Scottish budget: Kate Forbes must remain alive to dangers of 'widespread business collapse' – Scotsman comment

No one would disagree with Finance Secretary Kate Forbes when she said the Covid pandemic had “shaken our society and economy to their core. Every life has been impacted and every single life lost has been a tragedy”.

Finance Secretary Kate Forbes delivers her budget at the Scottish Parliament. Picture: Robert Perry/pool/AFP via Getty Images

However, the way in which the Scottish government is responding to the crisis is very much a subject for debate.

As Forbes revealed there would be no major income tax changes in Scotland, she said stressed the importance of “stability, certainty and targeted support”.

However, she also announced that spending on the health service will rise by more than £800 million to a total in excess of £16 billion, a record level, and there was also extra money for Police Scotland, a cut in the non-domestic rates for Scottish businesses that will save firms about £120m, and other significant spending pledges.

So this was not so much a “tax and spend” budget, as a “spend” one. Government borrowing is largely paying for all this and the Scottish government now plans to borrow a further £319m in 2021/22 to help cope with the pandemic.

It makes sense to borrow, rather than raise taxes, during this crisis because we need Scotland’s economy to recover as quickly as possible. Taking money out of people’s pockets would reduce their spending, cause further damage to businesses and only prolong the current agony.

But, of course, all this money will have to be repaid in the future when we can only hope we will be able to afford it.

The frightening thing is that all this government spending may not be enough.

Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, warned Scottish businesses had never been in such a “precarious” position.

While she welcomed the Forbes’ budget, she added that it did not “go nearly as far enough to avoid risk of widespread business collapse and job losses”.

The Covid pandemic has struck a serious blow to the economy – and one exacerbated by the folly of Brexit – with experts predicting that GDP will not return to pre-pandemic levels until 2024.

Only time will tell if Forbes has got the budget right but what is vitally important is that she remains willing to change her plans if they are not working or circumstances change.

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