The Scottish Budget: Nightmare before Christmas?

Humza Yousaf and his Finance Secretary and Deputy Shona Robison are under increasing pressure from all sides ahead of the Scottish Budget announcement next Tuesday (19th December). With spending margins tight, we’re expecting the focus to be on maximising the gain (or minimising the loss) of political capital, rather than any ground-breaking policy announcements.

?

A nightmare before Christmas? As it stands, the Scottish Government has a gaping and growing black hole in its public finances of at least ￡1bn hole and the Cabinet has met twice in the past week to try to find a solution. The way forward remains to be confirmed, but the options on the table have created a rift within government and heightened tensions with the civil service. Proposals to add an additional tax band or to increase current rates have been suggested, with reports in this morning’s media indicating that this has been adopted. While firmly backed by some in the cabinet, the Greens and the Scottish Trade Union Congress, other cabinet ministers are not so keen. Senior civil servants have also made it very clear that balancing the books will need to go beyond this, with deferred spending and further welfare cuts also needed.

?

Local bankruptcy fears. Many of the FM’s rivals will argue that the dilemma in which he finds himself is partly self-inflicted. Since coming to power in March, Yousaf has made a series of costly commitments, including Scotland-specific public sector pay-rises in health, rail and education and the surprise council tax freeze announcement at SNP Conference. The latter policy has increased pressures on Scottish councils, despite assurances from the Scottish Government that the policy will be fully funded. The Local Government Information Unit (LGIU) issued a warning this week that a quarter of councils north of the border are fearful of not being able to balance their budgets next year.

?

Labour lurking. Labour’s current vantage point is optimistic, but not without pitfalls. Labour will have a hard time arguing against council tax freezes, as they’ve proposed similar interventions in England. And while most unions support income tax increases, Labour have positioned themselves against any rises. Overall, though, any SNP budget fiasco is a Labour gain. The attack lines almost write themselves, and Labour will be continuing to hold the line that they are the only credible alternative for a country failed by successive governments (or something along those lines). Labour will likely continue to flaunt their business creds and sell themselves as the party with a plan.

?

Tough decisions ahead. The expectation-setting has begun. On Tuesday, Shona Robison announced a ￡30m cut to mental health services – a reversal on Yousaf’s commitment to improve them. An additional ￡75m will be made available by delaying improvements to ferry ports, a move likely to further alienate and anger island communities. ?

?

It's not all dreich. In a win for cross-party engagement, free bus travel for asylum seekers, a policy championed by Labour MSP Paul Sweeney, has been given the green light ahead of Tuesday’s Budget statement. As one of the – likely sparse – silver linings, the SNP will be sure to claim this as a win for the government.?

?

Do they know it’s Christmas? Whatever the outcome next week, the Scottish Budget promises to be a sombre affair for most. And with that - Happy Holidays!