SCOTLAND has reacted to the UK Government’s budget in which the Chancellor Jeremy Hunt announced substantial tax increases and spending cuts amounting to £55 billion.
Barnett consequentials will see £1.5bn passed on to the Scottish Government.
However, this is below the £1.7bn already wiped from Scotland’s budget because of the Truss government’s failed mini-Budget and increasing inflation.
The Chancellor opened his speech in the House of Commons by stating that according to the Office for Budget Responsibility (OBR) the UK is now officially in a recession.
Hunt said that “difficult decisions” would have to made to put the UK on a “path to stability”.
These decisions included an increase to the energy price guarantee scheme.
From April 2023 the price guarantee will increase from £2500 to £3000 for the average household, meaning people are set to pay even more for their energy bills next year.
Additionally, income tax personal allowance and main national insurance thresholds will be frozen until April 2028, which will result in people paying more in tax.
SNP Shadow Chancellor Alison Thewliss MP said that Hunt should have different choices when it comes to who is burdened with the cost of the UK’s economic decline.
She said: “The Chancellor should have made fairer choices - properly taxing non-doms, banks, share buybacks, and expanding the windfall tax to companies making excess profits - but instead the Tories have chosen to impose devastating cuts to family budgets and public services.
"Mr Hunt should have followed the lead of the SNP Scottish Government by matching progressive policies like the Scottish Child Payment - but instead he has cut household incomes by raising energy bills yet again and imposing stealth taxes on families."
'Sleekit tax'
Scottish Trade Union Congress General Secretary Roz Foyer said the Chancellor's announcements amounted to a "sleekit tax on workers".
She said: "Despite his glowing tribute to Nigel Lawson, this is a budget fronted by two of the richest men in British politics that was more ‘Big Bust’ than ‘Big Bang’
“Working people should not be thankful for a meagre rise in the minimum wage whilst the OBR predicts their incomes will be reduced by 7%.
"This is in addition to a sleekit tax on workers through the elongated freeze on national insurance contributions. We need wealth taxes, not stealth taxes and the Scottish Government must not repeat the mistakes of this beleaguered Chancellor seeking to cover the tracks of his predecessor."
She added: “Workers across Scotland are being held to ransom for the financial implosion of the UK Government.
"We cannot afford austerity; we cannot afford public spending cuts and we cannot afford more years of a Tory Government that callously neglects the poorest communities across the country in their hour of need."
'Unjust economy'
The Poverty Alliance - a network of anti-poverty campaigners in Scotland - said that while the news that social security benefits will increase alongside inflation was welcome, the budget will still leave millions fearful for the future.
The Chancellor announced that more than 600,000 people on Universal Credit will be asked to meet with a work coach "so that they can get the support they need to increase their hours or earnings."
However, Poverty Alliance director Peter Kelly said that entrants into such a scheme may face further sanctions that could push them further into poverty.
He said: “The announcement about forcing more people into interviews with government officials will strike fear into the hearts of thousands across the country.
"Our unjust economy doesn’t give people the kind of secure, suitable employment that they need, and too many people simply can’t increase their working hours because of poor transport links, health and disability issues, caring commitments, or lack of affordable childcare.
"That situation won’t be fixed by an interview at the Jobcentre. We will strongly oppose any extension of the shameful sanctions regime – it only creates more poverty and does nothing to help people into employment.”
Kelly also criticised the Chancellor's freeze on tax thresholds, which he said placed too big a burden on those least able to pay.
"By freezing income tax thresholds, the Chancellor will put a bigger tax burden on people who are on low and medium incomes. It doesn’t have to be like this.
"Tax Justice UK has shown that the Chancellor could raise £37 billion every year by taxing excess wealth. Tax should be about redistributing wealth – because that’s the only way we can make sure everyone has what they need to build a meaningful and fulfilling life for themselves and their families.”
An increase in the windfall tax on oil and gas companies from 25% to 35% was also announced.
However, despite these increases Hunt stated that the UK will remain one of the lowest taxed economies amongst developed nations – a comment which has drawn ire from the Scottish Greens.
Scottish Greens MSP Ross Greer said: “Hunt is keen to point out that, even after these tax changes, the UK will still be one of the lowest taxes developed nations.
“That’s a polite way of saying that under the Tories we remain a tax haven for the super-wealthy and corporations
“One change Hunt should have announced to the energy windfall tax, but didn’t, is an end to the 91%(!) tax relief for every pound spent on additional oil and gas extraction.”
“This dangerous Tory policy doubles down on the causes of climate breakdown.”
He added: “This Westminster Budget is once again about the haves and the have nots, as another Tory government and its Scrooge new Chancellor shamelessly look to protect their rich mates and fill their own coffers to make up for their mishandling of the economy.
“The UK remains a tax haven for the super-wealthy and corporations when they should be the ones bearing the brunt of these Tory misadventures.
“Instead we are seeing stealth and outright cuts to benefits, wages and essential public services.”
