FINANCE Secretary Shona Robison has set out her first Scottish Budget.

She said ahead of the announcement it would be one of the "most challenging" Budgets since devolution amid high inflation and an estimated £1.5 billion black hole.

During her statement, Robison said Scotland is at the “upper limit of mitigation” of UK Government policies and, while it would always do the best it could with the powers available, there "is no substitute for independence". 

Robison has confirmed there will be a new income tax band of 45% introduced for those earning more than £75,225.

The top rate of tax, levied against those earning more than £125,000, will also rise by 1% next year to 48%.

In other areas of tax, the three lowest rates will see no increase to their rates while the starter and basic rate bands will increase by the level of inflation.

She has also said the Scottish Government will "fully fund" a council tax freeze,  providing local government with the equivalent of a 5% rise and "delivering over £140 million of additional investment for local services."

The Scottish Child Payment will be brought up to £26.70 a week from April 2024 and school meal debt is to be wiped out with a £1.5m one-off fund for councils.

Business rates for premises valued at less than £51,000 will be frozen in Scotland while hospitality businesses in Scotland’s islands will be given 100% relief.

The small business bonus scheme will also continue while the Government will assess how valuations for business rates are carried out. 

Robison confirmed 100% relief would be provided for island hospitality properties capped at £110,000 per business.

Funding for NHS boards will rise by £550m – or 4.3% – the Deputy First Minister told MSPs.

The Deputy First Minister said this would help the NHS "evolve its delivery of services and work to improve waiting times". 

Robison said the "social contract" with the people of Scotland was at the heart of a Budget she said "reflects our shared values as a nation and speaks to the kind of Scotland we want to be". 

She told the chamber: “This is a Government committed to equality through tackling poverty and protecting people from harm.

"At the heart of this budget is our social contract with the people of Scotland where those with the broadest shoulders are asked to contribute a little more.

"Where everyone can have access to universal services and entitlements – and those in need of an extra helping hand will receive targeted additional support.

"This is what we mean when, in the face of Westminster austerity, we say we will always stand up for Scotland.”

Other key announcements included an investment of £220m in active travel, £358m to accelerate energy efficiency upgrades and installation of clean heating systems, and £129m to maintain and restore peatlands.

While devolution has brought benefits to Scotland, the Deputy First Minister said the Government was “fighting austerity with one hand tied behind our back”.

She said at the end of her speech that the Scottish Government would continue to do the best it could with the powers it has, but warned it was at the "upper limit on mitigation" of UK Government policies.

"We cannot spend money we do not have and we can’t mitigate every cut made by the UK Government," Robison said.

"We are at the upper limit of mitigation that can be provided within the devolved settlement.

"We will always do our best with the powers we have but there is no substitute for independence. We have always said that to truly transform our economy, society and public services, we need the full powers of independence and to retake our place in the EU."