Extra £350m brings questions of cash for Holyrood ministers

Yesterday’s Budget was what Treasury economists used to call “a day down the pub” affair, given that there was little chance of being needed to put out fires or reply to urgent requests on exciting new policies.

Nevertheless, there were some changes and initiatives that are of interest in a Scottish context.

Much of the reported £350 million extra money available to the Scottish Government, via Barnett consequentials, is related to schools, further education and social care funding. Will the Scottish Government spend this cash in the same areas?

On schools, local government has already been given another £160m for 2017-18, beyond the original draft Budget settlement of last December, and the population pressures on schools in Scotland are not as strong as in England.

However, the local government settlement remains controversial and the Accounts Commission recently calculated that councils have had their budgets cut by more than 9 per cent since 2010-11.

On further education, the Scottish Government has had a long-term preference to support higher education over further education but such a blatant neglect of further education may be a step too far.

On social care, the question again is: will this be allocated in the same way and given to local government to spend?

From a wider perspective, the social care budget boost still feels like a temporary measure undertaken before the issue, combined with NHS funding, can be addressed at a more fundamental level, in both England and Scotland.

It is unclear whether any of the extra £350m is related to the UK government’s business rates discretionary support. If so, is this added to the relief already announced by Derek Mackay and is this dispersed via local government, as in England?

On a different tack, Andrew Wilson, chairman of the SNP’S Growth Commission, was perhaps being prescient when he announced earlier this week that North Sea oil revenues should not play a central role in any Indyref2 debate. The latest Office for Budget Responsibility forecasts see such receipts remaining at, or below, £1 billion for the foreseeable future, despite rises in both price and production levels in the past year.

Meanwhile, the elephant in the room remains Brexit and what its long-term impact will be on the economy and public finances.

At present, any forecasts after 2018-19 can be largely disregarded.

Beyond changing economic circumstances, the next spending review will also have to take into account new spending decisions on Eu-dominated budget areas such as agriculture, fishing and regional development.

For Scottish budget holders the bad news is that the recent trend (three years and counting) of single-year Budgets is likely to continue for at least another two years.

● John Mclaren is an economist who writes for the Scottish Trends website