Analysis: 'Devil is in the detail' of Covid funding for Scotland
21 December 2021, 20:52 | Updated: 7 June 2023, 08:56
No bangs in Scotland now that the bucks are in place.
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Edinburgh’s Hogmanay celebrations - including the famous fireworks - have been cancelled as the Scottish Government aims to arrest the spread of the new Omicron variant of Covid.
Furthermore, no outdoor events with more than 500 people from Boxing Day - effectively making football a spectator-free sport for the first few weeks of the year.
Meanwhile, indoor events can only have 100 people if standing, 200 if seated.
Scotland's Deputy First Minister, John Swinney, went even further on LBC asking people not to go first-footing after the bells.
It's all to stop the spread of coronavirus and ease pressure on the NHS - but public health restrictions cost money. And the money is controlled by the UK Government. Cue another devolution-based spat between Scotland’s two governments.
Read more: Sturgeon says 'stay at home as much as possible' and imposes strict limits on event crowds
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The Scottish Government has said it has found £200m "with great difficulty" from its own budget to help compensate affected businesses, but quite where from has not been spelled out.
The UK Treasury also claims to have ridden, cavalry-like, to the rescue with not one, but two, tranches of £220m. Who wouldn't welcome an apparent £440m in total?
Yet the devil is in the detail and the detail of the fiscal framework is very complicated, and therefore highly suggestible to political spin from one party or the other.
According to the Scottish Government, one lot of £220m was already baked into its budget for this year - it's money it was expecting so in effect it is already spent, mostly on health services.
Furthermore, it's less than it was expecting by around £45m, so it has branded this as a cut.
Scotland deputy FM on new restrictions for Hogmanay
The second tranche is "new" money - an advance if you like on next year's block grant for Scotland - but given that "missing" £45m, the Scottish Government estimates it only amounts to £175m.
Further, the Barnett consequentials deriving from the £1bn for businesses announced by the Chancellor - which would be around £80m - are part of that second £220m, so no cherry on top there.
All in all, the Scottish Government says it now has a £375m fund to support businesses.
The UK Government says it has £440m to spend how it sees fit.
Inter-governmental finance is not the most riveting of subjects but when it comes down to whether businesses can make it to next year, and if people will still have jobs in those businesses, it’s impact on people's day-to-day lives is very obvious.
Nicola Sturgeon says there are structural problems with the current fiscal arrangements.
A report just out by the Institute for Fiscal Studies says the same - it recommends devolving more borrowing powers, even furlough procedures.
Radical reform is highly unlikely right now. Instead, the pressure is now on the Scottish Government to get that money to the businesses most affected by this latest round of restrictions, otherwise there's very little chance of a happy new year for Scotland's hospitality, tourism and retail industries.
