Six ways the Budget is to impact Scotland

While the specifics of day-to-day spending are unclear, much of the Budget has already been trailed, giving an idea of the UK Government’s intentions, if not the full details.

Amid claims of a £22 billion black hole left by the Conservatives, Labour claims that public services require a £40bn increase in taxation and spending.

Set to be announced around 12:30 on Wednesday, October 30, here is how the Budget is expected to impact Scotland, and what will be unveiled.

Tax

The government has confirmed it will not increase the main rates of the two biggest personal taxes - income tax and National Insurance. However, there will be a NI rises for employers, expected to raise up to £20 billion. This is an attempt to offset the NI cuts for working people handed out by the Tory Government.

There is no expected changes to income tax, however, capital gains tax, inheritance tax and pensions tax relief could all rise. Given these are not devolved, any changes would apply in Scotland.

Capital gains tax is charged on the profit made from the sale of assets, and is paid by individuals and some business owners. For higher earners, it is currently 24 per cent on gains from selling additional property, or 20 per cent on profits from other assets. This is expected to rise, but not substantially.

Inheritance tax is currently 40 per cent on the property, possessions and money of somebody who has died above the £325,000 threshold. Ministers are also considering increasing this.

Despite rumours of a hike in fuel duty, this is also unlikely.

Infrastructure

One area that will benefit Scotland is spending on infrastructure, with the UK Government changing its self-imposed debt rules in order to free up billions.

The Chancellor says adapting how debt is measured will allow extra investment in projects such as roads, railways or hospitals. Ms Reeves says this is being done "so that we can grow our economy and bring jobs and growth to Britain".

This will mean more money for Scotland, but it is crucially for investment projects, not for day-to-day spending. Holyrood cannot simply transfer the Treasury's capital budget allocation into the day-to-day budget. As such, it boosts long-term developments, but will do little to ease the pain of departments still facing cuts in the Budget. Jeremy Hunt as Chancellor deferred cuts to public services.

Any changes to budgets for Whitehall departments for which powers are devolved - such as transport, justice, health and education will then impact Scotland. While health is protected, the others could face cuts.

Transport

As well as funding for new roads, another measure already confirmed is a rise in England's flat fare on most bus routes, from £2 to £3.

While in Scotland the subsidy is paid to bus companies to provide free travel for those aged up to 21 and from 60 onwards, the reduction will feed through the funding formula for the block grant.

Housing

The UK Government has already confirmed a housing package to deliver up to 5,000 new affordable social homes with £500 million in new funding for the Affordable Homes Programme. After Shona Robison, the Finance Secretary, said housing would be a priority for the Scottish Government, there will now likely be consequential funding for it.

Education

The chancellor has promised her budget will include £1.4bn to rebuild schools in England, and the Treasury has also confirmed £1.8bn would be allocated for the expansion of government-funded childcare, with a further £15m of capital funding for school-based nurseries. This will again mean more money for Scotland.

Labour will also finally confirm the VAT exemption and business rates relief for private schools is over, in a bid to hire 6,500 new teachers in state schools. Also applicable in Scotland, the impact assessment of this will be published shortly after the Budget.

NHS

The Chancellor is expected to announce billions of pounds for the health service, including £1.5 billion for new surgical hubs and scanners and £70 million for radiotherapy machines. Scotland will then receive consequential funding for this.

Any rabbits?

A tradition not marked for several budgets now is the Chancellor unveiling a popular policy nobody expected, such as tax cuts or further investment. However, while Scottish Labour has been pushing for an end to the two child benefit cap, there is no indication this will be forthcoming. The main rabbits, if they can be called that, with negative things floated not going ahead. Just this month it was reported there would be 10 per cent cuts to infrastructure. That is no longer happening. Similarly, it was claimed ministers were looking at ending the freeze on fuel duty, this is now appears to be here to stay.

Scottish Government view

Scottish Government figures are expected to call for more public investment later today, stressing they should use the new fiscal rules to allow more investment in public services.

The Scottish Government has been candid about its dire financial straits in recent months, with Finance Secretary Shona Robison forced to make more than £500 million of in-year cuts.

The Tory verdict

Shadow chancellor Mr Hunt has written to the country’s top civil servant, claiming that the OBR risks “straying into political territory and failing to follow due process” over its handling of the review into this year’s spending plans.

The review was launched after Ms Reeves replaced Mr Hunt in 11 Downing Street following Labour’s election win and a Treasury audit unearthed what she claimed was a £22 billion “black hole” in the plans she inherited.

The OBR’s review will be published on Wednesday alongside the Budget forecasts.

Mr Hunt wrote to Cabinet Secretary Simon Case to complain that the report “will be used for highly political purposes” and has not been shown in advance to Tory former Treasury ministers.