Scottish politics is of course a little up in the air at the moment, following the decision of the current First Minister to resign and high drama of the start of the leadership race. We’re yet to hear too much about the economic policy intentions of her successor, but with nominations closing today, we expect to hear much more about that in the week ahead.
Aside from the distractions of the SNP leadership contest, here are few other issues making the news this week
UK – public finances
There was a larger than expected surplus in UK Public Sector Net Borrowing in January 2023. January is typically a year when there is a bump in tax revenues due to the self-assessment tax deadline and these were up £5.5 billion on the same time last year. Energy costs were also lower than expected with the government’s energy price subsidy coming in around £1 billion less than expected by the OBR.
Overall, in the financial year to January 2023, the public sector has borrowed around £30 billion less than the OBR were predicting back in November 2022. This does give some extra fiscal headroom for the UK Chancellor ahead of the upcoming UK Budget on the 15th March, although we wouldn’t expect any big changes given the Chancellor’s stated preference for caution off the back of the turbulence caused by his predecessor.
Scotland – Scottish Budget
In Scotland, the Scottish Budget passed stage three. As we often find at this point in the budget process, there was a little more money to play with due to extra funding (£125 million) coming through the Barnett formula as a result of spending in devolved areas in Westminster. There was also confirmation of an additional £21 million to correct for an error in a previous allocation.
Extra money (£100 million) has been promised to local authorities to help with pay offers for non-teaching staff, which comes off the back of money last week (£123 million) for teaching staff. Creative Scotland also got a boost.
Scottish council’s are now starting to finalise their budgets for the year ahead, with positions on Council Tax increases understandably getting a lot of attention. Already, Orkney have confirmed an increase their Council Tax by 10% with councillors in Aberdeen being recommended by to do the same. Although the very lowest income households are protected from these increases by Council Tax Reduction, many who do face them will of course be concerned over what this means for their household finances.
ONS – financial vulnerability
This week, ONS published an article on groups of people experiencing some form of financial vulnerability who are most exposed to cost of living increases. Whilst the groups cited as being most vulnerable to cost of living increases are what we would expect to see (renters, young people, parents with dependent children, and low-income households) it is great to see ONS continuing to use their data and tools to pull out these insights.
Quantitative data from the ONS does play an important role in policy development, and having data pulled out like this will also help with monitoring the impact of policies to help financial vulnerable groups over time.