£1bn for Scotland in UK Budget, but Mackay disputes

The UK government said the Scottish government will benefit from nearly £1 billion of additional funding as a result of this year’s UK budget.

Scotland will also benefit from £150 million for a Tay Cities Deal and a freeze in spirits duty, the UK government said.

UK finance minister Philip Hammond said the Budget announcements for Scotland include:

  • An extra £950 million for the Scottish Government “meaning its budget will have grown in real terms to £32 billion by 2020.”
  • £150 million for a Tay Cities Deal.
  • A boost to the Scotch Whisky industry, which already accounts for 20% of UK food and drink exports, as spirits duty is frozen for the second Budget in a row.
  • A UK-wide £10 million Fisheries Technology Fund to help transform the industry “and make fishermen in Scotland world leaders in safe, sustainable and productive fishing.”
  • Opening formal negotiations for a Moray Growth Deal and progressing talks for Ayrshire and Borderlands Growth Deals.
  • Continuing support for the North Sea oil and gas sector “through maintaining our globally competitive position and further strengthening Scotland’s role as a world leader in this area.”
  • Appointing a dedicated manager from the British Business Bank in Scotland, for the first time, to help to reduce geographical imbalances in small businesses’ access to finance.

The UK’s Secretary of State for Scotland David Mundell said: “The Chancellor’s decisions mean there will be an extra £1 billion to invest in public services in Scotland.

“I urge the Scottish Government to use this extra money to support the NHS in Scotland, fix the roads, boost Scotland’s economy and reinvigorate Scotland’s high streets.

“The freeze on beer and spirits, support for oil and gas, cash for fisheries technology and a £150m investment in the Tay Cities Deal will all drive growth in Scotland’s economy.

“Individuals up and down Scotland will benefit from the ongoing freeze on fuel duty and the increase in personal allowance.

“Today’s Budget demonstrates clearly how the UK Government is delivering for people in Scotland.”

The Scottish government’s finance secretary Derek Mackay said the Budget “has failed to deliver an end to austerity.”

Mackay said the UK Budget “does not deliver on the promises of a significant uplift in public spending, as Scotland’s resource block grant remains almost £2 billion lower in real terms in 2019/20, than it was in 2010/11.”

Mackay said: “According to this budget, the Scottish Government’s resource block grant from the UK Government — the money we are able to invest in day to day public services — remains almost £2 billion lower next year compared with 2010-11.

“This budget falls a long way short of delivering for Scotland.

“The changes announced to universal credit do not go far enough.

“They are just a drop in the ocean compared to the impact the roll-out of Universal Credit will have.

“I continue to call for the roll-out of Universal Credit to be halted – and halted straight away.

“Brexit is a serious threat to our economy and to household incomes.

“We continue to argue that the only deal that will deliver for Scotland is to remain in the Single Market and Customs Union.

“With the UK Government’s preferred approach to Brexit set to hit people’s incomes in Scotland by £1,600 a head – the changes in this year’s budget do nothing to alleviate the impact Brexit will have.

“There was little in this budget to boost our public services.

“The Scottish Government has already set out our plans to support the NHS in the years to come and the funding we have received as a result of health spending in England will go to our NHS in Scotland – but so far the UK Government has fallen at least £50 million short of what was promised only 4 months ago.

“The reality of today’s budget is that Scotland continues to be hit by UK austerity and the decision to leave the EU.

“I have consistently argued for a better settlement for Scotland, and this budget does not reflect that.”

The Scotch Whisky Association (SWA) welcomed the chancellor’s decision to continue the freeze on spirits duty.

The SWA said the duty rate on spirits remains £28.74 per litre of pure alcohol.

It said that of the £14.15 average price of a bottle of Scotch Whisky, £10.41 is collected in taxation through excise duty and VAT.

The tax burden remains at 74%, or £3 in every £4 spent on the average priced bottle of Scotch in the UK being tax.

Karen Betts, SWA Chief Executive, said:”The chancellor has made the right decision for the public finances, the industry and for consumers.

“The continuation of the duty freeze is a very welcome show of support for the Scotch Whisky industry, which plays an important role in the UK and Scottish economies and which is one of the UK’s most successful exporters.

“Time after time, the industry has shown that a stable rate of tax both boosts government revenue to help support vital public services and creates an environment which encourages investment in future growth.

“We have welcomed the support shown to the industry by the politicians from across the UK and the political spectrum who have backed our campaign and have stood up for the industry and the communities it supports.

“We welcome too the sound course set today by the chancellor, which supports the industry’s global competitiveness, nurtures growth and backs jobs and investment.

“However, the Scotch Super Tax remains, with £3 in every £4 spent on the average priced bottle of Scotch in the UK still collected in taxation, and a significant disparity between what consumers pay in tax on Scotch and other alcoholic products.

“HM Treasury should move quickly to begin detailed discussions with the industry about long-term reform of the UK’s alcohol tax regime.”

Oil & Gas UK welcomed what it called the UK Government’s commitment to “maintain fiscal conditions.”

“Chancellor Phillip Hammond announced that the current headline tax rate will continue,” said Oil & Gas UK.

“He also stated that the UK government will launch a call for evidence on its plans to make Scotland a global hub for decommissioning.

“It comes after Oil & Gas UK recently revealed that 11 projects have been announced by companies this year – more than the last three years combined, with more expected in the coming months.”

Oil & Gas UK chief executive Deirdre Michie said: “The chancellor’s commitment to fiscal stability is welcome recognition of the hard work by industry to encourage recovery following one of the most testing downturns in its history.

“With reduced costs, competitive fiscal terms and improved operational performance, the UK Continental Shelf is becoming an attractive investment proposition.

“These conditions are delivering a tentative recovery, with more projects approved so far this year than in the last three years combined.

“It’s important that this stability is sustained for the longer term, encouraging further investment and much needed new business for the supply chain, which continues to be under pressure.

“Essential for security of supply, supporting hundreds of thousands of highly skilled jobs and contributing billions to the economy, the UK’s offshore oil and gas industry will continue to play a vital role in the economy for many years to come.”

Oil & Gas UK said the decommissioning market in the North Sea is forecast to grow steadily and is likely to be worth £1.8 billion per annum on average over the next decade.

Michie added: “As decommissioning activity is predicted to grow, the UK supply chain has a major opportunity to develop world-class decommissioning capabilities.

“We look forward to informing this exercise with our expertise and ensuring that we can maximise opportunities in decommissioning while continuing our focus on maximising economic recovery.”