KATE Forbes has urged the Chancellor to extend Covid support for businesses and reject a return to austerity as a way out of the pandemic ahead of today’s Scottish budget.
The SNP Finance Secretary wrote to Rishi Sunak with a list of proposals for the UK budget, which has been delayed to March in a move Ms Forbes called “deeply problematic” for Holyrood setting its own tax spending plans for 2021/22.
She called on Mr Sunak to extend the jobs furlough scheme beyond April, maintain the £20 a week uplift in universal credit, and extend business rates relief for the hospitality sector.
She said Scottish Government research indicated the poverty and child poverty rates would both be two percentage points higher in Scotland if the £20 uplift was withdrawn
This would move 60,000 people, including 20,000 children, into relative poverty, she said, urging him to “avoid causing further anxiety for those reliant on this lifeline”.
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Mr Forbes, who has called today’s draft Scottish budget “the most important in the history of devolution”, went on: “A return to austerity as a way out of the Covid crisis must be avoided.
“The UK Budget must provide a definitive end to a decade of austerity under which Scotland has suffered and which has disproportionately hurt the poorest and most vulnerable in society.
“When we emerge from the greatest economic shock of our lifetime, it will remain essential that fiscal rules do not constrain the fiscal policy response, thereby weakening the economic recovery and doing more harm to the UK’s long-term fiscal position.”
She also repeated her well-worn call for the UK Government to allow Holyrood to borrow more and convert capital budgets into revenue spending to cope with the pandemic.
Mr Forbes also asked for clarity on capital spending, particularly long-term housing investment, following a cut to the capital side of the Scottish budget last year.
The Skye MP is due to present the Scottish Government’s final budget before the Holyrood election campaign, with a focus on Covid-related spending.
The UK Treasury gave Holyrood and extra £8.6billion for the current financial year 2020/21 and has earmarked another £1.3bn for 2021/22.
However the money for the coming year is expected to increase when Mr Sunak sets out his delayed budget on March 3.
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In her letter, Ms Forbes said all her proposals would have a “profound impact in the Scottish budget and economy”.
She said: “Considerable uncertainty remains over the long-term impacts, as the pandemic and our response evolves.
“I recognise this is hugely challenging territory for both our administrations.
“However, while I very much welcome the support that the UK Government has so far provided to workers and businesses, such as the furlough and business loan schemes, and the £8.6 billion of consequentials provided to the Scottish Government budget, it is evident that further support must be guaranteed in the upcoming UK Budget, together with additional fiscal flexibilities, to meet the on-going challenges of Covid, as well as to support the economic recovery.
“This should include extending the furlough scheme beyond the end of April, until the restrictions on the economy have been lifted, following the example of countries such as Germany.
“The Conservative Party in Scotland has asked me to offer certainty to businesses into next year through assurances that business grant schemes will continue for as long as restrictions remain in force. I have clearly and consistently demonstrated my commitment to supporting businesses and the economy.
“That will continue, of course, but there is clearly a compelling case for longer term guarantees that UK Government support will be available for resilience and recovery.”
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She went on: “It is imperative that the Scottish Budget is urgently allocated its share of the £21bn Covid funding being held in reserve, which could equate to around £1.7bn, so that plans can be made to mitigate the impact of the virus as far as possible on our health service, business and the wider economy.
“The lack of clarity currently available to the Scottish Government and Scottish Parliament about what level of funding may be deployed poses challenges for this year’s budget scrutiny process, which I will be addressing in the Scottish Budget 2021-22 this week and in subsequent engagement with Parliament about the passage of the Budget Bill.
“I trust that you will consider the measures I have outlined above, and that you will reflect them in your Budget on 3 March in order to provide the certainty needed.”