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Budget fails growth and fairness test - Swinney
The Chancellor’s Budget has missed a major opportunity to get the economy moving and deliver greater fairness, John Swinney said yesterday, noting that all of the targeted growth initiatives in Scotland are a direct product of strong Scottish Government pressure.
Mr Swinney welcomed the United Kingdom Government’s acceptance of the Scottish Government case for Enhanced Capital Allowances for Enterprise Areas in Nigg, Dundee and Irvine; the restoration of the computer games tax cut; measures to support the development of the North Sea oil and gas sector and acceptance of the case for reducing corporation tax.
The Finance Secretary said:
“This Budget fails the growth and fairness test. At a time when growth is very low in the economy, and significant stimulus is required, the Chancellor has allocated next to no new resources and taken no major initiatives to support this effort.
“At the Prime Minister’s request we gave the UK Government a list of shovel ready projects in Scotland worth £300 million which could start in the next financial year. There was no green light today and efforts to build economic recovery have not been given the boost we called for.
“We needed to see a sustained, targeted programme of capital investment to act as an economic stimulus. Unfortunately the Chancellor failed to deliver. The Budget delivers only £4 million a year for Scotland, mere tinkering at the edges of what was required.
“The Chancellor talks about fairness, yet he’s fixated on reducing the top rate of income tax and driving down public sector pay in areas outside London, which will only serve to exacerbate regional inequalities, take money out of the pockets of ordinary families and undermine recovery in the most fragile areas.
“The Treasury’s own figures show that since 2010 the UK Government’s measures have placed a greater relative burden on the lowest earning 20% of households than the average to rebuild the public finances.
“We desperately needed measures to boost household incomes. In Scotland, we have frozen council tax for five years and protected free prescriptions and concessionary travel to support economic confidence. Today’s increase in personal tax allowances will be swallowed up by higher fuel prices and VAT, yet we saw absolutely no action on rising fuel duty and further threats to welfare and pensions.
"And we needed help for small business, for too long deprived of affordable finance, limiting their ability to support investment and jobs in the economy. We will monitor very carefully the National Loan Guarantee Scheme to ensure SMEs in Scotland secure more access to finance than Scottish companies have in Project Merlin where only 4.8% of gross lending went to SMEs in Scotland.
“I welcome the fact that the UK Government has accepted our case for Enhanced Capital Allowances to apply at Nigg, Irvine and Dundee, a direct result of our choices on Enterprise Area status. New, low carbon technologies and industries will now breathe new life into these areas, helping create new jobs and boost long lasting initiatives thanks to the approach of the Scottish Government.
“We have long made a compelling case for video games tax relief and I welcome the Chancellor’s moves here. Scotland’s computer games industry is a global success, with more than 1,500 jobs and contributing £30 million to our economy, and tax relief should help level the playing field and let Scotland’s video games industry compete internationally to reach its full potential.
“Oil and gas taxes must be geared to maximising recovery rates. Support for oil and gas decommissioning and new field allowances west of Shetland are welcome and go some way to reversing the damaging tax raid of last year. But the Chancellor still needs to go further to restore the sector’s confidence and introduce a statutory consultation period for future tax reforms.
“We were promised a ‘tartan streak’ in this budget - and it is crystal clear that ‘tartan streak’ was delivered by the Scottish Government.”