The choices facing Mr Mackay

As he has been developing his budget over the past few weeks and months, Mr. MacKay will have confronted a number of difficult choices. How should he prioritise his £27bn resource budget across portfolios ranging from health to education and local government? Should he use his tax powers to raise additional revenues, and if so by how much? What can he do to support the conditions for inclusive economic growth?

In previous blogs and in our latest commentary, we’ve discussed some of the key aspects of Thursday’s budget from the perspective of the economy and public finances.

But what are the big things to look out for from a policy perspective? Continue reading “The choices facing Mr Mackay”

UK Budget: what will it mean for the Scottish Budget?

When the Chancellor Phillip Hammond sits down after delivering his Budget on Wednesday, this will signal the start of the final three weeks of preparations before the Scottish budget is launched on December 14th.

But how will the decisions and announcements made on Wednesday effect the options and choices available to Cabinet Secretary for Finance Derek Mackay in his budget three weeks later?

Continue reading “UK Budget: what will it mean for the Scottish Budget?”

Income tax increases on their own are not a solution for Scotland’s spending challenge

The Scottish budget faces a substantial challenge. Between now and the end of the parliament in 2021/22 the resources available to the government are projected to decline by about 3% in real terms.

This might not sound like much. But at the same time as the budget is declining, the health budget (which accounts for almost half of government spending) will increase by 3%. Whilst this might sound generous, a 3% increase is only just sufficient to keep up with a growing and ageing population (notwithstanding the general inflationary pressures facing the health service).

Furthermore, a range of other spending commitments have been made, on services ranging from childcare to policing, tuition fees to care for the elderly. Continue reading “Income tax increases on their own are not a solution for Scotland’s spending challenge”

Bypassing Barnett

David Eiser

Fraser of Allander Institute

As part of the agreement reached between the Conservatives and DUP, the UK Government has agreed to allocate an additional £1bn to the budget of the Northern Ireland Executive over the next two years. The funding includes £100m to support health service transformation, a further £50m for various ‘immediate’ pressures in health and education, £200m for infrastructure investment and £75m to support ultra-fast broadband. The agreement also includes renewed commitments to devolve Corporation Tax and establish City Deals.

Scottish First Minster Nicola Sturgeon and Welsh First Minister Carwyn Jones have both argued that the additional funding associated with this agreement should go through the Barnett Formula and generate consequentials for the Scottish and Welsh budgets.

Is this a legitimate argument? Continue reading “Bypassing Barnett”