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Finance Secretary Derek Mackay says the government will invest £2.4bn in skills and enterprise agencies.

Mr Mackay updates the chamber on city deal investment.

The finance secretary says £5m will be invested over three years to support women returning to work after a career break.

Mr Mackay says the government will increase capital investment by £1.56bn per year by the end of the next parliament.

Turning to social security, Mr Mackay highlights a recent UN rapporteur report criticising the UK government's approach.

"This government will continue to tackle poverty and support new families," he suggests.

Mr Mackay says the new social security system will continue to be a key priority for the government.

£435m will go towards new benefits, including;

• a Carers Allowances supplement
• the Best Start Grant
• and the Funeral Expense Assistance.

The Bedroom Tax will continue to be mitigated, and the Fair Food Fund budget will be increased, he says.

Mr Mackay confirms he has agreed a public sector pay policy with a 3% rise for all earning £36,500 or less.

The finance secretary insists this is a reasonable and acceptable public sector pay policy.

He adds that there will be a "real terms increase" for the education portfolio in 2019-20.

Mr Mackay says "economic consensus warns us of the damage of Brexit", no matter what kind of Brexit is secured.

Brexit is "reckless and unnecessary", he says, and adds the forecasts are subdued as a consequence.

Mr Mackay adds that GDP is forecast to grow 1.4% in 2018, faster than anticipated in the UK as a whole.

The forecasts for future years are:

• 1.2% for 2019
• 1% for 2020 and 2021
• 1.1% in 2022
• 1.2% in 2023

Significant resources have had to be diverted across the public sector to prepare for Brexit Mr Mackay says.

It is disappointing but necessary to say that, in the case of a no deal Brexit, "I may be required to revisit our budget priorities at a later date", the cabinet secretary says.

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Mr Mackay says: "There can be no doubt the prime minister did not keep her promise to end austerity."

The finance secretary accuses the UK government of "economic and social vandalism".

Scotland's resource block grant will be almost £2bn lower in real terms than ten years ago, he adds

He says if this year's health Barnett consequentials are set aside, the block grant will be £340m less than in 2018-19.

Finance Secretary Derek Mackay says this budget will safeguard the people of Scotland "as best we can".

Scottish Finance Secretary Derek Mackay is to set out his tax and spending plans for the coming year at Holyrood "under the shadow" of Brexit.

Mr Mackay will make his draft budget announcement on Wednesday afternoon.

He said he would "protect essential public services and boost our economy" despite the UK's "chaotic approach to Brexit which hangs over our economy".

However, opposition parties have warned ministers that they will need to work hard to get the plans through a vote.

The Greens have refused to enter formal talks about supporting the minority SNP administration until they see progress on local government finance reform, and the Lib Dems have pulled out of negotiations altogether.

• Scottish budget: What's going to happen?
• Watch Mr Mackay's statement on Holyrood Live from 15:25
• Scottish budget negotiations stall

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In February, in the last budget, Derek Mackay, announced a new tax band of 21p for those earning more than £24,000.

The higher rate of tax will be increased from 40p to 41p and the top rate from 45p to 46p.

But a starter rate of 19p in the pound will also be introduced, Mr Mackay confirmed in his draft budget.

Mr Mackay said the move to a five-band income tax system will mean no one earning less than £33,000 in Scotland will pay more tax than they do now.

• Scots budget: what does it mean for me?
• Mischievous Mackay's taxing budget
• Report: How was the budget unveiled?
• Scottish draft budget: At a glance
• Scottish economy facing 'subdued' growth
• Read more here

Douglas Fraser
Scotland business & economy editor

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• The Conservative focus on getting Britain's finances out of the red has been pushed aside. Spending is now being used to help the country get through Brexit.

• The consequences of Scotland include some tax changes for business, and in employment taxes.

• The immediate question for Holyrood is how to spend £950m, and whether it will accelerate the divergence from the UK Treasury's income tax structure.
• What does it mean for Scotland? Read more here

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The Scottish government is facing a battle to pass its budget plans for next year after talks with two of its most likely partners stalled.

The Liberal Democrats pulled out of talks after the government refused to "take independence off the table".

The Scottish Greens said if they were to back the budget the government would need to show a "meaningful" commitment to reforming council tax.

The finance secretary said he would hold more talks "in the weeks ahead".

Derek Mackay - who will present his draft budget to Holyrood on Wednesday - insisted that his proposed tax and spending proposals for 2019-20 would "protect vital public services and prioritise spending on health, education and economic investment".

• Rennie: Ditch indyref2 for budget support
• December date set for Scottish budget
• Read more here

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