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Reeves Budget ‘tackles cost-of-living and backs Scottish industry’

Scottish families will benefit from a Budget to cut the cost-of-living, create more high skilled jobs and invest in public services, as the Chancellor reaffirmed her commitment to drive economic growth.

  • Chancellor announces fair deal for working families with removal of two-child benefit cap, energy bill saving and fuel duty freeze 
  • Scottish industry backed by investments in Grangemouth, Greenock, Leith and Fife 
  • Public services backed with extra £820 million for Scottish Government

Rachel Reeves recognised Scotland’s huge £204 billion annual contribution to the UK economy with investments in Grangemouth, Greenock, Leith and Kirkcaldy, and provided long-term certainty to the oil and gas industry to support North Sea jobs and investment. 

Despite wages growing more in the first year of this government than at any point in the 2010s, the Chancellor was clear too many families are still struggling with the cost of living which is why the Budget included a range of measures to cut bills and boost pay packets.   

Saying that the fairest way to help people with the cost-of-living was to cut inflation and increase wages, Reeves announced £150 off energy bills, a fuel duty freeze, and national minimum and living wage rises. 

The Chancellor announced the removal of the two-child limit. 95,000 children in Scotland will benefit from this change. Funded by tackling welfare fraud and long-overdue reforms to the Motability scheme, it will result in the biggest reduction in child poverty at any Budget this century.

The Chancellor’s Budget also ensured that Scottish public services are fairly-funded, with an extra £820 million for public services in Scotland through the Barnett Formula, on top of a record settlement in June.

Secretary of State for Scotland, Douglas Alexander MP said: “This is a Budget which delivers for Scotland – raising children out of poverty and helping tackle the cost of living for working families with action on energy bills.

“Scrapping the two-child benefit cap will lift thousands of Scottish children out of poverty. Funded by raising online gambling taxes and tackling welfare fraud, it will result in the biggest reduction in child poverty at any Budget this century.

“The UK Government has backed Scotland’s public services with an extra £820 million — on top of the extra annual £9.1 billion already committed at the Spending Review.

“The £14.5 million announced for Grangemouth is also vital investment in Scotland.”

Ms Reeves also announced reforms to modernise the tax system, asking those with broader shoulders to contribute more through long-overdue fair reforms.

Backing Scottish industry 

  • £14.5 million will back Grangemouth’s transition to a hub for low carbon technologies as the UK Government cements Scotland’s place as the home of the UK’s clean energy revolution. 
  • A further £20 million for Inchgreen near Greenock will upgrade the port’s dry dock, creating up to 1,750 jobs.  
  • Up to £20 million will transform Kirkcaldy town centre and waterfront, including the creation of ‘Adam Smith Growth Works’, boosting local business and tourism.
  • £25 million will be released following the full sign-off of Forth Green Freeport – spanning Leith, Grangemouth and Fife.
  • To support oil and gas workers, the UK Government is introducing ‘Transitional Energy Certificates’ to manage existing North Sea fields for the entirety of their lifespan, and a new Jobs Brokerage Service – offering end-to-end career transition support.

Tackling child poverty, the cost-of-living and economic inactivity

  • 95,000 children in Scotland will benefit from the removal of the two-child limit. 
  • Raising the National Living Wage by 4.1% and the National Minimum Wage by 8.5% —building on April 2025 increases to the National Living Wage and National Minimum Wage that already directly benefitted 220,000 workers in Scotland. 
  • Uprating Universal Credit Standard Allowance by 6.1%, the first ever permanent real terms increase.
  • Increasing the State Pension by 4.8% from April 2026, directly raising incomes for 1.1 million pensioners in Scotland. 
  • Extending the fuel duty freeze and 5p cut, saving the average car driver £49 next year. 
  • Unleashing talent and opportunity with a Youth Guarantee package. This will include ensuring every eligible 18-to-21-year-old who has been on Universal Credit and looking for work for 18 months in Great Britain will get a six-month paid work placement.

Public services investment 

  • The Budget provides an extra £820 million for the Scottish Government to spend on its priorities such as education and tackling NHS waiting times— on top of the extra £9.1 billion already committed during the Spending Review.   
  • The Scottish Government continues to receive over 20% more funding per person than equivalent UK Government spending across the rest of the UK reflecting the real costs of delivering services across Scotland’s diverse geography, from the Highlands to the central belt.

Holyrood: ‘Chaotic’ UK Budget fails to deliver for Scotland

Finance Secretary responds to Chancellor’s statement

The UK Budget “fails to deliver” for Scotland and will not move the dial on the cost of living for squeezed households, according to Holyrood’s Finance Secretary Shona Robison.

Responding to the Chancellor of the Exchequer’s statement, Ms Robison said: “This Budget has been absolute chaos from start to finish. Westminster has been consumed with leaks, briefings and out and out incompetence – with Scotland left as an afterthought and families left to pay the price.

“We needed a step change from the UK Government with investment in public services, support for jobs and industry in Scotland and serious action on energy bills. Instead, we got a chaotic mess and the increase in funding for the Scottish Government will not even cover half the cost of the employer’s national insurance contributions brought in this year.

“With UK energy bills £340 higher than the Prime Minister promised even after today’s announcement, the UK Government are not even trying to deliver on the their promises. It is insulting to see the UK Government stand up and trumpet a proposed reduction that does not even cover the increase since they came to office.

“It does not come close to meeting the Prime Minister’s pledge on energy bills – they have not even attempted to keep their promises.

“The electric vehicle tax is the wrong decision for motorists, the climate and for Scotland given its disproportionate impact on rural drivers.

“And there is no serious support for jobs and industry in Scotland. The Energy Profits Levy is to remain in place – risking thousands of jobs in Scotland and in the North East in particular. Yet again, Scotland is an afterthought.

“And while the moves on the two child cap are welcome, they are long overdue and the UK Government has been forced into this position by the Scottish Government and other campaigners. And without a simultaneous change to the benefit cap it falls well short of the bold anti-poverty measures we have been calling for from the UK Government.

“But the complete chaos around this Budget gets to the heart of the fact that we should not be leaving crucial decisions around the economy, public finances and household bills in the hands of a deeply incompetent Westminster UK government.  We should take these decisions for ourselves with the fresh start of independence.” 

The impact of the increase Employers National Insurance contributions on public services is forecast to cost the Scottish Government at least £2 billion over the next five years.

Responding to the UK Government’s Budget, Poverty Alliance Chief Executive Peter Kelly said: “The Chancellor’s decision to fully scrap the unjust two-child limit is the right thing to do.

“For eight years, this cruel policy has severed the link between what families across the country need and the support they are entitled to, pushing children into poverty and limiting their potential. Our children deserve better.

“Campaigners across Scotland have been unified in their demand to scrap the two-child limit and we are pleased that the UK Government has listened, sending a strong message that every child in this country matters. The end of this policy must be the starting point of reform which ensures that our social security system truly provides security.

“This decision also frees up money earmarked for the mitigation of the policy in the Scottish Budget. Coupled with the additional £820 million allocated to the Scottish Government in this UK Budget, this will allow further investment in the action we know is needed to meet our child poverty targets, including increases to the Scottish Child Payment.”

Commenting on the UK Government’s Budget response, Debbie Horne, Scotland Policy and Public Affairs Manager for Independent Age said: “The Autumn Budget was an opportunity to address pensioner poverty across the UK. However, the UK Government has sadly missed the chance to take action on an issue that now affects almost two million older people across the UK, including 160,000 pensioners in Scotland. 

“While we welcome the retention of the Triple Lock, this measure alone does not go far enough for older people on the lowest incomes who are living across Scotland in cold homes and with not enough money to live on. 

“We continue to call on the UK Government to increase the Warm Home Discount to ease the burden of escalating bills, to support older private renters by uprating Local Housing Allowance so no one has to make dangerous sacrifices to pay their rent, and to boost income through a comprehensive take-up strategy for entitlements, including Pension Credit. 

“The absence of meaningful action to address later-life poverty will leave many older people on a low income in Scotland feeling forgotten and many will be worried about losing more of it in tax, because of the extension of the freeze on personal tax allowances to 2031, a year longer than was expected. 

“We estimate that without decisive government intervention almost 190,000 pensioners in Scotland could be in poverty by 2040. Worryingly, nothing in this Budget suggests we are being steered away from this frightening outcome.” 

Mary Glasgow, Chief Executive of Children First, Scotland’s national children’s charity said: “We welcome the UK Government’s decision to scrap the two-child limit as outlined in the Office for Budget Responsibility report. This is long overdue and frees up Scottish Government budget for other crucial support for children and families.  

“Poverty has a devastating impact on children’s mental and physical health, development, happiness and ability to learn that can last a lifetime.   

“Both governments must now work together to build on progress and meet the legal target to reduce child poverty in Scotland. Families need a stronger social security offer, for example, through the Scottish Child Payment and whole family support across Scotland to give every family the financial, practical and emotional help they need to tackle the root causes of poverty.  

“Children can’t wait. The Scottish Government must use this opportunity to go further and faster in their stated mission to eradicate child poverty.”  

Children First’s manifesto for the 2026 Holyrood elections calls on the next Scottish Government to deliver a comprehensive offer of whole family support to tackle child poverty and give every family the emotional, practical and financial support they need. 

Read the manifesto here: 2026 Holyrood Election Manifesto | Children First 

Helen Barnard, director of policy at Trussell, said: “Trussell is delighted to see the Chancellor take this bold step which will protect hundreds of thousands of children from growing up facing hunger and hardship. She has listened to the families and food banks across the UK who have been imploring her to act.

“The cruel two-child limit has driven countless families into hardship, forced to turn to food banks to survive. Today’s announcement of its full and swift removal will help ensure all our children have the best possible start in life, ease pressure on public services, and help to boost our economy.  

“This government came to power promising to end the need for emergency food and reduce child poverty. Removing the two-child limit will make a vital and significant contribution towards delivering on those manifesto commitments.

“This move will pull 470,000 children out of severe hunger and hardship by 2027 and ease pressure on food banks throughout the UK.

“The government has built on positive steps in strengthening support for people facing severe hunger and hardship. But this cannot be the end. Food bank need remains well above levels five years ago and many people are still struggling to afford the essentials.

“We need more bold choices to transform lives across our communities.”

The End Child Poverty Coalition commented:

Murdo Fraser comments ‘not racist’

A CALL FOR UNDERSTANDING AND UNITY

In my role as Chairman and President of the Indian Council of Scotland and United Kingdom, which also oversees the Buddhist Council, I have been asked to comment on recent remarks made by Murdo Fraser MSP, following the departure of Rangers FC manager, Russell Martin (writes NEIL LAL).

Mr Fraser’s post on social media – “No more vegans, Buddhists or Green Party members please @RangersFC” – sparked debate among Buddhists, vegans, and some environmentally conscious individuals.

As the lead organisation committed to representing and protecting diverse communities across Scotland and the UK, we felt it was important to independently assess the situation in a fair, measured and constructive manner.

Findings of Our Investigation:

After engaging with community leaders, interfaith representatives, and those mentioned in the comments, we undertook a thorough investigation to determine whether Murdo Fraser’s remarks constituted intentional racism, religious discrimination, or targeted exclusion.

We can now formally state the conclusion of our investigation:

⁠Murdo Fraser MSP has been CLEARED of any intentional racism or discrimination.

Our findings indicate the comment was not posted with malice or deliberate prejudice. It was a remark made in the emotionally charged context of a sports discussion – a space where passions often run high and words, which are intended to be humorous, can be misinterpreted. 

That does not remove the responsibility public figures carry, but it does offer context. We accept Mr Fraser’s remarks were not intended to target the Buddhist community, vegans, or supporters of the Green Party with hate or exclusion.

A Positive Way Forward:

Rather than fuelling division or prolonging misunderstanding, we believe this is a moment to encourage further dialogue.

To that end, we are extending a formal invitation to Murdo Fraser MSP to visit a Buddhist temple, where he will be welcomed by myself, as Chairman of the Indian Council, and by Mrs Warakant McLaughlin, Chair of the Buddhist Counciland Head Monk Samak.

Scotland is a proudly diverse and inclusive nation. At the Indian Council of Scotland and United Kingdom, we champion unity, understanding, and peaceful coexistence.

We believe in calling out intentional harm when it occurs, but we also believe in allowing space for reflection, conversation, and learning when offence is caused unintentionally. We also recognise that humour is also an important ingredient in public discourse.

From our perspective, this matter is concluded, and we look forward to a constructive and respectful engagement between Murdo Fraser MSP and the Buddhist community.

NEIL LAL

Chairman & President
Indian Council of Scotland and United Kingdom

Programme for Government: ‘Building the best future for Scotland’

Poverty Alliance: ‘People in Scotland are demanding better’

The NHS will deliver 100,000 additional GP appointments and Scotland will have a ‘best in UK’ cost-of-living guarantee, including the permanent abolition of peak rail fares, First Minister John Swinney announced as he set out a Programme for Government against a backdrop of global economic challenges. 

Speaking one year since he was elected First Minister and one year before the end of this Parliament, Mr Swinney committed to a package of cost-of-living initiatives for households and businesses and a new Six Point Export Plan to unlock target markets.

He set out plans to strengthen the NHS with the delivery of extra GP appointments for key health risks such as high blood pressure, and 150,000 more NHS appointments and procedures, including a 50% increase in surgical procedures such as hip and knee replacements.  

Key announcements include:   

  • 100,000 enhanced service GP appointments by March 2026 for key risk factors including high blood pressure, high cholesterol, high blood sugar, obesity and smoking as well as more than 150,000 extra appointments and procedures, including surgeries and diagnostic tests, and target cancer pathways to tackle backlogs against the 62-day referral to treatment standard 
  • The cost-of-living guarantee which includes ongoing free prescriptions, eye exams, bus travel for 2.3 million people, free tuition for students and more than £6,000 in early learning and childcare support for each eligible child 
  • ScotRail peak rail fares abolished and the general alcohol ban on ScotRail trains removed and replaced with time and location restrictions 
  • Winter fuel payments for pensioners restored 
  • A new Six Point Export Plan, with a focus on actions to unlock target markets, and showcase Scotland to global buyers 
  • A national regeneration fund that will support at least 26 projects to renew and restore communities, with a focus on delivering more local jobs 
  • More rights and stronger protections for tenants, helping deliver more than 8,000 affordable homes, including for social and mid-market rent, and removing barriers on stalled building sites with the potential to deliver up to 20,000 new homes 

The First Minister said: “This Programme for Government is focused on providing the best cost-of-living support across the UK, as well as delivering a renewed and stronger NHS.   

 “When I became First Minister a year ago, I heard loud and clear people’s concerns about the NHS which is why I am taking serious action to ensure the NHS meets the needs of the public.  

“This PfG also shows decisive action to protect Scotland’s economy and maximise our economic potential in the face of global challenges.   

 “It is being published earlier than usual, in part because it allows a clear year of delivery on the NHS and other public services, but also due to the scale of the looming economic challenge.    

 “It is a programme for a better Scotland, for a stronger NHS and a more resilient and wealthier Scotland. It is a Programme for Government that gets our nation on track for success.”

POVERTY ALLIANCE: Government programme misses need for fundamental change

Commenting on the Programme for Government, Poverty Alliance chief executive Peter Kelly said: “Many of today’s announcements are welcome, but the package doesn’t go far enough towards creating a just and compassionate Scotland where people have what they need to build a life beyond poverty.

“More and more people in Scotland believe the system is rigged against them and their families. And they’re right.

“Scrapping peak rail fares for good will help many people on low incomes, but many, many more are still being left with unaffordable buses that don’t meet their needs.

“It’s welcome that this programme turns its back on previous cuts to affordable homes, but we urgently need more investment to create a social housing programme that will bring the scandal of child homelessness to an end.

“Reversing the effect of the unjust two-child limit for households in Scotland is the right thing to do, but there was no sign of a pledge to raise the Scottish Child Payment – never mind raising it to the £40 a week that we know is needed to meet our legal child poverty targets.

“And it was good to hear the First Minister talking about sharing Scotland’s growing wealth more fairly, but the Government simply can’t do that without using its powers over investment and taxation.

“People in Scotland are demanding better, and they want a Scottish Govt that will make the big, fundamental changes that will empower households to build a better life for themselves and a better future for all of us.”

STUC: Scrapping peak fares is a victory for workers in Scotland

Commenting on the scrapping of peak rail fares within the Scottish Government’s Programme for Government, STUC Deputy General Secretary Dave Moxham said: “This is deeply welcome news that, whilst long overdue, shows the strength of campaigners and rail unions in demanding an affordable and accessible rail network that is fit for the future.

“This is a clear victory for workers in Scotland and it’s commendable the Scottish Government has listened to the voices of our movement – and listened to their own evidence – which showed the positive impact of scrapping peak fares.

“Peak fares were, simply put, a tax on workers that hit commuters directly in the pocket. We can now ensure we build an interconnected, cheaper and greener rail networks that puts people before profit and puts peak fares out of commission for good.”

Children First: First Minister missed another chance by not increasing Scottish child payment

Children First statement on Scottish Government Programme for Government

Mary Glasgow, chief executive of Children first, said: “We hoped the First Minister would bring bold, ambitious plans to tackle the crippling levels of child poverty in Scotland. Instead, the Programme for Government, while well-intentioned, lacked real action. The First Minister missed another chance to help families by not increasing the Scottish Child Payment to £40.

“While we recognise the Scottish Government’s commitment to eradicating child poverty, supporting whole families and improving mental health support for young people, we are deeply concerned that it lacks urgency and the necessary financial resources and policy ambition.

“Scotland is facing a childhood emergency. The children and families we support cannot wait another 12 months for yet another fresh approach.

“They need action now.”

ALBA Party: Scotland “won’t accept” the Scottish Government’s decision to omit independence from its Programme for Government, says Ash Regan

For the second year in a row First Minister John Swinney has failed to mention independence in his Programme for Government with the document not setting out any plans to give Scots a choice on their future in the remainder of the current Parliament. 

The SNP were re-elected in 2021 promising a referendum would be held during the life of the current Parliament but after the Supreme Court ruled against the Scottish Parliament’s ability to do so the Scottish Government have taken no action to find a path to giving the people of Scotland a choice on their future. 

Alba’s Ash Regan wanted to see First Minister John Swinney set out the actions his Government will take to advance the case for Scottish independence in the run up to next year’s Scottish Parliament elections. But she has hit out as the Government has confirmed today that the only action it will take in the next year will be the publication of another independence paper. 

The Alba MSP says that the Scottish Government’s plan for how it intends to progress the case for Scottish independence should have featured “front and centre” of John Swinney’s plans and the failure to do so is a “missed opportunity.” 

Last year, in his first ever PfG as First Minister, John Swinney did not make reference to independence when he addressed parliament and in his speech today he again failed to reference any actions his Government would take to help deliver independence. 

Commenting Alba Party Holyrood leader Ash Regan MSP said: “Last year the word ‘independence’ was not mentioned once in the Programme for Government statement to Parliament. Since then we have witnessed consistent polling showing that at least half the country favour independence. 

“The failure to put independence front and centre of today’s Programme for Government is a wasted opportunity. The people of Scotland are now ahead of the SNP when it’s comes to independence and that is why we have seen a separation of support for independence and support for the SNP. 

“Scots want to see a drive towards governing competently again and focus to be put back onto the people’s agenda of health, the economy, jobs and the protection of women and children.

“The case for independence has never been stronger, it is now vital we see support for Alba Party on the list to ensure the SNP don’t see out another term of Parliament without taking action on independence.”

RCEM: Scotland’s Programme for Government a ‘missed opportunity’ to tackle UEC crisis

After enduring another challenging winter, Scotland’s Programme for Government has failed to deliver a tangible plan to address the emergency care crisis. That’s the response from the Royal College of Emergency Medicine after the First Minister, John Swinney, delivered a speech today (6 May 2025) which laid out his government’s key pledges for the final year of the Scottish Parliament’s current term.  

Relating to the NHS, the First Minister’s key pledges were: 

  • Reducing time patients wait for treatment by delivering more than 150,000 extra appointments and procedures, including surgeries and diagnostic tests.
  • Ensuring more people can see their GP and get cared for in the community – reducing pressures in hospitals
  • Ensuring more people can be cared for at home, reducing pressures in hospitals by expanding the number of Hospital at Home beds to at least 2,000 by December 2026. 

Mr Swinney’s speech coincided with the release of new data by Public Health Scotland which revealed in March, there was an average of 1,925 people waiting to be discharged from hospital, despite being deemed medically well enough to go home.  

That’s the highest number of so called ‘delayed discharges’ for the month of March since guidelines changed in 2016.  

This is often caused due to a lack of social care support. Therefore, the system grinds to a halt, with patients stuck in Emergency Departments, often on trolleys in corridors, facing extreme waits because there’s no in-patient beds available.  

Today’s figures, which cover March 2025, also show:  

  • 120,143 people attended a major Emergency Department in Scotland – a 17.7% increase when compared to February. 
  • One in three patients waited four hours or more in Emergency Departments, one in 9 waited eight hours or more, and one in 23 waited 12 hours or more. 
  • While waits have slightly improved across the board when compared to February, they are significantly higher when compared to March 2018. The numbers waiting four hours or more has increased by 158%, the numbers waiting more than eight hours by 490%, and the numbers waiting more than 12 hours by 803%. 
  • There was a total of 60,129 days spent in hospital by people whose discharge was delayed – a 2.5% increase compared to March 2024 (58,646).  

The data comes after Scotland’s Emergency Departments also experienced the worst February on record for performance. 

Dr Fiona Hunter, Vice President of RCEM Scotland said, “Today’s Programme for Government is a missed opportunity. It was a moment to resuscitate emergency care but instead, we have been left without a tangible plan.

“You just have to simply look at today’s figures from Public Health Scotland to see the level of pressure our Emergency Departments our under – thousands of people waiting extreme and dangerous long stays, often on trolleys, in corridors, because there are no available beds on wards for them to move to.  

“And let’s be clear – these aren’t just numbers, data, statistics. Each is a loved family member – mums, dads, grandparents, sons, daughters.   

“While we welcome the government’s commitment to improving access to GPs, this can’t be done in isolation. Equal attention is needed at the ‘back door’ of hospitals – ensuring patients who are well enough to be discharged, can be, with the appropriate social care in place. 

“Only then will our patients be able to move as they should throughout the hospital system, rather than experiencing significant delays.  

“Our members and their colleagues will be deeply disappointed after enduring another challenging winter. It’s left us asking, when will Emergency Care become a political priority?” 

Greens hail peak rail fares U-turn and call for cheaper buses

The Scottish Greens have welcomed the Scottish Government’s decision to finally take forward the Green policy of scrapping peak rail fares for good, and have called for action to make public transport cheaper across the board.

The policy was initially secured by the Scottish Greens through budget negotiations in 2023 before being dropped by the SNP in 2024. 

In the 2025 budget the Greens secured a £2 bus fare cap that the Government has committed to rolling out as a regional pilot project by January 2026.

Speaking in the Scottish Government’s Programme for Government 2025-26 debate today at Holyrood, the party’s co-leader, Lorna Slater, said: “I am delighted that the Government has finally committed to the Scottish Green policy of ending peak rail fares for good. 

“Earlier this year, they said they wouldn’t do it. They even voted against Green calls to do it. We’ve finally got there.

“More brave decisions are needed to make all public transport cheaper. 

“The Scottish Government agreed to Green proposals for a £2 bus cap, only as a local pilot from January 2026, but people all across Scotland need cheaper buses now. 

“Will the First Minister avoid the hesitation he showed over peak rail fares, get on with delivering another great Green idea: capping the price of bus fares in Scotland for good?”

Independent Age: No New Support for Older People in Poverty

Debbie Horne, Scotland Policy and Public Affairs Manager at Independent Age said: “Today’s Programme for Government announced no new support for older people in poverty.

“Making sure every pensioner in Scotland receives some winter heating support is very welcome, particularly for older people on lower incomes. However, there is more the Scottish Government should do to reduce the growing number of pensioners in poverty.  

“With 156,000 older people across Scotland currently living in poverty – an increase of 30% the last decade – the need for a clear strategy to address this is more urgent that ever. Our polling shows that people of all ages in Scotland agree that a strategy to reduce pensioner poverty should be created – with 9 in 10 supporting the idea.  Without one, people facing financial hardship in later life will continue to struggle to maintain even the most basic quality of life. 

“Poverty at any age is extremely damaging to both mental and physical wellbeing. Our 2025 Index showed that nearly one in five (19%) older people in Scotland have a household income of under £15,000 a year and almost one in three (29%) older people in Scotland have skipped meals in the last 12 months.  

“In a compassionate and wealthy society, this shouldn’t be the case. Both the UK and Scottish Governments need to take action. If the Scottish Government wants to make Scotland the best place to grow old and tackle the injustice of pensioner poverty it is essential they have a plan for doing so.” 

Crisis, What Crisis? Chancellor to deliver emergency statement on the Medium-Term Fiscal Plan

HUNT MOVES TO STEADY MARKET JITTERS

The Chancellor will make a statement at 11am, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability.

He will also make a statement in the House of Commons this afternoon.

This follows the Prime Minister’s statement on Friday, and further conversations between the Prime Minister and the Chancellor over the weekend, to ensure sustainable public finances underpin economic growth.  

The Chancellor will then deliver the full Medium-Term Fiscal Plan to be published alongside a forecast from the independent Office for Budget Responsibility on 31 October. 

The Chancellor met with the Governor of the Bank of England and the Head of the Debt Management Office last night to brief them on these plans. 

That racket you hear is those infamous Mini-Budget economic plans being put through the shredder – Ed. …

UPDATE: The Chancellor of The Exchequer Jeremy Hunt has today, Monday 17 October, brought forward a number of measures from 31 October’s Medium-Term Fiscal Plan:

  • Changes designed to ensure the UK’s economic stability and provide confidence in the government’s commitment to fiscal discipline
  • Basic rate of income tax to remain at 20% until economic conditions allow for it to be cut, IR35 and dividend tax rate reforms no longer going ahead
  • Treasury-led review of energy support after April 2023 launched

Following conversations with the Prime Minister, the Chancellor has taken these decisions to ensure the UK’s economic stability and to provide confidence in the government’s commitment to fiscal discipline.

The Chancellor made clear in his statement that the UK’s public finances must be on a sustainable path into the medium term.

Today’s announcement represents another down payment following the reversal of the corporation tax cut announced on Friday 14 October by the Prime Minister. The Chancellor will publish the government’s fiscal rules alongside an OBR forecast, and further measures, on 31 October.

In his statement the Chancellor announced a reversal of almost all of the tax measures set out in the Growth Plan that have not been legislated for in parliament.

The following tax policies will no longer be taken forward:

  • Cutting the basic rate of income tax to 19% from April 2023. While the government aims to proceed with the cut in due course, this will only take place when economic conditions allow for it and a change is affordable. The basic rate of income tax will therefore remain at 20% indefinitely. This is worth around £6 billion a year.
  • Cutting dividends tax by 1.25 percentage points from April 2023. The 1.25 percentage points increase, which took effect in April 2022, will now remain in place. This is valued at around £1 billion a year.
  • Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place. This will cut the cost of the government’s Growth Plan by around £2 billion a year.
  • Introducing a new VAT-free shopping scheme for non-UK visitors to Great Britain. Not proceeding with this scheme is worth around £2 billion a year.
  • Freezing alcohol duty rates from 1 February 2023 for a year. Not proceeding with the freeze is worth approximately £600 million a year. The next steps of the Alcohol Duty Review announced in Growth Plan 2022 will continue as planned. The alcohol duty uprating decision and interactions with the wider reforms to alcohol duties under the Alcohol Duty Review will be considered in due course.

This follows on from the previously announced decisions not to proceed with the Growth Plan proposals to remove the additional rate of income tax and to cancel the planned increase in the corporation tax rate.

Taken together, these changes are estimated to be worth around £32 billion a year.

The government’s reversal of the National Insurance increase and the Health and Social Care Levy, and the cuts to Stamp Duty Land Tax, will remain benefitting millions of people and businesses. The £1 million Annual Investment Allowance, the Seed Enterprise Investment Scheme and the Company Share Options Plan will also continue to further support business investment.

Energy bills support review

The government has announced unprecedented support within its Growth Plan to protect households and businesses from high energy prices. The Energy Price Guarantee and the Energy Bill Relief Scheme are supporting millions of households and businesses with rising energy costs, and the Chancellor made clear they will continue to do so from now until April next year.

However, looking beyond April, the Prime Minister and the Chancellor have agreed that it would be irresponsible for the government to continue exposing the public finances to unlimited volatility in international gas prices.

A Treasury-led review will therefore be launched to consider how to support households and businesses with energy bills after April 2023. The objective of the review is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need. The Chancellor also said in his statement that any support for businesses will be targeted to those most affected, and that the new approach will better incentivise energy efficiency.

The government is prepared to act decisively and at scale to regain the country’s confidence and trust. The Chancellor stated in his speech that there will be more difficult decisions to take on both tax and spending. This means doing what is needed to lower debt in the medium term and to ensure that taxpayers’ money is well spent, putting public finances on a sustainable footing.

In light of this, government departments will be asked to find efficiencies within their budgets. The Chancellor is expected to announce further changes to fiscal policy on 31 October to put the public finances on a sustainable footing.

Further information

  • Table of total benefit of tax policy reversals:
Policy (£bn)2022-232023-242024-252025-262026-27
Re-instate plans to raise Corporation Tax to 25% from April 2023+2.3+12.4+16.6+17.6+18.7
Suspend 1p reduction in the basic rate of income tax0+5.3+5.9+5.8+5.9
Maintain additional rate of income tax+2.4-0.6+0.8+2.2+2.1
Maintain 1.25 percentage point increase in dividends tax rates0+1.4-1.0+1.1+0.9
Maintain 2017 and 2021 reforms to off-payroll working rules (also known as IR35)0+1.1+1.4+1.7+2.0
Cancel VAT-free shopping scheme for non-UK visitors to Great Britain00+1.3+2.0+2.1
Cancel one year freeze to alcohol duty rates+0.1+0.5+0.6+0.6+0.6
Total+4.7+20.1+25.4+30.9+32.3
  • Costings in the table are as set out in the Growth Plan 2022 – except for the 1p reduction in the basic rate of income tax, which is the costing from Spring Statement 2022 as adjusted in the Growth Plan 2022. Final costings will be set out as part of the Medium-Term Fiscal Plan on 31 October. Totals may not sum due to rounding.

THE CHANCELLOR’s STATEMENT:

A central responsibility for any Government is to do what is necessary for economic stability.

This is vital for businesses making long-term investment decisions and for families concerned about their jobs, their mortgages, and the cost of living.

No government can control markets, but every government can give certainty about the sustainability of public finances and that is one of the many factors influencing how markets behave.

And for that reason, although the Prime Minister and I are both committed to cutting corporation tax on Friday she listened to concerns about the mini budget and confirmed we will not proceed with the cut to Corporation Tax announced.

The government has today decided to make further changes to the mini budget.

And to reduce unhelpful speculation about what they are, we have decided to announce these ahead of the Medium-Term Fiscal Plan, which happens in two weeks.

I will give a detailed statement to Parliament and answer questions from Members of Parliament.

But because these decisions are market sensitive, I have agreed with the Speaker the need to give an early, brief summary of the changes which are all designed to provide confidence and stability.

Firstly, we will reverse almost all the tax measures announced in the Growth Plan three weeks ago that have not started Parliamentary legislation.

So whilst we will continue with the abolition of the Health and Social Care Levy and Stamp Duty changes we will no longer be proceeding with:

  • The cut to dividend tax rates.
  • The reversal of off-payroll working reforms introduced in 2017 and 2021.
  • The new VAT-free shopping scheme for non-UK visitors.
  • Or the freeze on alcohol duty rates.

Secondly, the government’s current plan is to cut the basic rate of income tax to 19% from April 2023.

But at a time when markets are rightly demanding commitment to sustainable public finances, it is not right to borrow to fund this tax cut. So I have decided that the basic rate of income tax will remain at 20% and it will do so indefinitely, until economic circumstances allow for it to be cut.

Taken together with the decision not to cut Corporation Tax, and restoring the top rate of income tax the measures I’ve announced today will raise, every year, around £32bn.

Finally, the biggest single expense in the Growth Plan was the Energy Price Guarantee.

This is a landmark policy supporting millions of people through a difficult winter and today I want to confirm that the support we are providing between now and April next year will not change.

But beyond that, the Prime Minister and I have agreed it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices. So I am announcing today a Treasury-led review into how we support energy bills beyond April next year.

The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.

Any support for businesses will be targeted to those most affected.

And the new approach will better incentivise energy efficiency.

The most important objective for our country right now is stability.

Governments cannot eliminate volatility in markets, but they can play their part, and we will do so because instability affects the prices of things in shops, the cost of mortgages, and the value of pensions.

There will be more difficult decisions to take on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.

All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut.

But, as I promised at the weekend our priority in making the difficult decisions that lie ahead will always be the most vulnerable.

And I remain extremely confident about the UK’s long term economic prospects as we deliver our mission to go for growth.

But growth requires confidence and stability, and the United Kingdom will always pay its way.

This Government will therefore make whatever tough decisions are necessary to do so.

REACTION:

Commenting on the Chancellor Jeremy Hunt’s fiscal statement today (Monday), TUC General Secretary Frances O’Grady said: “The Conservatives drove the UK economy over a cliff. Hunt slamming the gears into reverse now won’t help families and businesses already hit by soaring borrowing costs.

“People needed reassurances today. Instead, they got more uncertainty – about energy bills, about our public services, and about whether universal credit and benefits will rise with inflation.

“We are now on the brink of a deep and damaging recession that threatens millions of jobs. But the latest Conservative Chancellor still has the same basic approach that got us into this mess.

“The Chancellor should have announced a boost to universal credit and pensions, and a comprehensive plan to get wages rising faster for everyone. And he should have announced a much higher windfall tax on oil and gas giants.”

On the announcement of a review of support for families and businesses with energy costs beyond April 2023, she added: “Families and businesses now face months of worry. There is going to be less help with bills – but no-one knows who will lose out, by how much, or whether there will finally be a programme to fix Britain’s cold and draughty homes. This is not the reassurance working families need.”

Director of Policy & Communications at Independent Age, John Palmer, said: “Older people living on low and modest incomes were hoping to be reassured today, but frustratingly the Chancellor’s statement posed more questions than answers.  

“Instead of ensuring stability, today only provided uncertainty. The review of the Energy Price Guarantee is extremely concerning. It’s no longer clear who will receive support beyond April 2023. Now millions of older people are wondering if they will be abandoned by the government and left with unaffordable energy bills and freezing homes next year.  
 
“We know that many people in later life are already making dangerous cutbacks on heating and food. Our own polling revealed that 65% of older people plan to use less heating this winter.  
 
“The government must ensure that its new targeted approach from next year helps older people in financial hardship, including the 850,000 older people who are currently entitled to Pension Credit but do not receive it.  

 “A fundamental, non-negotiable way to help older people’s incomes keep up with the price of essentials is for the government to uprate benefits and the State Pension with inflation. Today was another missed opportunity to offer this reassurance. Instead, millions of people over 65 will continue to live in fear that they will be made even poorer, when their budgets have been broken by the cost-of-living crisis.”

Will Hodson, consumer champion and founder of How To Save It commented: ‘The Chancellor’s announcement that the Government will review the energy price cap in April is welcome. Supporting millionaires in paying their energy bills for two years was both morally and economically wrong.

“However, many households will be concerned about what this change means for them. The Government needs to make sure that their support is both good value to the taxpayer and provides sufficient, targeted support to those who really need it.’

Choudhury: Justice and fairness for all

Responding to the report by the Institute of Race Relations “Citizenship: From Right to Privilege”, which finds that British Muslims have had their citizenship reduced to “second-class” status, Foysol Choudhury MSP said: “I want to ensure all minority communities that I will continue my lifelong fight for freedom, justice and equality for all.

“As the report suggests, some groups are targeted more than others due to a mixture of unconscious biases and racist stereotypes and views within our institutions.

“We have seen through the Windrush scandal and the increasing use of the power to revoke citizenship from Muslims that minorities now cannot rely on British citizenship to guarantee their rights, and that the value of British citizenship is not equal for everyone.

“No one should be made to feel any less welcome in our society because of the colour of their skin, their culture or their religion, and every British citizen should be treated the same way. Unfortunately, this does not always happen and will always be a work in progress until every aspect of our society and institutions decolonise their mindsets and their practices.

“When the Home Office says they “make no apology for doing whatever is necessary to protect the UK from those who pose a threat to our security”, this is fine to the extent that it applies equally to every culture, race and religion living in the UK.

“Any security measures must also apply to, for example, the forces of the far-right, who have in recent years conspired to plot the murder of a sitting Member of Parliament and are responsible for almost two fifths of plots foiled by the security services. We do not, however, see their citizenship being in any way threatened, no matter how dangerous they may be.

“I am not asking for any special treatment for any particular ethnic or religious group, simply for justice and fairness for all.”

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A message for Melanie

I received a message from Melanie through Comments on the NEN blog early this morning.

Just to let you know, Melanie, I tried to respond to you immediately but unfortunately the link to your email address bounces back.

The link you asked me to download in your message simply hangs – so unless you get in touch there is nothing further I can do.

Please do email me at northedinnews@gmail.com as soon as possible to enable me to investigate this further.

Thanks.

Comments on the general election result

With all the votes now counted, the Conservatives now have a clear majority at Westminster. They have 365 seats, while the Labour Party had a disastrous night – their worst since the 1930s.

But while England voted to ‘get Brexit done’, it was a markedly different story north of the border where the SNP cemented their position as the dominant force in Scottish politics, winning 48 of the 59 seats- a rise of 13. Continue reading Comments on the general election result