Humza Yousaf set to hold special Cabinet meeting amid budget struggles

The First Minister faces a £1 billion budget black hole

Humza Yousaf is set to hold a special meeting of his Cabinet later on Thursday as the Scottish Government struggles to plug a £1 billion budget black hole.

The First Minister and his deputy, Shona Robison, have yet to conclude discussions with SNP and Green ministers ahead of the Budget on December 19. Insiders say it is proving difficult to “square the circle” amid a grim financial backdrop.

The Cabinet previously met on Tuesday and it is unusual for more than one meeting to take place in a week. This evening’s session will focus entirely on the Budget. Talks could also continue at a further Cabinet meeting on Monday in Haddington.

First Minister Humza Yousaf

Ms Robison previously said Chancellor Jeremy Hunt’s Autumn Statement delivered 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,” she said.

Mr Yousaf has already pledged to freeze council tax. However, it is not clear how much funding will be given to local authorities to compensate for this. The First Minister is also reportedly considering introducing a new income tax band for higher earners.

Recent weeks have seen a series of grim warnings from councils and public sector bodies as the Scottish Budget approaches. Ministers have to balance the books when they set out their £60bn tax and spending plans in Holyrood.

Ms Robison previously said the size of the public sector workforce "will have to reduce", but added the Scottish Government wanted to avoid compulsory redundancies.

Council leaders have warned there is a risk of bankruptcy for local authorities if funding provided by the Scottish Government is not improved. Cosla, the local government body, made the comment after Birmingham and Nottingham city councils effectively declared themselves bankrupt.

Both authorities have issued section 114 notices, which prevent spending on virtually everything apart from statutory services.

In a briefing paper published ahead of the Scottish Budget, Cosla said: “There is a risk this becomes the reality for Scottish councils if the funding by Scottish Government does not match growing cost pressures.” To deal with the impact of inflation and the council tax freeze, Cosla said councils need almost £14.4bn in the 2024/25 Budget to “stand still”.

Meanwhile, Police Scotland has warned officer numbers could drop by almost 1,500 and the force could move to a "reduced attendance model" nationwide if it does not receive extra funding.

It said a "flat cash" funding settlement in 2024/25 – where the settlement remains the same in cash terms as the previous year – would cause "a significant disruption to services".

This is likely to include "a reduction in visible local policing", it said, as well as delays in attending calls and the nationwide adoption of a "reduced attendance model".

Last month, the UK Treasury said the Autumn Statement would see an extra £545 million sent to the Scottish Government through the Barnett formula.