Scottish Budget: What it means for you as tax changes and a council tax freeze announced
A new tax bracket will be created in Scotland and the government will help "fully fund" council tax freeze, the Deputy First Minister has announced as she made her Budget statement.
Scottish finance secretary Shona Robison has attempted to plug an estimated £1.5 billion funding gap with her £60 billion budget.
Despite having more money to spend than ever before, the Scottish Government is facing a funding shortfall of an estimated £1.5 billion, according to the Fraser of Allander Institute.
The finance secretary has said this year's budget is against the backdrop of the most difficult financial conditions in the history of devolution and has scrutinised the UK Government's Autumn Statement as a "worst-case scenario for Scotland".
With limited tax powers, she said Holyrood is "fighting Westminster austerity with one hand tied behind our back".
Here are the key points from her statement.
Tax increases
As predicted, the finance secretary has introduced a new 45% tax band for people earning between £75,000 and £125,140 a year.
This means almost half a million Scots will be pulled into the higher rate tax band.
She said: "Those with the broadest shoulders are asked to contribute more."
Taxation changes mean Scotland will have six income tax bands while the rest of the UK continues to have three. They are:
Starter Rate (19%): £12,571 - £14,876
Basic Rate (20%): £14,877 - £26,561
Intermediate Rate (21%): £26,562 - £43,662
Higher Rate (42%): £43,663 - £75,000
Advanced Rate (45%): £75,001 - £125,140
Top Rate (48%): Above £125,140
The SNP argue that taxpayers all benefit from a "social contract". They say nearly half of the population paying more tax than their English neighbours will ensure continued access to free prescriptions, tuition fees and free bus travel for millions.
There will be no changes to tax rates for those paying starter, basic, intermediate and higher tax rates. Instead, it will increase with inflation.
Freezing the higher rate threshold next year will add an estimated £307 million to income tax, Ms Robison predicts.
First Minister Humza Yousaf said he was keen to explore increasing taxes for higher earners since he entered SNP leadership election earlier this year, but critics have warned tax increases will not be enough to plug funding gaps in Scotland’s finances.
Prime Minister Rishi Sunak has questioned the move, saying the Scottish Government “needs to explain why it’s choosing a different path which is one of higher tax for both people and businesses”.
NHS, social care and childcare
The Scottish Government says it is "absolutely committed" to protecting the NHS as the free, at the point access, publicly owned service that it is.
The health service's frontline boards will receive an increase of more than £550m.
£2bn will also be invested in health and social care integration. Ms Robison claims this will exceed the "commitment to increase social care investment by 25%" by the current government.
There will be £200m of additional funding given to raise pay by at least £12 an hour, in an attempt to attract more people to join the struggling social care, early learning and childcare workforces in the private, third and independent sectors.
Disabled people are also set to benefit from the reopening of the independent living fund.
Action on the cost-of-living crisis and families
Ms Robison confirmed the Scottish government will fully fund their previously announced council tax freeze.
She estimates the above inflation 5% council tax freeze will free-up £140m of additional investment for local services. However, Unison, Scotland's largest council union, has said the freeze won't benefit the poorest people.
"One child in poverty is one too many," the finance secretary said before confirming the government will support low income households by providing a “one-off emergency fund” of £1.5m to local authorities to cancel school meal debt, which has been a publicised issue facing the SNP.
With the pressure of the cost of living crisis, earlier this year children's school meal debt to councils had increased by 60% costing local authorities £1.8m.
While councils will receive a 6% funding increase since the last budget - a new record high of more than £14bn - critics say local authorities are still likely to feel short-changed.
The Government also intends to increase the Scottish Child Payment to £26.70 from April of next year. This falls short of the £30 per week payment which Child Poverty Action Group had called for and the First Minister supported.
Public services
Ms Robison confirmed a 5.6% increase in the amount spent on policing. This means the Scottish Policing Authority resource budget will hit £1.55bn in policing in 2024/25.
A 12.4% boost will also be given to help police invest in estates, technology and vehicles. This comes as Police Scotland says it may permanently shut more than 40 buildings to cut costs amid major budget concerns.
The rising costs facing prisons will be addressed by an investment of £38.6m to the Scottish Prison Service's resource budget and £176m to modernise the prison estate.
The finance secretary also announced a resource uplift next year of £13.5m and increased capital investment of £10.3m for the Scottish Fire and Rescue Service.
Spending cuts
As a devolved government, the Scottish finance secretary has limited borrowing powers, meaning she must present a balanced budget.
In the current financial climate, it was inevitable that the Scottish Government would make cuts to public spending.
Despite £550m of funding in the supply programme for rent, social rent and affordable home ownership, the budget was criticised for not meeting the scale of demand or addressing the waiting list for social housing.
The supply of residential housing across Scotland, including student and care accommodation, has long struggled to meet demand.
Earlier this year Edinburgh and Argyll and Bute formally declared a housing emergency.
The statement included a £200m cut to the housing budget within the statement - primarily in new build homes.
Ms Robison said "we cannot spend money that we do not have" and argued there was "simply no substitute for independence".
No change to Land and Buildings Transaction Tax means Scotland remains more expensive to buy property for first time buyers, with tax starting at £175,000 compared to £425,000 in England and Wales.
What didn't the Budget include?
Taking a swipe at the UK Government, Ms Robison said: "With our limited powers, there's only so much more we can do. But what we can do, we will."
The deputy first minister was criticised for not directly addressing economic growth and punishing the creative arts.
The Scottish Government's budget also came under fire for failing to meet its mental health targets, the Royal College of Psychiatrists has said.
Despite the SNP committing to investing 10% of frontline NHS spending in mental health by the end of this Parliament, no change in funding for the previous two years means there has been a 16% reduction in real-terms spending.
Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know...