Mackay: UK Budget ‘leaves Scotland £200m short’

The Scottish Government’s finance secretary Derek Mackay claimed 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 £200 million next year.”

That’s despite UK finance minister Philip Hammond claiming his budget would mean £2 billion more in spending power for the Scottish Government.

The UK Government said Scotland’s emergency services would benefit from a move in the Budget to enable Police Scotland and the Scottish Fire and Rescue Service to claim VAT refunds — saving them more than £40 million annually.

And Scotland’s oil and gas industry will benefit from the introduction of a Transferable Tax History — which will enable oil companies to pass on their tax history to new buyers when they sell their UK oil and gas fields.

The UK’s Secretary of State for Scotland, David Mundell said: “This Budget demonstrates the UK Government is delivering for Scotland.

“From support for city deals and some of our finest charities to landmark tax measures on oil and gas and whisky, this Budget backs Scotland’s great industries.

“This is in addition to the £2 billion of extra spending power the Scottish Government will have as a result of this Budget.

“This Budget will directly benefit people right across Scotland as we work to create an economy fit for the future.”

Mackay responded: “Scotland’s resource block grant for day to day spending will fall by over £200 million 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 £30 million this year the Scottish Government will receive only £8 million — a fraction of that spending.

“The reality is that over £1.1 billion 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 10 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 £2.6 billion, 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 £140 million 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 £1 billion 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.”