Scottish Budget: The 8 key announcements and what they mean for you - benefit cap, income tax, NHS

The SNP’s Budget focuses on tackling child poverty and reducing long waiting times in the NHS, but there is also extra money going to the education, housing and justice departments as well.

The majority of hospitality businesses are set to benefit from rates relief as well, including 100 per cent rates relief for those on the islands. Here, The Scotsman takes a look at some of the key announcements from the Scottish Budget statement.

‘The cap will be scrapped’

The biggest surprise of the Budget was the Government spending millions on ending the two-child benefit cap.

Ms Robison said: “The two-child cap is a pernicious part of the UK welfare system introduced by the Tories and it has caused misery for children and families in Scotland.

“Many expected an incoming Labour government to abolish the cap, but Labour haven’t delivered - this SNP Government will.

“We will mitigate the two-child cap and the detailed work of building a system starts with this Budget, but it requires co-operation with the UK government. We have a year and we will work as hard as possible to start paying families as early as we can in 2026, which is more than reasonable.

“But be in no doubt, the cap will be scrapped.”

Ms Robison said this move would lift 15,000 Scottish children out of poverty.

No increases to income tax

There will be no increases to income tax, but the bands for the basic and starter rates will increase by 3.5 per cent.

Ms Robison said Scottish taxes would bring in £24.6 billion in 2025/26, which is £777 million more than was forecast in December 2023.

Ms Robison said: “I can confirm we will not introduce any new bands or income tax rates for the remainder of this Parliament. Labour have hit pay packets, so we have decided to provide tax support for low and medium earners.

“So while Labour froze all income tax rates, the basic and starter bands will increase by 3.5 per cent and that means the majority of taxpayers will continue to pay less income tax than the rest of the UK.

“That will remain true until the end of this Parliament.”

“Record” funding for the NHS

A “record” £21bn will be spent in the health and social care department, which includes an increase of £2bn for frontline NHS boards.

Ms Robison said this would be used to help people access GP appointments, improve accident-and-emergency (A&E) departments and “ensure more Scots get the care they need in good time”.

Almost £200m will be spent on reducing waiting times, and Ms Robison pledged no one would wait longer than 12 months for a new outpatient appointment, inpatient treatment or day case treatment by March 2026.

Previously the Government pledged to increase social care spending by 25 per cent, and Ms Robison said she could now bring this forward two years earlier than planned.

A number of buildings will be funded, including the replacement of the Edinburgh Eye Pavilion, Belford Hospital in Fort William and Monklands Hospital in Airdrie.

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Thawing the council tax freeze

The Government has lifted the council tax freeze brought in by former first minister Humza Yousaf, with some councils now expected to increase taxes by over 15 per cent.

However, Ms Robison said “there is no reason for big increases in council tax” because she is increasing local authority funding by over £1bn, bringing the total funding to £15bn.

Tackling shoplifting

Almost £4.2bn will be spent in the justice department, including £3m on tackling retail crime such as shoplifting.

The department will also use £355m of its capital budget on replacing HMP Inverness and HMP Barlinnie.

A new government hub in the north-east

The Government will be setting up its own offshore wind hub in Aberdeen, coinciding with a tripling of investment in offshore wind to £150m.

Ms Robison said this money would help leverage private investment of £1.5bn in infrastructure and manufacturing facilities.

However, no ScotWind money will be used on day-to-day spending this year. In the previous year, this fund, generated from renting out the Scottish seabed, has been used to plug funding gaps.

Ms Robison said: “Instead, I am able to deploy over £300m of ScotWind revenues in 2025/26 for exactly the kind of long-term investment it should be spent on. This £300m will deliver substantial investment in jobs, and in measures to meet the climate challenge, all of it an investment in the long-term success of our nation.”

Support for business

The Scottish Government was under pressure to replicate the 40 per cent business rates relief on offer in England and Wales and Ms Robison confirmed she would do this for hospitality businesses, which are liable to basic property rates.

This will increase to 100 per cent for hospitality businesses on the islands. She also froze the basic property rate, which she says means 95 per cent of non-domestic properties will pay lower property taxes than anywhere in the UK.

The Federation of Small Businesses welcomed the relief for hospitality businesses, but said it is “a bitter pill to swallow” for retail and leisure businesses.

Policy chair Andrew McRae said: “The pressures they are facing are exactly the same as those in England and Wales, where relief has continued to be available since July 2022 - the last time such relief was offered in Scotland.

“A a result, many retailers will face yet more difficult decisions in the months ahead as they look to protect the future of their businesses and employees.”

Mr McRae added: “The hoped-for cushion in the form of rates relief has failed to be extended yet again, it will offer little comfort to small Scottish retailers this December.”

Thousands of new affordable homes

The government is to spend £768m on affordable homes, which will see 8,000 new properties for social rent, mid-market and low-cost home ownership being built over the coming years.

She will also work with Edinburgh City Council to create 800 new net zero homes in Granton.