The announcement, revealed in the press on 7th January, that the UK Budget will not be in February, as had previously been expected, but now will be on 11th March, has, unsurprisingly, created a few political waves, particularly north of the border.
As reported in the FT, “Chancellor Savid Javid will seek to lock the government into its new pledge to ‘level up’ economic performance in struggling towns in northern England and the Midlands in a tax-and-spend budget.” The new Conservative administration obviously needs to try to do whatever it takes to retain its newly acquired votes in the north.
North of the border, however, the main gripe from the Scottish government is that the time (three weeks) between the UK budget and the Scottish budget is now, in their view, too short to allow them to assess the budget allocated from Westminster on 11th March. Normally, according to the reports in the press, this process takes three months, although some would dispute this. Historically however, it has taken far less time than this on several occasions, as any perusal of the timescales in previous years will show.
In addition, local government in Scotland has a legal duty to pass their budgets by March 11th. Their concern is that, without knowing what they’ll get from the central (Scottish) government, this is going to be rather difficult and emergency legislation may be required to suspend this requirement temporarily.
The UK Treasury points out that in fact the Scottish Government already knows how much money it is going to get, with the last Spending Round stating clearly that the block grant for Scotland will increase by £1.2BN in the next financial year. On that basis, they say that the Scottish Government can go ahead and prepare its budget as normal. It is also worth noting that until a few years ago, the UK budget was in March every year anyway….
The principal problem here is that politics tend to get in the way of the economics. While acknowledging that expecting politicians to behave sensibly and courteously to each other may be a pipedream, it is incumbent on politicians in Westminster and Holyrood to make this work, otherwise we could be in a position in which HMRC cannot collect the tax that’s due in Scotland. However, reading between the lines, it’s clear that it’s in no-one’s interests for this to be the case and no-one actually expects it to happen… That should be the news story, not the political point-scoring between Holyrood and Westminster.
Stewart McKinnon, Director