Finance and the
The Finance and Constitution portfolio is a wide-ranging portfolio that is at the heart of implementing the powers over taxation that are provided for in the Scotland Act 2012 and 2016, and providing public services that are efficient, fair, flexible and valued.
The Finance and Constitution portfolio is central to delivering Scotland’s Economic Strategy and achieving a more productive, cohesive and fairer Scotland. Crucially, we recognise that increasing growth and tackling inequality are mutually supportive in making Scotland a more successful country with opportunities for all to flourish.
Key Strategic Priorities
The portfolio’s strategic priorities support the ambitions set out in Scotland’s Economic Strategy to boost competitiveness while ensuring that economic growth is inclusive.
In 2018-19, the additional powers over income tax provided for in the Scotland Act 2016 will continue to be used to protect low-income taxpayers while supporting investment in high quality public services and the Scottish economy.
The Scottish model of procurement plays a major role in supporting inclusive growth by balancing business needs and social responsibility to secure the maximum benefits from the £11 billion spent by the public sector each year. Delivering community benefits through procurement advances equality of opportunity and delivers wider social benefits.
The Scottish Futures Trust ( SFT) will continue to improve the efficiency and effectiveness of infrastructure investment in Scotland by working collaboratively with public bodies and industry, leading to better value for money and ultimately improved public services. This infrastructure investment improves access to services and creates greater opportunities for individuals.
Equality Implications Of The Draft Budget 2018-19
Procurement Shared Services
In 2018-19, £16.8 million of the Finance and Constitution budget is invested in Procurement Shared Services. Public procurement policy and legislation is fundamentally non-discriminatory and requires public bodies to treat all bidders equally and without discrimination. The Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012 places specific demands on public bodies and has informed the overall approach to public procurement in Scotland. The Procurement Reform (Scotland) Act 2014 established a national legislative framework for sustainable public procurement that supports inclusive growth by delivering social, economic and environmental benefits. This means our approach to procurement is socially responsible and delivers value that goes well beyond financial savings and benefits.
The Sustainable Procurement Duty is an important element of the 2014 Act and we use it as a means of identifying opportunities to promote equality through public procurement. It requires public bodies to think about how the procurement process can enable small and medium sized enterprises ( SMEs), supported businesses  and the third sector to access contract opportunities.
Procurement legislation also delivers greater community benefits which again can have positive impacts for equality outcomes. Public bodies in Scotland must try to include community benefits for any procurement over £4 million and explain their reasons if they choose not to include them. Our community benefit policy and associated guidance  encourages public bodies to identify priority groups for targeted recruitment and training and clarifies the intention to use community benefits to promote equality and to reduce inequality. Apprenticeships and training opportunities, for example, can benefit younger people by helping them to enter the labour market. Public procurement policy has also been used to promote, where appropriate, the payment of the ‘real’ Living Wage. In 2018-19 we will ensure that contracts for our large infrastructure projects include community benefit clauses to achieve continued employment and training opportunities.
Scottish Rate of Income Tax
The Scotland Act 2016 gave the Scottish Parliament powers over all revenue raised from non-savings non-dividend income tax paid by Scottish taxpayers. The Scottish Parliament now sets the rates and band thresholds, excluding personal allowance. These additional powers over income tax are used in a way that protect low-income taxpayers and provide additional revenue to invest in high quality public services.
The Scottish Government believes that any income tax change in 2018-19 must be assessed against the following four tests. Tax changes must:
- mitigate UK Government spending cuts and maintain and promote the level of public services;
- make the tax system more progressive;
- protect lower earners; and
- support economic growth.
A recent paper by the Scottish Government showed the distributional impacts of a number of tax options.  Different policy decisions have varying impacts on different income groups and revenue raised, depending on behavioural responses. These impacts have been taken into account when developing tax proposals for this budget.
However, the impact of income tax policy is limited to those who are in receipt of a taxable income. In Scotland, there are almost two million adults with no income tax liabilities due to low or no income, which is over 40 per cent of the 16+ population.
Even with further new income tax powers, the Scottish Government has limited powers to define the tax base or adjust tax reliefs, and National Insurance remains reserved to the UK Government. Due to these policy restrictions, the Scottish Government’s power to affect the relative distribution of tax is limited.
Scottish Futures Trust
In 2018-19, £4.5 million has been allocated to the Scottish Futures Trust ( SFT). This body was established to improve the efficiency and effectiveness of infrastructure investment in Scotland by working collaboratively with public bodies and industry, leading to better value for money and ultimately improved public services.
SFT will continue
to work to enhance value for money from infrastructure investment
across the public sector in Scotland. This includes working in
partnership with others to progress delivery of the Scottish
Government’s key policy commitments, including the expansion
of early learning and childcare and supporting the ‘Reaching
100 per cent’ project to deliver superfast broadband access to all residential and business premises by 2021.
Investment in our infrastructure – both physical and digital – improves access to services and creates greater opportunities for everyone, but benefits can be particularly significant for disabled people and people with accessibility issues. Improved connectivity for individuals can be life changing, and widening the pool of potential talent for Scotland’s firms is beneficial to the economy.
Sustainability is a key driver for SFT when developing infrastructure and delivery solutions. Economic, environmental and social sustainability are addressed in the early stages of product development and are an integral part of procurement and delivery. As part of this, there is a focus on improved outcomes for communities. Completed projects will allow public services to be delivered to communities in a more joined-up way, delivering affordable housing in high-cost housing areas and bringing economic activity to disadvantaged areas, thereby promoting socio-economic equality.
This portfolio is focused on delivering sustainable economic growth, with opportunities for all the people of Scotland to flourish. The focus on growth that is inclusive is based on the increasing body of evidence that demonstrates increasing equality through improving diversity and eliminating barriers also supports economic growth.