Budget deal secures £40million extra for north and north-east – but cuts threat remains

A budget deal has handed councils across the north and north-east a £40million boost – but leaders warned that threat of severe service cuts remained.

The package – negotiated between SNP ministers and the Scottish Greens, with the backing of two Liberal Democrat MSPs – includes more than £10million for lifeline internal ferries in the northern isles.

The six Green MSPs agreed to back Finance Secretary Derek Mackay’s budget in exchange for £159.5million being added on to the local government settlement.

It will give Aberdeen City Council £5.599million more than expected, while Aberdeenshire is poised to receive a £7.747million uplift, Highland is due £7.156million extra, and Moray is expecting another £2.752million.

Argyll and Bute will get a further £2.884million, Western Isles will get an additional £1.21million, Orkney gets £6.634million more, including £5.5million for ferry funding, and Shetland gets £6.27million more, including £5million for ferries.

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.

Mr Mackay said: “With all of this investment this government is delivering the best deal for taxpayers in the whole of the UK.”

John Finnie, the Green MSP for the Highlands and islands, hailed it as a “monumental deal” which would ensure that council cuts are “significantly reduced”.

“I have continuously pressed for these cuts to be scrapped and I’m thrilled that we have delivered a fair settlement today,” he said.

Local government umbrella body Cosla also hailed the package for having “taken our concerns on board”, but warned that “serious financial challenges” remain.

The concern was echoed by several council leaders, including Aberdeen’s Jenny Laing, who said: “Whilst we welcome the additional revenue Aberdeen City Council still remains the lowest funded council in Scotland.

“Even with this revised settlement we will be forced to look at cuts to vital services.”

Scottish Liberal Democrat MSPs Tavish Scott and Liam McArthur, who repeatedly called for the northern isles councils to receive fair funding for their internal ferry services, claimed credit for the £10.5million boost last night.

“From the outset we have made clear the importance of these lifeline internal ferry services to the communities and constituents we represent,” they said in a statement.

“On that basis, we have engaged in discussions with the cabinet secretary, made the case and persuaded him to change the budget.”

Skye, Lochaber and Badenoch MSP Kate Forbes said: “I was disappointed and incredulous at Highland Council’s proposals to cut additional support need staff and teachers across the Highlands a few weeks ago.

“Today’s increases meant that there is absolutely no excuse to keep any cuts to teacher numbers on the table.”

Scottish Conservative shadow finance secretary Murdo Fraser said: “While welcome, this extra funding demolishes the SNP’s claim it is being starved of funding.

“The SNP’s budget from Westminster is going up this year and, to nobody’s surprise, it turns out Mr Mackay’s had a rainy day fund all along to help buy off the Greens.”