Tag: budget

Chancellor announces tax cuts to ease cost of living pressures in Scotland

‘A failure of courage, a failure of compassion and a failure of justice‘ – Peter Kelly, The Poverty Alliance

  • Chancellor announces Spring Statement tax cut for 2.4 million Scottish workers through rise in National Insurance thresholds – saving the typical employee over £330 a year.
  • Unveiling plans to give families further help with the cost of living, Rishi Sunak also slashes fuel duty on petrol and diesel by 5p per litre for the next 12 months.
  • Spring Statement also sets out measures to help businesses boost investment, innovation, and growth – including a £1,000 increase to Employment Allowance to benefit around half a million SMEs across the UK
  • The UK Government is providing an additional £45 million to the Scottish Government next year as a result of measures announced by the Chancellor today.

The Chancellor delivered a Spring Statement today that ‘puts billions of pounds back into the pockets of hard-working people in Scotland’– unveiling a series of tax cuts to ease the cost of living.  

Rishi Sunak announced that National Insurance starting thresholds will rise to £12,570 from July, meaning hard-working people across the UK will keep more of what they earn before they start paying personal taxes.

The cut, worth over £6 billion, will benefit 2.4 million working people in Scotland with a typical employee saving over £330 a year, whilst the typical self-employed person will save over £250. This means the UK now has some of the most generous tax thresholds in the world.

Mr Sunak also announced that fuel duty for petrol and diesel will be cut by 5p per litre from 6pm tonight (23 March) to help drivers across the UK with rising costs. Worth £2.4 billion, this is the biggest cut ever on all fuel duty rates and means a one-car family will now save on average £100.

As a result of a cut to the basic rate of income tax for savings income, taxpayers in Scotland will see benefits worth £3 million. As other income tax rates are devolved in Scotland, the Scottish Government’s funding is automatically increased as a result of this tax cut as set out in the agreed Fiscal Framework. This is initially worth £350 million in 2024-25.

The Chancellor also set out a series of measures to help businesses boost investment, innovation, and growth – including a £1,000 increase to Employment Allowance to benefit around half a million businesses.

As a result of measures in this Spring Statement the UK Government is providing the Scottish Government with an additional £45 million through the Barnett formula next year.

Chancellor Rishi Sunak said: “We’re slashing taxes for millions of hard-working people in Scotland, getting pounds in people’s pockets and helping pay cheques to stretch further – from July more than 2.4 million in Scotland will get a tax cut with the typical employee keeping £330 more each year.

“By cutting fuel duty, we’re making it cheaper for people in Scotland every time they go to the pump, which together with the freeze means people save £100 per car on average a year.

“We’re boosting small business growth by increasing the Employment Allowance – a tax cut worth up to £1,000 for thousands of businesses.”

To grow the world’s very best talent in AI, the UK Government will partner with industry and academia to create 1,000 new AI PhDs. The Government will invest £117m to create PHDs across the UK at Centres for Doctoral Training, building on the existing three sites in Scotland. This will train a new generation of AI researchers who will develop and use AI in areas such as healthcare, climate change and creating new commercial opportunities.

Delivering the statement, the Chancellor made clear that our sanctions against Russia will not be cost-free for people at home, and that Putin’s invasion presents a risk to our economic recovery – as it does to countries all around the world.

However, announcing the further measures to help people deal with rising costs, he said the extra support could only be provided because of the UK’s strong economy and the tough but responsible decisions taken to rebuild our fiscal resilience.

The immediate financial support for people and businesses comes as part of a wider tax plan announced by the Chancellor that will create better conditions for growth and will share proceeds from growth more fairly – ensuring people can keep more of what they earn.

Mr Sunak also announced that the Scottish Government will receive £41 million more funding as there will be an extra £500 million for the Household Support Fund, which doubles it’s total amount to £1 billion to support the most vulnerable families with their essentials over the coming months.

The Chancellor also reduced the VAT on energy saving materials such as solar panels, heating pumps and roof insulation from 5% to zero, helping families become more energy-efficient. 

This cost of living support comes on top of the measures that the Chancellor has already announced over the recent months to support families. This includes an over £9 billion energy bill rebate package, worth up to £350 each for around 28 million households, an increase to the National Living Wage, worth £1,000 for full time workers, and a cut to the Universal Credit taper, worth £1,000 for 2 million families. 

The Spring Statement also confirms that:

  • A new Efficiency and Value for Money Committee will be set up to cut £5.5 billion worth of cross-Whitehall waste – with savings to be used to fund public services.
  • £50 million new funding to create a Public Sector Fraud Authority to hold departments to account for their counter-fraud performance and to help them identify, seize and recover fraudsters money.
  • Local residents across the UK will benefit from a fresh set of infrastructure projects as we open the second round of the £4.8 billion Levelling Up Fund. It will continue to focus on regeneration, transport and cultural investments.

Chancellor’s statement ‘a failure of courage and compassion’, says Poverty Alliance

Reacting to today’s Spring Statement, Peter Kelly, director of the Poverty Alliance, said: “Government should be about compassion and justice, and making sure people are able to live as full a life as they can.

“The Chancellor said his Spring Statement today was all about security. Yet his plans show a failure to comprehend the situations being faced by households across the country, leaving them with insecure and falling incomes in the face of rising costs.

“Amid a rising tide of poverty, the Chancellor could have thrown a lifeline by increasing benefits in line with inflation and by scrapping the unjust benefit cap. Instead he has provided additional funding of only £500m to the Household Support Fund which, although welcome, will quickly be consumed by the rising cost of living for families on the lowest incomes.

“The increase in the National Insurance threshold has also been presented as a support to people living on low incomes. In reality two thirds of this effective tax cut will go to middle and higher income households.

“By ignoring the tidal wave of rising living costs that is pulling so many people into poverty, the Chancellor has made clear his priorities. His tax cutting agenda will generate positive headlines, but could see another 400,000 people across the UK swept into poverty.

“Ultimately, the Chancellor’s statement is a failure of courage, a failure of compassion, and a failure of justice.”

The UK Government has not delivered the support and help that families and businesses need today, according to Finance Secretary Kate Forbes.

Responding to the Spring Statement, Ms Forbes said the Chancellor failed to help thousands of worried households facing poverty as a result of soaring energy bills and a cost of living crisis.

In 2018/19, the Scottish Government introduced a more progressive approach to tax, including a 19% starter rate band below the basic rate, ensuring those who can afford to pay a little more do so.

Ms Forbes said: “The Spring Statement has failed to address the biggest challenges facing households today. With soaring energy bills and a cost of living crisis, the Chancellor has not used his Spring Statement sufficiently to provide lifeline support that could prevent households facing fuel poverty.

“The Scottish Government is providing a further £10 million to continue our Fuel Insecurity Fund into 2022-23, which supports people struggling with their energy bills. Most powers relating to the energy markets remain reserved and Scottish Ministers have repeatedly called for the UK Government to urgently take further action to support households – including a reduction in VAT on household energy bills and support for those on low incomes.

“We are doing all we can to tackle the cost of living crisis – including doubling the Scottish Child Payment from £10 per week per eligible child to £20 next month. The UK Government should have followed our lead and matched the 6% uprate on social security benefits which the Scottish Government is adding to eight of the benefits we deliver. The Chancellor failed to match that commitment which could have provided lifeline support to thousands of households.

“On taxation, we have already acted to introduce a 19% starter rate of income tax below the basic rate, in line with our commitment to progressive taxation, which makes Scotland the fairest taxed part of the UK. We will continue to take that approach when we set taxation policy in future budgets.”

In the midst of the biggest wages and bills crisis in living memory, Rishi Sunak’s Spring Statement has failed families who need help NOW, says the TUC.

He didn’t stand up for families. He didn’t take the opportunity to stand up to the bosses who’ve sacked hundreds of workers at P&O. And he didn’t set out a plan to get wages rising – leaving the average workers facing a wage cut of over £500 this year.

Last week, we set out what we needed to see from the Chancellor to get a spring statement that is fit for purpose.

We were looking for the Chancellor to:

  • Deliver an immediate boost to pay
  • Fund efforts towards a peaceful solution to the conflict in Ukraine
  • Take additional measures to support families in the UK with rising energy prices
  • Deliver the long-term changes needed for a high-wage, high skill, high productivity economy

Below we set out how the spring statement matched up to our tests and assess what it means for working people.

The Chancellor didn’t deliver an immediate boost to pay

Workers’ pay prospects from the statement don’t look good. The OBR forecasts real weekly wages to fall by £11p/w (2.0 per cent) in 2022, and fall again in 2023. This will put wages back below their 2008 levels (after a brief recovery in 2021), where they’ll stay until 2025. And even this contains some optimistic wage forecasts, with the OBR forecasting pay before inflation to rise by as much as 5.9 per in Q3 2022.

The OBR forecasts that the 2022-23 financial year will see the biggest fall in living standards since records began in 1956-57, explaining that the “failure of nominal earnings growth to keep pace with rising inflation” is a “key factor” in this.

It adds that the policy measures announced since October only “offset a third of the overall fall in living standards that would otherwise have occurred in the coming 12 months”.

But there was no action to tackle falling pay in the Chancellor’s statement: nothing on raising the minimum wage, or funding public sector pay rises, and no recognition that collective bargaining (and union presence) is the most sustainable way to get wages rising.

Measures to support families in the UK with rising energy prices and the cost of living were totally inadequate

The spring statement offers little good news for struggling families, especially those in receipt of benefits.

  • Benefits uprating

Worst of all there was no increase in the basic rate of benefits. As it stands, the standard allowance for Universal Credit and legacy benefits is set to rise by 3.1 per cent in April 2022. But this is far below the latest inflation figure (CPI is 6.2% in Feb 2022 and RPI is 8.2%), with inflation forecast to rise higher in the coming months.

This will leave those on benefits facing a real terms cut at a time when energy bills are rising by 54 per cent. The families who need the most help have been left totally out in the cold by the Chancellor today.

The decision not to cut benefits in real terms will particularly impact those who are unable to work. This reflects a wider ignorance of the equalities impact of the cost of living crisis.

We also didn’t see a reversal of the decision to suspend the state pension triple lock. The decision to abandon the pensions triple lock will cost pensioners almost £500 a year. Pensioners are particularly vulnerable to price hikes as they spend a higher percentage of their income on food and fuel.

  • Targeted support

The big new announcement for targeted support for low-income households was £500 million in additional funding for the Household Support Fund – a temporary discretionary fund run by local authorities. This scheme was set to end this month, and the initial funding was £500 million.

This extra money is worth less than £10 each to the six million families claiming Universal Credit – in the unlikely event they hear about it and are able to jump through the hoops needed to claim it. And contrast this £500 million to the £10 billion cut to benefit spending in 2022-23 as a result of not uprating benefits in line with inflation.

  • Income tax and national insurance threshold

Changes to tax cuts won’t help the families who need it most now. Raising the National Insurance threshold mostly benefits middle earners and, compared to increasing benefits payments, does little to help those with low income. This can be seen in the chart below, from the Resolution Foundation.

And promises of income tax cuts tomorrow do nothing for families facing cuts to their living standards now.

  • Childcare and sick pay

Recent TUC research found that 1 in 3 parents with pre-school children spend more than a third of their pay on childcare. And yet the spring statement made no mention of childcare –or even children.

And the Chancellor has missed another opportunity to raise sick pay and make it available to all. Living with Covid requires decent sick pay for all, yet we’re still waiting for government to take action on this.

  • VAT-free insulation and solar panels

Alongside this was the removal of the 5% Value Added Tax currently applied to building materials, like home insulation and solar panels. But this only benefits families who own a home and can afford to renovate it anyway. 

The Chancellor should’ve taken the opportunity to invest in home retrofits at scale. Improving the average UK home’s energy efficiency to band C would reduce the country’s gas demand by 15% and cut hundreds of pounds off fuel poor homes’ energy bills. A massive social homes retrofits programme, delivered by local authorities, could also create over a quarter million good jobs over two years. But here again the Chancellor failed to act.

  • Transport

The 5p cut on fuel duty does next to nothing to support those at the sharp end of the wages and bills crisis. Analysis by NEF estimates that a third of this tax cut will go directly to the richest 20% of households, while the poorest 20% will on average only receive £5 per month. To make transport truly affordable for everyone, Government should be expanding bus and rail services in the public sector.

The Chancellor didn’t talk about the long-term changes needed for a high-wage, high skill, high productivity economy

 We heard nothing on reforms to corporate governance, industrial strategy or expanding the public sector workforce to deliver the decent public services we need to level up.

The Chancellor did announce a review of the apprenticeship levy. We believe that any changes to the levy should focus on significantly increasing the number of high-quality apprenticeships and widening access to groups facing long-standing barriers. A review must not be an exercise in allowing employers to duck their responsibilities on apprenticeships.

And much more than this is urgently needed to tackle the shortfall in training, including increased government skills funding and new workplace training rights to expand opportunities for everyone to upskill and retrain.

The Chancellor didn’t stand up to the scandalous behaviour by bosses P&O

The Chancellor talked about security but did nothing to take on the bosses who take every measure to undermine their workers’ job security. He could’ve made it clear that no employer who treats workers with the contempt shown by P&O Ferries would receive a penny of public money until they reinstate their workforce, including by taking freeports contracts off DP World, the parent company of P&O.

Yet once again the Chancellor failed to mention the issues that matter to working people.

The government’s response to those fleeing conflict and war is inadequate

The Spring statement document outlines the £400m in humanitarian support the government has given to Ukraine, and says it has committed “to provide local authorities with £10,500 per person for support services, and between £3,000 and £8,755 per pupil for education services depending on phase of education, as well as £350 per month for sponsors for up to 12 months”.

But it’s clear that the government’s support for the people fleeing war and conflict is worse than inadequate. The Ukraine for Homes scheme is no substitute for a properly funded system that provides universal refugee protection.  And yesterday, the Government’s nationality and borders bill, passed a vital stage in the House of Commons, meaning that those fleeing conflict may find themselves treated as criminals and deported, instead of finding sanctuary.

The Chancellor let families down today.

Families are facing soaring bills at a time when their incomes have been squeezed by years of wage cuts and attacks on the social security system. The wages and bills crisis is a consequence of decisions taken by successive governments. Today the Chancellor chose to make the pain last for longer.

THERE WAS SOME PRAISE FOR SUNAK’S MINI-BUDGET, HOWEVER:

Simon Roberts, Chief Executive Officer, Sainsbury’s said: “We know our customers and colleagues are concerned about increases to the cost of living and at Sainsbury’s we are doing everything we can to support them.

“We really welcome today’s changes to fuel duty and national insurance. We are passing a 6 pence per litre cut in fuel across our forecourts from 6pm tonight as we know fuel costs are one of the biggest pressures everyone is facing right now.

“We were pleased to welcome the Chancellor to one of our stores today to discuss what we are doing to offer customers great value and to invest over £100 million in increasing pay for our colleagues with a new hourly rate of £10 per hour nationally and £11.05 in inner London.”

Michelle Ovens CBE, Founder, Small Business Saturday said: “Moves in today’s Spring Statement to increase the employment allowance, reduce fuel duty and raise the National Insurance threshold are welcome, and will go some way to help businesses deal with rising costs.

“In particular, It is good to see the immediacy of this rise in employment allowance.”

Martin McTague, Chair, Federation of Small Businesses, said: “We are very pleased to see the Chancellor adopting our top ask for this Spring Statement: uprating the Employment Allowance to help small employers with national insurance costs.

“We originally put forward the Employment Allowance as a targeted measure to help small firms, and it has now been expanded three times since its creation.

“Together with a cut to fuel duty, these measures will provide crucial breathing space for our embattled small employers. 

“This Spring Statement marks a good starting point, with welcome measures on business rates, net zero and energy investment taking effect next month.

“With steep inflation, energy bills increasing fast, without the same support in place as enjoyed by consumers, and hiring pressures landing hard on small firms, more of the right stuff will be needed in the autumn given this challenging backdrop.

“We’ve seen a VAT cut on net zero investments for households today, which is good for small firms involved in their installation.

“However, a high street shop or local bar cannot access the same support that consumers do when dealing with the same energy supplier, and they should have access to the same assistance to reduce energy use and support the move to net zero.

“We look forward to working with the Chancellor on his new tax plan. Achieving the new culture of enterprise vision he rightly aspires to, alongside levelling up aspirations, will mean putting community small firms and sole traders front and centre of reforms.

“That means taking more of them out of the business rates system, protecting SME R&D investment incentives and delivering on commitments to end an endemic late payment culture that destroys thousands of firms a year.”  

Alex Towers, Director of Policy and Public Affairs, BT Group said: “We welcome the Chancellor’s focus on tax reforms for business investment, given how central this is to UK infrastructure and growth.

“This is particularly important for BT Group as we make once in a generation investments to build the UK’s full fibre broadband and 5G networks. The existing super-deduction has already helped us to significantly increase and accelerate that investment.

“We agree that longer-term incentives are now needed, to support this country’s growth and competitiveness, and we will be keen to contribute evidence to aid the Government’s decision-making.”

Dr Clive Hickman OBE, Chief Executive, the Manufacturing Technology Centre said:  “We welcome the Spring Statement, which outlines concrete steps to ensure that the manufacturing sector remains competitive, sustainable, and resilient.

“The Government’s commitment to cut tax rates on business investment is important if the UK is to boost manufacturing productivity and create high-quality jobs. In addition, the reform to R&D tax credits is a very positive step that will enable the scheme to be more effective, better value for money, and more generous.

“These measures will be crucial to spur innovation and encourage investment across the country.”

Julian David, Chief Executive, TechUK said: “Rightly the majority of the Spring Statement focused on addressing the cost of living concerns resulting from the war in Ukraine and rising inflation. Along with this vital action, the Chancellor also outlined a welcome package of consultations and policy programmes aimed at boosting businesses investment.

“In our recent Digital Economy Monitor Survey UK tech companies said increasing support to invest in R&D would be their top ask of Government, with 76% saying R&D is important to their business operations in the UK.

“The proposals unveiled today to further expand R&D tax credits and consult on ways to maintain the tax deduction for capital expenditure have the potential to unlock more investment into UK innovation.

“However, to get this right the Government must ensure that the software and intangible assets that power modern business investment are kept in scope. Otherwise, the Government risks missing an opportunity to unleash the potential of tech led growth.”

Dom Hallas, Executive Director, COADEC said: “Better R&D tax credits would mean more innovation from startups and innovative companies.

“We’re delighted the Chancellor recommitted to expanding it to cover cloud and data costs – and look forward to discussing the many ways to improve the credit further.”

Irene Graham OBE, Chief Executive, ScaleUp Institute said: “In the face of increasing pressures of inflation and wider international uncertainties, it is very good to see the Spring Statement continues to recognise the importance of business growth and innovation.

“It reaffirms policies targeted towards R&D, people and skills, investment, and innovation including the new Innovation Challenge across central government departments. We will continue to work closely with the Government on the evolution and development of these policies which are so vital to our scaleup economy.”

Michael Moore, BVCA Director General, said: “Increased business investment is key to the future of the UK economy and we welcome the measures announced by the Chancellor today which support this objective.

“Private capital’s focus on sectors like AI, robotics and fintech has helped the UK to become a world leader in these areas – further reform of R&D tax credits will help businesses to drive further innovation and strengthen the UK’s position in this new economy.”

Fuel Duty

Edmund King, President, the AA said: “The AA welcomes the cut in fuel duty. However, we are concerned that the benefit will be lost unless retailers pass it on and reflect a fair price at the pumps. Average pump prices yesterday hit new records- despite the fall in wholesale costs.

“The Chancellor has ridden to the rescue of UK families and businesses who use their vehicles, not for pleasure, but to function in their daily lives. Since the start of the year, the 20p-a-litre surge in pump prices has been the shock that rocked the finances of families, and particularly young drivers, pensioners and lower-income workers who need to commute each day.

“AA research showed that even in November, when petrol pump prices set new records at around 148p a litre, 43% of drivers were cutting back on car use, other spending to compensate or both. That rose to 59% among young drivers and 53% among the lower-paid. Petrol started this week averaging 167p a litre.

“On top of the duty cut, there has been a substantial reduction in wholesale road fuel costs feeding through to the forecourts since 9 March. That needs to drive lower pump prices also. The road fuel trade shouldn’t leave the Treasury to do the heavy lifting when cutting motoring costs.”

Elizabeth de Jong, Director of Policy, Logistics UK said: “With average fuel prices reaching the highest level on record and rising inflation, there has been an unstainable burden on logistics businesses which operate on very narrow margins of around 1%; the Chancellor’s decision today will help to ensure operators can continue to afford supplying the nation with all the goods it needs, including food, medicine and other essential items.

“Fuel is the single biggest expense incurred by logistics operators, accounting for a third of the annual operating cost of an HGV. The cut in fuel duty of 5ppl will result in an average saving of £2,356 per year per 44-tonne truck; this move will help to strengthen the UK’s supply chain during a time of ongoing financial and operational challenges.”

Zero rating VAT in energy efficiency measures

David Cowdrey, Director of External Affairs, MCS said: “The Chancellor has used the Spring Statement as an opportunity to kick-start the home heating revolution by zero rating VAT on home energy efficiency and renewable technologies for five years.

“This announcement allows people to insulate their homes and save on our fuel bills, making houses cheaper to run, especially when gas prices are at a record high.

 “The government’s bold move to zero rate VAT can help the UK meet its net zero targets by using proven, off the shelf, zero carbon domestic energy solutions, such as solar and heat pumps, which are ready to be upscaled now.“

Professor Robert Gross, Director, U.K. Energy Research Centre, Professor of Energy Policy, Imperial College said: “The VAT cut on energy efficiency products is a great first step in helping households adopt simple measures to help cut fuel bills for the coming winter.

“Better insulated houses need less energy to keep warm and this is good for our bills, energy security and the environment.”

Amy MacConnachie, Director of External Affairs, Association for Renewable Energy and Clean Technology (REA), said: “The REA warmly welcomes today’s announcement to remove VAT on domestic renewables for five years. We have long campaigned for this change because we know these installations will help protect people from volatile gas prices and reduce their energy bills, while also supporting the transition to Net Zero and providing a catalyst for new jobs and investment across the country.

“The move to bring forward business rate exemptions for green technologies from April 2022, including solar panels and heat pumps, will help to further drive down costs and support the decarbonisation of buildings.

“We now want to see the Government clarify and go further on the range of technologies included as Energy Saving Materials, particularly energy storage, but this is a positive package of measures for our sector.

“We stand ready to deliver an energy future which is independent, secure, and stable.”

Spring Statement: Chancellor vows to ‘stand by hard-working families’

  • Chancellor expected to unveil Spring Statement that builds a stronger, more secure economy for the United Kingdom.
  • Rishi Sunak will set out further plans to support people with the rising cost of living and pledge to continue to “stand by” hard-working families during the challenging times ahead.
  • He will say that freedom and democracy remain the best route to peace, prosperity, and happiness and that a strong economy is fundamental in enabling us to counter the threat Russia poses to our values.

The Chancellor will today deliver a Spring Statement that ‘builds a stronger, more secure economy for the United Kingdom’.

With people across the UK facing growing pressures exacerbated by the war in Ukraine, Rishi Sunak will pledge to continue to “stand by” hard-working families and outline further plans to help with the rising cost of living. 

Alongside Britain continuing its “unwavering” support to Ukraine, he will add that a stronger economy is vital in responding to the threat of President Putin and that freedom and democracy remain the best route to peace, prosperity, and happiness.

Delivering the Spring Statement, Chancellor Rishi Sunak is expected to say: “We will confront this challenge to our values not just in the arms and resources we send to Ukraine but in strengthening our economy here at home.

“So when I talk about security, yes – I mean responding to the war in Ukraine. But I also mean the security of a faster growing economy. 

“The security of more resilient public finances. And security for working families as we help with the cost of living.”

The Chancellor’s statement is also expected to set out how the government plans to create a new culture of enterprise, with the private sector training more, investing more, and innovating more.

The Spring Statement will build on UK government support worth around £21 billion this year and next to help families with the cost of living.

That includes the £9.1 billion Energy Bills Rebate, putting an average of £1,000 more per year into the pockets of working families via changes to Universal Credit and freezing fuel and alcohol duties to keep costs down.

The Government is also raising the National Living Wage to £9.50 per hour from April, meaning people working full time on the National Living Wage will see a £1,000 increase in their annual earnings.

And the Government’s Plan for Jobs is also helping people into work and giving them the skills they need to progress – the best approach to managing the cost of living in the long term.

Bold action needed to tackle cost of living

The UK Government must take bold and decisive action to help protect people from soaring living costs, according to Holyrood Finance Secretary Kate Forbes.

Speaking ahead of the Spring Statement, Ms Forbes said the Chancellor of the Exchequer must use every tool available to provide support through what is expected to be a turbulent period of economic uncertainty.

Finance Secretary Kate Forbes said: “This is not a time to be ducking the considerable challenges we face, and I expect the Chancellor to use the Spring Statement to outline significant actions to support households and businesses, considering that most of the relevant powers are reserved to the UK Government.

“The Scottish Government is doing all it can to help those most in need. We are uprating eight Scottish benefits by 6% from 1 April as well as doubling our Scottish Child Payment to £20 per week per eligible child. I call again on the UK Government to follow our lead and uprate social security benefits by 6%.”

The Scottish Government has called on the Chancellor to:

  • increase benefits at a higher rate, closer to inflation
  • implement business relief on National Insurance contributions
  • provide immediate funding to sectors directly impacted by the Russia/Ukraine conflict
  • remove/reduce VAT on household energy bills
  • take VAT off energy efficient and zero emissions heat equipment and products
  • provide powers to implement flexible working, to get more people into jobs
  • deliver two extra Cold Weather Payments – one immediately and another in winter 2022-23 when energy bills will have risen again.

Read the Finance Secretary’s letter in full here.

Commenting on today’s (Wednesday) inflation figures, which show CPI inflation rising to a 30-year high of 6.2% in February, TUC General Secretary Frances O’Grady said: “The Chancellor must respond to high inflation today with much greater help for families with soaring bills and a plan to get wages rising.

“Families need grants, not loans to help with soaring energy bills. These should be funded by a windfall tax on excess profits from gas and oil. Universal credit should get a boost to help families keep up with the rising cost of living.

“And we need a comprehensive plan to get wages rising, including new pay bargaining rights for workers and their unions.”

From Bad to Worse: Universal Credit families face another income cut

UP TO £660 PER YEAR COULD BE SLASHED FROM HOUSEHOLD INCOME

In a letter to the chancellor last week, the Bank of England stated that it expected inflation to be “around 8 per cent” this spring. With Universal Credit set to rise by just 3.1 per cent in April, families with children on universal credit now face a real-terms cut of around £660 per year, on average.

This is an increase on Child Poverty Action Group’s original analysis which showed a cut of £570, when inflation was expected to be 7.25 per cent.

The £20 cut to universal credit last October plunged out-of-work benefits to their lowest level in 30 years. Latest analysis shows that the picture for families is going from bad to worse.

Without government action, families will be pulled deeper into poverty. Increasing benefits by anything less than 8 per cent risks pushing those with already stretched budgets past breaking point.

Anti-poverty charities wrote to the Chancellor last week calling for a minimum 7% benefits rise:

Prices are rising at the fastest rate in 30 years, and energy bills alone are going to rise by 54% in April. We are all feeling the pinch but the soaring costs of essentials will hurt low-income families, whose budgets are already at breaking point, most.

There has long been a profound mismatch between what those with a low income have, and what they need to get by. Policies such as the benefit cap, the benefit freeze and deductions have left many struggling.

And although benefits will increase by 3.1% in April, inflation is projected to be 7.25% by then. This means a real-terms income cut just six months after the £20 per week cut to universal credit. 

Briefing_UC_Feb_2022_finalDownload

Child Poverty Action Group’s analysis shows families’ universal credit will fall in value by £570 per year, on average. The Joseph Rowntree Foundation has calculated that 400,000 people could be pulled into poverty by this real-terms cut to benefits.

The government must respond to the scale of the challenge. Prices are rising across the board. Families with children in poverty will face £35 per month in extra energy costs through spring and summer, even after the government’s council tax rebate scheme is factored in. These families also face £26 per month in additional food costs. The pressure isn’t going to ease: energy costs will rise again in October. 

A second cut to benefits in six months is unthinkable. The government should increase benefits by at least 7% in April to match inflation, and ensure support for housing costs increases in line with rents. All those struggling, including families affected by the benefit cap, must feel the impact.

Much more is needed for levels of support to reflect what people need to get by, but we urge the government to use the spring statement on 23 March to stop this large gap widening even further. The people we support and represent are struggling, and budgets can’t stretch anymore.

Alison Garnham, Chief Executive, Child Poverty Action Group

Emma Revie, Chief Executive, The Trussell Trust

Graeme Cooke, Director of Evidence and Policy, Joseph Rowntree Foundation

Morgan Wild, Head of Policy, Citizens Advice

Dan Paskins, Director of UK Impact, Save the Children UK

Imran Hussain, Director of Policy and Campaigns, Action for Children

Thomas Lawson, Chief Executive, Turn2us

Sophie Corlett, Director of External Relations, Mind

Dr Dhananjayan Sriskandarajah, Chief Executive, Oxfam GB

Caroline Abrahams, Charity Director, Age UK

Eve Byrne, Director of Advocacy, Macmillan Cancer Support

Kamran Mallick, CEO, Disability Rights UK

Katherine Hill, Strategic Project Manager, 4in10 London’s Child Poverty Network

Mubin Haq, Chief Executive Officer, abrdn Financial Fairness Trust 

Bob Stronge, Chief Executive, Advice NI 

Dr Ruth Allen, Chief Executive, British Association of Social Workers

Joseph Howes, Chief Executive Officer, Buttle UK

Helen Walker, Chief Executive, Carers UK 

Balbir Chatrik, Director of Policy and Communications, Centrepoint

Gavin Smart, Chief Executive, Chartered Institute of Housing 

Leigh Elliott, CEO, Children North East

Niall Cooper, Director, Church Action on Poverty

Lynsey Sweeney, Managing Director, Communities that Work

Anna Feuchtwang, Chair, End Child Poverty Coalition

Claire Donovan, Head of Policy, Research and Campaigns, End Furniture Poverty

Victoria Benson, CEO, Gingerbread 

Neil Parkinson, co-head of casework, Glass Door Homeless Charity

Graham Whitham, Chief Executive, Greater Manchester Poverty Action

Yasmine Ahmed, UK Director, Human Rights Watch 

Sabine Goodwin, Coordinator, Independent Food Aid Network 

Jess McQuail, Director, Just Fair 

Gemma Hope, Director of Policy, Leonard Cheshire

Paul Streets, Chief Executive, Lloyds Bank Foundation for England & Wales

Jackie O’Sullivan, Director of Communication, Advocacy and Activism, Mencap

Mark Rowland, Chief Executive, Mental Health Foundation

Chris James, Director of External Affairs, Motor Neurone Disease Association

Nick Moberly, CEO, MS Society

Anna Feuchtwang, Chief Executive, National Children’s Bureau

Charlotte Augst, Chief Executive, National Voices

Jane Streather, Chair, North East Child Poverty Commission

Tracy Harrison, Chief Executive, Northern Housing Consortium

Karen Sweeney, Director of the Women’s Support Network, on behalf of the Women’s Regional Consortium, Northern Ireland 

Satwat Rehman, CEO, One Parent Families Scotland

Mark Winstanley, Chief Executive, Rethink Mental Illness

James Taylor, Executive Director of Strategy, Impact and Social Change, Scope

Irene Audain MBE, Chief Executive Scottish, Out of School Care Network

Steve Douglas CBE, CEO, St Mungo’s 

Richard Lane, Director of External Affairs, StepChange Debt Charity

Robert Palmer, Executive Director, Tax Justice 

Claire Burns, Director, The Centre for Excellence for Children’s Care and Protection (CELCIS)

The Disability Benefits Consortium 

Dr. Nick Owen MBE, CEO, The Mighty Creatives

Peter Kelly, Director, The Poverty Alliance

Elaine Downie, Co-ordinator, The Poverty Truth Community

Tim Morfin, Founder and Chief Executive, Transforming Lives for Good (TLG)

UCL Institute of Health Equity 

Dr Mary-Ann Stephenson, Director, Women’s Budget Group 

Natasha Finlayson OBE, Chief Executive, Working Chance

Claire Reindorp, CEO, Young Women’s Trust 

Businesses in Scotland are also calling for the Chancellor to announce new measures to help with rising costs ahead of his Spring Statement tomorrow, according to a recent survey from Bank of Scotland.  

As inflation hits the highest levels seen since 1992, over half (55%) of Scottish businesses said that direct help with energy bills and rising costs tops their wish list for the Chancellor. This was followed closely by calls for a reduction in VAT, cited by two-fifths (40%), while almost a quarter of firms (23%) want increased funding to help create new jobs and develop skills. 

Rising prices remain a key challenge for business. Almost half (46%) of respondents said they are concerned about having to increase the costs of goods and services and over one in ten (14%) stated that inflation is reducing profitability. Almost one in ten (9%) said rising prices had caused them to worry about having to make staff redundant and a further one in ten (9%) were concerned about not being able to pay their bills. 

To help specifically with rising prices Scottish businesses are asking the Chancellor for a VAT reduction (46%), while a third (35%) have called for grants to cover rising energy costs. A further quarter (23%) called for grants to support investment in energy saving measures. 

The data comes as businesses face continuing supply chain challenges, which are reducing the availability of stock (40%), causing hikes in freight costs (39%) and disruption through Rules of Origin and VAT requirements from EU suppliers (33%).

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Rising prices are causing multiple challenges for businesses across Scotland and the pressure from inflation shows no sign of abating in the near-term.  

“As we wait for the Chancellor’s Spring Statement, we’ll continue to remain by the side of business in Scotland and support the country’s ongoing economic recovery from the pandemic.” 

Responding to the ONS public sector finances statistics for February  Chancellor of the Exchequer, Rishi Sunak said: “The ongoing uncertainty caused by global shocks means it’s more important than ever to take a responsible approach to the public finances.  

 “With inflation and interest rates still on the rise, it’s crucial that we don’t allow debt to spiral and burden future generations with further debt.”

 “Look at our record, we have supported people – and our fiscal rules mean we have helped households while also investing in the economy for the longer term.”

All will be revealed when the Chancellor delivers his Spring Statement (Budget) at Westminster tomorrow.

Holyrood committee conveners to grill First Minister

The Scottish Government’s record on climate change and the COVID-19 pandemic will be under the spotlight when the Scottish Parliament’s Committee Conveners meet later this month to quiz the First Minister. 

For the first time in Session 6, the Conveners Group will hold a public evidence session with First Minister Nicola Sturgeon MSP.  The session will take place on 15 December. 

The session, which will last almost two hours, will also see the First Minister take questions on the Scottish Government’s budget.

Speaking ahead of the session, Deputy Presiding Officer and Chair of the Conveners Group Liam McArthur MSP said: “The Scottish Parliament’s Committees play a crucial role in our democracy by scrutinising the Scottish Government and making sure those in charge of running the country are being held to account.

“This session will allow Conveners collectively to raise cross cutting matters of real concern such as climate change and the COVID 19 pandemic with Nicola Sturgeon.  As such it is a welcome addition to the various ways in which the Parliament carries out its role.

“I expect there will be robust questioning and some spirited debate.  As the new chair of Convener’s Group I’m looking forward to it immensely.”

The meeting can be viewed LIVE on SPTV.

Reduction in council funding must be halted, says COSLA

A real terms reduction in Local Government funding in recent years must be halted to prevent Scotland’s communities and businesses suffering the effects of further cutbacks, COSLA has said.

This year’s Scottish Budget – to be announced next week on December 9 – should also recognise Local Government’s unique role in economic transformation, and must enable meaningful reinvestment in the services that underpin the economy.  

Councils have significant spending power and the potential to build local wealth. Every pound spent in a local area – on pay, goods and services,  and on capital projects – stays in and strengthens the local economy that enables people to ‘Live Well, Locally’.

COSLA also warns that without adequate funding for Local Government to support economic transformation, issues such as unemployment and child poverty will continue to rise, hitting communities hard and costing the whole system more in the long run.

COSLA’s Resources Spokesperson, Councillor Gail Macgregor, said: “The economic challenges faced across Scotland require a new response – one that is in tune with the needs of local areas and resourced sustainably.

“The Scottish Budget on December 9 presents a perfect opportunity to reset Scottish public spending in a way that empowers councils to achieve their ambition for our communities, creating jobs and sharing prosperity.

“Scotland’s Councils have invaluable local intelligence with local businesses, colleges and universities, about key sectors, local labour markets, and skills/training needs that should be valued and fully utilised to allow our communities to thrive and enable people to ’Live Well Locally’.

“As well as the many great examples we have in our Lobbying document, take somewhere like Dundee where as part of the major development to their waterfront that includes the prestigious V&A Museum, Dundee City Council has used its influence to encourage payment of the living wage by partners and private sector business including its contractors.

“In addition, units that have been created for let are being leased to businesses that are committed to providing the living wage delivering positive and sustainable developments to the local economy.”

COSLA Vice President Councillor Graham Houston added:  “Only Councils have the vital local connections across the services that underpin economic transformation we require post-COVID.  

“Take something like housing for example – a basic human right.  It is not just about throwing up new homes – it’s about building them in a way which helps transform our communities, in a way which is affordable, and in a way which supports our commitments to tackle climate change and to community wealth building.

“There has to be that connectivity that only Local Government can provide.  Councils make and shape the places we live in and love and with proper funding form Government would be the real enablers in allowing people to ‘Live Well, Locally.’”

Councillor Alison Evison, COSLA President concluded:  “One of the reasons our communities are suffering is that recent years have seen a real terms reduction in Local Government funding overall, so Councils have had to prioritise protected areas like social work and education, over economic development, roads and transport.

“But these are the essential service areas that are critical in attracting investment, developing businesses, and creating jobs – this can create the conditions to lift families out of poverty.

“That is why this year’s Scottish Budget must recognise Local Government’s unique role in economic transformation, and must enable meaningful reinvestment in the services that underpin the economy.”

MSPs back ‘transformational changes’ to justice system

The Scottish Parliament’s Criminal Justice Committee is calling for comprehensive reforms to be made in the justice system, as well as more money for the sector, ahead of the Scottish Government’s budget next month.

After considering the financial position of the sector, the Committee has concluded that many of the budget challenges in the justice system are symptoms of wider problems that have not been significantly addressed over many years.

While it believes there is a need for greater investment, connected problems such as court backlogs, high numbers of remand prisoners, and overcrowded, outdated jails with ‘revolving doors’ and issues with drugs deaths need to be tackled together with policy-based solutions, as well as adequate funding.

The Committee is calling for joined-up, long-term plans, led by the Scottish Government, and incorporating all the main justice partners to try to address issues including:

• The huge court backlog of around 50,000 cases made worse by the pandemic;
• The size of the prison population, including the number of women in jail and remand prisoners;
• Improving the prison estate;
• Issues in prison such as drug misuse, prisoner and staff welfare, and managing serious organised crime groups inside;
• The need for investment in police and fire services;
• Issues in the legal aid system;
• Support for victims and community justice schemes.

The Committee has suggested that spending on areas such as:

• effective diversion from prosecution or diversion from incarceration schemes for cases where those are appropriate,
• drug recovery cafés in prisons, and
• Throughcare for those leaving prison,

may all help ease pressures in the system, and in time reduce the overall budgetary challenges for the justice sector.

Speaking as the report was launched, Committee Convener, Audrey Nicoll MSP, said: “We believe that there is a case for further spending to support the justice system to meet the many challenges it is facing.

“However, we recognise that money is not unlimited, and that some of the seemingly intractable issues faced by our courts, prisons and other justice partners will not be fixed simply by loosening the purse strings.

“We believe joined up actions, achieving long term goals such as reducing reoffending, could prove transformational. This would improve outcomes for society as well as the budget for the sector.”

CJS062021R3Download

Record £41 billion per year for Scotland in budget

‘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 2022/23Family 1: single adult, no children, not workingFamily 2: single parent, with one young child (assume age 5), part-time 16 hours per weekFamily 3: couple with two young children (assume 7 and 5). One FT workerFamily 4: single parent, with one young child (assume age 5), full-time 35 hours per weekFamily 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.”

£150 million budget boost for Scottish small businesses

The Chancellor is expected to announce a new, £150 million fund to help thousands of small and medium sized enterprises in Scotland in tomorrow’s budget – building on the Government’s commitment to level up opportunities across the UK.

The fund will be delivered through the British Business Bank, working closely with local partners, and will help Scottish SMEs to invest and grow. It will build on the success of existing funds in other parts of the UK, which have been shown to support the creation of high-paying high productivity jobs and the upskilling of existing workforces.

Similar existing funds in England and Northern Ireland typically provide loans or invest in local companies – this can be recent start-ups looking to borrow smaller amounts to kickstart activity or established SMEs looking for larger investments to grow their business. Details on how businesses in Scotland can access the fund will be outlined in due course.

Chancellor Rishi Sunak said: “This fund will help thousands of small businesses in Scotland to make ideas a reality and grow their companies . I’m always impressed by the innovation and determination of SMEs and the UK government will continue to support businesses across the UK.”

Since the start of the pandemic the UK Government has spent £352 billion right across the UK on support measures. In Scotland this included protecting more than 900,000 jobs through the furlough scheme, £294 million in self-employment support, help for businesses and the procurement of vaccines.

In addition to the £150 million for Scotland, Wales will benefit from £130 million for a new fund and the British Business Bank will receive an additional £70 million to build on existing programmes in Northern Ireland.

Budget Briefing: Wage boost for millions of low-paid workers

  • The UK’s lowest-paid workers will receive a pay rise next year as the National Living Wage increases from £8.91 to £9.50 an hour – an extra £1000 a year for a full-time worker.
  • From 1 April, young people and apprentices will also see their wages boosted as the National Minimum Wage for people aged 21-22 goes up to £9.18 an hour and Apprentice Rate increases to £4.81 an hour.
  • This builds on the government’s continued action to support people with the cost of living including through the £500 million Household Support Fund, Energy Price Cap, Seasonal Cold Weather Payments and Warm Homes Discount, and keeps the government on track to meet its target to end low pay by 2024-25.

MILLIONS of the UK’s lowest paid workers will benefit from a pay rise next year, as the UK government takes further action to help the country’s poorest households.  

The Chancellor is expected to confirm at Wednesday’s Budget and Spending Review that the National Living Wage will increase from £8.91 to £9.50 an hour – a 59p an hour boost which means a full-time worker on the National Living Wage will see a pay rise of more than £1,000 a year.

The National Living Wage was introduced in 2016 and sets the minimum hourly pay a person over the age of 23 can earn when working.

Rishi Sunak is also set to announce a wage rise for young people under the age of 23. For those aged 21-22 the National Minimum Wage rate increases to £9.18 an hour, up from £8.36 – a 82p increase.

With apprenticeships a key part of our Plan for Jobs, the minimum hourly wage for an apprentice will also see a boost next year, with an 18 year old apprentice in an industry like construction seeing their minimum hourly pay increase by nearly 12%, going from £4.30 to £4.81 an hour.

Chancellor of the Exchequer Rishi Sunak said: “This is a government that is on the side of working people. This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.” 

By introducing these changes, which are broadly consistent with previous increases, the government accepts all recommendations made by the Low Pay Commission – an independent advisory board which brings together economists, employer and employee representatives.

“The government remains committed to meeting its ambitious target of a National Living Wage of two-thirds of median earnings and expanding it to include workers over the age of 21 by 2024, provided economic conditions allow.

Since 2010, this government has continuously supported working people on the lowest wages – doubling personal tax thresholds, doubling free childcare for eligible working parents – worth up to £5,000 per child per year. It has also expanded Free School Meals to all five to seven-year-olds – saving families £400 a year.

This builds on recent action to support the lowest earners in the winter months, through measures like the £500 million Household Support Fund to help families with their food and utility costs, the Energy Price Cap, Seasonal Cold Weather Payments, and the Warm Homes Discount to ensure low-income households can keep their homes warm over the winter period.

As we enter the next stage of the Plan for Jobs, an extra £500m will also be invested to give people the skills and support they need to find good work as we build back better from the pandemic.

500,000 adults to ace maths with ‘Multiply’ numeracy programme

  • New £560 million Multiply programme to be launched providing personalised maths coaching for up to half a million people across the UK.
  • Transformational numeracy scheme will transform the lives of some of the 8 million adults in England who have numeracy skills lower than those expected of a 9-year-old.
  • Funding to be channelled through the new £1.5bn UK Shared Prosperity Fund – which replaces a pot of money previously divvied up and distributed by the EU and means the government can target funding where it is needed most.

A TRANSFORMATIONAL £560 million scheme to improve the maths skills of hundreds of thousands of adults across the UK is set to unveiled by the Chancellor next week.

At Wednesday’s Budget and Spending Review, Rishi Sunak will announce that up to 500,000 people will benefit from Multiply with improved basic numeracy skills through free personal tutoring, digital training, and flexible courses.

More than 8 million adults in England have numeracy skills lower than those expected of a 9-year-old with the North East, West Midlands and Yorkshire and the Humber worst affected. And by the age of 30, people with poor numeracy skills are more than twice as likely to be unemployed as their peers.

According to research, improving numeracy skills can increase your pay cheque by 14%, and reduce joblessness by half – boosting the economy and changing lives.

Chancellor of the Exchequer Rishi Sunak said: “Better maths can mean a better job and a bigger pay packet. Multiply will help people develop new skills and create opportunities.”

Sam Sims, Chief Executive of National Numeracy said: “Low numeracy blights lives, holding millions of people back from fulfilling their potential and it comes at a huge cost to the economy.

“We need solutions that reach and engage people with low numeracy to build confidence with numbers as well as skills, as a steppingstone to further learning and opportunity.

“National Numeracy is delighted with the announcement of the government’s new ‘Multiply’ scheme, which promises to help improve the numeracy of hundreds of thousands of people.”

Launching in the Spring, Multiply will give people who don’t have at least a GCSE grade C/4 or equivalent in maths access to free new flexible courses to improve their maths.

It will also include a new website with bitesize training and free one-to-one online tutorials to help hundreds of thousands of people improve their maths in every part of the United Kingdom.

The programme will be funded through the new UK Shared Prosperity Fund, which replaces the EU’s Structural Funds, which were previously divvied up and distributed by the EU.

Funding for the UKSPF will increase to £1.5bn per year, meeting the Government’s commitment to level up all parts of the UK. The Multiply scheme is the first step of the new Fund, with further investment provided for Scotland, Wales and Northern Ireland.

Rather than the EU’s scatter gun approach, the UK Shared Prosperity Fund will ensure the UK Government can target funding where it is needed most – through schemes like Multiply which will help level-up the UK.

Secretary of State for Scotland, Alister Jack said: “The UK Govt 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.

“This is good news for communities across Scotland who will continue to benefit from a range of important projects. Going forward, new arrangements will allow us to deal directly with communities ensuring money is spent on projects that matter most to the people of Scotland.”