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Scottish government sets out budget plans Scottish Budget: Mackay pledges £240m for local services
(35 minutes later)
Scotland's finance secretary has pledged a funding increase of £240m for Scotland's councils as he set out his draft budget. Scotland's finance secretary Derek Mackay has pledged a funding increase of £240m for local services as he set out his draft budget.
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. But opposition parties said the amount of cash going direct to councils will be cut.
This means the 40% income tax rate will start at £43,430, while in the rest of the UK it will be £45,000. Mr 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.
He also said £120m of government money will be given directly to schools. This means the 40% income tax rate will start at £43,430 in Scotland.
But it will start at £45,000 elsewhere in the UK.
The finance secretary also said £120m of government money will be given directly to schools, with head teachers deciding how the money will be spent.
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.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.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.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.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.
Analysis by Philip Sim, BBC Scotland political reporter
The key budgetary flashpoint was over funding for local services. Derek Mackay insists overall funding is going up, but Kezia Dugdale insisting he's set to "rip the heart out of local services".
Digging through the figures, the specific pot of money that goes direct to councils is going down. But there is a big new chunk of cash going to local services by other routes, like to schools and to health and social care partnerships.
Councils will have less money in the bank, but more cash will go direct to services; the political premise being that people care more about classrooms than councillors.
Of course, none of this has come to pass yet. The final vote on the budget isn't until February; there will be an awful lot of talks between now and then.
Labour and the Tories both said they couldn't back the budget as it stands. The Lib Dems say there are "miles to travel" and the Greens want to see "meaningful changes".
The SNP need to win over at least one of their opponents; announcing this draft budget will ultimately be just the start of Derek Mackay's work.
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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.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.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.""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 100,000 properties will be exempt from business rates under the small business bonus scheme by increasing the 100% relief threshold to £15,000.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.
'Local services'
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.
But the finance secretary said Scotland's GDP was forecast to grow by about 1% in 2016-17 and 1.3% in 2017-18, compared to about 2% a year previously.
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 his party could not support the budget proposals as they stand.
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". Mr Fraser said: "He (Mr Mackay) had the choice to use these new powers to support economic growth, and to tackle our underperforming economy.
"It is much to be regretted that he has chosen instead to hike taxes on families and businesses in Scotland, risking choking off economic recovery and depriving Scottish public services of vital tax revenue.
"This will make Scotland the highest taxed part of the United Kingdom, and as it stands this is not a budget we can support".
'Real terms cut'
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".
Ms Dugdale said: "However the finance secretary tries to spin it, today's budget means a real terms cut of £327m from the SNP government to local services.
"And they're making up the difference by holding councils to ransom - forcing them to use their tax powers, while they refuse to use theirs.
"They could have asked the richest 1% to pay a little more with a 50p tax, but they refuse."
The Scottish Greens said the draft budget was "modest in its ambitions when bold measures are needed to tackle poverty and protect public services".