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Shona Robison announced government spending plans for 2025/26
A pledge to remove the two-child benefit cap and changes to the basic and middle tax thresholds are among the Scottish Government's plans for the next financial year.
The announcements were made by Finance Secretary Shona Robison as she revealed her tax and spending plans for 2025/26.
Other talking points included an extra £2bn for the NHS and a £768m investment in affordable housing.
Here are five key points from this year's Scottish budget.
Two children cap
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The government has announced it will remove the cap on child benefit for two children by 2026.
The budget's biggest announcement isn't actually part of the tax or spending plans for next year.
It was the 'rabbit out of the hat' moment for Shona Robison when she announced that the Scottish Government would scrap – or offset, or ease – the two-child cap.
This is a UK-wide policy, imposed by the Department for Work and Pensions on social benefits such as Universal Credit and child tax credits – so it will take some time and will require assistance from the British government.
It is not yet clear what the mechanism will be, how it will work or how much it will cost.
The Scottish Tax Commission says it only received the proposal last week and has not had time to quantify the amount; they call it a “tax risk.”
But there is no doubt that this is a big challenge for Labour.
This comes days after an announcement on winter fuel payments, also intended to overwhelm Anas Sarwar's party and embarrass the British administration.
If all goes to plan, the SNP government will start sending payments to the families of the 15,000 affected children in April 2026, a month before the next Holyrood election.
Labor says it is ready to listen to the ideas, but stresses there is not a penny in the coming year's budget to support them.
They will surely have to come up with a more substantive response before the elections get much closer.
Taxes
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Certain tax thresholds will change following the budget
There have been no major changes to the income tax delegation system in this budget.
There have been some changes to the thresholds, which will have a political and even financial impact.
Robison is increasing the basic and middle rate thresholds – two of the lower rungs of Scotland’s six-band tax scale.
Given that Chancellor Rachel Reeves has frozen these thresholds across the rest of the UK, this means Scots earning less than £30,300 will pay less tax than if they lived in England or Wales.
The difference is less than £30 a year, but it allows Robison to claim that 51% of Scottish taxpayers pay less.
One bill that will almost certainly increase is council tax. But with the end of last year's one-off freeze on local rates, it will be up to your local representatives to decide.
Rather than brandishing a stick by imposing any sort of cap, Robison instead sought to guilt local officials into curbing increases, saying that “with record funding, there is no reason for strong council tax increases next year.
She says there is an extra £1 billion for local government – but it remains to be seen how much of that sum councilors will be free to allocate, and how much will go to fenced areas.
Every year the government claims it has increased funding for councils, then councils say it's not enough, and there is an argument over exactly how much is enough.
We'll probably be going around in circles on this until the local and national budgets are finalized next year.
Spending priorities
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Shona Robison has outlined the Government's spending priorities for next year.
The budget was more than £63 billion, and the previously ubiquitous discussions of tough decisions and austerity were noticeably absent. There was a positive tone – as if Robison suddenly had some money to spend on the government's favorite policies.
John Swinney has made ending child poverty his top priority and, as always, the Budget provides cash for the flagship Scottish Child Payment scheme.
Money to ease the two-child cap is not in this budget – just some money to put this system in place, whatever form it takes.
In total, social security spending increased by £800 million, highlighting a key feature of the devolved government, namely the SNP's appetite for large state interventions and social safety nets .
You can include in this announcement from last week winter fuel payments, which will be partially restored starting next year.
This week Mr Swinney also (unsurprisingly) named the NHS as a key priority and, as expected, it benefits from a record funding deal – £21bn, a third of the total budget.
This includes almost £200 million to reduce waiting times and cash for local hospital projects in Edinburgh, Fort William and Airdrie.
There were also billions of pounds for net zero and climate policies – including money from the ScotWind fund, a sum of money raised through the auction of seabed plots for wind power offshore, which Robison previously feared he would have to use on a daily basis. funding per day.
And there is £768 million for affordable housing, which mainly serves to reverse a cut made under Humza Yousaf's administration last year, but which ultimately will leave spending higher and apparently create 8,000 new housing over the coming year.
Growing the economy
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Economic growth is at the heart of the concerns of governments in the United Kingdom. Rachel Reeves put it at the heart of everything she does as chancellor, as Robison said a thriving economy was “an essential requirement”.
The Finance Secretary had been challenged to match the Chancellor's support for businesses in the retail, leisure and hospitality sectors – a 40% reduction on business rates.
Scotland has a slightly different system of “non-domestic rates”, but Robison ultimately said there would be a similar 40% relief for the vast majority of hospitality premises.
Retail and leisure were noticeably absent (although there is some support for live music venues), and we'll see how much this changes in terms of who is or isn't eligible for funding.
The Scottish Hospitality Group said it was a “significantly smaller” offering than the south, calling it a “drop in the bucket”.
One motive for Ms Robison's speech was to name-check her cabinet colleagues as she spoke about each of their portfolio areas.
This was particularly notable in the case of Kate Forbes – an influential figure whom John Swinney brought into government in part to make things right with business.
She highlighted more money for city center regeneration as well as a tripling of investment in the offshore wind supply chain, which was estimated to leverage ten times that amount in private investment.
This approach of using public funds opening the door to huge flows of private funds is one of Ms Reeves' favorite tactics – and indeed is the main aim of GB Energy.
The British energy company is set to have a business when it sets up shop in Aberdeen, with Ms Robison pledging to establish a hub or offshore wind farm in the North East.
Policy
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The Scottish government will need to count on the support of at least one other party to pass its budget.
The SNP does not have a majority in the Scottish Parliament and therefore needs help from other parties to pass a budget.
John Swinney said he wants to reach out to opponents and lead a collaborative administration.
But there is no chance of reaching a deal with the Conservatives, who want billion-pound tax cuts, or with Labour, who really just want elections.
That leaves the Greens and Lib Dems as the most likely dance partners.
Robison deliberately nodded to the key demands of both sides. There was funding for ferries, mental health and dental care for the Liberal Democrats. The Greens have demanded £4.7bn for green policies – and she has promised £4.9bn.
The Greens welcomed some measures, but said “other significant changes” were needed. They are particularly wary of the amounts offered to municipalities.
The Liberal Democrats further welcomed Robison's announcements, with leader Alex Cole-Hamilton unveiling a raft of measures in which he said it was right the government had listened to him.
The draft budget is truly the starting point for negotiations, which will only lead to the first votes at Holyrood in February.
But the feverish talk of a snap election that followed the collapse of the Bute House deal has faded. A deal with someone always seems like the most likely outcome.
