Money is on the minds of many in the run-up to Christmas and none more so than in Scotland where the budget for the next financial year is about to be announced.
Scotland’s Finance Secretary Shona Robison will be sharing the Scottish government’s plans for tax and spending in 2025/26 this week in the first Budget since John Swinney took office as First Minister.
Speaking ahead of her announcement to Holyrood, Robison said the Budget will set the country up to “win big” in the future, resulting in more jobs and “putting more money into people’s pockets”.
She added: “While the UK Government’s Budget treated Scotland like an afterthought, this is a Government that will put the people of Scotland first.
“We have listened carefully to the needs and priorities of organisations and businesses across Scotland and engaged seriously and constructively with other parties.
“But above all we have listened carefully to the people of Scotland – and this is a Budget that will deliver for them.”
But the Government’s ability to pass the budget will depend first on co-operation from other parties.
While the Scottish Lib Dems say they would not support it if it includes “one penny” spent on Independence, the Greens say they will not support it if it cuts funding for independence.
And Scottish Labour’s finance spokesman Michael Marra said: “Tory austerity has provided the SNP with cover for its own failures, but now Labour has turned the page and delivered record levels of funding for Scotland.
“The SNP is out of excuses – this Budget must deliver the genuine change in direction our country so badly needs.”
When is the 2024 Scottish Budget?
The Scottish Budget 2025/26 will be published on Wednesday 4 December, 2024.
Scottish Parliament committees have been carrying out pre-budget scrutiny of it in advance of the publication.
Then it will be made public by the Finance Secretary Shona Robison in the Scottish Parliament at around 3pm on Wednesday.
Opposition MSPs will be given up to an hour to respond to the details of the Budget in the chamber.
What can we expect from the Scottish Budget?
Winter fuel payment
The Scottish Government has already announced that the Pension Age winter heating payment (PAWHP) will replace the UK Government’s winter fuel payment (WFP) in winter 2024.
This new benefit will be delivered by the Department for Work and Pensions (DWP) in 2024/2025 on behalf of the Scottish Government and then by Social Security Scotland in winter 2025.
It will be made to support up to 130,000 eligible people, who have reached state pension age and are in receipt of relevant benefits this winter.
Payments are set at £200 or £300 depending on the age of those receiving the relevant eligible benefits during “the qualifying week” in September.
Health services
First Minister John Swinney said: “The National Health Service is a vital and precious institution for Scotland and it’s important we have that in place and well supported for the years to come.”
Support for the NHS will be “right at the heart” of the upcoming Scottish Budget, Swinney said this week.
Although he gave no details on how this would pan out in the Budget, he added: “Capacity is a crucial factor, but also it’s crucial that we ensure that individuals are treated and supported at the earliest possible opportunity to maximise the effectiveness of our hospital capacity.”
Renewable energy
Increased funding for renewable energy projects may be on the cars in the new Budget.
Edinburgh-based accountancy firm MHA said: “The Government may focus on boosting funding for the renewable energy industry, enhancing energy transition initiatives, including help to develop workforce skills and investing in digital and electrical infrastructure.
“Such measures would help support Scotland’s goal to lead in renewable energy.”
Income Tax
A key concern among individuals and businesses is the difference between Scotland’s income tax rates and those of the rest of the UK.
Scotland’s are currently higher than the UK, which some businesses argue hampers their ability to attract top talent.
There are six bands of income tax rates in Scotland, starter rate, Scottish basic rate, intermediate rate, higher rate, advance rate and top rate, compared to three in England and Wales.
The Scottish Conservatives have called for tax cuts and there has been suggestions of a possible realignment.
Although, Robison indicated this year income tax changes would be unlikely.
Council tax
There was a council tax freeze in the Scottish Budget this year, which angered local councils in need of extra funds.
For the next financial year, the Convention of Scottish Local Authorities (Cosla) has called for no council tax freeze of cap.
Councillor Katie Hagmann, Cosla’s Resources spokesperson, said: “It is vital that local government is empowered to set council tax locally with no freeze or cap imposed in 2025/26.
“We all agree that council tax needs reform along more progressive and fairer principles.
“Cosla has consistently called for greater local revenue-raising powers and we believe that a reformed council tax system has the potential to better empower Scottish local government for the benefit of all our communities.”
Business rates
Scottish business rates, like income tax rates, are currently higher than those in England.
In the Budget in October, the Chancellor announced that retail, hospitality and leisure (RHL) businesses in England would receive 40 percent rates relief next year.
Adjusting business rates in Scotland to match levels in England may help the same sectors manage increased employment costs and remain competitive.
MHA said: “Reforming this system could provide relief to brick-and-mortar businesses, particularly in retail, leisure, and hospitality sectors.”
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