David Watt: Oil was the key to this Budget

News that North Sea industry would receive assistance was the Budget's big highlight. Picture: Hemedia
News that North Sea industry would receive assistance was the Budget's big highlight. Picture: Hemedia
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THE headline of this year’s Budget for Scotland must be the essential changes to North Sea taxation which see both encouragement to the exploration of the future and that of the past.

It will see significant cuts in oil revenue taxes as well as real support for exploration – backdated in some aspects too, so perhaps they have been listening to the protestations of the industry.

The reduction in the duty on whisky – albeit small at 2 per cent – is to be applauded, particularly in the message it sends out to others across the world that we don’t penalise our own successful exporters.

It also brings to the end a period when it seemed that the only way such excise duty could go is up.

I suspect the legislation to enforce the opportunity to come out of annuities will cause some raised eyebrows in financial services, especially insurance industries based significantly in Scotland. In the long term these changes might bring benefits but will certainly cause some short-term disquiet.

Overall while these steps are very welcome – indeed, in the case of oil, essential – perhaps the best news is that he did not take the opportunity to veer towards what he himself described as “deeply irresponsible” spending on the back of recent progress. Business hates boom and bust and fickle politicians who change their mind for reasons of expediency or approaching election.

Some serious economic thought and planning is what the economy needs and there was some evidence of that in the 2015 budget. The Chancellor did outline his thinking and give fiscal arguments for many of his measures, although I am sure there was a good deal of political activity.

Other measures to be welcomed included the early reference to moving farmers on to a five-year income tax balanced assessment; the introduction of a personal savings allowance; the cancellation of the fuel duty rise scheduled for September; the selling off of stakes in Lloyds and other financial institutions; and further encouragement for first-time buyers with a 25 per cent bonus for those saving for their deposit.

All of these have a significant and positive impact in the private sector.

The continued commitment to Glasgow, Aberdeen and Inverness as part of the smart cities programme is very good and the further emphasis on broadband rollout is something business desperately wants and they are far from convinced that it is happening fast enough.

The review of business rates in England is positive but those of us north of the Border will have to wait and see if it has any impact.

The private sector will be pleased to see the Chancellor’s assertion that state spending is back to the level of the year 2000 and that he is committed to reduce departmental spending by a further £13 billion over the next year.

In addition, most will be more than happy with his commitment to clamp down on tax avoidance and get another £3.1bn from that source next year.

The abolition of National Insurance for a growing band of people – apprentices as well as under 21s – is very much a step in the right direction as is the raising of the tax threshold which helps people in work keep the money they earn.

We will all await with interest the continuing tax simplification and the abolition of the paper and annual tax return, though it appears many IoD members will still be filling in such forms – even if all online.

Overall it is “steady as you go” with slightly softer austerity and probably allows for continued business planning and growth.

As ever, there will be some Scottish consequential effects still to be seen as they spill out. But, I think most private sector leaders in Scotland will be happy.

• David Watt is executive director of the Institute of Directors (IoD) Scotland

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