AN economic think tank has questioned the transparency of the Holyrood budget process after the Scottish Government announced an extra £220 million not included in December’s draft budget.
The government struck a deal with the Greens to get its revised budget through the first stage of parliamentary scrutiny on Thursday, announcing the extra money of which £160 million will go to local authorities.
The Fraser of Allander Institute highlighted on a blog on its website that only £30 million of the extra cash is from dropping plans to raise the higher rate tax allowance in line with inflation and that details on the sources of the additional money are “as yet unclear”.
The Scottish Government said the remaining extra cash comes from a combination of a drop in the cost of borrowing, underspends in previous budgets, and business rates savings.
The institute said the announcement “raises some questions about the transparency of the budget process” and said it suspects a “significant part” is from underspends.
The blog continued: “Obviously there is clearly a negotiating advantage in the government holding back some monies as part of their tactics to get the Bill through, but similarly one can see MSPs from now on demanding greater clarity over what is really on the table. In addition, MSPs will also be looking for greater clarity on how total funding reconciles with total spending.
“’Moving’ money into one year but then underspending in that year, which in turn enables you to ‘move’ money again into another year, makes sense from a budgeting point of view, but the impact on the economy and the public services may not be immediately obvious. This makes the case for multi-year budgeting all the more important.”
Murdo Fraser, Scottish Conservative finance spokesman, said: “This analysis from the respected Fraser of Allander Institute destroys any claim by the SNP that they have to charge people more tax than in the rest of the UK.
“Far from suffering from so-called cutbacks, it turns out the SNP Government had tens of millions of pounds of taxpayers’ money squirrelled away in their accounts. Instead of returning this to working families in their pay cheques, as they could have, they instead used it to buy off the Greens.”
A Scottish Government spokesman said: “It has now been over two months since the final decisions around the draft budget were taken and it has been possible to obtain further clarity around underpinning income forecasts, expected spending levels in 2016-2017 - including on demand-led budgets - and to re-examine the non-domestic rates forecasts.
“This additional clarity and certainty has allowed adjustments to be made to our initial assumptions around the budget and will release the additional resources needed to fund these commitments. As an example, we now have greater certainty over the level of budget exchange carry forward, which we expect to be well within the range of previous years.”