Scotland's £35 billion budget faces 'substantial savings', warns Kate Forbes

Finance Secretary  Kate Forbes warned of savingsFinance Secretary  Kate Forbes warned of savings
Finance Secretary Kate Forbes warned of savings
Scots have been warned that "substantial savings" to balance Holyrood's £35 billion budget are looming amid growing anger over a lack of clarity from Westminster about pandemic spending.

Finance secretary Kate Forbes told MSPs she was being left in the dark as she planned the most important budget in the "history of devolution" after the cancellation of the UK Government's Autumn budget.

The SNP minister warned support for hard-pressed firms during the pandemic would suffer unless there was a change in approach from Westminster.

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The setting of income tax, council tax and business rates could all be thrown into disarray in the Scottish Government's planning for the 2021/22, Ms Forbes told MSPs at Holyrood today.

Holyrood's £35bn is usually provisionally published in December and passed in March.

The process depends on the UK Government's budget having already been set out because the latter includes the "block grant" for Scotland, which still makes up the bulk of Holyrood spending.

With Chancellor Rishi Sunak having cancelled his planned November budget, it means Ms Forbes must plan on the basis of provisional and partial figures, which are subject to "uncertainty and risk".

If Mr Sunak eventually decides to alter income tax rates in the UK, it could leave Scotland, where this responsibility is devolved, massively out of sync and unable to change course during the financial year.

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Ms Forbes warned: "The degree of uncertainty runs to the billions of pounds."

The uncertainty comes as Scotland's economy faces a bettering as a result of the Covid pandemic, with GDP down by a fifth and 217,000 Scots workers still furloughed.

Ms Forbes has now issued a call with the other devolved Finance ministers for seeking clarity from Mr Sunak as they seek to rebuild.

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"Our economy remains fragile and recovery will be slow," Ms Forbes said in Holyrood today.

"Economic activity is not expected to return to pre-crisis levels before the end of 2023."

The prospect of a no-deal Brexit would only make the situation worse, she added.

Scotland has received £6.5bn from Westminster to help weather the economic storm of Covid, while more than 700,000 Scots workers have been helped by UK job support schemes.

But Ms Forbes said that need "far outstrips" the resources available to the Scottish Government.

"Without further clarity on funding or flexibilities from the UK Government, substantial savings will be required to bring the budget into balance by year end," Ms Forbes said.

A joint statement from the Scottish, Welsh and Northern Irish finance ministers today demands a "full suite" of flexibilities to help the devolved administrations battle the pandemic.

"These are flexibilities that we need to manage the unprecedented, ongoing situation that we're facing - powers that we and other devolved governments are seeking are reasonable, they're straightforward and they wouldn't cost the UK Government a penny," the statement said.

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The key demand is for extended borrowing powers, which allows Holyrood to increase its spending.

Ms Forbes warned that the budget for 2021/22 will be "critical”.

She said: "It will be one of the most important in the history of devolution, it will determine how our economy and our public services respond to and recover from Covid-19."

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