Budget is ‘last chance to change flawed economic policy’

Today’s UK Budget provides the last opportunity for the Chancellor to scrap his failed austerity measures Deputy First Minister John Swinney said today. He said the final budget ahead of the General Election should be focused on delivering economic growth by tackling inequality.

In his final call to the Chancellor ahead of the Budget the Deputy First Minister urged him to scrap his failed economic policy. In the June 2010 Budget, the Chancellor stated that the UK Government was ‘on track to have debt falling and a balanced structural current budget by the end of this Parliament’. He has failed on both measures. Rather than debt falling as a share of GDP in 2014-15, it is now forecast to continue rising. Likewise, instead of running a structural current budget surplus in 2014-15, the UK Government is now forecast to run a structural current deficit of almost £50 billion (2.7% of GDP).

Speaking ahead of the UK Budget John Swinney said: “The current UK Government’s economic policy is fundamentally flawed and is damaging Scotland’s recovery. Despite the deep spending cuts we have seen, the Chancellor has not achieved the deficit reduction targets he set himself in his first budget in 2010.

“Between 2009/10 – 2014/15, Scotland’s budget has fallen by around 11% in real terms, within this capital expenditure has fallen by around 34%. This means our budget has been cut by a staggering £3.5 billion in real terms since 2009/10.

“And it doesn’t stop there. Scotland’s cumulative share of the cuts to day-to-day public spending over the 5 years to 2019-20 is forecast to be worth around £14.5 billion compared to 2014/15 levels.

“There is an alternative. George Osborne can use today’s budget to stop these deep cuts and grow our economy instead.

“The Scottish Government is doing all it can, within its limited powers, to support Scottish finances. The latest Scottish GDP figures show the economy grew by 3.0 per cent over the year to Q3 2014 – the fastest annual rate of growth in seven years – while the number of people in employment has risen by 180,000 since its post-crisis low in Spring 2010 and is now at a record high of over 2.6 million.

“However, successive UK budgets and Autumn Statements have undermined the Scottish Government’s ability to support economic revival, particularly through the significant cuts the Chancellor has made to capital investment over the spending review period and, in some cases, the in-year reductions he has made to the Scottish Government’s published spending plans.

“In addition to our proposals on austerity, the Budget must also deliver a permanent shift to a more competitive and predictable north sea oil tax regime, which will allow investors to shift their focus away from fiscal risk and towards the significant investment opportunities that remain in the North Sea.

“The Scottish Government has set out three key priorities for fiscal reform at this Budget:

• an immediate reversal of the 2011 increase in the Supplementary Charge;
• an investment allowance to provide a simple, stable and more competitive fiscal regime; and
• an exploration tax credit to help increase exploration and sustain future production.

“I hope that the Chancellor will have listened to reasoned proposals ahead of delivering his budget and that economic growth and tackling inequality will be given equal representation in this final budget before the General Election.”

The Chancellor will deliver his budget speech at 12:30.

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