Scotland's Economy

UK Budget reaction

October 27, 2021 by Kate Forbes MSP No Comments | Category Budget, Economy, Finance

“This morning I urged the Chancellor to provide real support for households and businesses facing a perfect storm of rising prices, reduced support and increasing shortages.

“This afternoon, while the Budget contains some welcome announcements, the Chancellor’s talk of ‘a new age of optimism’ will sound pretty hollow to those on low incomes, who face a cut in Universal Credit, increased National Insurance contributions, rising inflation and surging energy costs.

“The national living wage increase is important but not all that it seems. The new £9.50 per hour rate does not apply to under 23s, one of the groups worst affected by the pandemic, and workers on the national living wage in receipt of Universal Credit will lose over 50 per cent of any wage rise to the reduction in benefits. This contrasts with the Scottish Government’s approach. We strongly support payment of the real Living Wage, which already stands at £9.50 per hour from the age of 18 and is set to increase next month.

“Although the public sector pay freeze – something the Scottish Government resisted and never imposed – will be lifted in England and Wales, the lack of related funding perhaps belies the true intent and continues to constrain our consequential funding.

“Indeed, while the Chancellor today announced what he described as an increase in the block grant, in reality the Scottish Government will receive less grant funding in every year of the spending review than it has in 2021-22, despite the continuing challenges presented by Covid. Meanwhile the Chancellor has refused to extend last year’s Barnett Guarantee, which provided certainty on the amount of consequential funding we receive and was supported by the devolved governments in Scotland, Wales and Northern Ireland. This was a simple, cost free step the UK Government could have taken at a time when significant operational decisions are required. Instead, we must continue to drive Scotland’s recovery from the pandemic and meet our climate targets with one hand tied behind our back.

“No-one would guess from this Budget that COP26 is taking place next week. There is no sign of the ambition required to tackle the climate crisis from the UK Government, which last week ignored a transformative carbon capture project in the north east that would have created up to 20,000 jobs and built on the region’s energy expertise. Any investment in Aberdeen announced today is dwarfed by this once in a generation opportunity that has been missed – but which must be revisited.

“On non-domestic rates, it is interesting to see the UK Government belatedly adopting our ideas. We are already committed to three yearly revaluations from 2023 and were the first administration in the UK to introduce a relief for property improvements in our more generous Business Growth Accelerator relief, which also covers new builds. This year our retail, hospitality, leisure and aviation relief, at 100%, is more generous than the UK Government’s and we already have the most generous renewable energy relief package in the UK.

“I am disappointed, but not surprised, that the Chancellor has pushed ahead with his centralised approach to Levelling Up, ignoring the views of governments in Scotland, Wales and Northern Ireland. It means that money Scotland would have previously received under the seven year EU Structural Fund programmes to spend according to its own needs will now be distributed annually according to a UK Government agenda. This approach potentially leaves Scotland worse off, raises value for money concerns and undermines devolution.

“Overall this Budget and Spending Review disappoints in too many key areas.”

Kate Forbes

Cabinet Secretary for Finance and the Economy

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