This is my first budget as the Cabinet Secretary for Economy, Fair Work and Culture. My absolute priority is supporting economic recovery while we continue to do all that we can to suppress Covid-19 and ensure the safety of Scotland’s workforce.
We have an opportunity to invest for the future and design an economic recovery that works for all of Scotland’s people. Crucially, our plans are to rebuild our economy with wellbeing, sustainability and fair work at its heart. The budget allows us to make further progress by investing in policies that support our national mission to create new green and good jobs to ensure that no one is left behind as a result of the economic crisis. The total economy, fair work and culture portfolio budget allocation for 2021-22 increases by 10.5 per cent, which is £98.5 million, to £1.036 billion. That includes a £170.3 million increase in resource funding plus a £27.2 million increase in capital.
I advise the committee that the Cabinet is currently agreeing the budget allocation following yesterday’s confirmation by the UK Treasury of £1.1 billion of Covid-19 support. That will provide an additional £21.5 million financial transaction funding to Scottish Enterprise, which will bring Scottish Enterprise’s financial transaction spending power to the same levels as in the current financial year, at £48.5 million. That welcome development means that Scottish Enterprise will see a significant overall rise in its budget allocation, of £42.2 million, which will include £12 million for resource and £30.2 million for capital—including £8.4 million for the green jobs fund—with FTs maintained at the 2020-21 level, rather than a £21.5 million reduction, as reflected in the budget.
That additional investment is in the face of the on-going economic challenges arising from Covid-19 and the UK’s exit from the European Union. The budget underpins our plans to renew and rebalance our economy. It will support the work that Scottish Enterprise is doing to help companies to withstand the challenges, to protect and create jobs and to help deliver an economic recovery that is fair, sustainable and green.
Central to our plans for economic recovery is our commitment to doing everything that we can to protect existing jobs, to support workers to upskill and reskill and to create good-quality jobs for the future. We must protect and create opportunities for our young people, many of whom are being hit the hardest by the economic impacts of the pandemic.
The budget includes an additional £125 million for employability and skills provision relating to the young persons guarantee, which will support delivery of continued investment in employability, training and skills opportunities, such as the national transition training fund and the flexible workforce development fund. The additional £125 million in 2021-22 will be allocated as follows: £70 million to deliver the young persons guarantee and achieve our ambition of supporting every young person; £35 million to strengthen skills interventions, including the national transition training fund, the flexible workforce development fund and the talent attraction service; and £20 million for the no one left behind programme, which demonstrates our commitment to person-centred and place-based employability support.
For 2021-22, the budget includes funding of £27 million for our devolved employment service, Fair Start Scotland. The funding underpins a two-year extension of the service, which we expect to support up to 29,000 people, and represents a £5.8 million increase on 2020-21, based on the forecast of expenditure that has been assessed by the Scottish Fiscal Commission.
The Government’s commitment to employability and skills is reflected in the education and skills portfolio allocations for 2021-22. The grant in aid for Skills Development Scotland has been increased by £6 million to £230 million, and additional funding of £21 million has been made available to the Scottish Funding Council to support foundation apprenticeships in the college sector and graduate apprenticeships in higher education.
We are supporting local authority environmental health officers and trading standards officers with extra resources of £2.9 million in this financial year and next, to reflect the increased asks of them and to allow them to step up their inspection and enforcement where necessary.
The budget builds on our already significant investments in employability and skills in relation to the young persons guarantee, and recognises the increasing challenges that we are likely to see in the labour market this year while contributing to our national mission for new green and good jobs, alongside our fair work commitments.
Over the next session of Parliament, we will deliver a new £100 million green jobs fund, which will invest £50 million through our enterprise agencies to help businesses that provide sustainable and/or low-carbon products and services to develop, grow and create jobs.
A further £50 million will support businesses and supply chains to take advantage of public and private investment in low-carbon infrastructure and in the transition to a low-carbon economy, which should boost green employment. In 2021-22, we will allocate an initial £14 million from the green jobs fund.
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We will continue our investment in the Scottish National Investment Bank, which represents the single biggest economic development in the history of the Scottish Parliament—it is also the UK’s first development bank. We have committed to bank capitalisation of £2 billion, and we will provide £200 million of fresh capital for investment in 2021-22. The bank is mission led, with a primary mission to help to provide the investment needed to put businesses at the forefront of driving forward our net zero ambitions. Its investments will provide finance and catalyse private investment to achieve a step change in economic growth, by powering innovation and accelerating the move to a net-zero-emissions, high-tech, connected, globally competitive and inclusive economy.
We will provide £36.7 million for the continued development and build of the National Manufacturing Institute Scotland. Through our inward investment plan and “A Trading Nation—a plan for growing Scotland’s exports”, we aim to attract more foreign investment and to help our exporters to be more successful. We are working to support more strategic investments, with up to £20 million per annum,?and to grow exports from 20 per cent to 25 per cent of gross domestic product by 2029. Our capital investment plan is planned for launch in March. It will set out a strategy based on Scotland’s future strengths and opportunities, with a set of actions to improve our performance in attracting internationally mobile private capital.
Following the outcome of the capital spending review, we will invest £26 million of capital funding over five years in a low-carbon manufacturing challenge fund, which will support innovation in low-carbon technology, processes and infrastructure. We will also provide £25 million of investment over five years to support the Clyde mission low-carbon heating project.
The Scottish budget commits to extending the current non-domestic rates relief available to properties in the retail, hospitality, aviation and leisure sectors for at least the first three months of the financial year.
The latest GDP statistics, published on 12 February, show that the UK economy grew by 1.2 per cent in December but shrank by 9.9 per cent in 2020 as a whole—more than twice the previous largest annual fall on record. We recognise how difficult the challenge ahead is, but this budget and the portfolio priorities will help to lead our economic recovery and to rebuild a stronger, more resilient and sustainable economy for Scotland. I look forward to engaging with the committee on the budget.