By Alexander Garden, chair of the CIOT's Scottish Technical Committee
This article was originally published in the Thunderer column of the Times (Scottish edition) and can be viewed here.
Since its publication, both the Conservatives and Labour have said that, if elected, they will publish a UK Budget in February 2020.
One unintended casualty of Britain’s Brexit impasse has been Scotland’s budget process. In recent years a November budget at Westminster would be followed by Holyrood’s in December. Then there would be two to three months of parliamentary scrutiny before it became law for the start of the new tax year in April.
With the UK budget postponed until after the general election these processes are likely to be thrown into chaos, leaving MSPs in a race against time to set next year’s budget, diluting opportunities for scrutiny and leaving HM Revenue & Customs scrambling to ensure its systems are ready for April.
Just a few weeks ago Derek Mackay told Holyrood’s finance and constitution committee that any delays to the UK budget would make his planning “immeasurably more difficult”.
A January UK budget, surely the earliest we can now expect, would come at a time when MSPs are usually halfway through budget scrutiny. This would limit opportunities for examining the Scottish government’s plans as well as leaving less room to react to tax changes made at Westminster. It would be a budget process conducted at breakneck speed. This would be a blow to the welcome processes being established for the scrutiny of devolved tax and spending decisions following the 2017 Budget Process Review Group.
Holyrood could choose to go first and set a budget before Westminster but there are huge problems with this because the size of the Scottish block grant will not be known until the Westminster budget, leaving Mr Mackay without Scotland’s full fiscal picture. Significant tax changes from London could cause further headaches for a finance secretary who may feel under pressure to respond; he has already hinted that Holyrood may face a “turning point” on tax if Scots feel they are left at a disadvantage to the rest of the UK.
So it will be a “breakneck” budget process curtailing scrutiny, or a “blindfold” budget without the full fiscal picture. One will be exacting, the other impractical.
In any normal year there would already be many moving parts in the Scottish and UK budgets to manage. By delaying the UK budget until 2020 the Brexit-driven general election is complicating this further