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Scottish government sets out budget plans Scottish government sets out budget plans
(35 minutes later)
Scotland's finance secretary has set out the Scottish government's draft budget, which included the first use of its new tax powers. Scotland's finance secretary has pledged a funding increase of £240m for Scotland's councils as he set out his draft budget.
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. Derek Mackay also confirmed he will not change income tax rates or bands - but will not replicate the UK Treasury's tax cut for higher earners.
This means the 40% income tax rate will start at £43,430, while in the rest of the UK it will be £45,000.This means the 40% income tax rate will start at £43,430, while in the rest of the UK it will be £45,000.
He also said £120m of government money will be given directly to schools.He also said £120m of government money will be given directly to schools.
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.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.
The Scottish Conservatives said Scotland was now the highest-taxed part of the UK, and accused Mr Mackay of giving to councils with one hand while taking with the other.
And Scottish Labour leader Kezia Dugdale said Mr Mackay had "acted like a Tory chancellor" as she claimed his measures would cut £327m from the overall budgets for local services such as schools and social care.
The ending of the council tax freeze in April 2017 will mean that local government leaders can increase the charge by up to 3% - potentially generating up to £70 million additional funds a year.
And Mr Mackay insisted the proposed local government finance settlement and local taxation would mean £240m of additional spending power to support local government services, with all revenues raised locally being spent locally by councils.
On income tax, Mr Mackay told MSPs that he was "sympathetic" to calls for the top rate for those earning more than £150,000 to be increased from 45p to 50p.
But he said: "In using the Scotland Act income tax powers for the very first time, we must have a balanced approach.
"Let me be clear, I will not pass the costs of UK austerity on to the household budgets of the lowest-income taxpayers."
Mr Mackay announced £60m for the first phase of the plan to expand early learning and childcare to 1,140 hours.Mr Mackay announced £60m for the first phase of the plan to expand early learning and childcare to 1,140 hours.
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.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.
Business rates poundage will be reduced by 3.7% to 46.6p.Business rates poundage will be reduced by 3.7% to 46.6p.
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. And 100,000 properties will be exempt from business rates under the small business bonus scheme by increasing the 100% relief threshold to £15,000.
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.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.
'Local services'
The Scottish government will also use £47m to mitigate the bedroom tax and will "abolish" it at the earliest opportunity, Mr Mackay said.The Scottish government will also use £47m to mitigate the bedroom tax and will "abolish" it at the earliest opportunity, Mr Mackay said.
The finance secretary said his budget would deliver £700m of additional spending on the economy and public services.The finance secretary said his budget would deliver £700m of additional spending on the economy and public services.
And he said he wanted to protect "vital local services", saying that there will be "no overall reduction" in local government funding.And he said he wanted to protect "vital local services", saying that there will be "no overall reduction" in local government funding.
Among his other commitments were:Among his other commitments were:
Scottish Conservative finance spokesman Murdo Fraser said the budget meant Scotland was now the highest-taxed part of the UK.Scottish Conservative finance spokesman Murdo Fraser said the budget meant Scotland was now the highest-taxed part of the UK.
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".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".