UK Budget Fails on Fairness
The UK Government’s recent budget was a budget that failed Scotland on both economic growth and on fairness.
It is a budget that will hit older people in our constituency and our older relatives – with 330,000 older people in Scotland affected by the Chancellor’s billion pound tax raid on the elderly. By 2016-17, the number of pensioners affected will have risen to 500,000, each paying up to £220 extra each year in income tax. This damaging pensions raid is financing the Chancellor’s determination to cut the top rate of income tax to benefit the richest 1 per cent of the country who earn over £150,000 a year.
It is also a budget that will take money out of the household budgets of hard working families which will exacerbate inequalities and undermine recovery in the most fragile areas. The Institute of Fiscal Studies has estimated that, taken as a whole, the tax and benefit reforms of the coalition will cost the average Scottish household almost £800 in 2012/13.
Labour at Westminster failed to vote on an SNP amendment in opposition to Budget plans to cut the top rate of tax for the highest earners, despite Shadow Chancellor Ed Balls repeatedly voicing his opposition – this no show seriously questions their credibility.
While the UK Government’s budget is hitting the poorest the hardest, the Scottish Government is taking a different approach. In Scotland we have recognised that we desperately need measures to boost household incomes and have taken action to secure family budgets. The Scottish Government has extended the council tax freeze for the lifetime of this Parliament, the average B and D household will benefit by around £1,200 in total, with households in the bottom half of the income distribution scale estimated to see the greatest benefit. The Scottish Government has also maintained free university education in Scotland, saving students around £23,000, compared with the cost of studying in England. And by scrapping prescription charges, freezing water charge, protecting concessionary travel and paying a living wage to staff under our remit, the Scottish Government is providing support for households throughout Scotland.
UK Budget Fails on Growth
This budget was a missed opportunity to get Scotland moving and falls short on the stimulus needed for Scotland in a time of low economic growth.
Scotland needs a sustained programme of capital investment and unfortunately the UK Government failed to respond to the list of shovel ready projects provided to them by the Scottish Government in advance of the Budget. This list detailed some £300m of capital projects - on which work could start immediately if additional funding was allocated.
The growth initiatives that were gained are welcome. The tax relief for our globally successful computer games industry and the acceptance of the Scottish Government’s choices on Enterprise Area status will provide a welcome boost and support growth. These are both areas in which the Scottish Government has long made a case for increased investment to stimulate progress and create jobs.
Under the UK Government, a year of oil investment was jeopardised by last year’s tax hike. Support for oil and gas decommissioning and new field allowances west of Shetland in this year’s budget are welcome, and will go some way to repairing the damage inflicted on the sector by the UK Government last year. However support for our oil industry must be further reaching and future tax changes must undergo a consultation period to prevent the smash and grab raid of just a year ago.
The reality here is a budget that delivers only £4m a year for Scotland. At a time when growth is very low in the economy what Scotland needed was investment and stimulus to allow to economy to flourish. The Chancellor has allocated next to no new resources and taken no major initiatives to support this effort.
This was not a budget for Scotland. It illustrates how little Scotland figures in the UK Government’s thinking and is further proof of the need for Scotland to have control over financial powers with independence.
UK Budget Fails on Fuel
While the Tories have prioritised a tax cut for the rich, there was nothing in the Budget to help hard pressed motorists with the soaring cost of fuel. Indeed, in the Budget, George Osborne said there would be no change to his plans to increase fuel duty from August.
For many people in Aberdeenshire East, owning a car is a necessity, not a luxury and, with the average price of a litre of petrol breaking 140p last week, households in this area are feeling the pinch in their pockets.
We not only need a cut in duty, but the introduction of a fuel duty regulator to permanently bring prices under control. With the bulk of the pump price made up of tax, the Treasury must stop this highway robbery because soaring fuel prices are hindering economic recovery.
The SNP at Westminster have tabled an amendment to the Budget Bill which would deliver relief on soaring fuel prices by introducing a fuel duty regulator. The mechanism – which was supported by the Tories when in opposition - would freeze fuel duty increases as oil prices rise with a parallel reduction in duty to match the extra revenue from VAT from higher pump prices. The proposal has been backed by the Road Haulage Association.
With record North Sea oil and gas revenues flowing to the Treasury, we need to see stable fuel prices for ordinary people, hauliers and businesses.
If Westminster will not act, the powers should be passed to the Scottish Parliament so that it can.