Scotland’s councils face financial penalties as their budget fell to the lowest since devolution. Local authorities must make hard economic choices that will hit public services and squeeze people. But Scotland can attract investments from inside the UK and beyond the borders. Therefore, it would experience an economic boost and a budget surplus.
- What is the 2023/24 Scottish budget perspective?
- How will Scotland’s councils compensate for the budget deficit?
- Does investment increase the country’s revenue?
Westminster Raised Scotland’s Budget
Holyrood passed the 2023/24 Scottish Budget Bill, providing money to local authorities and official workers. However, Scotland’s councils experience a budget shortfall, and the Government must increase the funding. The 2023/24 Scottish budget had been deficient, but the Government announced £100 million in financing for non-teaching staff. It will fund £123 million for teachers to raise their salaries from April. The UK Government had also provided the Scottish Government a £146 million boost.
Scotland Lacks Money to Fund Councils
The 2023/24 Scottish budget is the most challenging settlement since devolution, pressing local authorities to afford vital services. In this difficult financial time, the additional budget should help people the most in need. The 2023/24 Scottish budget should enable local authorities to improve public services and strengthen social contracts with Scottish citizens. The last-minute budget boost for Scotland’s councils would help with the local authorities’ expenditure to deliver frontline services.
Budget Gaps Increase Taxes
Some of Scotland’s councils have to increase taxes to make ends meet. Their revenues are less than their expenses, so they must save to balance the books. Increases in council tax come with cuts to services as the local authorities grapple with budget gaps. Some council authorities need help with the most challenging spending choices and must reduce staff numbers despite existing job vacancies.
Councils Cut Jobs
Local authorities across Scotland’s councils must deal with shortfalls and a long-term expense squeeze. The shortfalls range from £7m to £120m, various in borders to the centre of 32 councils of Scotland. The authorities must shut down the education and sports centres because of job cuts nationwide. Loss of grant funding from local authorities puts pressure on charities supporting people in need.
Low Budget Damages Literacy
Scotland’s councils will cut school staff which hits the literacy and numeracy of Scottish students. Scottish schools and pupils have been suffering from education damage in recent years. Pandemic isolation had a severe impact on the pupils’ education in Scotland. After the Covid pandemic, schools faced a retention crisis and high job vacancies. In recent months, teacher strikes have disrupted pupils’ education even more.
Councils Should Protect Vital Services
Educational standards have been at risk as many schools have already increased class sizes or cut subject options. Sacking the remaining teachers from their job will be a hard blow to the education system in Scotland. The 2023/24 Scottish budget shortage will devastate education and public services in the coming years. The local authorities must protect vital services and consider education as important as the other sectors.
Project Progresses Are at Risk
Cuts to council budgets will narrow down their ability to drive economic development in their communities. When councils have the money to invest in projects, the community feels and enjoys the benefits. Any budget cuts will result in successive years of cuts, putting the progress of many projects at risk. The 2023/24 Scottish budget will halt fair and accessible work opportunities for everyone in the communities.
Local Governments Face Financial Restraint
Although Scotland’s councils have decided to axe jobs and increase taxes, they still face a real-term cut to funding. The 32 local authorities have said they have to cut 240 jobs from every council in Scotland. Every household in Scotland will experience tax rises and service cuts simultaneously. Yet, there will be a difficult time for the local governments because the 2023/24 Scottish budget hugely constrains their financial resources.
Economic Boost Changes the Status Quo
Scotland needs an economic boost and should look to Ireland for investment lessons. Ireland had also been struggling with the Covid pandemic and the cost-of-living crisis. But Ireland ran a budget surplus in 2023, and its Government could provide an excellent budget position in Europe. VAT, income tax, and corporate tax receipts grew and increased the Government’s revenue. The essential factor behind the surplus was the strength of corporate tax revenue.
Investment Significantly Affects Economy
Foreign-owned multinational corporates located in Ireland faced higher tax increases. Most of this money was spent on core services and investments, directly increasing the current gross domestic product (GDP) level. Investment in Scotland could secure jobs and protect economic interests. Inward investments make a distinct and significant impact on Scotland’s national and regional economy.
Investments Increase Job & Productivity
Inward investment can be through Mergers and Acquisitions (M&A). This way, a firm based in the rest of the United Kingdom or a foreign firm merges with an existing Scottish firm. Investment can also be in the form of starting a new venture, which creates new jobs and higher turnovers. Higher investment from foreign and UK sources will increase the Scottish economy’s productivity.
UK Model Halts Scottish Economic Productivity
Although revenue from investments is a powerful tool to boost the economy, other sources of income would uplift the budget. The Scottish economy will have many strengths and potential if independent of the UK economic model. Scotland has offshore renewable resources and could decide on its revenues at the Scottish Parliament. That gives Scotland the potential to become more productive and overcome the budget shortage.
Scotland Should Pass through Difficult Time
The 2023/24 Scottish budget takes place at a difficult time for businesses and households. The cost-of-living crisis driven by high inflation has squeezed everyone in the country. The additional funding to Scotland’s councils will offer budget increases for public services but cannot compensate for all budget deficits. Attracting higher investment and having complete control over resources could address the budget shortfalls in Scotland and fund local authorities.