DESPITE a £350 million bung in the budget, Chancellor Philip Hammond has left Scotland out of pocket to the tune of £2.9 billion over the next 10 years, Scottish Government finance secretary Derek Mackay has claimed.
The SNP minister said the Tory Budget was “confirmation” of a real terms cut of 9.2 per cent.
Scottish Tory leader Ruth Davidson said the extra money announced in yesterday’s Budget was money the SNP didn’t know they were going to get, and that they should “use this extra resource” to “give taxpayers and businesses a break.”
It was the Chancellor’s last Budget before Prime Minister Theresa May triggers Article 50, the formal process for leaving the EU. Yet, there were very few mentions of Brexit, though it loomed over all of the Tory Chancellor’s decisions.
The choice that will dominate the coverage of this Budget was his decision to hike national insurance contributions for the self-employed, breaking a manifesto commitment. Class 4 contributions will increase from 9 per cent to 11 per cent over two years. The change will affect around 300,000 people in Scotland.
There was a commitment to review the tax regime in the North Sea to fully exploit what oil and gas remained in the UK continental shelf.
Hammond upset the Scotch Whisky Association (SWA), with an increase to excise duty amounting to an extra 36p levy on a bottle.
The SWA said the change meant around 70 per cent of an average priced bottle of Scotch Whisky goes to the tax man, 21 per cent higher than in 2010.
Last week in her speech to the Scottish Tory conference the Prime Minister had described Scotch Whisky as “a truly great Scottish and British industry”.
Julie Hesketh-Laird, the SWA’s acting chief executive called the move “a major blow”.
“Distillers will find it hard to understand why the Chancellor is penalising a strategically important British industry with this tax increase,” she added.
The Chancellor had said previously that there would be “difficult choices” and people shouldn’t be expecting the traditional Budget surprises.
It was, Hammond said, a Budget that would take “forward our plan to prepare Britain for a brighter future.”
He added: “It provides a strong and stable platform for those negotiations; it extends opportunity to all our young people; it delivers further investment in our public services; and it continues the task of getting Britain back to living within its means. We are building the foundations of a stronger, fairer, more global Britain.”
The new powers devolved to Holyrood, meant that many of the Chancellor’s big announcements in the Budget didn’t apply to viewers in Scotland.
There was an extra £2bn for social care services, help for firms affected by business rate hikes, and money for free schools.
Under the Barnett Formula, this increased spending in England will mean an extra £350m in consequentials for the Scottish Government’s coffers. The resource budget will be boosted by £260m in the period to 2020 while the capital budget will increase by £90m to 2021.
The SNP, however, remained sceptical.
“Every little helps but I don’t think we will be putting out the bunting,” SNP Economy spokesman Stewart Hosie said in the Commons.
Hammond said the funding package was “demonstrating once again that we are stronger together in this great United Kingdom’’.
He added: “Benefitting from £350m of extra investment, the Scottish Government can take further steps to strengthen Scotland’s economy and make sure that Scottish people, of all background and no matter where they live, feel the benefits of economic growth.”
Mackay said: “The Chancellor has today confirmed a real-terms cut to the Scottish budget of 9.2 per cent between 2010/11 and 2019/20.
“While I welcome the additional Barnett consequentials that were announced today, no-one should think that this Budget provides an end to austerity from the UK Government – in fact there is still a further £3.5 billion of cuts to come.
“On top of that the Chancellor continued with the UK Government’s damaging welfare cuts that will make many vulnerable and low income households worse off.
“The real elephant in the room in this Budget was Brexit. There was no mention of the UK Government’s plans to protect and grow the UK economy as the Prime Minister gets ready to trigger Article 50.
“This is simply not acceptable. Brexit is a real threat to people across Scotland in so many ways.
“The Chancellor must tell us his plans.”
He added: “The Scottish Government will continue to do everything it can to boost the economy, tackle inequality and provide high-quality public services, but today’s UK Budget does little to support those aims.”
Scottish Secretary David Mundell said: “The Autumn Statement announced an additional £800m for Holyrood and this Budget allocates a further £350m.
“That means, in the past year, the UK Government has set out an extra £1bn investment in Scotland. “
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BUDGET BREAKDOWN
- Barnett consequentials will mean an extra £350m in funding for Holyrood, though Scottish Government say this confirms a real terms cut to the Scottish budget of 9.2 per cent between 2010/11 and 2019/20
- National Insurance contributions for the self-employed to increase from 9 per cent to 10 per cent in April 2018 and 11 per cent in April 2019
- Class 2 National Insurance to be scrapped as planned in April 2018
- No changes to National Insurance paid by the employed and employers or to income tax or VAT
- Personal tax-free allowance to rise as planned to £11,500 this year and to £12,500 by 2020
- Tax avoidance to stop businesses converting capital losses into trading losses
- Introduction of UK VAT on roaming telecoms services outside the EU
- Review of taxation of North Sea oil producer
- A new minimum excise duty on cigarettes based on a packet price of £7.35
- Tobacco will rise by 2 per cent above Retail Price Index (RPI) inflation, with a packet of 20 cigarettes costing 35p more
- Duty on beer, cider, wine and spirits will increase in line with RPI inflation
- This will equate to 2p on a pint of beer, 1p on a pint of cider, 36p on a bottle of whisky and 32p on a bottle of gin
- Reduction in tax-free dividend allowance for shareholders and directors of small private firms from £5,000 to £2,000
- Most sugary soft drinks to be taxed at 24p per litre as part of plans to reduce childhood obesity
- £20m new funding to support the campaign against violence against women and girls
- A further £5m committed to project to celebrate the centenary of women first getting the vote, and to educate young people about its significance
- Growth forecast for 2017 upgraded from 1.4 per cent to 2 per cent
- GDP downgraded to 1.6 per cent, 1.7 per cent, 1.9 per cent in subsequent years, then 2 per cent in 2021-22
- Annual rate of inflation forecast to rise from 2.3 per cent to 2.4 per cent in 2017-18 before falling to 2.3 per cent and 2 per cent in subsequent years
- Borrowing forecast to total £58.3bn in 2017-18, £40.6bn in 2018-19, £21.4bn in 2019-20 and £20.6bn in 2020-21
- Public sector net borrowing forecast to fall incrementally from 3.8 per cent of GDP last year to 0.7 per cent in 2021-22. But borrowing predicted to be £100bn higher by 2020 than forecast
- Debt rose to 86.6 per cent this year, but will fall to 79.8 per cent in 2021-22
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