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Pay rise for public sector workers

Mackay’s Budget secured after Green Party backing

Derek Mackay: ‘progressive tax system’

Finance Secretary Derek Mackay said today that public services would be protected and public sector workers will get a pay rise after agreeing a deal with the Green Party that supports his Budget.

Critics seized on adjustments to the higher rate threshold which will fall from £44,273 to £43,430.

The Tories said this will see higher rate tax payers forking out an extra £169 in income tax compared to the SNP’s draft budget proposals.

Mr Mackay said the change would remove an anomaly that meant some higher rate tax payers saw their bills fall while others on slightly lower incomes saw a rise, due in part to changes in the personal allowance. 

While 70% of taxpayers will continue to pay less next year than they currently do, 55% will pay less than they would elsewhere in the UK.

The income tax policy will raise around £55m and support an additional £420m of investment in the Scottish budget.

Mr Mackay said the total package takes steps to mitigate UK Government cuts, increases funding for the NHS by £400 million and supports the building of 50,000 homes, among a number of measures.

The Finance Secretary also confirmed he will extend the Scottish Government’s commitments on public sector pay to ensure all public sector employees earning up to £36,500 receive a minimum 3% pay increase – meaning 75% of public sector workers, including NHS staff, will benefit from an inflationary pay rise.

As part of an agreement with the Green Party, Mr Mackay said the budget will now include a real terms increase in revenue investment for local authorities with local services benefitting from an additional £159.5m of resource funding.

Following discussions with Shetland and Orkney Island Councils, funding of £10.5m will be made available to support inter-island ferry services in 2018-19 – with talks continuing on a long term solution.

Investment in Low Carbon infrastructure – which is already increasing from 21% of planned infrastructure investment in 2017-18 to 29% in 2018-19 – will continue to increase in each year of the parliament, with additional support made available this year for home energy efficiency, the exploration of new local rail services and the delivery of marine protected areas.

Confirming the changes during the Stage 1 of the budget debate, Mr Mackay said: “As a parliament of minorities, we must work across the chamber to find compromise and consensus in order to give support, sustainability and stimulus to our economy and to our public services.

“This budget invests record amounts in our NHS, supports our efforts to improve attainment in our schools, invests in our economy with support for infrastructure, for broadband and for innovation, and supports our ambitions to tackle climate change.

“We are lifting the pay cap with a real terms increase in pay for the majority of public sector workers and we are supporting local services with a real terms increase for day to day spending and for long term investment, with an additional £170 million going into local services, on top of the £10.5 billion already proposed.

“Our changes to tax ensure Scotland has a progressive tax system – with 70% of taxpayers paying less next year than they do currently and 55% paying less than they would across the rest of the UK – while businesses benefit from support for investment.

“The changes I have announced ensure that people in Scotland will benefit from the best deal for taxpayers in the whole of the UK.”

Scottish Labour’s finance spokesman James Kelly, said: “Labour is now the only party at Holyrood standing for the real and radical change Scotland needs.

“Yet again the Greens have abandoned their principles and agreed a shoddy deal so they can shore up the minority Nationalist government.”

The Draft Budget proposals have now been updated to reflect a 1% increase in the Higher Rate threshold:


Budget Bill 2018-19

Income Bands


Starter Rate

£11,850* – £13,850


Basic Rate

Over £13,851 – £24,000


Intermediate Rate

Over £24,001 – £43,430


Higher rate

Over £43,431 – £150,000*


Top Rate

Above £150,000 **


* Assumes individuals receive the standard UK Personal Allowance.

** Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000

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