The 2021/22 Scottish Budget and the people profession

By Marek Zemanik, Senior Public Policy Adviser. 

The last Scottish Budget before Scotland goes to the polls in May has been unveiled on Thursday, 28th January 2021. CIPD Scotland sent our views to Kate Forbes MSP, Cabinet Secretary for Finance, in advance and were pleased to see some of our asks reflected in the Budget. This blog offers a brief look at some of the key measures announced and what they mean for the people profession.

A pre-election Budget? 

The Scottish Budget process is very complicated, with standard challenges arising from the fiscal framework compounded this year by the UK Budget being postponed until March, unusually fluctuating deflators and uncertain tax and growth forecasts. The full Budget document is available here, but this blog provides an overview of some of the key relevant measures in it. 

Perhaps the most surprising thing about the announcements was that there were no real surprises. The last Budget before an election usually contains some unexpected giveaways or eye-catching initiatives. The closest thing to this was the return of the council tax freeze, alongside the previously announced £500 thank you payment for NHS staff. Modest public sector pay increases and small rises to income tax thresholds did not make it onto the front pages of newspapers. 

In some ways this is extraordinary, but then these are extraordinary times. Although this will depend on UK Government policy too, the Scottish Fiscal Commission forecasts unemployment to peak at 7.6% in 2021 and Scottish GDP to return to pre-pandemic levels as late as 2024. The Scottish Government has for now decided to keep the ship steady through what will become even choppier waters. 

Tax policy may have to change of course, depending on the measures announced by the Chancellor in March. One of the floated ideas of a new property tax to replace both council tax and stamp duty would potentially have a significant impact on Scotland’s competitiveness and the Scottish Government may have to reconsider its approach. With CIPD members responsible for talent recruitment, development and retention, we will need to keep an eye on any developments in this space. 

Supporting jobs and skills 

The Scottish Government has put what it calls a “national mission for new, green and good jobs” at the heart of the Budget. One of our key asks was to see fair work and job quality front and centre of the plans, so we are pleased to see this commitment. When it comes to specific policy initiatives, we see a reaffirmed support for Fair Work First (which attaches fair work criteria to Government procurement, grants and loans) as well as a focus on fair work principles in the social care sector. The CIPD will continue to push for greater employer recognition of fair work as well as better progress measurement. 

A range of announcements around business rates relief, business grants and PACE (the government’s partnership redundancy service) were also included, necessitated by the continuing lockdown across the country. Business groups were quick to welcome the plans, but highlight that gaps remain and the Government must stand ready to go further. 

One of the key headlines in the Budget document was £1.1 billion allocated to jobs and skills. This funding covers a range of initiatives, including an additional £125 million for employment support, including the National Transition Training Fund and Young Person’s Guarantee. Both of these featured in CIPD’s own submission, so we are pleased to see further announcements here. 

On the Young Person’s Guarantee, the additional funding will allow officials to design and fund the proposed incentive scheme for employers. We will keep an eye on how this is targeted (we know there can be a lot of deadweight in these schemes) and what the degree of local differences will be. Additional funding for the National Transition Training Fund is also welcome, but we would like to see this complemented with an enhanced Individual Learning Account model

Lastly, alongside a £100m Green Jobs Fund, the Government also announced an interesting scheme in the form of a Green Jobs Workforce Academy. Its intention is to support “existing employees, and those who are facing redundancy, to assess their existing skills and undertake the necessary upskilling and reskilling they need to secure green job opportunities as they emerge.” It will be interesting to see the detail and whether this model could be expanded to other sectors facing significant change. 

Wellbeing and inclusion 

The Budget recognises the significant impact of COVID-19 on people’s wellbeing and in particular their mental health. CIPD’s own research has shown the deterioration in employee wellbeing across Scotland. We were pleased to see additional funding for direct mental health support, although more will need to be done if we are to boost capacity to meet demand. 

One of the many annexes to the Budget also includes a detailed analysis of the impact of each portfolio’s budget on equality and socio-economic disadvantage. Inclusion is an incredibly important area of public policy, but we also know it is a priority for the CIPD and our members. The Budget outlines several initiatives in this space, even though most are continuations of existing programmes – the Parental Employment Support Programme, the Women Returner Programme or the Fair Work Workplace Equality Fund. 

Furthermore, the Scottish Government has reaffirmed its intention to halve the disability employment gap by 2038 and has highlighted a £5.8 million increase in the budget for Fair Start Scotland – one of the Government’s employability schemes - which will help people with disabilities and long-term health conditions. 

The Budget also allocates significant funding for the expansion of publicly-funded childcare to all 3- and 4-year-olds. This was delayed by a year, with COVID-19 given as the primary reason. The CIPD’s submission, reflecting discussions we’ve been having with members, pointed out that the expansion still leaves a significant gap between parental leave and funded childcare – something we would like the Government to address. 

What next? 

The Scottish Budget scrutiny will follow over the coming weeks, with further changes to be expected as part of cross-party negotiations – the SNP is a minority Government and requires other party votes to pass its Budget. These don’t tend to be huge changes, but more significant ones may be made following the UK Budget statement expected in early March. 

After the Budget gets passed, the election campaign will be in full swing. The CIPD will be publishing our own manifesto, setting out the people profession’s asks from the next Government – not just for one financial year, but for the entire 5-year parliamentary session. Job quality, skills, wellbeing and inclusion will continue to be our focus. We hope these will be the next Government’s priorities too.

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