Day: October 27, 2021

‘The Budget delivers for people in Scotland’

• UK Government will provide a record £41 billion per year to the Scottish Government.
• Scotland will also benefit from UK-wide support for people and businesses, green jobs and investment to level up opportunities.
• Targeted funding will support local projects across Scotland, including road and infrastructure improvements, investment in local communities and funding for businesses.

The Chancellor today announced Barnett-based funding for the Scottish Government of £41 billion per year – delivering the largest annual funding settlement, in real terms, since devolution over 20 years ago. This includes a £4.6 billion per year spending boost – as part of a Budget and Spending Review that delivers a stronger economy for the whole of the UK.

Rishi Sunak set out a plan to deliver the priorities of the British people by investing in stronger public services, levelling up opportunity, driving business growth and helping working families with the cost of living.

As part of the significant spending plans, Scotland will receive an average of £41 billion per year in Barnett-based funding representing a 2.4% rise in the Scottish Government’s budget each year. The Scottish Government will now receive around £126 per person for every £100 per person of equivalent UK Government spending in England.

Chancellor of the Exchequer, Rishi Sunak said: “This is a budget for the whole of the UK. We’re focused on what matters most to the British people – the health of their loved ones, access to world-class public services, jobs for the future and tackling climate change.

“By providing record funding, the Scottish Government can tackle backlogs in the NHS and ensure people in Scotland get the support they need as we recover from the pandemic.

“The UK Government continues to level up opportunities across all parts of the UK, with investments in green jobs and high-speed internet access for thousands more homes in Scotland through Project Gigabit.

Scottish Secretary, Alister Jack said: “The Budget delivers for people in Scotland, and right across the UK.

“The Scottish Government’s block grant, boosted by an additional £4.6 billion a year due to spending in England, means that the funding for the Scottish Government is the highest it has ever been.

“It demonstrates our commitment to level up right across the UK. The Budget ushers in an era of real devolution, ensuring money is spent on projects that matter most to people in Scotland.

“The UK Government made a clear commitment to maintain Scotland’s level of funding following the vote to leave the EU, and we have delivered on that promise. We are taking decisions in the UK rather than in Brussels and dealing directly with local authorities who know their communities best.

“From the Knoydart community pub, to Dumbarton town centre and the Granton Gasworks – all these projects will bring real, visible improvements for local communities. Special funding for Glasgow’s iconic Burrell Collection and Extreme E will help drive economic growth and jobs on the back of culture and tourism.

“The continuation of the freeze on spirit duty will be a boost to Scotland’s thriving whisky industry.

“Over the past 18 months the UK Government has been focused on protecting people’s livelihoods, their incomes, and their jobs. We now need to look to the future, to build a stronger economy for people in all parts of the UK.”

Targeted funding in Scotland

On top of the record funding for the Scottish Government, Scotland will benefit from the UK Government’s commitment to invest in people, jobs, communities and businesses. Targeted projects in Scotland include:

Over £200 million to be invested in Scotland to boost the post-pandemic recovery and enhance the Scottish economy, including:

• £172 million of the Levelling Up Fund for 8 important projects including the redevelopment of Inverness Castle, the much-needed renovation of the Westfield Roundabout in Falkirk, and a new marketplace in Aberdeen City Centre.
• Over £1.07 million of the Community Ownership Fund for five projects in Whithorn, Inverie, New Galloway, Kinloch Rannoch and Callander that are protecting valued community assets.
• Providing £1.9 billion for farmers and land managers and £42.2 million to support fisheries.
• Up to £1 million, to support the delivery of a ‘green’ formula E race showcasing Hebridean Green Hydrogen to a global audience.
• Expanding the existing trade and investment hub in Edinburgh to grow trade for Scotland.
• Up to £3 million to bring world-class art exhibitions to the Burrell Collection in the heart of Glasgow.

UK-Wide Support

As a result of our strong United Kingdom, Scotland will benefit from:

• A 50% cut in domestic Air Passenger Duty for flights between England, Scotland, Wales and Northern Ireland and an additional £22.5 million of new funding in anticipation of the Union Connectivity
• Review recommendations where we will work with the devolved administrations on improving UK-wide connectivity.
• New funding for the British Business Bank to establish a £150 million fund in Scotland, helping Scottish businesses to get the financing they need.
• The new £1.4 billion Global Britain Investment Fund which will support investment directly into Scotland.
• A record £20 billion by 2024-25 in Research and Development supporting innovation in Scotland.
• Confirmation that total funding will at a minimum match the size of EU Funds in Scotland, each year through the over £2.6bn UK Shared Prosperity Fund, which will invest in skills, people, businesses, and communities, including through ‘Multiply’, a new adult numeracy programme that will provide people across Scotland with essential numeracy skills.
• An increase to the National Minimum Wage of £9.50 an hour, with young people and apprentices also seeing increases.
• Freezes to fuel duty for the twelfth consecutive year and a freeze on Vehicle Excise Duty for heavy goods vehicles.
• A freeze on alcohol duty, which will mean that whisky benefits from the lowest real terms tax rate since 1918.

BUDGET REACTION

Rachel Reeves MP, Labour’s Shadow Chancellor, responding to the Budget, said: Families struggling with the cost of living crisis, businesses hit by a supply chain crisis, those who rely on our schools and our hospitals and our police – they won’t recognise the world that the Chancellor is describing. They will think that he is living in a parallel universe.

The Chancellor in this budget, has decided to cut taxes for banks. So, Madame Deputy Speaker, at least the bankers on short haul flights sipping champagne will be cheering this budget today.

And the arrogance, after taking £6 billion out of the pockets of some of the poorest people in this country, expecting them to cheer today for £2 billion given to compensate.

In the long story of this Parliament, never has a Chancellor asked the British people to pay so much for so little.

Time and again today, the Chancellor compared the investments that he is making to the last decade. But who was in charge in this lost decade? They were.

So, let’s just reflect on the choices the Chancellor has made today – the highest sustained tax burden in peacetime.

And who is going to pay for it?

It’s not international giants like Amazon – the Chancellor has found a tax deduction for them. It’s not property speculators – they’ve already pocketed a stamp duty cut. And it’s clearly not the banks  – even though bankers’ bonuses are set to hit a record high this year.

Instead, the Chancellor is loading the burden on working people. A National Insurance Tax rise – on working people. A Council Tax hike – on working people. And no support today for working people with VAT on their gas and electricity bills.

And what are working people getting in return? A record NHS waiting list, with no plan to clear it, no way to see a GP and still having to sell their home to pay for social care.

Community policing nowhere to be seen, a court backlog leaving victims without justice and almost every rape going unprosecuted.

A growing gap in results and opportunities between children at private and state schools. Soaring number of pupils in supersize classes and no serious plan to catch up on learning stolen by the virus. £2 million announced today – a pale imitation of the £15 billion catch up fund that the Prime Minister’s own education tsar said was needed. No wonder, Madame Deputy Speaker, that he resigned.

Now the Chancellor talks about world class public services. Tell that to a pensioner waiting for a hip operation. Tell that to a young woman waiting to go to court to get justice. Tell that to a mum and dad, waiting for their child the mental health support they need.

And the Chancellor says today that he has realised what a difference early years spending makes. I would just say to the Chancellor, has he ever heard of the Sure Start programme that this Tory government has cut?

And why are we in this position? Why are British businesses being stifled by debt while Amazon gets tax deductions?

Why are working people being asked to pay more tax and put up with worse services?

Why are billions of pounds in taxpayer money being funnelled to friends and donors of the Conservative party while millions of families are having £20 a week taken off them?

Madame Deputy Speaker, why can’t Britain do better than this?

The Government will always blame others. It’s business’ fault, it’s the EU’s fault, it’s the public’s fault.

The global problems, the same old excuses. But the blunt reality is this – working people are being asked to pay more for less for three simple reasons:

•     Economic mismanagement,
•     An unfair tax system,
•     And wasteful spending.

Each of these problems is down to 11 years of Conservative failure and they shake their heads but the cuts to our public services have cut them to the bone. And while the Chancellor and the Prime Minister like to pretend they are different, the Budget they’ve delivered today will only make things worse.

The solution starts with growth. The Government is caught in a bind of its own making. Low growth inexorably leads to less money for public services, unless taxes rise.

Under the Conservatives, Britain has become a low growth economy. Let’s look at the last decade – the Tories have grown the economy at just 1.8 percent a year.

If we had grown at the same rate as other advanced economies, we could have spent over £30bn to invest in public services without needing to raise taxes.

Let’s compare this to the last Labour Government. Even taking into account the global financial crisis, Labour grew the economy much faster – 2.3 percent a year.

If the Tories matched our record, we would have spent £30bn more on public services without needing to raise taxes.

It could not be clearer. The Conservatives are now the party of high taxation, because the Conservatives are the party of low growth.

The Office for Budget Responsibility confirmed this today – that we will be back to anaemic growth. The OBR said that by the end of this Parliament, the UK economy will be growing by just 1.3%. Which is hardly the  plan for growth that the Chancellor boasted about today, hardly a ringing endorsement of his announcements.

Under the Tory decade we have had ow growth and there’s not much growth to look forward to.

The economy has been weakened by the pandemic but also by the Government’s mishandling of it.

Responding to the virus has been a huge challenge. Governments around the world have taken on debt, but our situation is worse than other countries.

Worse, because our economy was already fragile going into the crisis. Too much inequality, too much insecure work, too little resilience in our public services.

And worse, because the Prime Minister dithered and delayed, against scientific advice – egged on by the Chancellor – we ended up facing harsher and longer restrictions than other countries.

So, as well as having the highest death toll in Europe, Britain suffered the worst economic hit of any major economy.

The Chancellor now boasts that we are growing faster than others, but that’s because we fell the furthest.

And whilst the US and others have already bounced back to pre-pandemic levels, the UK hasn’t. Our economy is set to be permanently weaker.

On top of all of that, the Government is now lurching from crisis to crisis. People avoiding journeys because they can’t fill up their petrol tank is not good for the economy. People spending less because the cost of the weekly shop has exploded is not good for the economy. And British exporters facing more barriers than their European competitors because of the deal that this government did is not good for the economy.

If this were a plan, it would be economic sabotage. When the Prime Minister isn’t blagging that this chaos is part of his cunning plan, he says he’s “not worried about inflation.”

Tell that to families struggling with rising gas and electricity bills, with rising prices of petrol at the pump and with rising food prices. He’s out of touch, he’s out of ideas and he’s left working people out of pocket.

Madame Deputy Speaker, Conservative mismanagement has made the fiscal situation tight. And when times are tight it’s even more important to ensure that taxes are fair, that taxpayers get value for money. But the Government fails on both fronts.

We have a grossly unfair tax system with the burden heaped on working people.

Successive budgets have raised council tax, income tax and now National Insurance. But taxes on those with the broadest shoulders, those who earn their income from stocks, shares, and property portfolios have been left largely untouched.

Businesses based on the high street are the lifeblood of our communities and often the first venture for entrepreneurs.

But despite what the Chancellor has said today, businesses will still be held back by punitive and unfair business rates. The Government has failed to tax online giants and watered-down global efforts to create a level playing field.

And just when we need every penny of public money to make a difference, we have a government that is the by-word for waste, cronyism and vanity projects.

We’ve had £37 billion for a test and trace system that the spending watchdog says, ‘treats taxpayers like an ATM cash machine’. A yacht for ministers, a fancy paint job for the Prime Minister’s plane and a TV studio for Conservative Party broadcasts, which seems to have morphed into the world’s most expensive home cinema.

£3.5bn of Government contracts awarded to friends and donors of the Conservative Party, a £190 million loan to a company employing the PMs former Chief of Staff, £30 million to the former Health Secretary’s pub landlord. And every single one of those cheques signed by the Chancellor.

And now he comes to ordinary working people and asks them to pay more. More than they have ever been asked to pay before and at the same time, to put up with worse public services. All because of his economic mismanagement, his unfair tax system and his wasteful spending.

There are of course some welcome measures in this budget today, as there are in any budget.

Labour welcomes the increase in the National Minimum Wage, though the Government needs to go further and faster. If they had backed Labour’s position of an immediate rise to at least £10 an hour then a full-time worker on the minimum wage would be in line for an extra £1,000 a year.

Ending the punitive public sector pay freeze is welcome, but we know how much this Chancellor likes his smoke and mirrors. So, we’ll be checking the books to make sure the money is there for a real terms pay rise.

Labour also welcomes the Government’s decision to reduce the Universal Credit taper rate, as we have consistently called for. But the system has got so far out of whack that even after this reduction, working people on universal credit still face a higher marginal tax rate than the Prime Minister. And those unable to work – through no fault of their own – still face losing over £1000 a year. And for families who go out to work everyday but don’t get government benefits, on an average wage, who have to fill up their car with petrol to get to work, who do that weekly shop and who see their gas and electricity prices go up – this budget today does absolutely nothing for them.

We have a cost-of-living crisis.

The Government has no coherent plan to help families to cope with rising energy prices. Whilst we welcome the action taken today on Universal Credit, millions will struggle to pay the bills this winter.

The Government has done nothing to help people with their gas and electricity bills with that cut in VAT receipts as Labour has called for. A cut that is possible because we are outside the European Union and can be funded by the extra VAT receipts that have been experienced in the last few months.

Working people are left out in the cold while the Government hammers them with tax rises.

National Insurance is a regressive tax on working people, it is a tax on jobs.

Under the Chancellor’s plans, a landlord renting out dozens of properties won’t pay a penny more. But their tenants, in work, will face tax rises of hundreds of pounds a year. And he is failing to tackle another huge issue of the day. Adapting to climate change.

Adapting to climate change presents opportunities – more Jobs, lower bills and cleaner air. But only if we act now and at scale. According to the OBR, failure to act will mean public sector debt explodes later, to nearly 300% of GDP.

The only way to be a prudent and responsible Chancellor is to be a Green Chancellor. To invest in the transition to a zero-carbon economy and give British businesses a head-start in the industries of the future.

But with no mention of climate in his conference speech and the most passing  of references today, we are burdened with a Chancellor unwilling to meet the challenges we face.

Homeowners are left to face the costs of insulation on their own, industries like steel and hydrogen are in a global race without the support they need and the Chancellor is promoting domestic flights over high speed rail int he week before COP26.

It is because of this Chancellor that in the very week we try and persuade other countries to reduce emissions, this Government can’t even confirm it will meet its 2035 climate reduction target.

Madame Deputy Speaker, everywhere working people look at the moment they see prices going up and shortages on the shelves. But this Budget did nothing to address their fears.

Household budgets are being stretched thinner than ever but this Budget did nothing to deal with the spiralling cost of living. It is a shocking missed opportunity by a government that is completely out of touch.

There is an alternative.  Labour would scrap the business rates and replace it with something much better by ensuring online giants pay their fair share. That’s what being pro-business looks like.

We wouldn’t put up National Insurance for working people, we would ensure those with the broadest shoulders pay their share. That’s what being on the side of working people looks like.

We’d end the £1.7 billion subsidy the Government gives private schools and put it straight into local state schools. That’s what being on the side of working families looks like.

We’d deliver a climate investment pledge – £28bn every year for the rest of the decade. That’s Giga-factories to build batteries for electric vehicles, a thriving hydrogen industry and retrofitting, so we keep homes warm and get energy bills down. That’s what real action on climate change looks like.

This country deserves better but they’ll never get it under this Chancellor who gives with one hand but takes so much more with the other.

The truth is this – what you get with these two is a classic con game. It’s like one of those pickpocketing operations you see in crowded places. The Prime Minister is the front man – distracting people with his wild promises. All the while, his Chancellor dips his hand in their pocket. It all seems like fun and games until you walk away and realise your purse has been lifted.

But people are getting wise to them. Every month they feel the pinch. They are tired of the smoke and mirrors, of the bluster, of the false dawns, of the promises of jam tomorrow.

Labour would put working people first. We’d use the power of government and the skill of business to ensure that the next generation of quality jobs are created right here, in Britain.

We’d tax fairly, spend wisely and after a decade of faltering growth, we’d get Britain’s economy firing on all cylinders.

That is what a Labour budget would have done today.

Edinburgh Pentlands SNP MSP Gordon MacDonald said that the Tory UK Government’s budget makes it clear that “independence is the only way to give Edinburgh a fair recovery from the pandemic.”

Gordon MacDonald said that the budget, described by the head of the Institute for Fiscal Studies as “actually awful” for living standards, is failing the people of Scotland by failing to tackle the cost of living crisis, the Brexit crisis and the climate crisis whilst the Tory Government prioritise cuts to the cost of champagne and giving tax breaks to bankers.

The Edinburgh Pentlands MSP said: “What the Tory UK Government has outlined today does not meet the ambition needed to build a fair and sustainable recovery and to tackle the cost of living crisis.

“It’s painfully clear that there will be no fair recovery from the pandemic under Westminster control.

“This Tory budget fails Scotland as a whole and doesn’t go anywhere near supporting people in Edinburgh, who are being hit by an energy crisis, a Brexit crisis, labour shortages and an inflation crisis under Westminster control.

“The UK Government budget is leaving families in Edinburgh hundreds of pounds worse off next year due to Tory cuts, tax hikes and the soaring cost of Brexit.

“It’s little wonder that, in May’s election, the people of Scotland voted overwhelmingly for a different future when they gave the SNP the highest share of the vote since the dawn of devolution and a clear mandate for an independence referendum – Independence is the only way to keep Scotland safe from Tory cuts.”

Commenting on today’s budget and spending review (Wednesday), TUC General Secretary Frances O’Grady said: “The chancellor has gone from pay freeze to pay squeeze.

“The chancellor admitted that we will have zero pay growth across the economy next year. And he has no plan to get real wages rising for everyone after an eleven year pay squeeze, with average real pay growth over the next four years predicted to be just 0.3 per cent.

“Millions of key workers who saw us through the pandemic will still be worse off than they were in 2010. That puts vital services under pressure as even more staff leave, and it risks the recovery.  

“He should have announced fair pay deals for whole industries, negotiated with unions, designed to get pay and productivity rising in every sector.

“Families face a triple whammy of a £1,000 universal credit cut, tax hikes and fast-rising energy and food bills. All the while wages across the economy stand still.”

On the universal credit taper cut, she added:

“Workers on universal credit should always have been able to keep more of their wages. This change does not make up for the £1,000 per year cut to universal credit, and does not help those on universal credit who cannot work.”

Centre for Cities’ Chief Executive Andrew Carter said: “Raising the National Living Wage is a quick win for the levelling up agenda and will have the biggest impact in the places that are crucial to the Prime Minister winning the next election. Four of the five places where the most people will benefit are in the North.

“While a pay increase is good news for people struggling with the cost of living crisis, it does not address the reasons why they live on low pay in the first place: a lack of well-paid jobs in their local area.

“We’ve seen today the beginnings of a plan focused on skills, innovation and infrastructure to address this, but turning it from rhetoric to reality will depend on ministers’ willingness to work with metro mayors and councils on delivering it.

“I am now looking to the delayed Levelling Up White Paper to set out how this will happen.”

Katie Schmuecker, Deputy Director of Policy & Partnerships at JRF said: “This is a tale of two Budgets for families on low incomes. 

“For those in work, the change to the taper rate and work allowance, alongside the National Living Wage increase, are very positive steps, allowing low-paid workers to keep more of what they earn. Together these measures improve our social security system for working families and demonstrate a serious intent to turn the tide on the pre-pandemic trend of rising in-work poverty.  

“But the reality is that millions of people who are unable to work or looking for work will not benefit from these changes. The Chancellor’s decision to ignore them today as the cost of living rises risks deepening poverty among this group, who now have the lowest main rate of out-of-work support in real terms since around 1990. 

“Among the people in our society who cannot work are cancer patients, people with disabilities and those caring for young children or elderly parents. 

“Their energy bills and weekly shop are going up like everyone else’s and they face immediate hardship, hunger and debt in the months ahead. The Chancellor had an opportunity to support families on the lowest incomes to weather the storm ahead, and he did not take it.” 

New analysis by the independent Joseph Rowntree Foundation reveals that the rising cost of living wipes out much of the financial gain some families will receive from the Universal Credit changes announced today.

Weekly incomes and Costs for 2022/23	Family 1: single adult, no children, not working	Family 2: single parent, with one young child (assume age 5), part-time 16 hours per week	Family 3: couple with two young children (assume 7 and 5). One FT worker	Family 4: single parent, with one young child (assume age 5), full-time 35 hours per week	Family 5: Couple with two young children (assume 7 and 5). 1 FT worker (35 hours), 1 PT worker (16 hours)
Weekly income before new announcements	£77	£278	£433	£333	£489
Weekly gain from taper rate and work allowance	£0	£8	£19	£19	£31
Total loss from higher cost of living due to…	-£13	-£16	-£23	-£18	-£24
1) increase in energy prices	-£7	-£7	-£7	-£7	-£7
2) overall cost of living increase	-£6	-£8	-£13	-£8	-£13
3) increase in National Insurance and impact of inflation on earnings	£0	-£1	-£3	-£3	-£4
Overall weekly gain or loss after measures and cost of living	-£13	-£8	-£4	£1	£7

Note all five families lost £20-a-week in October 2021, due to the cut in the Universal Credit Standard Allowance, so all are worse-off than they would have been in September 2021. All workers are assumed to be paid at the National Living Wage rate, so benefit from its increase.

Peter Kelly,Director of the Poverty Alliance, said: “It is a shameful, unjust decision that makes the Chancellor’s rhetoric about ‘levelling up’ seem as empty as the pockets of the hundreds of thousands of people swept into poverty as a result.”