Mackay warns devolution "must be respected" in budget row

Scotland’s Finance Secretary has warned the Tory Government at Westminster against bypassing Holyrood and “directly” spending cash in devolved areas like health and education.

Derek Mackay says devolution mist be respected

Derek Mackay fired the broadside as he called for greater flexibility from UK ministers as he draws up his budget for 2020/21. A row broke out last week when it emerged that Chancellor Sajid Javid will set out his Budget on March 11 - several months behind the usual timescale after the election.

This causes a particular problem north of the border because Holyrood’s spending plans usually come after the UK Budget which sets out Scotland’s settlement. It must be done before the start of the new financial years on April 1.

Mr Mackay states in his letter to Chef Secretary to the Treasury Rishi Sunak: “The timing of your Budget leaves me with a choice between two highly undesirable outcomes: Publishing the Scottish Budget before yours, with the associated uncertainty, or completing the process from publishing the Scottish Budget to receiving Royal Assent for our Budget Act in an extraordinarily short time.”

UK officials have offered to support the budget process in Scotland with a flexible approach to “block grant adjustments” if Mr Mackay is forced to publish his budget before the UK. Mr Mackay is also seeking a commitment to additional flexibility in the management of “reconciliations” resulting from the forecast errors.

He added: “I believe from experience to date that an increase to the limits on our resource borrowing and Scotland Reserve powers is necessary even in normal times, and I await your further response in relation to that matter as well.”

The SNP minister is seeking information about future policy changes from the UK Government which could affect his own decisions and forecasts.

But the prospect of UK ministers spending cash directly in devolved areas prompts a warning from Mr Mackay.

“I am concerned about comments made during the election campaign suggesting that the UK Government ‘could’ in future bypass the Barnett formula and directly fund activity in devolved areas,” he adds.

“While I will always make the case for additional investment in Scotland the devolution settlement must be respected, and accordingly I expect you to confirm our arrangements will be fully respected and that you will not depart from this.”

Mackay reacted furiously to the timing of the budget last week. Although SNP ministers accepted that a delay was inevitable as a result of the election, they insist there was no need for it be as late as mid-March. The impact on Scottish councils is also a worry because March 11 is the legal deadline for them to have set their budgets for the year ahead.

UK ministers have insisted that there is nothing to stop the Scottish Government from setting a budget before March 11 and that estimated figures have been provided to assist with this.