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Scottish budget for year 2022-2023

Posted: 9th December 2021

Kate Forbes today announced the first budget published under this new Government. She stated that it aims to look beyond Covid as well as dealing with its ongoing effects, whilst wanting to build on the renewed approach to collaboration shown during pandemic. We have summarised the key points for our members below, but the full budget can be found here.

The economic and fiscal context

  • The long-term damage to the Scottish economy is estimated to be around -2%.
  • The long term impact of Brexit is expected to mean a -4% long-term reduction in living standards, whilst the scale of the negative impact of Brexit is three times higher in Scotland than in London.
  • Unemployment is expected to peak at 4.9% by the end of this year.
  • Despite that, the Scottish economy is now expected to recover to pre-pandemic levels by April-June 2022.

Non-Domestic Rates and other taxation

  • In order to phase back in the return of rates liabilities, reliefs for retail, hospitality and leisure sectors will continue at 50% for the first 3 months of 2022-2023, capped at £27,500 per rate payer.
  • Scotland will also continue to offer a rate of poundage of 49.9p in the pound, meaning a below-inflation uplift for the fourth year in a row.
  • It has been confirmed that the next NDR revaluation is still scheduled for 2023.
  • The Small Business Bonus Scheme will continue, meaning that small high street businesses with a rateable value of less than £15,000 will pay no rates for 12 months.
  • New builds will pay no rates for the first 12 months after occupation, through the Business Growth Accelerator, whilst the reliefs under this scheme will be expanded to include the installation of solar panels.
  • Income Tax rates next year will remain unchanged. Starter and Basic Rate bands will increase in line with inflation (3.1%), whilst Higher and Top Rate thresholds will remain frozen at current levels.
  • The Land and Buildings Transaction Tax: residential and non-residential rates and bands will be maintained at their current level.
  • The Scottish Landfill Tax: there will be an increase in the standard and lower rates of tax to maintain consistency across UK and support ambitions for a more circular economy.
  • The Scottish Government has stated that they remain committed to introducing Air Departure Tax (ADT) when a solution to the Highlands and Islands exemption issue has been found. Until ADT is introduced, the UK Government will maintain the application of Air Passenger Duty in Scotland.

Business and the economy

  • There was a stated recognition that the Government cannot talk about public services without supporting businesses to recover. The biggest challenges seen to be facing businesses right now are labour shortages, rising costs, and inflationary pressures.
  • They will therefore invest in skills and employability, aim to make catalytic investments to regenerate areas, and work to boost trade.
  • They will shortly publish a National Strategy for Economic Transformation to provide vision and leadership for longer term.
  • £205m will go towards capitalization for the Scottish National Investment Bank
  • Over £225m to be invested in Skills Development Scotland to support a range of national training interventions.
  • Nearly £2bn to go to universities and colleges to deliver education and training.
  • More than £370m to support the enterprise agencies.
  • Nearly £50m VisitScotland to promote innovation and, strengthen key sectors including tourism.
  • £9.2m will be used to harness the digital ambitions of SMEs and strengthen the digital economy.

Health and Social Care

  • Covid-19 will remain the primary focus of Government in the immediate term, with a record funding of £18bn for health and social care.
  • £4bn has been promised across social security and welfare, including £1.95bn to start the delivery of Adult Disability Payment next year, replacing the UK Personal Independence Payment scheme.
  • £110m will fund free bus travel for young people from January 2022.
  • £831m promised for affordable, energy-efficient housing.
  • As previously announced, the promised doubling of Scottish Child payment will be brought forward to April 2022, and eligibility will also be expanded from December 2022.

Climate crisis

  • Almost £2bn of low-carbon capital investment in public infrastructure, supporting the decarbonisation of buildings and transport.
  • They will also work with the private sector to mobilise investment behind the low-carbon transition.
  • £60m promised for large-scale heat decarbonisation projects along with £53m for a range of energy transition and industrial decarbonisation projects.
  • £23.5m for the Green Jobs Fund
  • £1.4bn to maintain, improve and decarbonise the rail network and investment of £150m in infrastructure to make active travel safer
  • £43m to drive forward a circular economy
  • £53m to restore natural environment
  • They will work to attract investment into Scotland’s Green Investment Portfolio, which aims to bring together market-ready projects worth £3 billion by 2022

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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