Scottish Budget 2024-25 | Scottish Parliament

Scottish Budget 2024-25

Author: Ross Burnside, Ailsa Burn-Murdoch, Andrew Feeney-Seale, Nicola Hudson, Greig Liddell, Rob Watts

PDF Published: Thursday 04 Jan 2024 (24/01)

Chart showing the allocation of the total budget (Total Managed Expenditure) by Resource, Capital, AME and Non-cash. TME will fall by 2.6% in 2024-25. Within that Resource (day-to-day spend on salaries and public service delivery) will increase by 4.4% in real terms, but capital spending (on infrastructure like building roads, schools and hospitals) will fall by 7.1% in real terms.

Image: Figure 1: Allocation of TME

Chart showing absolute cash and real terms changes to Resource and Capital spending. Resource will increase by £1,847 million in real terms next year, and Capital (including financial transactions monies) will fall by £484 million.

Image: Figure 2: Absolute change in Resource and Capital, 2023-24 to 2024-25, £m

Chart showing the Budget to Budget 2023-24 to 2024-25 portfolio changes in cash and real terms. Eight of the portfolios increase in both cash and real terms. The largest real terms percentage increases are in Social Justice (which includes social security spending) and Justice – both these portfolios increase by 11.2% in real terms. Rural Affairs, Land reform and Islands; Wellbeing, Economy, Fair Work and Energy; and Transport, Net Zero and Just Transition fall in cash and real terms. The largest percentage fall is in the Rural Affairs, Land Reform and Islands portfolio which falls by 9.3% in real terms.

Image: Figure 3: Fiscal Resource and Capital, including financial transactions, by portfolio, 2024-25

Chart showing the split between Resource and Capital by portfolio. This shows that most portfolios are heavily weighted towards funding day-to-day spending commitments (the Resource budget). The Transport, Net Zero and Just Transition and Wellbeing, Economy, Fair Work and Energy portfolios have the highest proportion of their budget comprising Capital spending – both over 60%.

Image: Figure 4: Resource and Capital allocations by portfolio area

Chart showing the SFC forecasts for spending in 2024-25 on each Scottish benefit. Total spend on devolved social security is forecast to be £6,258 million in 2024-25.

Image: Figure 5: Devolved Social Security spend for 2024-25

Chart showing the largest level 3 budget line real terms changes in 2024-25, compared with 2023-24. The largest real terms increase next year comes in the Adult Disability payment which increases by just under £500 million in real terms.

Image: Figure 6: Real terms changes to level 3 budget

Chart showing path of GDP since 2019 and forecasts to 2028. The SFC projections for GDP growth have been revised downwards slightly since their May 2023 forecasts.

Image: Figure 15: Scottish GDP, 2022 Q1 = 100

Chart showing CPI inflation since 2021 and forecasts to 2029. The SFC is expecting CPI inflation to reduce more slowly than had been expected at the time of the May 2023 forecasts.

Image: Figure 16: CPI inflation, year-on-year growth

Chart showing Scottish average earnings as a % of UK average earnings. Forecasts suggest that the gap between Scottish and UK earnings will narrow over the period to 2028-29 but remain wider than the average for the period before 2015-16.

Image: Figure 17: Scottish average earnings as % of average UK earnings

Chart showing breakdown of capital budget in 2024-25. The capital budget totals £6.2 billion in 2024-25. The main component of this is the capital allocation of £4.7 billion from HM Treasury.

Image: Figure 18: Total capital budget, 2024-25, £ million

The Scottish Government state that £4.7 billion in capital and resource funding in the 2024-25 Budget will contribute to meeting Scotland's climate goals. Of this, £2.5 billion represents the ongoing investment in public transport, £394 million is the affordable housing supply programme and £344 million is planned spending for energy efficiency.

Image: Figure 19: Key policy and budget allocations expected to contribute to meeting the Scottish Government climate goals in 2024-25

Greenhouse gas emissions associated with the 2024-25 Budget as expected to be largely comparable to the 2023-24 Budget. In absolute terms, emissions are higher than in 2010-11, but lower than in 2021-22.

Image: Figure 20: Greenhouse gas emissions associated with Scottish budgets, 2010-11 to 2024-25

While in absolute terms greenhouse gas emissions associated with the Scottish Budget are higher in 2024-25 than when the first carbon assessment was published in 2010-11, the size of the Scottish Budget has also increased over this period. When comparing the ratio of emissions to spending, there has been a reduction by almost half in nominal or cash terms. However, after adjusting for inflation, while there is still a reduction in the emissions associated with each £1 in spending in the Scottish budget, this reduction is more muted.

Image: Figure 21: Carbon intensity of Scottish Budgets, total emissions compared to Total Managed Expenditure, since 2010-11

The updates taxonomy of capital spend and the new resource taxonomy show that the majority of spending is expected to have a neutral impact on Scotland's climate goals, 51% of capital and 75% of resource. 42% of capital spending is expected to have a positive impact, and a further 5% of resource spending.

Image: Figure 22: Capital and resource spending taxonomies, 2024-25

Infographic showing breakdown of real terms change in portfolio, alongside primary outcomes and performance assessment against those outcomes

Image: Figure 23: Performance change in national outcomes, by portfolio

The percentage of local government's total revenue settlement which is either ring-fenced or transferred in-year rose from 11% in 2020-21 to 18% in 2023-24. However, the 2024-25 Budget shows a fall back to 13%.

Image: Figure 7: Percentage of total revenue settlement either ring-fenced or transferred in-year

The Scottish Fiscal Commission estimate that behavioural effects will reduce expected revenues from the Scottish Government's income tax proposals from £199 million to £82 million.

Image: Figure 8: Impact of Scottish Government tax policy decisions on income tax revenues, 2024-25

Chart showing income tax net position forecasts for 2024-25 to 2028-29. Latest Scottish Fiscal Commission forecasts show the gap between expected income tax revenues and the equivalent block grant adjustment widening from £1.4 billion in 2024-25 to £2.3 billion in 2028-29.

Image: Figure 9: Income tax net position, £ million

Chart showing impact of income tax changes for households at different points on the income distribution. The proposed income tax changes have the biggest impact on households at the top end of the income distribution. For the richest 10% of households, income is reduced by £540 per year, compared to an average of £61 per year across all households.

Image: Figure 10: Impact of income tax changes on household incomes, £ per year

The basic property rate on properties with a rateable value up to and including £51,000 remains at 49.8 pence for 2024-25. The intermediate property rate (for rateable values between £51,001 and £100,000 will increase to 54.5 pence, and the higher property rate for rateable values above £100,000 will increase to 55.9 pence.

Image: Figure 11: Non-domestic rates poundage rates, 2024-25

The Scottish Fiscal Commission forecast that income from non-domestic rates will increase over the next few years to reach around £3.5 billion by 2026-27. Since the December 2022 forecast, income in 2024-25 and onwards is expected to be higher in each year. New relief announcements in the 2024-25 Budget decrease income by around £30 to £40 million per year from 2024-25 onwards.

Image: Figure 12: Forecast income from non-domestic rates

Income from Land and Buildings Transaction Tax is forecast to reduce slightly in 2024-25 before increasing to exceed £1 billion by 2028-29. Compared to the SFC's December 2022 forecast, income is expected to be around £40 million higher in 2023-24, but thereafter is largely unchanged.

Image: Figure 13: Forecast income from Land and Buildings Transaction Tax

The Scottish Landfill Tax forecast shows a material reduction in revenues as it is expected that less waste will be sent to landfill in order to meet climate goals. By 2026-27, this tax is expected to generate less than £20 million annually. Compared to the SFC's December 2022 forecast, income in 2024-25 and 2025-26 is expected to be around £15 million lower.

Image: Figure 14: Forecast income from Scottish Landfill Tax

Last Updated: 1/12 5:20pm

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