Calls to back Scottish business in Holyrood budget

Kate Forbes said her budget would prioritise tackling poverty and climate change as well as backing business recovery

The Scottish government has been urged to confirm extra support in its annual budget for businesses recovering from the Covid-19 pandemic.

Finance Secretary Kate Forbes is to set out her tax and spending plans to MSPs later on Thursday afternoon.

They are effectively guaranteed to pass through Holyrood, with the SNP and Greens holding a majority of seats.

However opposition groups have set out demands for hundreds of millions of pounds of extra support for business.

Both the Conservatives and Labour have called for firms in the sectors hit hardest by the pandemic to be given further tax breaks.

Ms Forbes has said business recovery is one of three areas to be prioritised, alongside the transition to "net zero" carbon emissions and tackling child poverty.

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Holyrood's budget is bigger now than at any point pre-pandemic, although ministers say the amount of money to spend is less than was on hand over the last two years with funding for Covid-19 relief having been wound down.

Ms Forbes said she faced "very difficult choices" while drawing up her plans, with "acute needs" in a number of sectors.

The Scottish Conservatives have called for a £631m business support package, comprising a freeze on the business tax rate and a full year of 75% rates relief for leisure, hospitality and retail firms.

Finance spokeswoman Liz Smith said firms had been "devastated by Covid" and that the plans "would give them the essential breathing space to recover and rebuild"

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Scottish Labour has also called for rates relief for these sectors, as part of an "ambitious fiscal stimulus package" to rescue high street firms, along with a £50 voucher for every adult to spend in shops.

In addition to this, the party has demanded a "game changing" investment in education by providing tutors for pupils in schools in the most deprived areas of the country.

Meanwhile the Scottish Lib Dems said they were open to backing the budget as long as it delivers cash for the NHS and social care and "ambitious action" to tackle climate change - and does not put funding towards a fresh independence referendum.

Business groups have also urged ministers to prioritise support for firms, with the CBI saying Scotland "faces a race against time to reassert its competitiveness as a destination for top talent and investment".

Kate Forbes has made clear that supporting business recovery from the pandemic will be one of her three spending priorities.

However, she has also said that the Scottish government cannot sustain 100% rates relief for retail, hospitality, leisure and aviation businesses for another year.

Instead, there's likely to be a phased approach to the reduction of that support.

Other key measures will be tackling child poverty with the doubling of the child payment to £20 next year and new investment to help cut carbon emissions in transport and homes.

The finance secretary has also said funding to upgrade the A9 and the A96 will not be deprioritised.

She has promised to protect local government as far as possible and to give councils some more flexibility over how they spend cash, while ensuring their share of extra money for social care is ringfenced for that purpose.

Ms Forbes is not expected to make major changes to the income tax system, with the SNP having pledged to freeze rates and bands in May's election manifesto.

She said there would be a "significant" increase in the NHS budget, with social care funding also in line to be boosted.

The finance secretary also said she would seek to "protect" the local government settlement, although she warned that there was "never enough money for everybody to be happy".

And she said there would be a particular focus on tackling poverty saying that the pandemic had been "particularly hard for those on the lowest incomes".

The government's plans look set to pass through Holyrood unaltered with the support of the Scottish Greens, who helped draw up the budget for the first time since the party's cooperation agreement with the SNP.

Co-leader Lorna Slater said the budget would mark the start of "a green recovery from the pandemic" and a "just transition" away from the oil and gas industry.