Scottish Government condemns ‘£1bn spending cut buried in Budget’

The Scottish Government has said the Chancellor’s Budget – which provides support for Scotland’s oil industry, armed forces, cities and regions – contains a “hidden” £1 billion cut to spending north of the border.

George Osborne said his Budget demonstrates “we are better together in one United Kingdom” and is backed by “the most radical devolution of power in British history”.

Major tax cuts were announced for the oil and gas industry, which has been hit by falling global prices.

A decision to cut the supplementary charge on oil and gas from 20% to 10% prompted Tory MPs to gesture wildly at the SNP benches, urging them to support the move.

But Scotland’s Deputy First Minister John Swinney said the Budget “conceals a cut of £3.5 billion in public spending across the UK” and “will see a real-terms reduction of £1 billion in Scotland’s budget”.

He welcomed the oil tax reforms but warned more action is “urgently required to address the short-term challenges facing the sector”.

Mr Swinney said the spending cut was “buried in the detail of the Treasury Budget document”, leaving Scotland “in the dark about how much will fall on public services north of the border”.

He added: “Scotland will see a billion pounds real-terms cut in the day-to-day budget that pays for public services – and that is before the hidden £3.5 billion further cut to public spending across the UK is applied.

“The Budget statement today will deliver very little for Scotland – the modest consequentials that Scotland will receive are almost certainly wiped out by the increase in public sector employer pension contribution costs from 2019.”

Duty on whisky, one of Scotland’s major exports, was frozen but shares in Scotland’s “other national drink” – Irn Bru -plummeted as the Chancellor announced a sugar tax on the soft drinks industry.

The tax will raise an estimated £520 million a year and Scotland will receive a share of the revenue through the Barnett formula. Mr Osborne urged the devolved administrations to follow Westminster’s lead and spend the money on school sports.

Mr Osborne said: “We are also opening negotiations on a city deal with Edinburgh, we backed the V&A Museum in Dundee, and in response to the powerful case made by (Scottish Tory leader) Ruth Davidson, we are providing new community facilities for local people in Helensburgh and the Royal Navy personnel in nearby Faslane, paid for by Libor fines.”

He said none of this spending “would have been remotely affordable if, in just eight days’ time, Scotland had broken away from the rest of the UK as the nationalists had wanted”.

He added: “Their own audit of public finances confirms that they would have struggled from the start with a fiscal crisis, under the burden of the highest deficit in the western world.

“Thankfully the Scottish people decided that we are better together in one United Kingdom.”

Scottish Secretary David Mundell said the Budget “shows the UK Government has listened and delivered”.

He said: “There will be an additional £650 million available to the Scottish Government through the Barnett formula, as a result of action the UK Government is taking on education and business rates in England.

“This, along with the power to set income tax rates and thresholds which the Scotland Bill delivers, will allow the Scottish Government to invest more in schools and hospitals in Scotland if it chooses to.

Scottish Labour leader Kezia Dugdale said the Chancellor has “delivered tax cuts for the better off and spending cuts for everybody else”.

She added: “This is the last time a UK Chancellor will set the income tax rates for Scotland.

“With the new powers we will soon have in the Scottish Parliament, we will reverse George Osborne’s tax cut for the top 15% and invest in our public services.”

Scottish Liberal Democrat leader Willie Rennie said: “When Scotland receives the Smith powers to set tax bands, our priority is a zero-rate tax band, which will effectively extend the personal allowance and lift thousands of people on low incomes out of tax altogether.”

Scottish health campaigners welcomed the sugar tax and the increase in tobacco taxes.

Prof Naveed Sattar, Professor of Metabolic Medicine, University of Glasgow, said the sugar tax “will not solve the obesity crises” on its own.

“We need more legislation to force food companies to make better quality food products and less unhealthy products which contain less fat, salt and sugar,” he said.

Prof Derek Bell, president of the Royal College of Physicians of Edinburgh, said the sugar tax “must be looked at alongside a range of other preventative measures and educational tools to allow consumers to make healthier choices in the interests of their health”.

Sheila Duffy, Chief Executive of ASH Scotland said: “The additional 3% rise in excise duty on hand-rolled tobacco on top of the 2% overall tobacco duty will help close the price gap between manufactured cigarettes and hand-rolled tobacco. I hope that these taxes will lead to many more smokers becoming free from tobacco.”

Citizens Advice Scotland (CAS) said the changes to the Personal Independence Payment (PIP) will cost disabled people up to £3,000 per year, but it welcomed the new “help to save” initiative.

CAS policy manager Keith Dryburgh said: “Access to credit for people on low incomes has been getting more difficult for the last few years, so moves to help people build up a small savings cushion is welcome.”

The Child Poverty Action Group (CPAG) in Scotland said the Budget “puts the next generation last and sets it up to be the poorest generation for decades”.

Director John Dickie said: “Improving children’s life chances starts with ensuring families have enough money.

“That means restoring cuts to Universal Credit – which from April will hit the very same working families as would have been hit by the now abandoned tax credit cuts – and re-investing in children’s benefits.”

Copyright (c) Press Association Ltd. 2016, All Rights Reserved.