The Scottish Government’s Budget has passed its first hurdle at Holyrood, after agreements with the Greens and two Liberal Democrats saw the tax and spending package approved in principle.
MSPs voted by 69 to 56 in favour of the Budget (Scotland) Bill at Stage 1, with Finance Secretary Derek Mackay insisting he had made a “deal that works for Scotland”.
He won the support of the six Green MSPs with a string of measures, including an additional £159.5 million for local government budgets.
Meanwhile a further £10.5 million for Orkney and Shetland councils for ferry services secured the backing of Liberal Democrats Liam McArthur and Tavish Scott, who represent the two island constituencies.
Mr Mackay told the Scottish Parliament the SNP had secured “popular support for our tax plans, popular support for our investment plans in our public services, popular support to tackle inequality as well”.
He stated: “In a Parliament of minorities we have reached out, we have found consensus, we have a deal that works for Scotland. We are building a better country in the face of Tory cuts.”
After the deal was struck First Minister Nicola Sturgeon tweeted her congratulations to the Finance Secretary, insisted the Budget will “reverse Tory austerity, protect public services and grow our economy”.
Scottish Green co-convener Patrick Harvie hailed the deal as “just the latest example of Greens leading the change in Scottish politics”.
He stated: “Last year we stopped the cuts; this year we’ve pushed the government even further and delivered a real-terms increase in funding, including a fair contribution towards the additional pressures councils are facing.”
New changes announced to the draft Budget will end the anomaly which would have seen some higher earners pay less income tax next year – with this move raising an additional £55 million.
This cash, together with previously unspent funding, will help the Scottish Government to find the extra money for councils.
The Budget will also mean public sector workers earning up to £36,500 will receive a pay rise of 3% in 2018-19 – with Mr Mackay saying this would include 80% of NHS staff and the “vast majority of teachers”.
Meanwhile an extra £400 million of funding for the NHS in Scotland next year will take health spending to a record level, he said.
Tory finance spokesman Murdo Fraser savaged the Greens, after they backed the SNP’s Budget plans for the second year in a row.
The Conservative MSP hit out: “The ever faithful Patrick Harvie has once again saved the SNP’s bacon.
“The always willing Scottish Greens are there to do their master’s bidding. The wholly-owned subsidiary has had its orders from head office.”
He accused the SNP of having broken its 2016 manifesto pledge not to increase the basic rate of income tax, adding: “This is a budget that can be summed up in four words – pay more, get less.”
Under the Scottish Government’s planned income tax changes, the two highest rates of the levy will be increased by 1p.
While the basic rate will be frozen at 20p, Mr Mackay plans to create a new intermediate rate of 21p, but he is also bringing in a “starter rate” of 19p, which will be applied to the first £2,000 of taxable earnings.
The Tories claimed almost 400,000 Scottish taxpayers would be left worse off after what Mr Fraser branded as “yet another tax grab”.
Labour finance spokesman James Kelly also vowed his party would oppose the Budget, claiming it “falls well short of what is required”.
He added: “There’s a lack of investment in public services, it doesn’t properly fund fair pay for public sector workers, it lacks ambition in tackling child poverty and it does not alleviate the growing crisis in the NHS.
“The grubby deal that’s been announced today by Derek Mackay, the Green SNP deal, just does not cut it.”
Scottish Liberal Democrat leader Willie Rennie said the proposals did not deliver the transformational change that Scotland needed.