RACHEL Reeves’s Budget has left a “£500 million question” for Scotland, the First Minister has said.
John Swinney’s comments came as he was speaking at First Minister’s Questions on Thursday, which was dominated by the impact of the UK Labour Government Budget laid out the previous day.
Anas Sarwar, the Scottish Labour leader, did not so much as ask Swinney a question as list measures announced by his party’s Chancellor on Wednesday.
He said: “Yesterday, Rachel Reeves announced the first Labour Budget in 14 years and after 14 years of Tory chaos, division and decline, it was a transformative and game-changing Budget for Scotland.
READ MORE: 'Some nerve': John Swinney and Russell Findlay clash during heated FMQs Budget debate
“It delivers on the promises made in the election, ends the era of austerity, provides vital new investment for our public services and prioritises economic growth.
“It includes the largest block grant settlement to the Scottish Parliament in the history of devolution. That’s £1.5 billion of additional funding for the Scottish Government this year and a further £3.4bn next year.”
Sarwar then asked if the First Minister would “welcome” the Budget.
In his response, Swinney said he would “provide some calming influence” – and raised what he called “a £500m question”.
The First Minister said: “The Budget is a step in the right direction. I accept that, and I welcome that …
“It delivers for Scotland an increase because of the Barnett consequentials in health and education, but we have to be conscious that there will be negative consequentials arising out of financial implications for areas such as culture, environment and transport.”
Swinney further said that there “also remains significant uncertainty about the impact of the increase in employers’ National Insurance contributions on public spending in Scotland”.
“We have to publish a budget on December 4, and there is currently uncertainty about whether our public finances will be compensated in full for all that's involved in advance of that Budget.
“That, of course, is not an insignificant sum. It's a £500m question, so we will, of course, engage constructively with the United Kingdom government on these questions.”
READ MORE: Lower pay rises likely as result of Budget tax increases, Rachel Reeves admits
There have been suggestions that the Treasury will compensate the Scottish Government for the rise in employers’ National Insurance contributions, but it has as yet not been confirmed.
If there is no compensation, the touted £3.4bn extra for Scotland will be closer to £2.9bn.
Speaking at FMQs, Swinney also said that he regretted the fact that the Labour Government had not used its Budget to end the two-child cap on benefits.
“[The Chancellor] indicated over the course of a three-year period there will be a £10bn surplus in the Budget, and that's obviously encouraging.
“But she wasn't able to find a single penny to lift the two-child cap that is putting and forcing families into poverty in our country today, and I regret that very deeply.”
He added: “While there are welcome steps in the Budget, there are issues that will prolong the agony of individuals in our society, and a Labour Government should address that and right the wrongs that they’re presiding over now.”
Scottish Green co-leader Lorna Slater then asked Swinney if the extra £1.5bn for the Scottish Budget this year would be used to reverse recent cuts to nature and active travel funding – or if it would prevent the need to empty the ScotWind fund just to balance the books.
The First Minister suggested that it wouldn’t, and that the extra funding had already been taken into account.
And Swinney replied: “It was a matter of deep regret to the government that we had to remove funding from those priorities to enable us to create a path to balance … “The increase in funding for this financial year largely accords with our expectations in our internal planning and is necessary to meet the costs of increased pay settlements and the effect of inflation that the Finance Secretary has previously explained to parliament.
“So my expectation is not that we have any new capacity that opens up in this financial year.
“The resources that have been allocated so far, I expect, will be required to enable us to balance the budget during this year because of those pay and inflationary costs that we are facing.”
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