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Finance Secretary faces grilling of £1 billion Scottish budget black hole

Derek Mackay will be questioned by MSPs on the Finance Committee about the looming shortfall.

Derek Mackay is facing questions about the Scottish Government’s looming budget shortfall (Jane Barlow/PA)
Derek Mackay is facing questions about the Scottish Government’s looming budget shortfall (Jane Barlow/PA)

Finance Secretary Derek Mackay is facing a grilling from MSPs over how the Scottish Government plans to meet a possible budget shortfall of more than £1 billion.

Adjustments to the block grant from Westminster mean the funding gap could open up over the next three financial years.

Experts at the Scottish Fiscal Commission have already warned ministers may need to either increase taxes or cut public spending as a consequence.

Mr Mackay will be questioned on the likely options when he gives evidence to MSPs on Holyrood’s Finance Committee on Wednesday.

Speaking ahead of the meeting, Labour finance spokesman James Kelly said: “Derek Mackay must produce some answers today over how he intends to close the £1 billion black hole in the SNP government’s books.”

He said the funding shortfall, resulting from income tax reconciliations, represented a “huge financial danger for the devolved government which puts lifeline public services at risk”.

Mr Kelly demanded: “It is time for Derek Mackay to stop the constitutional rants and get real and deal with the looming financial problems he has helped create”.

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Finance Secretary Derek Mackay. (Jane Barlow/PA)

The session comes after Fraser of Allander economics think tank criticised ministers for having failed to outline their response to the £1 billion “hit to revenues” in the recently published medium term financial strategy.

A Scottish Government spokesman said: “The Scottish Fiscal Commission has reduced its growth forecasts for 2019 and 2020 as a direct result of continuing Brexit uncertainty.

“On top of this, Scotland faces a challenging future as a result of continuing UK austerity, which has meant that over £12 billion less has been invested in Scottish public services over the last nine years.

“Despite these challenging circumstances, the latest income tax forecasts are higher for every future year than those made at the time of the Budget thanks to Scotland’s strong labour market performance, with unemployment at a record low and the outlook for earnings growth improving.

“If we’d followed UK Government income tax policy, we would have over £500 million less to spend in 2019-20.”

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