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Presentations from Scotland’s Budget Report 2019 Event

On Tuesday we published our fourth annual Scotland’s Budget Report. This was accompanied by an event at the National Museum of Scotland.

Alongside the FAI analysis, Paul Johnson, Director of the Institute for Fiscal Studies, Andy King from the Office for Budget Responsibility, Caroline Gardner, Scotland’s Auditor General, and Charlotte Barbour, director of taxation for ICAS, also spoke at the event. All discussed the current fiscal environment which is made all the more uncertain by the General Election and the flurry of announcements by all political parties on future spending commitments.

These presentations can be found below.

FAI Scotland’s Budget 2019 slides – Presented by Mairi Spowage and David Eiser, FAI
Taxation – Growing divergence? – Presented by Charlotte Barbour, ICAS
Fiscal risks in the UK – Presented by Andy King, OBR
Financial planning in uncertain times – Presented by Caroline Gardner, Scotland’s Auditor General
Economic and fiscal outlook – Presented by Paul Johnson, IFS

Key points from our Scotland’s Budget Report 2019

Today we published our 4th annual Scotland’s Budget Report.

The latest report shows that the Scottish Government’s resource budget in the past three years has evolved more healthily than was anticipated at the start of the parliamentary term in 2016, due to both UK government spending increases and Scottish government tax decisions.

Following announcements of further spending increases this year – and via the Barnett Formula – the outlook for Scotland’s resource block grant from Westminster has improved even further this year and next. Real terms increases of around 2% per annum are anticipated for the next two years, the first time period of consistent real terms increases since the start of the ‘austerity’ period.

But two issues, both relating to devolved income tax, will offset some of this increase:

1. The block grant in each of the next two years will be reduced to take account of the fact that outturn Scottish income tax revenues in 2017/18 and 2018/19 turned out to be lower than forecast. The Scottish Government will be required to repay £200m in 2020/21 and potentially as much as £600m in 2021/22.

2. On the basis of the latest official forecasts, Scottish income tax revenues are on track to disappoint relative to the rest of the UK.

As a result, despite the block grant from Westminster growing by 2.1% in 2020/21, the resources available to the Scottish Government may still only grow by less than 1% in real terms.

All this comes at a time of heightened political and economic uncertainty. Financial responsibility for £3.5bn of social security spending will transfer to the Scottish budget in April 2020, bringing new pressures and risks.

2019 Sir Alexander Stone Lecture: ‘Brexit: the unanswered questions for UK and Scottish policymakers’

Introduction

Thank you Andrew and can I add my welcome to everyone for coming along this evening.

I must confess to only knowing of Sir Alexander Stone as the name on the building at Glasgow where my economics lectures used to be held.

For those of you who don’t know, he was a banker and philanthropist helping to support a number of notable cause across the country.

He was also the son of Jewish parents who fled Russia in the early 20th century to escape persecution.

In these current times, it does no harm to be reminded of our shared history and the importance of human values, respect, tolerance and solidarity.

Commentary perspectives – Highlights from service re-design in healthcare

This blog includes highlights and key points from the article Service re-design in healthcare: the impact of innovative methods to compare costs and benefits (Anderson et.al, 2019).

The article was written by Robyn Millar, Gillian H. Anderson (corresponding author) Robert Van Der Meer and Alec Morton – all at the Department of Management Science, University of Strathclyde Business School

In the face of growing cost pressures, policy makers are looking for cost effective ways to meet the increasing healthcare needs of the population and improve the service to patients[1].

The collaborative study between the University of Strathclyde, The Scottish Government and NHS Scotland seeks to demonstrate the cost effectiveness of an innovative ‘virtual’ patient pathway – and, more generally, supported capacity building in service redesign and improvement across the Scottish health service.

To the authors knowledge, this is the first time that discrete event simulation has been used in an action research approach to develop bottom-up micro costing models to evaluate the kind of virtual clinic approach that is rapidly gaining acceptance in NHS Scotland and beyond[2].Continue reading

Commentary perspectives – Highlights from Innovation and Business Performance

This blog includes highlights and key points from the article “Innovation and Business Performance (Turnbull, Slow and Richmond, 2019)”.

The link between innovation and business performance has been well documented, with innovation being a crucial factor in determining an economy’s competitiveness with much of the long term rise in living standards attributed to innovation[1].

Studies have shown a large and increasing share of economic growth and living standards in recent decades is derived from innovation, which leads to increased productivity and the creation of new products, services, processes and industries[2].

Evidence also shows a positive relationship between competition, innovation and productivity, with product and process innovations having the potential to lead to increased efficiency, quality and reduced costs, or to open-up new markets[3].

Further evidence also suggests that innovative businesses grow twice as fast as non-innovative businesses. It is estimated that, on average across UK regions, a one per cent increase in the percentage of innovating firms is associated with an increase of £749 pa in GVA per person[4].