Scottish budget: Glimmers of hope amid financial hopelessness

The Cabinet Secretary for Finance said that yesterday’s budget was one of hope.  If you look hard enough, I do think there are glimmers of hope in there for Scotland’s voluntary sector, but overall I’m not sure it will do much to dispel the immediate sense of financial hopelessness felt by many of Scotland’s voluntary organisations. 

Ahead of the budget, SCVO made two asks of the Scottish Government: to work with us on mitigations to the rise in employer National Insurance contributions (NICs), and to adopt the recommendations of the Social Justice and Social Security Committee pre-budget scrutiny on Fair Funding.  On both, the budget contains the usual warm words, but not so much in the way of concrete commitments. It all feels a bit more “hope for the best” than hopeful. 

On NICs, the budget document confirms the Scottish Government will continue to press the Chancellor to cover the costs of NICs for all public services, regardless of the provider, and this is welcome.  The government fell short, however, of putting its money where its mouth is and committing to cover those costs for the voluntary organisations it funds through grants and contracts, should the Chancellor’s support not be forthcoming.  That leaves many voluntary organisations facing the options of not being able to afford cost of living increases next year and/or making staff redundant. While the budget goes to great lengths to protect the number of teachers and police officers, and the public sector pay policy includes above inflation pay increases, it’s hard not to draw the conclusion that voluntary sector staff are considerably less important to the Scottish Government than their public sector counterparts. 

The budget’s reference to continued work on fairer funding is also welcome - in that it’s better for it to be in there than not - but it’s hard to see how the budget presented is going to do much to enable that.  For example, a flatlined budget for third sector infrastructure, while perhaps better than the cuts we might have feared, suggests another year of standstill budgets for the voluntary organisations funded through that part of government. 

The first glimmer of hope, however, comes in relation to a stalwart of the Fair Funding agenda, multi-year funding, with the Cabinet Secretary making a commitment to multi-year settlements for organisations in the culture sector.  While ideally this commitment would apply to organisations right across the sector, having support for the idea from another Cabinet Secretary is welcome, and this hopefully provides proof of concept that it is possible to provide this vital stability to voluntary organisations.  We will watch with interest to see what this means in practice, and what impact it has. 

The other glimmers of hope that I see are less to do with the pounds and pence, and relate to the presentation of information. For several years our response to the Scottish budget has included the comment that the sector is invisible within it.  While there is, of course, much more that I’d like to see within the budget to support voluntary organisations, I do think there are a couple of things in this year’s budget that suggest the sector was at least thought of when some parts of the budget were being drawn up. 

In relation to provisions being made for staff salaries in social care and early years, the budget is explicit that this includes staff in the third sector as well as the public sector.  This removes the uncertainty we often experienced in previous years of wondering whether voluntary sector staff will be included in these agreements. 

Unpicking the implications of the budget for the voluntary sector is notoriously difficult, because decisions about voluntary sector grants and contracts are made ‘a level down’ from the budget, which sets out overall departmental budgets, without much detail below that.  In the interests of transparency, we have called for more information on voluntary sector spend to be made available, and it is interesting to note that for the first time (as far as I’m aware) this year’s budget contains a reference specifically to voluntary sector funding within the spending plans for community justice. 

 These two examples, while nuanced, and admittedly pretty small, do seem to me to suggest a (very) subtle shift in the positioning of the voluntary sector within the budget.  In relation to our long-term aspiration at SCVO to improve understanding of the role and value of the sector within ‘the system’, I could probably clock them up as a milestone on our long journey.  My worry, though, is that without more immediate financial support, some voluntary organisations won’t be there to come on that journey with us.  And today’s budget doesn’t make me any more hopeful about that. 

For more analysis of the impact of the Scottish budget on the voluntary sector, join our webinar with colleagues from Fraser of Allander Institute and COSLA on 21 January 2025.