“Scandal of child poverty in a rich country must end”
Scottish child payment must rise to £30 to protect lower income families who don’t benefit from proposed council tax freeze.
Campaigners at the Child Poverty Action Group (CPAG) in Scotland are calling for tax and spending decisions to do more to prioritise hard up families ahead of tomorrow’s Scottish budget.
With the proposed £300 million council tax freeze set to benefit better off households they say the very least that is needed to protect lower income families is a £58 million investment to raise the Scottish child payment to £30 per week. CPAG were one of over 150 signatories to a letter sent to the First Minister Humza Yousaf last month urging him to deliver the increase.
The Scottish child payment, which currently provides a vital £25 per week extra support for children in lower income families, must by law be uprated in line with inflation.
However during the SNP leadership campaign the First Minister said he wanted to see it rise to £30 in his first Budget. In a pre-Budget briefing sent to all MSPs the campaigners say this is the “minimum extra investment that is needed to support lower income families and demonstrate the First Minister is genuinely ‘shifting the dial’ on child poverty.”
The group have also joined over sixty other groups today to call on all Scotland’s political leaders to build a fair tax consensus that can provide the social investment needed for ‘a more equitable, resilient, and prosperous Scotland’. They say the Scottish Budget must be a ‘pivotal moment for fundamental change.’
Speaking ahead of today’s budget statement John Dickie, Director of Child Poverty Action Group in Scotland, said; “Struggling families desperately need a budget that will provide immediate support as well as help meet statutory child poverty targets.
“Increasing the Scottish child payment to £30 is a cost-effective investment that would provide much needed financial support to the lower income families who get little if any benefit from the proposed council tax freeze.
“It would make a substantive impact and demonstrate the First Minister is genuine in his desire to ‘shift the dial’ on child poverty.”
Recognizing the challenging fiscal backdrop Mr Dickie added: “Difficult budget choices will be needed. But the right choice is to prioritise tax and spending decisions that will help end the poverty that still blights the lives of tens of thousands of children across Scotland.
“We are a wealthy country and we need all our political leaders to work together to harness that wealth to end the scandal of child poverty in a rich country once and for all.”
Child Poverty Action Group is calling for a Scottish Budget that:
• Increases the Scottish child payment at the very least to £30 per week from April 2024, as committed by the First Minister in his leadership campaign. This investment is supported by the Children and Young People’s Commissioner and over 150 trade unions, faith groups, children’s charities and community organisations from across Scotland. • Ensures sufficient resources are harnessed and allocated to fund the wider measures (including on childcare, employment and housing) set out in the statutory child poverty delivery plan – Best Start, Bright Futures. • Provides additional cash payments to families impacted by the two-child limit and the under 25 penalty in universal credit. • Invests in childcare so not only can the actions in Best Start, Bright Futures be delivered, but every parent can access the childcare they need, when they need it. • Is bold in using tax powers in a progressive way to ensure sufficient resources are available to fully deliver on the actions that are needed to tackle child poverty.
Barratt Developments Scotland, which includes Barratt Homes and David Wilson Homes, has made a substantial contribution of £355.5m to the Scottish economy, with the housebuilder’s East Scotland division supplying £115.5m in GVA itself.
In the year ending 30 June 2023, Barratt East Scotland also completed 847 new homes of which 187 were affordable, and supported 1,641 direct, indirect and induced jobs across the region, which includes Edinburgh and The Lothians.
2023 also saw the largest UK housebuilder reinforce its commitment to creating homes for nature as well as people. The business created 10.3ha of public green spaces and private gardens around the region, the equivalent of 15 football pitches, to help support wildlife on and around its sites.
Across the UK, Barratt is working towards reducing its direct carbon emissions by 29 per cent by 2025 and indirect emissions by 24 per cent per square metre by 2030. In the past year, CO2e emissions per 100m.sq. of completed build area fell to 1.87t in Scotland – a reduction of 2 per cent from the 2018 benchmark.
Alison Condie, managing director for Barratt Developments East Scotland, said:“As the UK’s largest housebuilder, and one of the most sustainable, we place considerable emphasis on supporting people, the environment and generating strong economic growth for the region.
“We are proud to have made such a positive contribution to the region in 2023 with 847 new homes being delivered to families and boosting the local economy by £115.5m.”
As part of its housebuilding activity, Barratt East Scotland has made £3.4m in local contributions to help build new facilities and community infrastructure. This contribution includes the provision of 173 new school places. More than £27.3m has also been spent on physical works within communities, such as highways, environmental improvements and community facilities.
Other key findings from the Barratt East Scotland 2021 socio-economic report include:
Increased support for public services with £28.9m in generated tax revenues
Over £96,000 donated to local charitable and community causes
296 supplier and 276 sub-contractor companies supported
Increased support for the UK supply chain with 90% of all components centrally procured, assembled or manufactured in-country
More than £15.2m in retail spending by new residents, helping support 150 retail and service-related jobs
The development of new and future talent remains a key priority for Barratt Developments Scotland and 75 graduates, apprentices and trainees launched their careers with the company in 2023, including 24 from its East Scotland division.
The assessment of Barratt Developments’ performance was carried out by independent consultants Lichfields, who analysed socio-economic impacts through the delivery chain for new housing based on Barratt datasets, published research and national statistics.
Changes could add £30 million to Scotland’s economy annually
Allowing asylum seekers the right to work could help them settle into communities better while boosting Scotland’s economy and workforce.
Research by the Scottish Government’s independent Expert Advisory Group on Migration and Population sets out how enabling asylum seekers to gain employment could improve health and wellbeing and reduce the risk of exploitation.
Changes could also benefit the Scottish economy, help fill gaps in the workforce and see increased council tax paid directly to local authorities which host asylum seekers.
The report will underpin the development of proposals for a Scottish Asylum Right to Work pilot, to be submitted for consideration to the Home Office in 2024.
Migration Minister Emma Roddick said: “Scotland provides a welcoming home to many people seeking asylum, with policies underpinned by dignity, respect and compassion.
“This independent report shows how enabling asylum seekers to find work could reduce anxiety and improve the wellbeing of vulnerable people, while supporting Scotland’s economy by helping fill skills shortages and addressing population challenges.
“As the UK Government continues to pursue repugnant policies on asylum and immigration, we are developing mitigations as far as possible within our devolved powers and budget, including through our New Scots refugee integration strategy.
“The Scottish Government will now use this report to design a proposal to work within the current devolution settlement, but only independence would give us power to implement a full Scottish asylum system rooted in respect for human rights.”
Chair of the Scottish Government’s independent Expert Advisory Group on Migration and Population Rebecca Kay said: “Our report shows strong international evidence that strict restrictions on the right to work have negative consequences for asylum seekers’ material and emotional well-being, and for long-term integration outcomes.
“We also find substantial evidence of the considerable barriers which people seeking asylum are likely to face on entering the labour force. These will require careful consideration by Scottish Government, and deliberate remedy, when designing a pilot proposal.
“Wider measures to provide adequate reception, settlement and integration services will be required in order to realise the full benefits of a right to work policy for asylum seekers.”
Plan for stronger economy will reward hard work, putting £450 back into the pocket of the average worker earning £35,400 a year thanks to National Insurance tax cut from 12% to 10% for 27 million working people from January.
Tax to be cut and simplified for 2 million of the self-employed, abolishing an entire class of NICs and cutting the rate of the NICs top rate from 9% to 8% – with an average total saving of around £350 for someone earning £28,000 a year.
Biggest permanent tax cut in modern British history for businesses will help them invest for less and boost investment by £20 billion per year over the next decade.
Triple lock maintained for pensioners, benefits to rise in line with inflation and Local Housing Allowance increased to continue supporting families with the cost-of-living. Government is making work pay.
National Living Wage rise represents boost of £1,800 to the average annual earnings of a full-time worker, and the Back to Work Plan will help over a million people start, stay, and succeed in work while ensuring tougher consequences for those choosing not to.
Great British pubs, breweries and distillers backed by freezing alcohol duty for six months to August 2024.
Public finances in a better position than in March thanks to government action, with borrowing and debt as a share of the economy down on average across the next five years.
Autumn Statement gets the economy growing, debt falling and helps return inflation to its 2% target – long-term decisions to build a brighter future.
Tax cuts for working people and British business headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ yesterday.
Aimed at building a stronger and more resilient economy, the Chancellor set out a plan to unlock growth and productivity by boosting business investment by £20 billion a year, getting more people into work, and cutting tax for 29 million workers – the biggest tax cut on work since the 1980s.
With higher revenues resulting from stronger growth than previously projected and the pledge to halve inflation having been met, the government has stabilised the economy through taking sound decisions. As set out by the Prime Minister this week, the stronger outlook means taxes can now be cut in a serious, responsible way.
To that end, Mr Hunt announced that a 2 percentage point cut to Employee National Insurance from 12% to 10% will come into effect from January 2024.
For the average worker earning £35,400 a year, that amounts to an over £450 annual tax cut – almost immediately improving living standards for millions of people and rewarding hard-work as the government builds an economy for the future.
Taxes for the self-employed will also be cut and reformed. From April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs, saving the average self-employed person on £28,200 a year £350 in 2024/25.
Taken together, this is a tax cut of over £9 billion per year and represents the largest ever cut to employee and self-employed National Insurance. The independent Office for Budget Responsibility (OBR) says these reductions will lead to an additional 28,000 people entering work.
Cutting National Insurance will not lead to any change in NHS funding or pension payments. Services will remain unchanged and continue to be funded as they are now.
Businesses will also benefit from the biggest business tax cut in modern British history. As signalled at Spring Budget, the Chancellor announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery.
Full Expensing: Invest for Less is an effective permanent tax cut of £11 billion a year, boosting business investment by £14 billion across the forecast period and helping to grow the economy.
With the tax cut now permanent, the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, such as the United States, Japan, South Korea and Germany.
Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.
To further ensure that work pays, Mr Hunt confirmed that the National Living Wage will increase by nearly 10% to £11.44 an hour from April 2024, the largest ever cash increase.
The Chancellor also reinforced the new £2.5 billion Back to Work Plan for those with long-term health conditions, disabilities and difficulties finding employment, which includes tough new sanctions for those who can work but choose not to.
The Chancellor also announced that the government will honour its commitment to the triple lock in full, with the state pension to increase by 8.5% in April in what is the second biggest ever cash increase. Universal Credit and other working age benefits will also be boosted by 6.7% in April, in line with September’s inflation figure as is convention.
Further action to help families includes increasing the Local Housing Allowance rate to cover the lowest 30% of rents from April – benefiting 1.6 million households with an average gain of £800 in 2024/25 – and an alcohol duty freeze to 1st August 2024, following common-sense changes of the duty system made possible by Brexit.
Measures today take the government’s total support for the cost-of-living between 2022-25 beyond the £100 billion mark, to an average of £3,700 per household.
Accompanying forecasts by the OBR confirm that today’s measures will make the economy permanently bigger, with growth every year of the forecast period. Borrowing and debt as a share of the economy are lower than in Spring this year and next year, with borrowing also lower on average across the forecast by comparison. They also confirm that inflation is expected to return to target in line with the Prime Minister’s economic priorities.
Tax
With inflation halved and debt forecast to fall, Mr Hunt delivered on the government’s commitment to cut taxes – rewarding and incentivising work as part of its long-term plan to grow the economy.
The main rate of Employee National Insurance will be cut by 2 percentage points from 12% to 10%, coming into effect from January 2024 – delivering the benefit of a tax cut quickly for 27 million workers.
The combined rate of income tax and National Insurance for employees paying the basic rate of tax will therefore fall from 32% to 30% – the lowest combined basic rate since the 1980s.
The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.
The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 – will effectively be abolished, with no-one required to pay from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate. The cuts to Class 4 and Class 2 together amount to a tax cut of £350 a year for the average self-employed person on £28,200, with around 2 million individuals to benefit.
Business
Measures to back British businesses big and small will remove barriers to investment and help to bridge the productivity gap between the UK and its G7 peers – unlocking £20 billion extra business investment per year over the next decade.
Permanent Full Expensing will create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
A business rates support package worth £4.3 billion over the next 5 years will help high streets and protect those small businesses that are the backbones of communities. This includes a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier, which will protect around 90% of ratepayers for a fourth consecutive year.
Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
SMEs will be supported with tougher regulation on late payers to improve prompt payments, the expansion of Made Smarter in Great Britain and continued funding for Help to Grow.
The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.
The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.
Work and welfare reform
Mr Hunt set out steps to reward work, help make work pay, and reform welfare in recognition of the need to expand the workforce and get those out of work back into work to deliver growth.
The OBR expect that the measures announced at Autumn Statement will support a further 78,000 people into work by 2028-29, on top of the 110,000 resulting from action taken at Spring Budget.
From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers. For the first time this will include 21- and 22-year-olds. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2.7 million low paid workers.
The government will also substantially increase the National Minimum Wage rates for young people and apprentices: for people aged 18-20 by 14.8% to £8.60 an hour, for 16-17 year olds and apprentices by 21.2% to £6.40 an hour.
The government is reforming the Work Capability Assessment to ensure that people who can work are supported to do so via the welfare system. Changes to the activities and descriptors will better reflect the greater flexibility and reasonable adjustments now available in the world of work, preventing some individuals from being deemed not fit for work and ensuring they will be better supported into employment.
The boosting of four key programmes – NHS Talking Therapies, Individual Placement and Support, Restart and Universal Support – will benefit up to 1.1 million people over the next five years.
The government is exploring reforms of the fit note process to provide individuals whose health affects their ability to work with easy and rapid access to specialised work and health support.
Mandatory work placements will boost skills and employability for those who have not found a job after 18 months of intensive support. Those who choose not to engage with the work search process for six months will have their claims closed and benefits stopped.
Infrastructure and levelling up
The Chancellor unveiled a raft of supply-side measures and funding packages to benefit businesses and local communities.
£4.5 billion of funding for British manufacturers in the high-growth industries of the future, including £960 million earmarked for the Green Industries Growth Accelerator to support clean energy.
The government has published its full response to the Winser review and Connections Action Plan, which will cut grid access times for larger projects by half, halve the time to build major grid upgrades and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure.
Three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4 billion of private investment and creating 65,000 high-quality jobs within the next decade.
The Investment Zones programme and freeport tax reliefs will be extended from 5 years to 10 years, and a new £150 million Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities.
Four new devolution deals across England have been agreed. Mayoral deals with Greater Lincolnshire and Hull and East Yorkshire, and non-mayoral deals with Lancashire and Cornwall, will boost investment right across the country and deliver on the Prime Minister’s commitment to levelling-up.
£500 million of funding over the next two years will help establish two more Compute innovation centres, supporting the development of artificial intelligence as a growth opportunity for Britain.
The life sciences will also be supported as one of the Chancellor’s key-growth sectors, with £20 million to speed up the development of new dementia treatments coming as part of the government’s full response to the O’Shaughnessy Review of commercial clinical trials in the UK.
To prioritise those who want to invest in the UK’s future, the government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment. This includes additional resource for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors.
Scottish Secretary Alister Jack said: ““This is an Autumn Statement to support hard working families and grow our country’s economy. It is great news for Scotland.
“The National Insurance cut and increase in the National Living Wage will mean a pay boost for millions of workers right across Scotland. We have honoured the pensions triple lock, meaning pensioners will get a £900 a year increase.
“Vital new support for Scottish businesses will ensure we get growth back into our economy.
“The Chancellor confirmed more than £200 million of new, direct UK Government investment in exciting projects across Scotland, which will create jobs, boost growth and transform communities.
“Plus, there will be an additional £545 million in Barnett Consequentials for the Scottish Government, on top of their record block grant.
“There is a lot to cheer about, not least the duty freeze on spirits to support Scotland’s biggest export industry.”
Rain Newton-Smith, Chief Executive, Confederation of British Industry said:“With tough decisions to be made, the Chancellor was right to prioritise ‘game-changing’ interventions that will fire the economy.
“While the move on National Insurance will give hard-pressed households some much needed breathing room, making full capital expensing a permanent feature of the tax system can be transformational for accelerating growth and improving living standards in the long-term.
“Helping firms to unleash pent-up investment is critical to getting momentum into the economy. Making full expensing permanent will give firms the stability they need to press on with decisions on investment whilst keeping the UK at the top table internationally for investment incentives.
“Moves to speed up planning and grid connectivity should also bolster business confidence to invest in high growth areas like green technologies, renewable energy and advanced manufacturing.”
Eve Williams, General Manager, eBay UK said: “The hundreds of thousands of UK small businesses who use eBay and other online marketplaces will warmly welcome the Chancellor’s cuts in national insurance, more support for the self-employed, as well as the decision to make permanent full expensing.
“There are enormous productivity gains to be had from encouraging the long tail of Britain’s SMEs to invest in existing digital technologies. And given that around half of our online businesses also trade offline, they will benefit hugely from the measures on business rates for retail as well as freezing the business rate multiplier.”
Kate Nicholls, Chief Executive, UKHospitality said:“The Chancellor has brought forward a significant package of business rates measures that will help hospitality businesses across the country. UKHospitality led the calls for Government to extend relief and take action on the multiplier and I’m delighted the Chancellor has acted on our asks.
“Reforms to the planning system to drive quicker approvals will remove a significant barrier to business investment. This type of reform to reward the best performing local planning authorities is exactly the type of change we have been suggesting to drive growth in hospitality.
“We’re also pleased that the Chancellor has acted on our proposal and frozen alcohol duty until August next year to support our supply chain.
“The reduction in National Insurance for employees will put more money in people’s pockets and provide a boost to hospitality in the New Year, often a challenging time for the sector.”
Responding to the freeze in alcohol duty until 1 August 2024
Nuno Teles, Managing Director, Diageo GB said:“Today we raise a glass to the Chancellor and the Prime Minister, who have listened to the industry’s plea for support and decided to back our homegrown sector, that employs so many people across the UK.
“Drinkers and pub-goers across the country now have even more reason to celebrate this festive season. Cheers, Chancellor!”
Responding to the announcement of £7million of funding to tackle antisemitism
Mark Gardiner, Chief Executive, Community Security Trust (CST) said:“The commitment to fund education to tackle antisemitism in universities and schools, alongside the promise to continue the increase in funding for security guarding in the Jewish community, is not just a welcome, concrete contribution to the fight against antisemitism: it sends an important and powerful message to the Jewish community that we have the sympathy and support of government in this struggle.
“We are grateful for the Chancellor for this commitment and we will work with government and communal partners to ensure it is put to effective use.”
Responding to the protection of the Triple lock
Caroline Abrahams, Influencing Director, Age UK said:“We’re pleased and relieved the Government kept its promise to older people to honour the Triple Lock.
“For the 4.2 million older people who recently cut back on food and groceries to make ends meet, having a State Pension that delivers the basics in life is essential.
“Today’s decision also crucially makes is more likely that older people will keep their homes adequately warm this winter, with less fear of facing an energy bill they simply cannot afford to pay come the spring.”
Responding to the support for Veterans
Anna Wright, Chief Executive, the Armed Forces Covenant Fund Trust said: “We are delighted by Chancellor of the Exchequer’s announcement of an additional £10 million to support the Veterans’ Places, People and Pathways programme.
“These projects have delivered significant work already to support our veterans, growing collaborative cross sector working and giving a more seamless interface between statutory and charity or not for profit support.
“They have great potential to help even more veterans, and further develop better, more inclusive local support and better coordination and communication that sustains into the future”
Autumn Statement offers ‘worst case scenario’ for Scotland
Deputy First Minister responds to announcements from Chancellor
The Autumn Statement delivered the ‘worst case scenario’ for Scotland’s finances and failed to live up to the challenges posed by the cost of living and climate crises, Deputy First Minister Shona Robison has said.
The statement failed to deliver the investment needed in services and infrastructure, Ms Robison said. While welcoming the increase in the statutory minimum wage, she said this did not go far enough and fell well short of the Real Living Wage of £12 an hour for 2024-25.
The Deputy First Minister said: ““Today’s Autumn Statement from the UK Government has delivered what is the worst case scenario for Scotland’s finances. Scotland needed a fair deal on investment for infrastructure, public services and pay deals – the UK Government has let Scotland down on every count.
“We needed investment in the services that people rely on and in infrastructure vital to the economy, but the Chancellor’s actions failed to live up to the challenges we are facing as a nation, while not doing enough to help those on the lowest incomes.
“The cut to National Insurance shows the UK Government has the wrong priorities at the wrong time, depriving public services of vital funding. Shockingly, the health funding announced today represents an increase of less than 0.06% to Scotland’s health budget in 2023-24 of £19.138 billion.
“The increases to the state pension and Local Housing Allowance are welcome, but the increase to the minimum wage falls well short of the Real Living Wage. Some of the measures for businesses are also positive, but they come in the face of UK growth having been projected downwards as a result of Brexit and the UK Government’s mismanagement of the economy.
“As global temperatures push ever higher, the Autumn Statement was a chance to fund efforts to cut the UK’s carbon emissions – but it did not. It’s not enough to say they support measures to encourage more renewable energy developments and expand the UK’s electricity grid need. It needs to be matched with funding to actually deliver and help us meet our net zero targets.
“We will now assess the full implications of today’s statement as we develop a Budget that meets the needs of the people of Scotland, in line with our missions of equality, community and opportunity.”
The Scottish Budget will be announced on 19 December.
TUC: Hunt’s Autumn Statement “is a plan for levelling the country down”
Chancellor has confirmed “another round of punishing spending cuts to public services and investment”
Cutting NI won’t make up for “13 continued “years of economic failure on living standards and growth”
Growth forecasts revised down with real wages set to remain below 2008 level until 2028
“The Conservatives have broken Britain. They cannot be trusted to fix it,” says TUC
Commenting on the Autumn Statement, TUC General Secretary Paul Nowak said: “This is not a plan for rebuilding Britain. It’s a plan for levelling the country down.
“At a time when our schools and hospitals are crumbling – the Chancellor has confirmed another round of punishing and undeliverable spending cuts to public services and investment.
“Be in no doubt – if the Tories win the next election, even more austerity is on the way.
“Cutting national insurance won’t make up for 13 continued years of economic failure on wages and living standards.
“Jeremy Hunt has nothing to smile about when working people are on course for a 20-year real wage freeze.
“The Conservatives have broken Britain. They cannot be trusted to fix it.”
Responding to the 2023/24 Autumn Statement, SCVO Chief Executive Anna Fowlie, said: “I share the disappointment of other voluntary sector bodies that this week’s budget Autumn Statement did not recognise the essential services and support of voluntary organisations both in Scotland and across the UK.
“Our sector is a major employer, a partner in delivering public services, and a vital contributor to society and the economy.
“The last few years have been a period of significant change and upheaval for Scottish voluntary organisations, their staff and volunteers, and the people and communities they work with. Rising inflation and the resulting cost-of-living crisis and running costs crisis has strained sector finances and increased demand for the support and services many organisations provide, as demonstrated in our Third Sector Tracker.
“This crisis is not over. We welcome the increase in the National Living Wage which will offer some support to the lowest paid, but to meet the rising cost-of-living this needed to go further, lifting both the National Living Wage and the National Minimum Wage to at least Real Living Wage.
“Our sector is central to building a stronger economy and offers specialist support to those furthest from the labour market and should be included in these plans.
“To protect our sector’s essential contributions for the future, underfunding and a lack of inflation-based uplifts in grants and contracts needed to be addressed in this statement. As people and communities struggle through the largest reduction in household incomes since records began in the 1950s, our support will be needed more than ever.”
· Business confidence in Scotland falls seven points in October to 26%, but firms remain optimistic in their own trading prospects, at 44%
· Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (37%), introducing new technology (37%) and entering new markets (31%)
· Overall UK business confidence increased three points in October to 39% with firms’ outlook on the economy also up by four points at 34%
Business confidence in Scotland fell seven points during October to 26%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up five points at 44%. When taken alongside their optimism in the economy, down 19 points to 10%, this gives a headline confidence reading of 26%.
Scottish businesses identified their top target areas for growth in the next six months as months as evolving their offer (37%), introducing new technology (37%) and entering new markets (31%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 33% of businesses in the region expect to increase staff levels over the next year, up two points on last month.
National picture
Overall UK business confidence rose three points in October from 36% to 39%, and firms’ outlook on the overall UK economy increased four points to 34%. Businesses’ confidence in their own trading prospects also continued the upward trend, rising four points to 45%.
Companies’ hiring intentions reached their highest level since May last year, with 32% of firms intending to increase staff levels over the next 12 months, up six points month-on-month.
Firms in Yorkshire reported the highest levels of business confidence, jumping 12 points to 52% – the highest reading for the region since March 2022. Companies in the South West reported the biggest uptick in business confidence, increasing 26 points month-on-month to 47%.
Following a fall in confidence in September, the retail and service industries both saw an increase in business confidence, with retail business confidence increasing by five points to 37% and services rising seven points to 43%. Levels are still lower than seen in August, however, when retail business confidence was at 44% and services at 42%.
Manufacturing confidence was 36%, unchanged from last month when confidence rose to a three-month high. Construction fell for a second month in a row to 31% (down five points).
Martyn Kendrick, regional director for Scotland at Bank of Scotland, said: ““Despite the drop in overall business confidence, it’s reassuring to see that firms across the country remain optimistic about their own trading prospects as we head into the final quarter of the year.
“As we approach Christmas, and what’s the busiest trading period of the year for many Scottish firms, those in the retail, hospitality and leisure sectors companies will benefit from maintaining a steady cashflow to remain resilient and be well-placed to seize any opportunities to grow.
“It’s no secret that Christmas can be a frenetic and expensive time for businesses and their customers, so firms need to have a plan in place to manage this, as well as having some money aside to cover unexpected costs.
“We’ll remain by the side of Scottish businesses to help them capitalise on avenues for growth in the final months of the year.”
Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: ““Retail and service sectors have clearly felt reassured this month, after confidence fell in September. While others have commented that consumers may be feeling the strain, our data shows that in terms of their future appetite, it certainly isn’t ‘doom and gloom’ for retailers.
“However, higher energy costs and rising oil prices will undoubtedly have an impact on consumers and businesses alike. If businesses can look to their future financial stability now and ensure cash-flow remains a priority, that should put them in good stead for the months ahead.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Business confidence this month reflects a more positive outlook as we head into the important festive period, with trading prospects and economic optimism both at their second highest levels this year.
“The level also underlines the wider upward trend of steadily rising confidence in 2023. If you look at the year in quarterly time periods, confidence has steadily risen from 20% in the first quarter, 26% in the second and in September an average of 27% in the third.
“However, our data shows that firms are still safeguarding their profit margins in response to the possibility of interest rates remaining high, wage increase pressures, and the prospect of higher energy prices again this winter.
“Therefore, businesses will be keeping a keen eye on the forthcoming Autumn Statement and Bank of England policy announcements as they navigate through a challenging economic period ahead.”
Humza Yousaf addressed the Scottish National Party Conference for the first time as First Minister, in a speech that contained a few new proposals. We’ll take you through some of the main consequences of what was announced (writes MAIRI SPOWAGE, Director of the Fraser of Allander Institute).
Council tax frozen, but at what cost?
The centrepiece announcement was that 2024-25 council tax rates across Scotland would remain the same as in 2023-24. This was a surprise to many – including COSLA – although the Scottish Government has said it “will fully fund the freeze to ensure councils can maintain their services.”
What does that mean in practice? Councils will already have been in the process of deciding what council tax policy will be for the 2024-25 financial year – many of us will have seen consultations and discussions in our local area about this. As they are constrained to fund current spending out of current sources of revenue – of which council tax is a significant component – decisions on spending going forward may have already been taken on the basis of future income from council tax. The First Minister’s announcement changes that prospective revenue.
Whether or not the promise of “fully funding” the freeze in council tax will depend on what the Scottish Government assesses as the counterfactual for what increases in rates would have been – and how that will be put into practice.
Our calculations indicate that accounting for growth in the number of properties expected in 2024-25, total net revenue from council tax will be £2,865m.
But it we assume councils would have applied the same increases as they did last year (which averaged 5%), revenues would have been £3,013m. And if the proposal for increasing multipliers for the higher bands in the recent council tax consultation had been taken forward revenues would have been higher still, at £3,196m.
In summary then, the freeze in council tax – assuming that councils would have followed the increases from the previous year – will cost £148m. In addition, the decision not to increase the multipliers as has been consulted on will cost £183m.
The true size of the shortfall will depend on what councils were actually budgeting for. If we assumed an 8% increase was being planned – which is lower than some councils implemented last year, and would still not bring much in terms of real increases in funding for local authorities – the total shortfall would be £417m (£229m from the freeze plus £188m from not increasing the multipliers).
How much of the shortfall is covered by the First Minister’s funding pledge will be the subject of a negotiation process with COSLA, and we’ll need to wait to see how it plays out. But ultimately it could lead to councils having less spending power than was expected if the definition of “fully funded” is in dispute.
The Scottish Government was already facing challenges on its budgetary position, given the gap it set out in the Medium Term Financial Strategy in May, of an estimated £1 billion gap between its commitments and likely resources.
Despite a better outturn on income tax than expected, and an increase in borrowing powers, prior to the Programme for Government this was still likely to be around £600m. It is not clear where the extra funding will come from to pay for the council tax freeze – and indeed the announcement on health below.
An “additional” £100m a year to cut NHS waiting lists – but within the fixed envelope
The First Minister also outlined a proposal to spend an extra £100m a year on reducing the NHS waiting lists. The goal is to reduce waiting list by 100,000 by 2026.
As with so many of these proposals, the devil is in the detail, and in this case, the additionality of the pledge is questionable. While the First Minister has announced that more money will be spent on this particular issue, there was no detail where the money was coming from.
With the Scottish spending envelope through the Block Grant largely fixed, spending commitments well ahead of funding sources (as discussed above) for 2024-25, and limited options in terms of yield from tax rises, this announcement seems like it will lead to a reallocation of funding, either from other areas of the health service or from other areas of government spending rather than actual additional spending.
Scottish bonds for capital investments announced – how and why?
The FM announced plans to issue the first-ever government bonds for Scotland to finance infrastructure.
In theory, the power to issue government bonds was devolved as part of the Scotland Act 2012, with the power given full effect in April 2015.
So what would be the process for this? One of the key steps is likely to be establishing a credit rating from major rating agencies. This would provide potential investors with a professional evaluation of Scotland’s creditworthiness.
This process is likely to be fairly involved, consisting of a detailed assessment of Scotland’s economic, fiscal and political environment.
Two questions we’ve been asked already are (i) what will this rating (and therefore the likely interest rate that would have to be paid) be compared to UK government bonds and (ii) to what extent does this tell us about the likely cost of borrowing for an independent Scotland?
The answer to the first question is that there is likely to be a premium to be paid by Scotland compared to UK Government bonds (i.e. it will be more expensive), as a new entrant to the bond market. However, given that ultimately the borrowing is underwritten by the UK Government, it may be that the premium is fairly small. But it will of course depend on the rating and then investors’ reaction to that.
The answer to the second is much more unknown. Given this is underwritten by the UK Government, it is likely that this tells us little about the interest rate that may need to be paid by an independent Scotland.
It is worth underlining that this plan does not increase the borrowing available to the Scottish Government. The annual limit (of £450m in 2023-24 prices) and total cap (of £3bn in 2023-24 prices) will still apply. Rather, it is an alternative to borrowing from the National Loans Fund (essentially from the UKG).
It’s unlikely that the terms of borrowing through issuing bonds will be more favourable than borrowing from the National Loans Fund, which tends to be very close to Bank Rate plus a minimal spread.
Another point to note is that the Scottish Government in recent years has used its capital borrowing powers extensively. In the current year, its debt stock sits at 73% of the debt cap already – forecast to rise to around 80% by the end of the parliament. Therefore the borrowing that will be possible may be more limited by the end of the parliament, particularly as borrowing costs are rising.
The FM set out why they may wish to do this in his speech – focussing on the enhanced profile it could give Scotland internationally, and the additional investment it could attract from international investors. It may be that the process of establishing and issuing the bonds is seen as strengthening the Scottish state in advance of a future independent Scotland.
But in a constrained fiscal environment, it will be fair to ask whether borrowing in a more expensive way makes sense.
Discussions about the necessities and trade-offs around the transition to net zero are back on the news agenda this week (write Fraser of Allander Institute’s EMMA CONGREVER and CIARA CRUMMEY).
The changes required to meet net zero targets are complex and challenging yet the risks of not doing enough are immense. Inherent in this are trade-offs but also opportunities. An ordered transition where businesses and households have certainty over what they will need to do is the best way to minimise harm to incomes and to maximise the benefits that can be realised.
For many businesses and households, the costs associated transition to net zero will be manageable, and perhaps even cost effective in the long run. But for some, the upfront costs will be difficult to manage.
Whilst there is a general awareness of the direct costs that will fall on households from, for example the phasing out of gas boilers (a devolved policy, so not affected by the UK Prime Minister’s recent announcement) there is also the impact in livelihoods due to changes in the structure of the economy.
At the moment, all the attention is on the ‘just transition’ for workers in carbon-intensive industries, in the North East in particular. But the impact on jobs could be far wider than this.
The Joseph Rowntree Foundation asked us, along with colleagues in the Strathclyde Business School, to look into the potential for disruption to jobs in the wider Scottish economy, particularly in relation to low paid jobs. Our assessment of the available literature and various Scottish Government plans, reports and action plans didn’t provide much to go on, so we embarked on some experimental mapping and modelling of the potential intersection of net zero and low pay.
Today we published a report that we hope provides a rationale and a way forward for government, and others, to consider this issue fully. Whilst we can’t yet confidently put a figure on it, we have found that there is potential for significant disruption to jobs in sectors that employ large numbers of low pay workers, including retail and hospitality.
The mechanisms through which this impact could be felt are varied. Issues we looked at included the knock-on impact from depressed wages in areas where carbon intensive businesses cease trading. We also considered the impact on the viability of businesses with large commercial footprints who may need to invest large amounts to bring buildings up to new energy efficient standards.
There are many unknowns in this type of analysis, including the sufficiency of government policy and the behavioural response from consumers. For example, the Scottish Government is hoping to see car use reduced in Scotland.
Households may also independently decide they wish to reduce car use. It is easy to see how this could impact on the viability of out-of-town shopping centres that rely on customers arriving by car and if there aren’t serious efforts to provide adequate replacement public transport or alternative active travel routes, these large centres of employment may become unviable.
Some of the scenarios that we work through may not lead to jobs disappearing completely, but simply shifting to other places or other sectors. There are two further issues to consider here. Firstly, low paid workers tend to be less flexible on where they can work, due to a variety of factors including available transport and difficulties finding affordable childcare to cover long commuting times.
They also tend have less of a financial buffer to deal with even short periods of unemployment. Secondly, simply moving low paid jobs from one place to another misses a crucial opportunity to maximise the benefits that the transition to net zero could bring by providing career pathways into new, higher paid, growth sectors.
There is an opportunity here to better join up Scottish Government ambitions on tackling poverty and the transition to net zero that is currently missing from both the Just Transition plans and the Fair Work Action Plan. We hope this analysis will be useful in informing the future development of this work.
MSPs from the Scottish Parliament’s Finance and Public Administration Committee will visit Largs next week (Wednesday 30 August) to hear from local people about Scotland’s Budget challenges.
The visit is part of a parliamentary inquiry into the sustainability of Scotland’s finances.
It follows the Scottish Government’s forecast that public spending in Scotland is set to outstrip income expected by £1 billion in 2024/25, rising to £1.9 billion in 2027-28.
This means the government is forecasting that it will not have sufficient money to fund the spending it currently wishes to make.
The politicians are meeting with local people, organisations and businesses to hear their views on what the Scottish Government’s priorities should be in its 2024-25 budget.
Their views will help inform the committee’s scrutiny of the government’s budget in the autumn.
Finance and Public Administration Committee Convener Kenneth Gibson MSP said:“The focus of our work this year is how the budget for 2024-25 and beyond will ensure Scotland’s finances are sustainable in both the short and longer-term.
“It is an incredibly important subject matter given the forecast budget pressures and longer-term demographic challenges in Scotland.
“Coming to Largs and talking to North Coast people – including businesses, third sector bodies and residents – will enable us to hear different views of the impact of the Scottish Government’s tax and spending decisions.
“And that matters because the budget and the long-term sustainability of Scotland’s finances will affect everyone in the country.
“I am delighted that we will also meet the following day in Seamill to discuss our committee’s work programme for the forthcoming parliamentary year.”
Participants will be asked to give views on:
what should the Scottish Government’s priorities be for its budget in 2024-25, given the challenges that Scotland faces next year, and in the years ahead?
Studio growth enabled inward film and HETV production spend to increase by 110%, driving increases in employment and economic value in Scotland’s screen sector
Overall production spend in Scotland grew by 55%, including content made by Scotland-based producers
Screen Scotland has published latest figures evidencing continued growth in the value of Scotland’s film and TV industries to the country’s economy including in Edinburgh.
Commissioned by Screen Scotland and produced by Saffery Champness and Nordicity, the independent report which looks at The Economic Value of the Screen Sector in Scotland in 2021 finds that significant growth was found in all areas of production, particularly inward investment film and High-End TV (HETV) production:
Inward investment film and HETV production spend increased by 110%, from £165.3 million in 2019 to £347.4 million in 2021.
In total, an estimated £617.4 million was spent on the production of film, TV and other audiovisual content in Scotland in 2021, compared to £398.6 million in 2019, up 55% compared to 2019*.
This included content made by Scotland-based producers, producers based outside of Scotland filming in Scotland and Public Service Broadcasters (PSBs) commissioned content.
The employment impact in Scotland’s production sub-sector rose from 5,120 full time equivalent jobs (FTEs) in 2019 to 7,150 FTEs in 2021, a 39% increase. The employment impact across Scotland’s entire sector increased at a lower rate, by 5.6%, from 10,280 FTEs in 2019 to 10,940 FTEs in 2021 – with the covid impacts in that year on employment in the cinema exhibition and screen tourism accounting for the difference.
According to the research, undertaken by Saffery Champness and Nordicity as a follow-up to their recent study of 2019, growth is in large part due to sector development work undertaken since Screen Scotland’s formation in 2018, including significant skills development work and the opening of new or expanded studio facilities, particularly FirstStage Studios in Edinburgh, where Prime Video’s The Rig (which has returned to Scotland to film series 2) and Anansi Boys were filmed, and the expansion of The Pyramids in West Lothian, home to another Prime Video HETV series, Good Omens 2.
These studio facilities have made Scotland an even more attractive place to film, opening in time to catch the global post pandemic boom in production**.
Alongside film and TV development and production, the wide-ranging study analyses the economic contribution of the full screen sector value chain – film and TV development and production, animation, VFX and post-production, film and TV distribution, TV broadcast, film exhibition – and extends into the supply chains that provide services at each stage of the content process, including facilities, equipment, transport, catering and accommodation.
Beyond that direct supply chain, the study looks at where the screen sector stimulates economic activity elsewhere in the Scottish economy: screen tourism, the education and training sectors and infrastructure.
In total, the screen sector in Scotland contributed Gross Value Added (GVA) of £627 million to Scotland’s economy in 2021, providing 10,930 full time equivalent (FTE) jobs, up from £568 million and 10,940 FTEs in 2019. GVA is the standard measure used by the Office for National Statistics (ONS) and other national statistical agencies for measuring the monetary value of economic activity and the economic performance of industries.
Isabel Davis, Screen Scotland’s Executive Director said: “The growth in all forms of production in Scotland between 2019 and 2021 is a phenomenal result. It shows us that public investment via Screen Scotland in infrastructure, development, production and skills development, combined with attractive levels of production incentive are the catalyst for a successful industry.
“Now is the time to build on these newly created jobs and growth with a sustained funding commitment towards skills development, attraction of large-scale productions and a focus on the development of locally originated film and television. Screen Scotland is committed to delivering further growth, working hand in hand with the commercial production and studio sectors.
“This will rely upon sustained funding and support in order for Scotland to seize the opportunities ahead of it and see that growth trajectory continue.”
Authors of the Report, Stephen Bristow, Partner, Saffery Champness LLP and Dustin Chodorowicz, Partner, Nordicity noted further significant Report findings: “The doubling of Scotland’s annual level of inward investment film and high-end TV production between 2019 and 2021, was nearly three times the 39% growth rate experienced by the UK as a whole, according to published BFI statistics.
“In addition, Scotland’s screen sector GVA rose by 9.7% in those two years – well ahead of the 1.2% increase in nominal GVA (i.e. not adjusted for the effects of price inflation) posted by Scotland’s overall economy during that period.”
Wellbeing Economy Secretary, Neil Gray said: “This report highlights another banner year for Scotland’s screen sector, which is all the more significant for the jobs, investment and economic growth it has delivered. The scale of the return to the Scottish economy from the investment in screen production is remarkable.
“Beyond film and TV, this report also highlights how our tourism, hospitality and construction sectors have benefitted from this investment through screen tourism, catering contracts, and infrastructure expansion, and the supply chains that support these activities.
“The efforts of Screen Scotland have been key to this result and we are committed to working with them and the sector to ensure this growth and the wider benefits being delivered can continue.”
Bob Last, who’s FirstStage Studios in Leith has housed Prime Video’s Anansi Boys and The Rig, and where the second series of The Rig is currently filming, said: “We at FirstStage Studios are excited to have created a facility that helps our customers and their creatives realise ambitious visions for audiences both local and global.
“We are pleased to have rapidly built relationships with, in particular Amazon Prime Video, enabling us to play a part in anchoring more of this global industry and its varied employment opportunities in Scotland and Leith.
“We thank all those who have chosen to make our facility their creative home and especially the crews whose hard work we witness daily, every one of them is a part of the good news today’s Screen Scotland report outlines.”
As a highly experienced Scotland-based film and HETV producer, and currently producer on The Rig, Suzanne Reid commented: “As I progressed in my career the higher-level productions I wanted to work on just didn’t exist in Scotland, in part due to a lack of studio facilities – so I had to head to England and Wales for this type of work.
“It has been wonderful to be working back at home and to be able to work alongside our brilliantly talented Scottish crew on such a highly ambitious series. While it may have been a very successful couple of years for the Scottish Film and TV industry, we need to keep pushing for more high-end productions to be based in Scotland so we can continue to grow our talent base and keep them working at home.”
TUC General Secretary Paul Nowak declares “now is the time to start a national conversation about taxing wealth”
The TUC has called for a national conversation on taxing wealth, as it publishes new analysis which shows a modest wealth tax on the richest 140,000 individuals – which is around 0.3% of the UK population – could deliver a £10.4 bn boost for the public purse.
The analysis sets out options for taxing the small number of individuals with wealth over £3 million, £5 million and £10 million, excluding pensions.
The TUC says these options are illustrative examples of what a wealth tax could look like, using Spain’s existing policy as a potential model.
“It’s time for a national conversation”
The TUC says it is publishing the analysis to “kickstart a conversation” about tax – with the TUC general secretary Paul Nowak declaring “now is the time to start a national conversation about taxing wealth”.
According to analysis commissioned by the TUC, conducted by Landman Economics, a cumulative one-off wealth tax (excluding pensions wealth) on:
A wealth threshold of £3 million with a marginal tax rate of 1.7% would yield £2.7 billion (with the tax payable on wealth above £3 million by 142,000 individuals or 0.27% of adults in the UK)
A further wealth threshold of £5 million with a marginal tax rate of 2.1% would yield an additional £3.2 billion (with the tax payable on wealth above £5 million by 48,000 individuals or 0.09% of adults in the UK)
A further wealth threshold of £10 million with a marginal tax rate of 3.5 % would yield an additional £4.6 billion (with the tax payable on wealth above £10 million by 17,000 individuals or 0.02% of adults in the UK).
Together this could raise more than £10 billion for the exchequer.
The tax would apply as a marginal rate on wealth and assets above each threshold – in the same way income tax works. For example:
Someone with £3 million wealth would pay nothing.
Someone with £4m wealth would pay tax on £1m of their wealth – paying £17,000.
Someone with £9m would pay tax on £6m of their wealth – paying £118,000
Analysis reveals that of those with wealth over £3 million (excluding pensions), three quarters derives from wealth other than their primary residence, and over half comes from financial wealth:
Net financial (non-pension) wealth: 53.3%
Primary residence: 23.6%
Other residences: 18.7%
Physical wealth: 4.4%
The TUC says further debate is needed on what type of wealth is included in this kind of tax.
The union body has already called on the government to equalise capital gains tax with income tax which could raise around £14 billion.
The union body says it is inherently “unfair and unjust” that people who get income from assets or property get off more lightly than someone who relies on work.
Tale of two Britains
The TUC says increasing wealth inequality is resulting in a “tale of two Britains”.
While working people have been “hit by a pay loss of historic proportions” after the longest wage squeeze in modern history, the wealth of multimillionaires and billionaires has boomed.
Financial wealth over the decade from 2008-10 to 2018-20 increased by around £0.9tn (80 per cent) from £1.1tn to £1.9tn.
TUC General Secretary Paul Nowak said: “It’s time to start a national conversation about how we tax wealth in this country.
“It is absurd that a nurse pays a bigger share of their income in tax than a city trader does on profits from their investment portfolio.
“That’s not only fundamentally unfair and unjust – it’s bad for our economy too.
“Our broken tax system means those at the top are hoarding wealth and getting richer and richer, while working people struggle to get by.
“That is starving our economy of spending – as it’s working people who spend their money on our high streets – and it’s starving our public services of much-needed funds.
“This research sets out potential options for getting those with the broadest shoulders to pay a fairer share.
“This is a debate we should not be afraid of having. The Chancellor should use his autumn statement to make sure the wealthiest pay their fair share of tax.”
Commenting on widening inequality over the past decade, Paul added: “Widening wealth inequality means we are seeing a tale of two Britains.
“While working people are suffering the longest pay squeeze in modern history, the super-rich are coining it in.
“Porsche sales are at record highs, bankers’ bonuses are at eyewatering levels, and CEO pay is surging.
“Enough is enough. We need an economy that rewards work – not just wealth.
“Fair tax must play a central role in rewiring our economy to work for working people.”
