Scottish Budget: Kate Forbes unveils pay hike for public sector workers

Those on salaries up to £25,000 will receive an uplift of at least 3%, capped at  £750, while those on higher salaries will receive a 1% rise capped at £800.

The promise from Forbes came as she laid out her tax and spending plans for the year ahead. 

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There were unprecedented sums of money for a Scottish Government budget, as the Finance Secretary moved to tackle the economic chaos of the coronavirus. 

Forbes told MSPs the pandemic had "shaken our society and economy to their core".

One of the key promises was that all Scottish taxpayers will pay slightly less this year than last year, after she kept the tax band system unchanged.

The starter, basic and higher bands of tax will all rise by inflation, with the top rate frozen at £150,000.

"This will see all Scottish taxpayers pay slightly less income tax next year than they will this year based on their current income," Forbes said.

"In addition to this, a majority will continue to pay less income tax than if they lived in other parts of the UK."

"Our approach continues to target support in the immediate term, as well as tracking a course over the coming year to build a fairer, stronger and greener country."

She told MSPs her draft spending plans would see £1.1 billion of support for jobs and skills , £16 billion for health, as well as a further £869 million for tackling coronavirus - including funding for the vaccination and test and trace programmes.

Forbes said the strategic framework business fund, which provides grants based on restrictions put on businesses, will continue beyond this financial year, provided funding is forthcoming from the UK Government.

Grants being paid to businesses in February will also be paid at the maximum level, regardless of the level of restrictions on firms, she said.

Councils will also see an increase in their finances, with discretionary funding doubling to £60 million and a further £200 million to compensate for a loss of income due to the pandemic.

There was also a half billion pounds extra for councils, including a promise of £90 million extra cash for those local authorities that choose to freeze council tax. 

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Forbes said businesses in the retail, hospitality and leisure sectors will continue to pay nothing while other firms will see their rates fall.

She sought to commit to relief for longer but said the delay to the UK Government's Budget meant she did not have sufficient clarity to allow her to do so.

"The absence of clarity on UK Government non-domestic rates policy has undermined our ability to continue this relief," she said.

"I've been clear that the only way I can replicate that relief in full is if there is additional funding from the UK Government."

She also said a national infrastructure plan for Scotland which aims to support 45,000 jobs across the country will be announced next week, investing £1.5 billion by 2025-26.

The money for health includes a total of £145.3 million for alcohol and drugs, that comes after the First Minister's pledge last week of an extra £50 million per year for five years to tackle Scotland’s drugs deaths crisis.

Forbes also announced that mental health funding would increase by £1.1 billion to cope with the effects of the pandemic on the mental health of Scots.

Other pledges in the budget include a promise of £1.3 billion for the Scottish Police Authority, including a £60 million increase in Police Scotland’s revenue budget. 

Forbes said this would eliminate Police Scotland’s structural deficit.

There was also £1.6 billion for rail and bus services and £100.5 million for active travel, while an additional £27 million would be used “to expand woodland creation and the associated infrastructure, supporting green jobs”.

Announcing the spending plans in Holyrood on Thursday, Forbes said she could not guarantee "there won't be more tough times ahead", but added: "Throughout these dark times, we have never given up hope.

"Hope for a better future, for a healthier, greener, fairer society. And now with large-scale vaccination, focused firstly on the most vulnerable, there is some light at the end of the tunnel.

"This budget seeks to build on that hope and by focusing on how we continue to protect, recover, rebuild and renew our country it seeks to make that light at the end of the tunnel shine that bit brighter."

This is just the first step in the budget negotiations. As the SNP don’t have a majority in Holyrood, they need at least one other party to support their plans. 

In recent years, they’ve been able to rely on the support of Scottish Greens, but  Patrick Harvie was critical of the Finance Secretary’s pledges. 

He said: “Even before Covid, Scotland was on track to miss targets on child poverty and climate emissions. This Budget simply doesn’t address that, and refuses to consider progressive taxation.

“This is the year a new American president will come to the climate summit in Glasgow with ambitious plans to invest in a low-carbon future and create jobs. Scotland needs to at least match that level of ambition if we want to be taken seriously.”

Meanwhile, the Tories called on Forbes not to spend a penny on preparing for indyref2. 

Murdo Fraser said: “This is not the time to waste government resources on the preparation of another independence referendum.

“All government resources need to be devoted to tackling the pandemic and its economic consequences, not wasted on constitutional divisions.

“This budget process is a chance for the Scottish Government to put aside its party political priorities and act in the national interest.”

He added: “We will reject any plans to waste precious resources, money or time on campaigning for another divisive independence referendum.

“We need a budget that is about building up, not breaking up.”

Forbes hit back at Fraser, telling him: “In terms of talking about wasting time, I’m standing here delivering a budget investing £1.1 billion in skills, £6 billion in capital infrastructure and £3.5 billion for social security and welfare payments.

“Meanwhile, his leader is breaking the spirit of the rules on essential travel to do what? Make the case apparently for the Union because he’s running scared, after poll after poll shows support for independence.”

Lib Dem Leader Willie Rennie said the £1.1 billion for mental health services was not enough.

He said: “The mental health budget falls short of the funds it needs, especially following the massive impact on our mental health from the pandemic.

“We had called for £1.2 billion and that was before the pandemic. This budget falls £100 million short.”