Scotland has vowed to scrap the two-child benefit cap, saying it will lift 15,000 Scottish children out of poverty.
Scotland’s finance secretary Shona Robison also committed to a record investment in the NHS as she unveiled the nation’s draft budget for the coming year in a speech at Holyrood.
The MSP previously said the budget would put “the people of Scotland first”.
Ms Robison told the chamber on Wednesday: “This budget invests in public services, lifts children out of poverty, acts in the face of the climate emergency, and supports jobs and economic growth.
“It is a budget filled with hope for Scotland’s future.”
Highlights from the draft budget:
• The Scottish government will mitigate the impact of the UK government’s two-child benefit cap. Ms Robison has urged Westminster to provide the necessary data to allow for the change to be made. She said: “Let me be crystal clear, this government is to end the two-child cap and in doing so will lift over 15,000 Scottish children out of poverty.”
• The nation’s NHS will receive a record £21bn for health and social care – an increase of £2bn for frontline NHS boards. The investment comes as spending watchdog Audit Scotland warned the NHS is unsustainable in its present state, with a fundamental change “urgently needed”.
• Almost £200m will be invested to reduce NHS waiting times. Ms Robison said by March 2026, no one will wait longer than 12 months for a new outpatient appointment, inpatient treatment or day-case treatment.
• The SNP has ditched its flagship council tax freeze. Local authority funding will be increased by more than £1bn, taking the total amount to more than £15bn. Ms Robison said while it is up to the local authorities to make their own decisions with the funding, there is “no reason for big increases in council tax next year”.
• More than £300m of ScotWind revenues will be invested in jobs and in measures to meet the climate challenge.
• £768m will be invested into affordable homes, enabling more than 8,000 new properties for social rent, mid-market rent and low-cost home ownership to be built or acquired this coming year.
• The Scottish government will also work with the City of Edinburgh Council to “unlock” more than 800 new net zero homes at the local authority’s Granton development site.
• New funding of £4m will be invested to tackle homelessness and for prevention pilots.
• An additional £800m will be invested into social security benefits.
• More than £2.5m will be delivered to support actions within the Disability Equality Action Plan.
• Spending on education and skills will increase by 3% over and above inflation, an uplift of £158m.
• £120m will be provided to headteachers to support initiatives designed to address the poverty-related attainment gap.
• Free school meals will also be expanded to primary 6 and 7 children from low-income families.
• A new initiative titled “bright start breakfasts” will be funded to help deliver more breakfast clubs in primary schools across the country.
• £29m will be invested into an additional support needs (ASN) plan, which will help maintain teacher numbers at 2023 levels and additionally train new ASN teachers.
• Almost £4.2bn will be invested across the justice system. The funding will seek to maintain police numbers. An additional £3m will be made available to help mitigate retail crime amid shoplifting concerns.
• £4.9bn will be invested to tackle the climate and nature crises.
• £25m will be allocated to support the creation of new jobs in the green energy supply chain in Scotland. And to help people at home and work, £300m will be invested in upgrading heating and insulation.
• £90m will be invested to protect, maintain and increase the nation’s woodlands and peatlands.
• £190m will be made available to boost bus services and to make it easier for people to walk, wheel or cycle. The electric vehicle charging network is also to be expanded.
• Almost £1.1bn will be used to maintain and renew the nation’s rail infrastructure.
• £237m will be invested to maintain and improve the nation’s ports, as well as deliver a “more resilient and effective ferry fleet”.
• In rural communities, more than £660m will be used to support farmers, crofters and the wider economy.
• The culture budget will increase by £34m.
• Income tax rates in Scotland have been frozen until 2026.
• The SNP had already confirmed it intends to restore a universal winter fuel payment for pensioners next year. Those in receipt of pension credit or other benefits will receive a £200 or £300 payment, depending on their age. All other pensioners will receive a reduced payment of £100.
Image: First Minister John Swinney and Ms Robison at Holyrood on Wednesday. Pic: PA
The Scottish budget is largely funded through the block grant alongside taxes raised north of the border.
Holyrood has an additional £3.4bn to spend in 2025-26, thanks to cash announced by UK Chancellor Rachel Reeves in her budget in October – taking the overall settlement to £47.7bn.
However, the Scottish budget for 2023-24 amounted to around £59.7bn.
Holyrood ministers are legally obliged to balance the books and have limited borrowing powers with which to raise additional funds.
The draft budget will be scrutinised in the Scottish parliament over the coming weeks before an expected vote in February, where the SNP will need to garner support from outside its minority administration for it to pass.
Image: Ms Robison during a visit to Logan Energy in Edinburgh earlier on Wednesday. Pic: PA
Following her statement, Ms Robison said she was looking forward to working with the opposition parties.
She added: “I am proud to present a budget that delivers on the priorities of the people of Scotland.
“Parliament can show that we understand the pressures people are facing.
“We can choose to come together to bring hope to people, to renew our public services, and deliver a wealth of new opportunities in our economy.”
In response, the Scottish Greens said it will not back the proposed budget “as things stand”.
Ross Greer, the party’s finance spokesperson, cited its failure to expand free school meals for all P6 and P7 pupils.
The MSP said: “The government has agreed to more modest Green proposals like free ferry travel for young islanders, free bus travel for asylum seekers and higher tax on the purchase of holiday homes, but these measures are not nearly enough to make up for the cuts elsewhere.
“Big changes will be needed if they expect the Scottish Greens’ support.”
IPPR Scotland welcomed the intention to scrap the two-child benefit cap, as did Oxfam Scotland.
However, the charity criticised the Scottish government’s failure to implement a tax on “pollution spewing private jets” and is calling on ministers to “turbocharge talks with the UK government in order to give the tax clearance for take-off as soon as possible”.
Meanwhile, the Scottish Conservatives branded it “more of the same from the SNP”.
Craig Hoy, the party’s shadow cabinet secretary for finance, said: “Taxpayers are paying the price for years of SNP waste on ferries, gender reforms, failed independence bids, and a National Care Service that has already cost £30m.”
The MSP said the NHS is on its knees and needed “urgent reform”.
He added: “The extra funding is welcome but our NHS needs more than money, it needs leadership and a serious plan to reduce waiting lists, yet the SNP’s only proposal is rehashing a previous broken promise.
“The Nationalists have no vision for the future of the country and it’s clear John Swinney is out of ideas.”
The Scottish Tories also said the two-child benefit cap is “necessary”.
MSP Liz Smith, the party’s shadow social security secretary, said: “Social security payments must be fair to people who are struggling and to taxpayers who pick up the bill.
“We believe the two-child cap is necessary and the right approach at this time.
“The rapidly rising benefits bill is currently unsustainable as a direct consequence of the SNP’s high tax rates and mismanagement of our economy and public finances.”
Donald Trump’s trade war escalation has sparked a global sell-off, with US stock markets seeing the biggest declines in a hit to values estimated above $2trn.
Tech and retail shares were among those worst hit when Wall Street opened for business, following on from a flight from risk across both Asia and Europe earlier in the day.
Analysis by the investment platform AJ Bell put the value of the peak losses among major indices at $2.2trn (£1.7trn).
The tech-focused Nasdaq Composite was down 5.8%, the S&P 500 by 4.3% and the Dow Jones Industrial Average by just under 4% at the height of the declines. It left all three on course for their worst one-day losses since at least September 2022 though the sell-off later eased back slightly.
Analysts said the focus in the US was largely on the impact that the expanded tariff regime will have on the domestic economy but also effects on global sales given widespread anger abroad among the more than 180 nations and territories hit by reciprocal tariffs on Mr Trump‘s self-styled “liberation day”.
They are set to take effect next week, with tariffs on all car, steel and aluminium imports already in effect.
Price rises are a certainty in the world’s largest economy as the president’s additional tariffs kick in, with those charges expected to be passed on down supply chains to the end user.
The White House believes its tariffs regime will force employers to build factories and hire workers in the US to escape the charges.
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The latest numbers on tariffs
Economists warn the additional costs will add upward pressure to US inflation and potentially choke demand and hiring, ricking a slide towards recession.
Apple was among the biggest losers in cash terms in Thursday’s trading as its shares fell by almost 9%, leaving it on track for its worst daily performance since the start of the COVID pandemic.
Concerns among shareholders were said to include the prospects for US price hikes when its products are shipped to the US from Asia.
Other losers included Tesla, down by almost 6% and Nvidia down by more than 6%.
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PM: It’s ‘a new era’ for trade and economy
Many retail stocks including those for Target and Footlocker lost more than 10% of their respective market values.
The European Union is expected to retaliate in a bid to put pressure on the US to back down.
The prospect of a tit-for-tat trade war saw the CAC 40 in France and German DAX fall by more than 3.4% and 3% respectively.
The FTSE 100, which is internationally focused, was 1.6% lower by the close – a three-month low.
Financial stocks were worst hit with Asia-focused Standard Chartered bank enduring the worst fall in percentage terms of 13%, followed closely by its larger rival HSBC.
Among the stocks seeing big declines were those for big energy as oil Brent crude costs fell back by 6% to $70 due to expectations a trade war will hurt demand.
The more domestically relevant FTSE 250 was 2.2% lower.
A weakening dollar saw the pound briefly hit a six-month high against the US currency at $1.32.
There was a rush for safe haven gold earlier in the day as a new record high was struck though it was later trading down.
Sean Sun, portfolio manager at Thornburg Investment Management, said of the state of play: “Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade.”
He warned there was a big risk of escalation ahead through countermeasures against the US.
Sandra Ebner, senior economist at Union Investment, said: “We assume that the tariffs will not remain in place in the announced range, but will instead be a starting point for further negotiations.
“Trump has set a maximum demand from which the level of tariffs should decrease”.
She added: “Since the measures would not affect all regions and sectors equally, there will be winners and losers as in 2018 – although the losers are more likely to be in the EU than in North America.
“To protect companies in Europe from the effects of tariffs, the EU should not respond with high counter-tariffs. In any case, their impact in the US is not likely to be significant. It would be more efficient to provide targeted support to EU companies in the form of investment and stimulus.”
British companies and business groups have expressed alarm over President Donald Trump’s 10% tariff on UK goods entering the US – but cautioned against retaliatory measures.
It comes as Business Secretary Jonathan Reynolds launched a consultation with firms on taxes the UK could implement in response to the new levies.
A 400-page list of 8,000 US goods that could be targeted by UK tariffs has been published, including items like whiskey and jeans.
On so-called “Liberation Day”, Mr Trump announced UK goods entering the US will be subject to a 10% tax while cars will be slapped with a 25% levy.
The government’s handling of tariff negotiations with the US to date has been praised by representative and industry bodies as being “cool” and “calm” – and they urged ministers to continue that approach by not retaliating.
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Business lobby group the CBI (Confederation of British Industry) said: “Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices”.
Industry body the British Retail Consortium (BRC) also cautioned: “Retaliatory tariffs should only be a last resort”.
‘Deeply troubling’
While a major category of exports, in the form of services – like finance and information technology (IT) – has been exempted from the tariffs, the impact on UK business is expected to be significant.
Mr Trump’s announcement was described as “deeply troubling for businesses” by the CBI’s chief executive Rain Newton-Smith.
The Federation of Small Businesses (FSB) also said the tariffs were “a major blow” to small and medium companies (SMEs), as 59% of small UK exporters sell to the US. It called for emergency government aid to help those affected.
“Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat,” the FSB’s policy chair Tina McKenzie said. “The fallout will stifle growth” and “hurt opportunities”, she added.
Companies will need to adapt and overcome, the British Export Association said, but added: “Unfortunately adaptation will come at a cost that not all businesses will be able to bear.”
Watch dealer and component seller Darren Townend told Sky News the 10% hit would be “painful” as “people will buy less”.
“I am a fan of Trump, but this is nuts,” he said. “I expect some bad months ahead.”
Industry body Make UK said the 25% tariffs on cars, steel and aluminium would in particular be devastating for UK manufacturing.
Cars hard hit
Carmakers are among the biggest losers from the world trade order reshuffle.
Auto industry body the Society of Motor Manufacturers and Traders (SMMT) said the taxes were “deeply disappointing and potentially damaging measure”.
“These tariff costs cannot be absorbed by manufacturers”, SMMT chief executive Mike Hawes said. “UK producers may have to review output in the face of constrained demand”.
The new taxes on cars took effect on Thursday morning, while the measures impacting car parts are due to come in on 3 May.
Economists immediately started scratching their heads when Donald Trump raised his tariffs placard in the Rose Garden on Wednesday.
On that list he detailed the rate the US believes it is being charged by each country, along with its response: A reciprocal tariff at half that rate.
So, take China for example. Donald Trump said his team had run the numbers and the world’s second-largest economy was implementing an effective tariff of 67% on US imports. The US is responding with 34%.
How did he come up with that 67%? This is where things get a bit murky. The US claims it studied its trading relationship with individual countries, examining non-tariff barriers as well as tariff barriers. That includes, for example, regulations that make it difficult for US exporters.
However, the actual methodology appears to be far cruder. Instead of responding to individual countries’ trade barriers, Trump is attacking those enjoying large trade surpluses with the US.
A formula released by the US trade representative laid this bare. It took the US’s trade deficit in goods with each country and divided that by imports from that country. That figure was then divided by two.
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So, in the case of China, which has a trade surplus of $295bn on total US exports of $438bn, that gives a ratio of 68%. The US divided that by two, giving a reciprocal tariff of 34%.
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PM will ‘fight’ for deal with US
This is a blunt measure which targets big importers to the US, irrespective of the trade barriers they have erected. This is all part of Donald Trump’s efforts to shrink the country’s deficit – although it’s US consumers who will end up paying the price.
But what about the small number of countries where the US has a trade surplus? Shouldn’t they actually be benefiting from all of this?
That includes the UK, with whom the US has a surplus (by its own calculations) of $12bn. By its own reciprocal tariff formula, the UK should be benefitting from a “negative tariff” of 9%.
Instead, it has been hit by a 10% baseline tariff. Number 10 may be breathing a sigh of relief – the US could, after all, have gone after us for our 20% VAT rate on imports, which it takes issue with – but, by Trump’s own measure, we haven’t got off as lightly as we should have.