This was clearly a late addition, and one which has not been included in their own or the Scottish Fiscal Commission’s analysis – though it might cost as much as £200m a year.
The Scottish Government will be hoping this is brought in UK-wide before they have to fund it – a heavily caveated 2026 was mooted as the start date, but it can take the moral high ground in the meantime.
There were also announcements of growth in health spending and the affordable housing budget, although as we have said frequently, how and where the money is spent is just as important.
There was also an announcement of non-domestic rates relief for the hospitality industry, which may seem the same as that announced in England at first glance, but is actually much narrower. It only applies to the smallest premises – many of which will get full relief anyway – and retail and leisure premises are excluded.
And ScotWind monies will be called upon less than previously pencilled in, although some of the usage will still be for day-to-day spending – not exactly “the kind of long-term investment it should be spent on” that the Finance Secretary espoused.
But the most surprising decision was to not account for the shortfall increase in employment costs due to the increase in employer National Insurance Contributions, and which we only learned from the Scottish Fiscal Commission’s documents.
This is a significant and certain permanently higher cost that will come in on 1 April, setting up a possible need for further emergency measures during the course of the next financial year – leaving us wondering whether any lessons have been learned from going into a new year without fully setting aside budget cover for what are known costs, as highlighted by the recent Audit Scotland report.
Joao Sousa, is the Deputy Director of the Fraser of Allander Institute
