Scottish Government Unhappy With Budget
23rd November 2017
The UK Government's budget does not represent a good deal for Scotland, as a consequence of a real terms cut to Scotland's revenue block grant of over £200m next year.
Commenting on today's UK Government budget Finance Secretary Derek Mackay said that Scotland is being "short changed".
Despite a commitment of over £300m resource funding for the NHS in England this year, Scotland will receive only £8m in consequentials in 2018-19 due to UK cuts elsewhere.
Of the additional money the UK Government announced as being added to Scotland’s budget, over half of it - £1.1bn - are financial transactions which the Scottish Government cannot spend on frontline public services, and which have to be repaid to the Treasury.
Mr Mackay said:"Scotland’s resource block grant for day to day spending will fall by over £200m in real terms next year and while money for the NHS in England should see a proportionate share come to Scotland, cuts in other UK departments mean that instead of receiving over £30m this year the Scottish Government will receive only £8m - a fraction of that spending.
"The reality is that over £1.1bn of the money being promised to Scotland over the next four years are loans that the Scottish Government cannot spend directly on frontline public services and that have to be paid back to the Treasury.
“Austerity has not ended and over ten years of this UK Government, between 2010-11 and 2019-20, we will continue to see Scotland’s discretionary budget fall in real terms by £2.6bn, that’s 8.1%.
“At the same time this budget has failed to lift the public sector pay cap. The Scottish Government believes all public sector workers deserve a pay rise and we will deliver one.
“On business rates and stamp duty the UK Government are following our lead. We have already moved to make revaluations more frequent and the vast majority of first time buyers are already exempt from tax when they buy a home.
“Ending the VAT obligation on police and fire services and supporting the oil and gas industry is welcome, but in both cases these moves are well overdue, and the UK Government must now pay back the £140m of VAT they have already taken.
“The reality of today’s budget is that Scotland continues to be hit by UK austerity and the decision to leave the EU. Compared with the £1bn awarded to the DUP, the funding settlement for Scotland unveiled today is disappointing.
“I have consistently argued for a better settlement for Scotland, and this budget does not reflect that."
Ian Blackford MP's response to the 2017 UK budget -
Thank you Mr Speaker
Let me welcome the removal of VAT on police and fire services in Scotland.
It is though a disgrace that we have had £140 million taken out of frontline spending by the Tory Government ahead of this announcement.
VAT should never have been charged on police and fire services in Scotland.
The blame for that lies solely with this Tory Government.
The SNP have spoken out here and in Holyrood 140 times before the Government here finally saw sense.
What about the £140 million that has been paid? The Chancellor has confirmed today what we knew all along, it was a political choice to charge VAT on our emergency services.
He has accepted today that was wrong, but I am calling on the Chancellor today to refund VAT charged for the last three years.
The Chancellor has painted a picture of a strong economy, ready for the impending economic disaster of Brexit.
We all have to wonder, Mr Speaker, just what planet he is on.
Most workers are seeing a decline in their living standards and have done since the financial crisis.
We are living through the worst decade for wage growth in 210 years.
Young people are going to be poorer than their parents.
Housing has become unaffordable for many.
The austerity economic model has failed millions, the Prime Minister alluded to this when she talked about those just about managing.
Today’s budget was an opportunity to address these challenges and make this a budget for people and prosperity.
The reality is there is nothing in this budget that deals with the challenges we face.
We have the impending UK exit from Europe.
We know the government is preparing for a no deal.
Yet the Chancellor made no mention of how the economy is ready to cope with that.
The cliff edge is before us and the Chancellor sits transfixed, unable or incapable of rising to the challenge.
No doubt the Chancellor recognises the economic self-harm that comes with leaving the single market and the customs union but he has failed to act.
Why, because the Brexiters have set the agenda for this Government and the Chancellor is without the authority to challenge the madness.
The Chancellor like his Government is in office - but not in power.
We know the Prime Minister has to present a financial settlement to the EU27 over the coming days, yet there was no mention of that in the statement.
This government has to take its head out of the sand and accept that the future indicates the likelihood of significant economic self-harm.
Before the winds of Brexit hit us, the starting position for millions of people is that by then they will have already been stuggling with nine years of austerity.
The cuts being imposed on public services meaning that service delivery is being impacted and public service workers in particular are feeling the squeeze.
This is a budget that shows the chancellor is either blind to what is going on or that he is behaving like a frightened rabbit caught in the headlights.
Either way, people are going to pay a price for the lack of leadership.
This Government, that used to speak of the empty rhetoric of long term economic planning, has failed to provide a vision and has no plan for delivering prosperity.
The long term economic plan has given way to no plan.
Scratch the surface of the economy and you see a structure barely coping with the state of society.
A structure that is so unfairly built in the favour of the wealthy, we have created a situation where we have the worst wage growth in 200 years and the IFS tell us an additional 400,000 children will be in “absolute poverty" within six years due to benefits cuts.
The case is Mr Speaker that working people are paying the price for this government’s ideological obsession with austerity.
Make no mistake it is an ideological obsession.
Effective stewardship of our economy has to recognise the importance of fiscal and monetary policy working in tandem to create the circumstances of sustainable and inclusive economic growth.
Any disconnect leads to a failure to deliver an economy that works for all which is precisely what is happening.
A failure to deliver a budget for prosperity hits all workers, in particular those in the public sector.
In September, the Scottish government became the first in the UK to announce it will scrap the public sector pay cap.
Our nurses, teachers, police officers and firefighters deserve a fairer deal for the future. Future pay rises will be based on the cost of living and today the Chancellor betrayed public sector workers by refuising to fund a fair pay rise.
But it’s not just the squeeze on pay which is leaving low earners struggling to get by.
This UK Government’s social security cuts are specifically designed to remove the welfare state.
The SNP will never accept this ideological attack on the most vulnerable in our society.
The damaging and destructive universal credit system must be halted and fixed.
The system is not only flawed but causing severe societal damage.
The Scottish Government asked the UK government in March, and again in September to halt the roll out of universal credit and fix the system.
The disastrous inbuilt delay of 6 weeks wait for the first payment is resulting in significant financial hardship for families.
The SNP today urges the government, not only to reduce the waiting time for first payment from 6 weeks to a maximum of 4 weeks, but to go further and move to twice monthly payments to ease budget constraints and reverse the cuts in work allowances.
That should just be the start of reforms required to universal credit.
We also call on the Chancellor to scrap the two child policy and immoral rape clause.
According to the IFS, the two child cap on tax credits will mean around 600,000 three-child families lose £2,500 a year on average, and 300,000 families with four or more children lose £7,000 a year on average.
Most affected families are in work.
There is nothing in this budget for the woman born in the 1950’s who are seeing a rise in pensionable age of six years without proper notice, depriving millions of a pension they are entitled to.
Time and again the Government has been asked to slow down the current rate of increase in womans pensionable age which is increasing at three months for each calendar month just now.
Either the chancellor decides to act now in delivering fairness to 1950’s Waspi women or he will find that Parliament will do it for him.
There is a private members bill calling for mitigation to be put in place for 1950’s woman.
Let me say to the Government, recognise the cross party nature of this bill and act or face defeat.
Whilst the Tories attack on benefits pushes more families into poverty, the financial squeeze on household incomes continues as Brexit bites.
Today inflation sits at 3%.
Prices are rising at a faster rate than wages.
The Resolution Foundation has calculated 3% inflation combined with the benefit freeze will impact 7.3m children, 2.4m disabled people and 0.8m people looking for work.
Let me just tell the Chancellor what life is like outside the gilded rooms of Whitehall.
Electricity bills have increased 9% in price.
Children’s clothing has increased 6.7% in price.
Butter has increased 12% in price.
Travel by bus and coach has increased 13%, road 8% and train 3.4%.
Transport insurance has increased 12.6%
Motor vehicle insurance 13.0%
Travel insurance 10.1%
Whilst inflation is making the cost of a weekly shop soar, real wages are falling.
The rise in inflation and squeeze on wages is creating a crisis for low income earners.
Between 2010 and 2016, official GDP per employee had risen by 3.5%, yet real wages are 1.1% lower when adjusted for consumer price inflation.
If inflation is calculated to include housing costs, real wages are down 7.2%.
The collapse in UK productivity growth has driven low growth and stagnant wages.
But whilst many of my constituents and families across the UK are relying on credit cards to put food on the table, a different story is unfolding in the City.
Under this Tory government boardroom pay has soared.
From 2010 to 2016 the average remuneration for FTSE100 CEO’s almost doubled.
The average remuneration of an Executive Director has doubled from £1.5million to £3.1million.
The inequality goes deeper.
European Commission figures revealed the UK had the biggest increase in the EU’s gender pay gap in 2015.
The difference in average hourly pay for male and female workers jumped from 19.7% in 2014 to 20.8% in 2015.
This means in effect that woman are working unpaid for more than two months a year in comparison to men.
This government has not only driven thousands into poverty, it has completely failed to invest in building an inclusive economy fit for future generations.
The legacy this Chancellor leaves is an economy that only works for the rich and reckless.
We needed a Government that would create the circumstances to deliver inclusive, sustainable economic growth, one that would encourage investment, enhance innovation and drive up productivity and living standards.
One that recognises monetary and fiscal policy have to work in unison.
What we have had is a focus on monetary policy that has driven up house prices and stocks and shares but has failed to drive investment in the real economy.
Back in 2009, quantitative easing was an obvious choice to be part of restoring confidence and growth provided it was matched with fiscal measures, particularly investing in our infrastructure, building capacity in our economy with a focus on investment to improve efficiency.
A chance to invest in the economy to kick start growth and productivity.
But under the steer of this government it was invested to benefit the wealthy and in the end has done nothing but exacerbate the gap in the UK between the rich and poor.
Even the Bank of England has recognised the negative effects caused by this policy.
In 2012 they said that although Quantitative Easing had increased asset prices, this had disproportionally benefitted the top 5% of households.
Standard and Poors argued last year that inflating asset prices had exacerbated the gap between rich and poor.
They found that the wealthiest 10% of households held 56% of all net financial assets in 2008.
By 2014 the proportion of the nation’s wealth in the hands of this group had risen to 65%. It’s easy to see why the Tories don’t want to change this policy.
Reducing inequality has never been one of their aims.
The evidence is stark that Quantitative Easing has mostly benefitted those who started with considerable wealth.
The FTSE 100 was sitting at 3805 on the 18th March 2009. Last night the market closed at 7411, growth of 95% in just over eight years.
The Government has stuffed cash into the pockets of the wealthy whilst ordinary folk paid the price of austerity.
The cry that there is no money flies in the face of the Government’s own agenda.
A further £70 billion was invested in QE after the Brexit vote taking the programme to £435 billion.
That is £435 billion onto our debt with no plan as to how this will be repaid.
We could have invested in our infrastructure, investing for example in housing, dealing with the demand for housing and dampening the rise in house prices to affordable levels as one example.
Investing in connectivity, in transport and in digital, to allow all our citizens and busineses to compete effectively and not caught in the slow lane of transport snarl ups or fighting to get decent broadband or mobile connection.
This investment in our people and infrastructure would have grown the economy, grown tax receipts and allowed us to cut the deficit.
There would have been a pay back. They could have supported business at the same time as supporting people.
Don’t tell us that there is no money when you can invest an additional £70 billion in QE at a drop of a hat.
Take proper responsibility for creating the circumstances for inclusive growth and prosperity.
Taking responsibility, is something this Government does not do.
£6.9 billion is lost to our schools and hospitals, every year, because this government has failed to tackle aggressive tax avoidance and tax evasion.
They've chosen to cut public services in order to protect the super-rich. On tax, the Tories are the party of the super-rich.
This needs to change. So, I am calling on the Government to take tough new action to ensure the richest in society and the biggest corporations pay the taxes they owe in full.
And if you won’t take the action required, then devolve the powers needed to tackle the issue to the Scottish Parliament.
When I asked the chancellor last month on any assessment he has made on the inter-relationship between monetary and fiscal policy the answer I got was that monetary policy was the responsibility of the Bank of England.
There was no regard for a link between the two.
It is left to the Bank of England to shine a light on the failure of the chancellor to engage in joined up thinking.
In written evidence to the Treasury Select Committee, the Bank of England admitted that the steep rise in house prices in the decade preceding the crisis, together with the fall in longer-term interest rates, has led to “a sharp rise in the inter-generational dispersion of wealth, benefiting in particular older people who had already entered the market before prices began to rise”.
This government has avoided every opportunity to invest in young people.
What hope do millennials have to cling on to?
Robbed of their housing allowance, lumbered with chronic student debt - this government has gone out of its way to avoid investing in future generations.
The intergenerational wealth unfairness is creating the perfect storm for future generations.
Research from the Resolution Foundation shows today’s 27 year olds are earning the same amount that 27year olds did a quarter of a century ago.
A typical millennial has actually earned £8,000 less during their twenties than those in the preceding generation.
We have missed chance after chance to invest in inclusive growth opportunities.
The government has been the proverbial one club golfer relying on monetary measures but in a vacuum.
Even the IFS has warned the Chancellor on his calculations.
First of all we had George Osborne proclaim he wanted to balance the books by 2015. That didn’t happen.
Now the current Chancellor wants to eliminate borrowing by the mid-2020s.
But with Brexit set to hit the economy, even the IFS has called on him to abandon his fanciful fiscal targets.
There is more uncertainty on forecasts now than ever before.
The Chancellor himself told the Treasury Committee a “cloud of uncertainty is acting as a temporary damper, and we need to remove it as soon as possible”.
Well Mr Speaker, I’m in a giving mood today.
I’ll give the Chancellor a bit of fundamental economic advice.
End the suicidal flirtation with a no deal scenario, give business something to invest in and work on keeping the UK in the single market.
The stupidity and recklessness of some of the front bench who rode around in that famous red bus has to be the most damaging economic pledge in modern history.
£350million a week for the NHS they said.
They are silent on that now.
Well, the Foreign Secretary and Environment Secretary should listen up because here are some home truths about the mess they created.
The Bank of England have confirmed 75,000 jobs are at risk in the financial sector due to Brexit.
The LSE has revealed Scotland’s towns and cities could lose up to £30billion over five years.
Fraser of Allander revealed Brexit would cost Scotland up to 80,000 jobs and see wages fall by £2,000 a head per year.
Now the Chancellor is planning for a ‘no deal’.
A complete catastrophe which is unfolding under his watch.
He knows how devastating such a path would be for the UK economy.
He’s given departments £213 million to carry out work in preparation.
To put that into context for you all, that would pay for 11,553 new starter nurses, teachers or police officers.
But it’s not just the spending to fund Brexit that is costing communities.
Leaving the EU will cut off the financial social funds we have benefited from for so long.
This will be devastating for communities where poverty and destitution at the hands of the Tories austerity policies have seen volunteers pick up the pieces.
Although, as the UK haemorrhages EU-funding and the Chancellor proclaims austerity is essential to save, he did manage to find £1 billion for the DUP.
Quite remarkable, Mr Speaker.
You see, the Chancellor found £1billion for devolved areas in the Northern Irish Executive to spend, but there were no additional funds being provided to Scotland or any other part of the UK.
Cash for votes. Not very honourable at all.
And what use are – the Scottish Conservative benches – who pledged to work as a bloc to protect Scotland’s interests.
Well, this was your chance to shine.
A golden opportunity to show you were prepared to put politics aside and stand up for Scotland.
But no, party loyalty prevailed and now Scotland is being overlooked in this dodgy deal.
This money cannot be processed until the discussions have concluded on the appropriateness of the way in which the UK government decided to provide the additional financial support.
The Barnet formula rules mean Scotland, Wales and Northern Ireland are entitled to an extra £2.9 billion and £1.67 billion respectively as a result of the deal.
Where were the calls from Scottish Tories for this UK Government to match the deal from Northern Ireland? They have been found wanting.
And year-after-year, the UK government continues to let down our world-class oil and gas industry in the North East of Scotland.
Two years ago the Conservatives boasted the creation of a new oil and gas Ambassador.
It would ‘promote the North Sea around the world and boost inward investment’.
How embarrassing then for the Chancellor that the role – two years later – has not been filled.
It seems the Chancellor and his Cabinet colleagues have simply forgotten about our key North Sea industry once again.
Despite the Chancellor’s tight grip restraining Scotland’s economic potential, the SNP have delivered much progress in government.
International exports are up 41% between 2007 and 2015..
The latest employment figures show Scotland has higher employment rates and lower unemployment rates than the UK.
Youth unemployment rates continue to outperform the UK.
The Scottish Government fulfilled its commitment to reduce youth unemployment by 40%, four years ahead of schedule.
See, that’s how you make fiscal targets.
But it’s not just the ability of the Scottish Government to deliver an inclusive economy that works for all.
It’s their vision for an economy that benefits all.
When the UK government chose the rape clause, the Scottish Government chose the baby box.
When the UK government trebled tuition fees, the Scottish Government maintained the principle of free tuition for all.
When the Conservatives pushed for a dementia tax, the Scottish Government stood by free personal care for the elderly.
We know that an economy is not just a tool for inclusive growth but is central to the social fabric of the society in which we grow up.
It’s time to build an economy that benefits all.
End the damaging austerity agenda and stop the catastrophic ideological obsession with a Brexit ‘no deal’.