Holyrood Finance Secretary Derek Mackay said his Budget deal for 2018-19 would give Scots the “best deal for taxpayers in the whole of the UK” – despite some higher earners having to pay more.
He made the comments after agreeing a deal with the Scottish Greens which will allow his tax and spending plans to win the Scottish Parliament’s approval.
In addition, the promise of a further £10.5 million for ferry services in Orkney and the Shetlands persuaded the two Liberal Democrats who represent the island constituencies to back the draft Budget.
That is part of £170 million extra cash for councils the Greens said they had secured in talks with Mr Mackay – with £159.5 million being added on to the local government settlement.
The Budget will also mean public-sector workers earning up to £36,500 will receive a pay rise of 3% in 2018-19 – with Mr Mackay saying this would include 80% of NHS staff and the “vast majority of teachers”.
Changes to Scotland’s new income tax regime will end the anomaly which would have seen some higher earners pay less income tax next year – with this raising £155 million.
This cash, together with previously unspent funding, will help the Scottish Government to find the additional money for councils.
The Budget also commits an additional £400 million to the health service for 2018-19, taking NHS spending to a record high.
“With all of this investment this Government is delivering the best deal for taxpayers in the whole of the UK,” Mr Mackay said.
After striking a deal with the Greens and with Liam McArthur and Tavish Scott – the Lib Dem MSPs for Orkney and Shetland respectively – the Finance Secretary said: “We’re a parliament of minorities and must work across the chamber to find compromise and consensus in order to give support, sustainability and stimulus to our economy and our public services.”
He claimed the spending plans he had set out would help “build a fairer more prosperous country”.
The Scottish Government’s planned income tax changes in Scotland will see the two highest bands increased by 1p.
While the basic rate will be frozen at 20p, Mr Mackay plans to create a new intermediate rate of 21p, which would apply to earnings between £24,000 and £44,273 – but he is also bringing in a “starter rate” of 19p, which will be applied to the first £2,000 of taxable earnings.
Scottish Green co-convener Patrick Harvie hailed the deal as “just the latest example of Greens leading the change in Scottish politics”.
He stated: “Last year we stopped the cuts; this year we’ve pushed the government even further and delivered a real-terms increase in funding, including a fair contribution towards the additional pressures councils are facing.”
Opposition politicians criticised the six Green MSPs, with Tory finance spokesman Murdo Fraser stating: “The ever faithful Patrick Harvie has once again saved the SNP’s bacon.
“The always willing Scottish Greens are there to do their master’s bidding. The wholly-owned subsidiary has had its orders from head office.”
He accused the SNP of having broken its 2016 manifesto pledge not to increase the basic rate of income tax, adding: “This is a budget that can be summed up in four words – pay more, get less.”
Labour finance spokesman James Kelly said his party would oppose the Budget, claiming it “falls well short of what is required”.
He added: “There’s a lack of investment in public services, it doesn’t properly fund fair pay for public-sector workers, it lacks ambition in tackling child poverty and it does not alleviate the growing crisis in the NHS.
“The grubby deal that’s been announced today by Derek Mackay, the Green SNP deal, just does not cut it.
“This budget falls short and the deal will be condemned by local communities faced with cuts to lifeline services.”
Scottish Liberal Democrat leader Willie Rennie said the proposals did not deliver the transformational change that Scotland needed.