.”

Speaking in the debate preceding the vote, the Cabinet Secretary laid out the concessions made to secure the support it needed.

Significant advance’ in local government powers

Scotland’s councils have been under considerable financial strain for some time. Mr Mackay sought to offer some relief with a real-term increase in both revenue and capital funding alongside a real-terms increase in overall support through a £11.1bn settlement.

A key request from the Greens agreed to by the Government centred on the autonomy of local government. Green MSPs had called for local authorities to have the ability to make more decisions locally, particularly in relation to raising revenues.

Derek Mackay stated his Government was setting out the most significant extension of local authority power since devolution, acknowledging that “local government funding requires increased funding and flexibility”.

As a result, the agreement made with the Greens includes bringing forward a three-year funding settlement for local government from the 2020-21 budget onwards.

Also included in the revised offer is an increase to the core resource local government settlement of £90m and the continued provision of a reserved £160m from Government for local authorities to support social care and mental health measures, including those delivered by Integrated Joint Boards, whilst, according to Mr Mackay “…allowing local authorities the flexibility to offset their own adult social care contributions in 2019-20 by 2.2% compared to 2018-19 or up to £50m across all authorities to help them manage their own budgets.

Addressing an NHS in crisis

The total health and sport portfolio allocation from Government comes to over £14.4bn, but it is unlikely that this will be enough to answer the call in Audit Scotland’s report on The NHS in Scotland 2018 for “urgent action” to move the NHS away from “short-term firefighting” and to bring about essential long-term and fundamental change. Audit Scotland’s fears were born out when the chief executive of NHS Scotland, Paul Gray, recently wrote to the Health & Sport Committee providing an update on the number of territorial health boards in Scotland that were the subject of escalation measures, due to concerns over performance or finance.

A need for greater transparency in budgetary processes was also highlighted by convener of the Health & Sport Committee, Lewis Macdonald, during debate in Parliament on Committee’s pre-budget scrutiny.

He explained that rather than producing a reactive post-budget report, the Health & Sport Committee had sought to influence the content of this year’s budget by producing a pre-budget report in October, which among other things raised concerns that the significant health and social care budget was not being spent efficiently by integration authorities.

Issues regarding transparency were highlighted with Lewis Macdonald stating that “developing information that links budgets with outcomes should be a top priority”.

The Committee’s report in November also encouraged Government to have a greater focus on preventative spending, particularly to address health issues such as diabetes that consume a significant proportion of overall funding.

Delivering his Budget proposals in December, Derek Mackay sought to address some of these concerns and insisted that “record levels” of NHS funding were being offered despite the threats posed by Brexit to Scottish prosperity.

Adamant the Budget would deliver on his Government’s vision for a “healthier, wealthier and fairer Scotland”, Derek Mackay had said his spending plans confirmed health was a top priority; included additional revenues to “mitigate the shortfall in NHS funding promised by the UK Government”, and would “transform the NHS with £730m of additional investment in health and social care.”

The Budget Bill proposes a further shift in the balance of spending through an increase in investment in health and social care integration of over £700m. Total investment in health and social care partnerships looks set to be more than £9bn.

Significant commitments have been made to improve mental health services, including investment of £27m, taking total funding to £1.1bn in 2019-20.

The social security and older people portfolio has been allocated nearly £585m. The Scottish Government has said much of this will go towards mitigating welfare spending reductions from the UK Government.

However clear a picture Derek Mackay has been able to draw today, the ambiguity emanating from Brexit still casts a long shadow. Reiterating warnings that he made to Parliament in December, Mr Mackay stated that any budgetary plans were still dependant to a considerable extent on what Brexit brings next.