Scottish Budget proposals - let the games begin...

03 February 2016

Shirley McIntosh 

Parliamentary debates on budget proposals are not generally the most exciting topic of conversation, but the exception could be Holyrood’s debate on the Scottish Government’s 2016 Budget proposals this week - just over 90 days before the Scottish Parliamentary elections on 5 May. The last of the opposition parties’ submissions has been made by Labour, who echoed the Lib Dems’ call for an increase in the Scottish Rate of Income Tax of 1p from April 2016. This is contrary to the SNP’s position that any move away from the existing UK rates of tax should not take place until the Scottish Government has the full range of tax raising powers proposed by the Smith Commission at its disposal. This is generally expected to be from April next year.

Whatever the detail of the debate at Holyrood, the immediate concern for all must be the lack of agreement on the fiscal framework which will underpin the Scotland Act when (although some are now saying 'if') it becomes law.

Discussions have been taking place between Holyrood and the Treasury over how the Scottish block grant should be adjusted to take account of the tax raising powers that Scotland will be granted. Although the discussion is taking place behind closed doors, it is clear that there is a gap between the two sides, and time is running out to resolve their differences. A deadline of 12 February has been set and speculation is mounting as to the implications of missing this date.

Efforts are being made to amend the Scotland Bill to allow it to be passed before the fiscal framework is agreed. These amendments would set a time limit for agreeing the framework after enactment failing which certain clauses in the Act would not operate. But is this really the answer?

Speculation abounds about whether the two sides are really serious about reaching an agreement. However, both probably have more to lose than to gain if Smith fails. Agreement is therefore essential, but it seems increasingly likely that the deadline will be tested.

The opposition parties’ proposals in response to the Scottish Budget are the first step in setting out their stalls for the forthcoming election. The funding of public services will be a key battleground, particularly education. We await the manifestos with interest...

For further information please contact Shirley McIntosh or your usual RSM contact.


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