Holyrood busts pay cap with final budget approval

23 Feb 18

The Scottish Government has passed a budget giving public sector employees a pay rise and an extra £170m over the next year to local authorities.

The tax and spending plans, which were passed by a majority of 14 votes on Wednesday, will give 75% of public sector workers - earning less than £36,500 - a 3% pay rise.

Local government was awarded an extra £170m after ministers struck a deal with the Scottish Greens.

Under the proposals, 70% of taxpayers will pay less tax next year meaning those earning under £33,000 will pay less income tax in 2018-19 than in 2017-18, with higher earners paying proportionately more.

People earning £45,000 will pay £42 a month more and someone earning £150,000 will pay £161 a month more. 

The Scottish Government has also said that 55% of taxpayers will pay marginally less income tax than if they lived elsewhere in the UK.

The Independent Scottish Fiscal Commission has forecast that by lowering Starter Rate of tax and increasing the Top Rate of tax, Scotland will raise an additional £164m for use on public services.

The budget will also see £400m put towards health spending, which is £200m more than is needed to stay ahead of inflation.

Finance secretary Derek Mackay said the budget: “Delivers increased funding for the NHS, protects low and middle income earners, and provides further support for our economy, helping businesses, large and small to develop and thrive in the 21st century.

“It ensures our partners in local government will receive real-terms increase in funding to more than £10.5bn.” 

He added: “This fair funding settlement is in addition to any changes to council tax local authorities may pursue.”

Scottish councils had called for greater certainty over local government funding ahead of the budget vote on Wednesday.

Gail Macgregor, resources spokesperson for the Convention of Scottish Local Authorities, called for multi-year settlements.

“We have had enough of short termism by way of one year funding deals from the Scottish Government,” she said.

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