Scottish budget due this week 'the most important of our lifetimes'

Business leaders in Scotland want a timetabled approach for "reopening the economy" to be set out by Finance Secretary Kate Forbes in her Budget at Holyrood this week.

Kate Forbes will set out her budget on Thursday

The statement to MSPs on Thursday, setting out Scotland’s spending plans for 2021/22, is being described as “the most important of our lifetimes” by industry chiefs as the country seeks to bounce back from the coronavirus pandemic.

Ms Forbes has pledged to deliver a package of measures which will drive economic growth, create jobs and support beleaguered firms struggling to deal with the impact of the virus lockdown.

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The Finance Secretary has already complained that she is being forced to publish a budget before Chancellor Rishi Sunak has set out his UK Budget, which will include Scotland's block grant settlement.

Commenting on the figures, Liz Cameron, Chief Executive, Scottish Chambers of Commerce said:

Scottish industry leaders say that protecting jobs and livelihoods must be as much of a focus as public health in the £40 billion package set out by Ms Forbes.

Dr Liz Cameron, chief executive of Scottish Chambers of Commerce, said: “This week’s Scottish Budget is arguably the most important budget of our lifetimes. The scale of the challenges facing Scottish businesses in 2021 cannot and should not be underestimated.

“The Scottish Government must deliver a budget that protects businesses through what will be more months of lockdown restrictions, as well as the stimulus needed to boost the economic recovery once widespread vaccination of the population has taken place.

“This must include a timetabled approach to re-opening the economy, aligned with testing and the roll-out of vaccinations. The Budget must provide certainty on long-term business support, job creation and training programmes, infrastructure plans as well as extending crucial business rates reliefs.

"This Budget will be a critical first step to setting our economic recovery in motion.’’

The economy shrunk by a fifth during the previous national lockdown in spring 2020 and the current return to blanket shutdown is likely to have a similarly acute impact on growth.

CBI Scotland says full business rates must not be re-instated for firms which are currently exempt, while Covid grant support schemes must be escalated to reach businesses with “speed and simplicity”.

The organisation is also urging against income tax rises which could discourage spending in areas like tourism, hospitality, and retail when the economy does reopen, although Ms Forbes has indicated such hikes are unlikely.

Tracy Black, CBI Scotland director, said: “With Covid transmission rates at worryingly high levels, the country in severe lockdown and a new more virulent strains of the virus to contend with, it can feel as though we’re caught in the eye of a storm.

"Many companies across Scotland remain in a precarious position and, alongside public health, protecting jobs and livelihoods has to be a primary focus.

“But the immediate challenge must not prevent us from investing in the future. We need to start laying the foundations for recovery now and putting in place a clear plan for building back better from the pandemic.

" Unlocking the private sector is pivotal to kick-starting recovery and limiting the lasting economic damage done by Covid-19. That’s why we need to create a stable, competitive, pro-business environment where firms can grow, recruit and invest with confidence."

Fast-track funding and planning for a rapid expansion and acceleration of electric vehicle charging infrastructure is also backed by the CBI to boost the transition to a net zero economy.

Andrew McRae, FSB’s Scotland policy chair, wants a commitment to helping smaller firms "survive and recover" from the crisis.

"That means getting the grants system working, helping smaller firms develop their digital skills and pushing overheads down for smaller operators until they build back their strength,” he said.

"We’re also pressing the case for mental health support for the business community.

“As the last few weeks have showed, the announcement of policies can be less important than their delivery. Whatever the Cabinet Secretary unveils, it must come with a watertight action plan.”

Ms Forbes has pledged that recovery and renewal will be at the heart of her budget package.

“We remain in the grip of a pandemic which continues to put pressure on our economy, health services and each of us as individuals," she said.

"But the vaccine is providing a route back to normality and we must now sharpen our focus on rebuilding for the future.

“The budget will include innovative, targeted measures to help businesses and families get back on their feet and bolster our vital public services.”

Scotland won’t follow the UK Government’s public sector pay freeze and Ms Forbes has pledged to set out details of a pay settlement that is “fair and affordable”.

“It is vital that we rebuild our economy in a way that provides equal opportunities for all, delivers on our green commitments and creates the kind of Scotland we all want to see," she said.

Ministers have already established a National Transition Training Fund to support up to 10,000 people and set out a £60 million Young Person’s Guarantee and committed £2 billion in low carbon funding.

Views have also been sought on the role of Scotland’s devolved taxes and the nation’s fiscal framework in supporting the recovery.

"There was clear feedback regarding the need for stability and targeted support and that has also been a particularly strong message in my meetings with businesses and their representative organisations," Ms Forbes said.

"The budget will deliver on those priorities."

The Budget statement on Thursday will set out the support for firms currently receiving full business rates relief. This measure was introduced south of the Border last year to alleviate the impact of the lockdown and the funding consequentials for Scotland allowed Ms Forbes to follow suit north of the Border.

But with the Chancellor not setting his own budget until March, Ms Forbes says she is in the dark about whether she can press ahead with full rates relief again in Scotland until the situation is clarified by the Treasury.

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