The UK Chancellor is promising £4.6billion for Scotland in a Budget he says will provide the foundation for a “new age of optimism”.
Rishi Sunak said Holyrood would benefit from its largest block grant in the era of devolution, as a result of the spending plans he outlined on Wednesday.
But the SNP branded it “smoke and mirrors”, insisting the UK Government could not hide that the Budget had “short-changed Scotland”.
As well as a grant uplift, the Budget confirmed that Aberdeen, Inverness and Perth and Kinross would be among the areas of the UK that would benefit from “levelling up” cash.
Under the plans, £20million has been promised to Aberdeen to help pay for a new market development on Union Street.
Almost £20m will also go towards a redevelopment of Inverness Castle, as well as new event infrastructure at the Northern Meeting Park in the Highland capital, and a redevelopment of the Bught Park Stadium.
And from the community ownership fund, £250,000 will be awarded to the Rannoch Hub in Perth and Kinross, while £219,000 has been promised to help renew The Old Forge on the Knoydart peninsula.
Row over cheaper flights
Scottish airports will also be among those which could take advantage of a 50% cut to air passenger duty – a move that has already been branded an “international embarrassment” on the eve of the COP26 global climate change summit in Glasgow.
Meanwhile, the Scotch whisky sector was raising a glass to a decision to cancel a planned alcohol duty rise, at a cost of £3bn.
The chancellor also announced “draught relief” to help hard-pressed pubs, with duty on draught beer and cider to be cut by 5%.
However, the Budget was delivered amid a warning that inflation was at 3.1% and would rise further, as well as an admission that there was still much to do in the recovery from Covid.
Money for Holyrood
In the Commons, Mr Sunak also announced:
- Holyrood will get £4.6billion in extra funding as a result of the Budget.
- Aberdeen, Inverness, Knoydart and Perth and Kinross in line for millions of pounds of “levelling up” cash from Westminster.
- Flights between UK airports to be subject to a new lower rate of Air Passenger Duty from April 2023.
- Fuel duty frozen, alcohol duty rise scrapped and draught beer and cider duty cut.
- An increase to the National Minimum Wage of £9.50 an hour.
- Universal Credit taper rate will be cut by 8%, bringing it down from 63% to 55%.
- Office for Budget Responsibility (OBR) had revised up its growth forecasts, with GDP to expand by 6.5% this year, compared to 4% forecast in March.
- OBR expects unemployment to peak at 5.2%. The chancellor said this was “over two million fewer people out of work than previously feared”.
- Inflation has hit 3.1% and is expected to rise further.
Unveiling his plans in the Commons, Mr Sunak said: “Today’s Budget does not draw a line under Covid. We have challenging months ahead.”
He added: “But today’s Budget does begin the work of preparing for a new economy, post-Covid.
‘New economy’
“The prime minister’s economy of higher wages, higher skills and rising productivity, of strong public services, vibrant communities and safer streets.
“An economy fit for a new age of optimism, where the only limit to our potential is the effort we are prepared to put in, and the sacrifices we are prepared to make.
“That is the stronger economy of the future, and this Budget is the foundation.”
The Treasury said Scotland would receive an average of £41bn per year in Barnett-based funding, a 2.4% rise in the Scottish Government’s budget each year.
SNP Westminster Leader Ian Blackford MP said: “It’s increasingly clear that there will be no fair recovery under Westminster control.
“The only way to keep Scotland safe from Tory cuts is to become an independent country.
“No amount of smoke and mirrors can disguise the fact that the UK Budget has short-changed Scotland, and left millions of families hundreds of pounds worse off next year due to Tory cuts, tax hikes and the soaring cost of Brexit.
“Under the Tories, the UK has the worst levels of poverty and inequality in north west Europe and the highest levels of in-work poverty this century.
“Yet, this Budget did nothing to tackle the Tory cost of living crisis. The piecemeal measures won’t even offset Tory Universal Credit cuts, National Insurance hikes or rising inflation, let alone boost incomes.”
Ross Greer, Scottish Greens finance spokesman, said: “This is a Budget written for the Tories’ corporate donors, not for the millions of people across the UK who desperately need help after a decade of Westminster austerity and a disastrous Brexit process.
“It certainly wasn’t written with the planet’s future in mind either. To cut aviation taxes just days before hosting COP26 has confirmed the UK Government’s reputation as an international embarrassment.”
Universal Credit
As part of the Budget, Universal Credit claimants will be able to keep more of the benefit as they earn more.
The taper rate will be cut by 8% “within weeks”, bringing it down from 63% to 55%.
The taper rate is the amount of benefit taken away from every £1 earned above the claimant’s work allowance – meaning claimants will now be able to keep an additional 8p per £1 of net income.
The move, which will take place no later than December 1, will ease the burden on claimants who are in work by providing more of an incentive to increase their hours.
But it does not compensate for the £20-a-week reduction earlier this month or do anything to help people who are not in work.
Rachel Reeves, Labour’s shadow Chancellor, said: “This Budget makes the Chancellor’s out-of-touch priorities clear.
“As he hits working people with the highest sustained tax burden in peacetime, he’s giving a tax cut to bankers who like to take short haul flights while sipping champagne.
“After taking £6 billion out of the pockets of some of the poorest people in this country, he is expecting them to cheer today at being given £2 billion to compensate.
“In the long story of this parliament, never has a Chancellor asked the British people to pay so much for so little, loading the burden on working people with tax rises and wasting billions of pounds of taxpayer money.”
Scottish Liberal Democrat leader Alex Cole-Hamilton said: “This Budget is a toxic cocktail of cost-of-living hikes and planetary neglect.
“Today the Chancellor missed the chance to avoid a cost-of-living crisis which will cause sleepless nights for families up and down the country.”