The most important proposal emanating from the Government's budget is the freeze on council-tax rates for the next three years, which would effectively cut tax by 2.7% per year. To enable this, ministers have set aside £500 million to be given to the 32 Scottish councils if they freeze their council tax rates. Additionally, councillors have been promised that they will be consulted before new policies affecting local government are introduced and that they will be subject to a reduced level of regulation and inspection. However, despite these strong incentives, councils have indicated that they can only guarantee a halt on rising rates for one year. It should also be noted that this deal with the councils has not yet been ratified, with each of the 32 local authorities still to vote on the matter.
Efficiency targets for government are to be increased, with the finance secretary demanding 2% savings per year from the public sector. The focus of the finance budget is transport, with the Government committing £7.3 billion over the next three years to improving public transport and roads. Railways, trams, roads and ferry services will all receive significant financial boosts, while free bus travel has been promised for more than one million people. The budget has also pledged £20 million, £25 million and £30 million over the next three years towards replacing the Forth crossing.
Small businesses have been favoured in the budget that introduces a rates relief scheme, which will see 150,000 Scottish firms pay either reduced or no business rates by 2011.
With regard to the environment, the Government has promised increased spending on energy and climate change, growing to £33 million by 2010/2011. The budget also committed Scotland to generating 50% of its electricity from renewable sources by 2020, a proposal which was greatly welcomed by the renewable energy industry.
The Government intends to spend £11.2 million on health in 2008/2009, rising to £12.2 billion over the next three years. Additionally, the budget has committed £85 million to fight alcohol abuse, £9 million to cut smoking and £35 million to reduce obesity. The Government has also pledged £97 million over the next three years to phasing out prescription charges for people with chronic health problems, cancer or who are in full time education.
The budget will increase spending in the justice department to over £1 billion in 2011, including £107 million dedicated to improving prisons, which will include replacing Peterhead and Aberdeen with a new prison and building a new prison at Bishopbriggs.
Education appears to have come off worst from the budget announcement. While the Government has stood by its manifesto commitment to reduce class sizes to 18 children in primaries one to three, no money has been set aside for this in the budget and no timescale has been announced, although Mr Swinney did comment that they would be moving as quickly as possible in this direction. Universities Scotland are particularly unhappy about the budget's proposal to give just £30 million to tertiary education, rather than the £168 million that they said was required in order to compete with English Universities. While the Government's plan to remove the graduate endowment fee was included in the budget, their promise to wipe out student debt was absent from the proposals.
Both Labour and the Liberal Democrats have been highly critical of the budget, commenting that the SNP has failed to deliver the key policies that it promised as part of its election manifesto. However the Government has blamed the restrictive financial settlement they have been given following the UK Government's 2007 Comprehensive Spending Review for the choices he has had to make (see November Public Law e-bulletin for further information on that Review). First Minister, Alex Salmond, criticised the £100 billion allocation when it was announced in October, claiming that Scotland had been "short changed", whereas the UK Government commented that the lower spending increase in Scotland will enable more money to be spent on reserved matters such as international development and anti-terrorism proposals which will also benefit Scotland.
The formal 2008-09 Budget Bill must be laid before parliament before 20 January 2008, and following intense scrutiny, the Parliament will vote on the proposals in early February. With a minority administration, the SNP are very much reliant upon the other parties in order to get this budget passed. The SNP must therefore focus on gathering confidence and support during the upcoming scrutiny period; any failure to pass the Budget Bill will have significant impact on the Parliamentary session.