Scotland's Economy

Chancellor embeds Westminster austerity

December 6, 2013 by John Swinney MSP No Comments | Category Economy

It’s clear to see from the Chancellor’s Autumn Statement that Westminster’s failed economic policy has deepened the challenge of delivering a real return to growth and will see cuts to public spending in Scotland applied for years to come.

The £3.1bn cuts that we’re already facing will be outstripped by the £4bn a year cuts suggested by Westminster in the event of a vote against independence.

Taken alongside the Chancellor’s proposed increases in the pension age, these measures underline that decisions on Scotland’s economy and public finances should be taken in Scotland.

The benefits of having decision-making powers in Scotland are highlighted by the latest GDP figures which show the economy grew by 1.8 per cent during the last year, faster than the UK as a whole. Our employment, unemployment and inactivity rates are also the strongest of the four nations of the UK.

These factors demonstrate that with limited powers over the economy we can deliver real improvements. With full powers we could do much more.

Yesterday’s statement shows the damaging economic consequences for Scotland of a vote to remain part of the Westminster system.  This is delayed action directed not at helping people with the cost of living but at embedding austerity.

Scotland’s budget is being cut by 9.9 per cent in real terms over the current five year spending review period. In addition to these £3.1bn of cuts, Westminster politicians have now threatened to introduce £4bn of additional cuts if Scotland votes against independence.

It is ludicrous for Westminster to claim increased funding for Scotland when yesterday’s announcement does not make up the ground lost by cuts announced earlier this year.

The UK Government’s austerity approach has missed out on key opportunities for growth. Despite the Chancellor’s claims by the end of 2015, the UK economy is forecast to be 5.9 per cent smaller than was projected in June 2010 and the UK remains smaller than it was prior to the recession.

That missed opportunity means borrowing will be £197bn higher than projected in June 2010. That is the cost of Westminster’s economic failures.

It is now becoming clear that it will be Scotland’s pensioners, now and in the future, that will pay the price of Westminster government’s austerity. Under Westminster plans people in Scotland will enjoy fewer years of retirement than people in almost any other country in western Europe.

The increase in the pensions age will specifically hurt people on lower incomes who unfortunately have lower life expectancy and fewer alternatives to the state pension.

Following a vote for independence the Scottish Government will review the proposed pension age increase to 67 and make sure the pension age in Scotland is fit for Scotland’s people rather than the Westminster treasury.

Scotland has paid more per person in taxes every year for the last 30 years than the rest of the UK.  Our finances are strong and we can more than afford to be an independent country.  With the approach to public spending that we saw from the Chancellor yesterday it is clear that Scotland cannot afford not to be an independent country.

With regards to the latest oil projections from the Office of Budget Responsibility they are simply not consistent with industry expectations for production or current price trends. For example, despite offsetting the costs of record industry investment the OBR fails to account for the resulting increase in production.

The Scottish Government’s forecasts are based not on the high price projections of DECC or the OECD but on a cautious assumption that prices remain at $113 in cash terms and on the industries’ estimates of production.  Scotland has a vibrant oil and gas sector and will continue to do so for many decades to come.

This Scottish Government offers the most competitive business rates regime in the UK with more than 92,000 businesses paying reduced or no business rates. We will confirm the Scottish Government’s proposals for next year in a statement to Parliament next week.

Once again the Barnett consequentials include financial transactions that can only be used for specific purposes and must be paid back to the Treasury. We will consider carefully yesterday’s funding announcement and set out our plans in due course.

Tags: economy, independence, pension

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