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Finance Secretary Shona Robison has announced the Scottish government’s plans for the next financial year, revealing a pledge to scrap the two-child benefit cap and adjust basic and intermediate tax thresholds. Other highlights of the budget include £2bn for the NHS, £768m for affordable housing, and billions of pounds for net-zero and climate policies. The budget’s total of more than £63bn represents a positive shift, with talks of austerity and tough decisions notably absent.
The Scottish government’s plan to mitigate the UK-wide two-child cap on welfare benefits, primarily child tax credits and universal credit, has been called a ‘rabbit out of the hat’ moment. The policy has yet to be costed, with the Scottish Fiscal Commission calling it a “fiscal risk.” The plan is seen as a big challenge to the Labour party, and the payments are expected to begin in April 2026, one month before the next Holyrood election.
There were no significant changes to the devolved income tax system in the budget, only minor adjustments to the basic and intermediate rates, which means that Scots earning under £30,300 will pay less tax than those of England and Wales. Council tax is set to increase, and local councillors will decide to what extent, with Robison urging councils to hold down rate increases in light of record local government funding.
The Scottish government continues to prioritise the eradication of child poverty, and substantial funding for social security is up by £800m. The NHS has been allocated £21bn, one-third of the total budget, and £768m will be invested in affordable housing. The SNP also aims to foster economic growth, with a 40% relief on non-domestic rates for hospitality premises, but the Scottish Hospitality Group has declared this significantly less than the sum available elsewhere.
The SNP, who lack a parliamentary majority, will need support from other parties to pass their budget. Talks will begin on the draft budget, with some of the key asks of the Greens and the Lib Dems, such as ferries, mental health, dentistry, and £4.7bn for green policies, addressed in Robison’s announcement. However, significant changes are still required, and discussions will continue until the first votes at Holyrood in February
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