Delay to UK budget 'deeply problematic' claims finance secretary amid calls for furlough scheme extension ahead of Scottish budget

Kate Forbes has labelled the decision by the UK Government to delay the budget until March as “deeply problematic” in a letter setting out demands for additional funding ahead of her own budget announcement today.

Writing to Chancellor Rishi Sunak, the Scottish finance secretary called for an extension to the furlough scheme, support for businesses and non-domestic rates relief for retail, hospitality and leisure sectors.

Setting out her demands to Mr Sunak, Ms Forbes highlighted the difficulties faced by the Scottish Government in planning due to the delay to the UK Budget, set to be announced in March.

The finance secretary also called for a commitment from Mr Sunak to make the £20-per-week uplift to Universal Credit permanent and for more clarity on capital funding for the coming year.

Finance secretary has written to the Chancellor of the Exchequer Rishi Sunak requesting guarantees on further financial support for Scotland

Calling for Mr Sunak to “set out the further support it [the UK] intends to provide ahead of the budget”, Ms Forbes said a “lack of clarity” available to the Scottish Government “poses challenges” for scrutiny of her budget.

In the letter, she calls for a “definitive end” to austerity and to delay any tax rises until “the economic recovery is well underway”.

Ms Forbes also calls for any extension to the furlough scheme and rates relief to last “well into the next financial year”, stating the consequentials available from the Spending Review are “entirely insufficient” to avoid a “reverse cliff edge” for businesses and to provide clarity ahead of March 3.

She writes: "The UK Budget must provide a definitive end to a decade of austerity under which Scotland has suffered and which has disproportionately hurt the poorest and most vulnerable in society.

Finance Secretary Kate Forbes in her office in Holyrood, Edinburgh, ahead of delivering the Scottish Budget. Picture: Jane Barlow/PA Wire

"When we emerge from the greatest economic shock of our lifetime, it will remain essential that fiscal rules do not constrain the fiscal policy response, thereby weakening the economic recovery and doing more harm to the UK’s long-term fiscal position.

“The UK Budget must demonstrate extended fiscal support, delaying any fiscal consolidation efforts or tax rises until the economic recovery is well underway. In the short term, suppressing the virus and supporting the economy and jobs through public spending will create the confidence which will allow the economy to recover.”

Demanding more clarity on the capital budget available to Scotland, Ms Forbes claims the £321 million cut to the block grant funding for Scotland “risks having a devastating impact” on the Scottish Government’s affordable housing plans.

On Brexit and the delay to the budget, Ms Forbes highlights uncertainty around the potential impact on Scotland’s budget.

She writes: “The Trade and Competition Agreement between the UK and EU has moved us into a period of significant prolonged legal uncertainty with regard to the rules surrounding subsidy control.

"It is essential, therefore, that to avoid such uncertainty in making or receiving subsidies a clear regulatory environment must be introduced as soon as possible.

“Delaying the UK Budget has been deeply problematic for our budget-setting and scrutiny processes.

"Given the extraordinary level of uncertainty and risks facing the economy and the public finances, I have repeatedly requested greater flexibilities so that the Scottish Government can mobilise funding when it is most urgently needed.

"Beyond greater borrowing and reserve limits, this includes end-year flexibilities for the devolved administrations that are under discussion now.”

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