Mackay to set out Scottish government budget plans
Scottish government sets out budget plans
(about 4 hours later)
Finance Secretary Derek Mackay is to publish the Scottish government's budget plans for the coming year.
Scotland's finance secretary has set out the Scottish government's draft budget, which included the first use of its new tax powers.
Mr Mackay will set out his tax and spending plans, which will include the first use of Holyrood's new tax powers.
Derek Mackay confirmed he will not change income tax rates or bands - but will not replicate the UK Treasury's tax cut for higher earners.
Opposition parties will get the chance to outline their own priorities while putting questions to the minister.
This means the 40% income tax rate will start at £43,430, while in the rest of the UK it will be £45,000.
The budget proposals will be scrutinised by parliament and Holyrood's committees, with final votes taking place in February.
He also said £120m of government money will be given directly to schools.
There will be a separate vote on tax the week before the final budget vote in February, with the government requiring opposition support for both votes. However there is not yet any consensus on tax at Holyrood, with a vote on Wednesday ending in stalemate.
The funding will replace plans to council-tax revenues to tackle the attainment gap, with Mr Mackay instead stating local authorities will keep extra cash raised as a result of council-tax reforms.
This is the first Scottish budget since Holyrood took on a series of new tax powers from Westminster, with the SNP already pledging not to replicate a tax cut for higher earners proposed by the UK government.
Mr Mackay announced £60m for the first phase of the plan to expand early learning and childcare to 1,140 hours.
The Scottish budget is traditionally outlined in September, but Mr Mackay delayed his until December in order to take account of Chancellor Philip Hammond's Autumn Statement.
And he pledged a £3m package of "targeted" rail fare reductions "to ease costs for passengers and thank them for their patience" following criticism of the performance of ScotRail.
Analysis by BBC Scotland political editor Brian Taylor
Business rates poundage will be reduced by 3.7% to 46.6p.
On income tax, Derek Mackay will leave rates alone - but won't replicate the Treasury's cut for higher earners.
And the Small Business Bonus Scheme will be expanded by raising the eligibility threshold for 100% relief to a rateable value of £15,000 - which Mr Mackay said would take 100,000 businesses out of the system.
He'll start acting on manifesto promises. So that's protecting NHS and police budgets.
Mr Mackay said he would deliver on the SNP's commitment to protect the police resource budget in real-terms, and announced an additional £300m for the NHS resource budgets - £120m more than inflation.
There's more for childcare and school attainment.
The Scottish government will also use £47m to mitigate the bedroom tax and will "abolish" it at the earliest opportunity, Mr Mackay said.
Council tax rises will be capped at three per cent - with higher charges for the most expensive properties.
The finance secretary said his budget would deliver £700m of additional spending on the economy and public services.
But it's thought he'll shelve a plan to divert cash from that to schools in the poorest areas, following objections.
And he said he wanted to protect "vital local services", saying that there will be "no overall reduction" in local government funding.
Councils are braced for big cuts - but sources suggest the impact will be contained.
Among his other commitments were:
Mr Mackay insisted his proposals would "support the economy, tackle inequality and provide high-quality public services for all".
Scottish Conservative finance spokesman Murdo Fraser said the budget meant Scotland was now the highest-taxed part of the UK.
He said: "This is a historic budget, delivered in challenging economic and political times. The UK government's Autumn Statement was a missed opportunity to end austerity. It did not go far enough to get the economy back on track and lacked much-needed investment in public services.
And Scottish Labour leader Kezia Dugdale said there would be a real-terms cut of £327m for councils, which would "rip the heart out of local services".
"Despite these challenges, the proposals I will publish will be a budget for our economy and public services, our environment and communities. It will support stability and growth, help tackle climate change and promote fairness in our society."
The Scottish Conservatives oppose any plans which would see Scots pay more tax than workers south of the border.
Leader Ruth Davidson said the budget was a "historic moment", but said there was "basic unfairness" in the SNP's proposals.
She said: "The absolute priority in today's budget must be to grow jobs, grow the economy and so increase the funding we have to support our NHS and school funding.
"To do that, Scotland must remain competitive within the United Kingdom, and Scottish families and businesses should not be taxed more than in the rest of the United Kingdom. Leaving aside the basic unfairness of the SNP plan, it will be a drag on our economy - thereby reducing the sums of money available to ministers.
"The SNP is now in the driving seat. It must ditch its obsession with a referendum on independence, ditch its plan to make Scotland the highest taxed part of the UK, and focus on growing Scottish jobs."
'Historic powers'
Scottish Labour meanwhile have urged the government to up the additional rate of tax paid by those earning over £150,000 to 50p, warning they would not back a budget that fails to protect services.
Leader Kezia Dugdale said if Mr Mackay did not back her tax proposals, it would "destroy" any claim the SNP has to be a party of the progressive left.
She said: "Today, voters will learn the truth about the SNP.
"The nationalists claim to be a progressive party. If that is the case, they will use Holyrood's historic powers to ask those with the broadest shoulders to pay more tax to raise money to tackle Scotland's schools crisis.
"If Derek Mackay fails to do that, he is no better than a Tory Chancellor. Labour will not vote for a budget that puts our economy at risk."
The Scottish Greens have also previously called for more "progressive" taxation via a series of new rates and thresholds.
Co-convener Patrick Harvie put forward a lengthy list of "areas for action in the budget", including "fair funding for local authorities", a top-up of child benefit, a new benefit for young carers, investment in GPs, and green initiatives like low-carbon transport and energy efficient housing.
He said: "The SNP must remember that they are a minority government once again, and that they must work together with others to pass their budget. If they're willing to use that opportunity to tackle poverty and protect public services, we'll respond constructively.
"This is a test for Scottish ministers. If their budget is timid it will go nowhere; if it's bold it will signal that they want to work constructively to make a real difference to people's lives."
The Scottish Lib Dems meanwhile back raising income tax across all bands by 1p, generating funds for education services.
Leader Willie Rennie said: "Liberal Democrats are proposing a modest penny on income tax that would deliver hundreds of millions of pounds that can be invested in our schools.
"After seeing education slip in the SNP's hands now more than ever we need to see investment to make sure we can make our education systems one of the best in the world again. A boost to education would provide a boost to the economy and help make Scotland a high wage, high skilled economy that we all strive to see."
