Scotland increases landfill tax, confirms sharp rise in offshore wind budget

Under pressure to address a multi-billion-pound Budget shortfall, Scotland’s Deputy First Minister and Finance Secretary Shona Robinson announced a council tax freeze but an increase in income tax to 45% for anyone earning between £75,000 and £125,140 annually.

This change is expected to raise £18.8bn in 2024-25, with Scotland touting a £1.5bn uplift than if it had maintained alignment with the UK Government’s tax brackets.

Less fanfare was made around the Scottish Government’s spending plans to support its 2045 net-zero target and aims on nature and the circular economy – but there were some notable announcements.

Budget documents state that Scotland’s ability to fund the low-carbon transition for heat, buildings and transport have been “particularly impacted” by changes made in Westminster this year. This includes rollbacks on energy efficiency requirements for landlords, fossil fuel boiler phase-outs and electric vehicle (EV) sales announced by UK Prime Minister Rishi Sunak in September.

Scotland is setting aside around £4.5bn for transport, net-zero and the just transition in 2024-5 – a slight year-on-year increase but not matching the levels exceeding £4.8bn seen last year.

Funding for energy efficiency will total £358.2m in 2024-5, down slightly from £367.5m this financial year. And Scotland’s active and low-carbon transport Budget will shrink year-on-year from £348.6m to £307.8m.

Additionally, the Budget includes no provisions for carbon capture in 2024-5. This decision is attributed to “uncertainty from the UK Government on the timescales” for supporting carbon capture, utilization and storage clusters.

The Acorn project in Northeast Scotland was chosen in July as among the next set of clusters for the Government’s CCUS programme. It is slated for completion in the late 2020s.

Offshore wind and landfill tax

One notable increase in funding is for the offshore wind supply chain. From a £9.3m budget this financial year, an increase to almost £67m has been confirmed for 2024-5.

Budget documents state: “Our strategic investment in offshore wind will stimulate and support private investment in the infrastructure and supply chain critical to the growth of the sector. It will also support market certainty, providing thousands of new jobs, embedding innovation and boosting skills.”

The UK is targeting 50GW of offshore wind by 2030 and much of this will be located in Scotland. Last month, the UK Government increased the maximum strike price for offshore wind projects in its Contracts for Difference (CfD) auction scheme, after the previous auction round failed to attract any bids from offshore wind developers.

A rise of 66% was confirmed for traditional projects and the increase is 52% for floating wind projects. Additionally, developers will start to be paid for wider socio-economic benefits from 2025.

Elsewhere, Scotland’s landfill tax rates have been increased slightly.

The standard rate will increase from £102.10 to £103.70 per tonne and the lower rate will increase from £3.25 per tonne to £3.30. These changes will take effect from 1 April 2024.

Scotland said the changes are consistent those on the horizon for the rest of the UK.