Autumn statement is 'worst case scenario' for Scottish budget - Shona Robison

Ministers face a squeezed budget in December after a lack of major public service investments, government sources said.

Jeremy Hunt’s Autumn Statement is the “worst case scenario for Scotland’s finances”, the finance secretary has said.

The warning comes as government sources said Scotland’s budget is set to be “very bleak” with no-one “bluffing” about the scale of spending cuts or tax rises required to balance the books.

They added there was little to boost the Scottish exchequer less than a month before a tough budget is laid out to MSPs by finance secretary, Shona Robison.

First Minister Humza Yousaf and Deputy First Minister Shona Robison (right) arrive for First Minister's Questions (FMQs) in the main chamber of the Scottish Parliament in Edinburgh.

Ms Robison said health consequentials after pay deals was less than £11m, a real-terms cut for NHS Scotland. The Treasury said £545m in additional consequentials had been sent to Scotland over the 2023/24 and 2024/25 financial years.

She said: “Today’s Autumn Statement from the UK Government has delivered what is the worst case scenario for Scotland’s finances. Scotland needed a fair deal on investment for infrastructure, public services and pay deals – the UK Government has let Scotland down on every count.

“We needed investment in the services that people rely on and in infrastructure vital to the economy, but the Chancellor’s actions failed to live up to the challenges we are facing as a nation, while not doing enough to help those on the lowest incomes.

"The cut to National Insurance shows the UK Government has the wrong priorities at the wrong time, depriving public services of vital funding. Shockingly, the health funding announced today represents an increase of less than 0.01 per cent [£10.8m] to Scotland’s health budget in 2024-25.”

SNP figures have been warning the upcoming Scottish budget will include significant difficult decisions as they seek to narrow a near-£1bn fiscal black hole.

The Scottish Government is facing budgetary pressures caused by an ageing population, an economy growing more slowly than the rest of the UK, and increased spending on social security and other policies.

That position has improved somewhat since it was set out by Ms Robison in May through a combination of changes to the fiscal framework and better than expected tax receipts.

However, sources are still pessimistic about the difficulty facing the government at the budget, due to be announced on December 19.

One source said the announcements from the Chancellor had made little difference to the financial challenges facing the Scottish Government, saying: “Nothing much in the Autumn Statement changes the dial for us. It’s still very bleak.”

A senior government source told The Scotsman there was little in the way of positive impacts on the Scottish position.

“Nobody is bluffing here, it’s going to be tough,” they said. “Nothing from the Chancellor today substantially helps.

Referring to the freeze in alcohol duty, they added: “At least we can have a few pints before the end of the world like they do in the Hitchhiker’s Guide to the Galaxy.”

Government sources pointed at apparent real-terms cuts to key budgets such as health, justice, transport, culture, and environment which will have a knock-on effect for the Scottish budget.

Capital budgets in education, justice, and transport have also been hit by real terms cuts, further weakening the spending power of the Scottish Government.

Another senior government source said the failure of the UK Government to announce spending on key service areas was the worst case scenario for the Scottish Government.

They said: “This is as bad as I thought it could be. This is the worst outcome for the devolved nations. I would never have imagined they would go this far in not investing in services.

"There is going to have to be big, hard, decisions to keep services on the road.”

It comes as ministers came under pressure to match business rates reliefs for small businesses, a measure which it chose not to pass on last year.

Business groups called on Ms Robison to match those reliefs, but were split on their backing for changes brought in by Jeremy Hunt elsewhere in the budget.

Scottish Retail Consortium director David Lonsdale said the Chancellor had “flubbed” the opportunity to freeze the headline business rate, a move that he said “will put upward pressure on shop prices and undermine efforts to rejuvenate high streets and retail destinations”.

He added: “This misstep is the antithesis of the Prime Minister’s anti-inflation strategy and recently unveiled long term plan for towns. Hopefully, the Scottish Government’s Finance Secretary will take a more enlightened approach and go further and freeze the business rate or at least blunt any uplift in next month’s Scottish Budget.”

“Last year shops and hospitality businesses here in Scotland missed out on the rates relief available to their counterparts in England and Wales.

“With relief for retail, hospitality and leisure sectors in England being extended temporarily once again this time it is imperative that the Finance Secretary ensures a similar rates discount applies equally in Scotland.”

Scotland policy chair for the Federation of Small Businesses, Andrew McRae, welcomed the Chancellor’s crackdown on late payments and reforms to self-employed National Insurance.

On the rates reliefs for those in retail, leisure and hospitality, he added: “It’s great news for our fellow small business owners south of the border in these hard-pressed sectors. They’ll continue to see their business rates reduced by 75 per cent.

“The particular inflationary and other economic challenges these firms continue to face underlines the case for the reintroduction of similar reliefs in Scotland, where they’ve not been available since July 2022.

"We’ll be pressing this case with the Scottish Finance Secretary as she draws up next month’s Scottish Budget.”