Scottish budget to receive £737m UK Government ‘bailout’

The Scottish Government is set to receive a £737 million increase in its budget from the UK Government, to offset poor income tax receipts, it has been revealed today.

The ‘bailout’ has been agreed by the Treasury in the first of a new annual process called reconciliation following the devolution of powers over income tax.

HMRC has calculated that the Scottish Government raised £941 million less than expected in devolved income taxes in 2017/18. Because of an agreement between the UK and Scottish Governments, this shortfall will now be offset by a £737m increase to the block grant, funded by the UK Government.

The news comes as public spending statistics show that thanks to this fiscal arrangement, public spending in Scotland is £1,531 or 16% higher per head than the UK average.

The Scottish Government is able to meet the rest of the shortfall by borrowing up to £1.75 bn, using part of a £700m reserve or by trying to boost income tax receipts by growing the economy.

John Lamont MP has said this ‘bailout’ highlights the benefits of Scotland being part of the UK but is urging the Scottish Government to boost income tax receipts.

John Lamont MP said: “The Scottish Government now has significant economic powers but these figures show they raised £940m less in income tax than they expected.

“Thanks to the UK Government, much of this shortfall will be plugged with a £740m bailout, but the SNP need to start taking responsibility.

“By making Scotland the highest taxed part of the UK, they are holding the economy back. The devolution settlement means that the Scottish budget is boosted if our economy is doing better. It is time for the SNP to stop with their excuses and get on with the day job of growing Scotland’s economy.

“Most importantly, these figures show the huge benefit Scotland enjoys as being part of the UK. Instead of having to fill a £1 billion black hole in public finances, the broad shoulders of the UK will support the Scottish Government and allow them to continue to spend far more on public services than elsewhere in the UK.”