Deputy First Minister John Swinney has written to the Chancellor ahead of this week’s Budget, objecting to cuts to welfare funding and suggestions that tax credits are to be reduced.
In his letter to George Osborne, Swinney has renewed his criticisms of the austerity agenda and outlined his concerns about the £107 million cut to the Scottish budget.
Swinney, who is also the Scottish Government’s Finance Secretary, said more should be done to improve productivity and support those in low pay.
He also asked for more investment in the economy to be accompanied by a more gradual approach to deficit reduction, and reiterated Holyrood’s objection to the decision taken by the UK government to end support for the onshore wind sector.
Swinney said: “The Scottish Government remains concerned about the social and economic impact of further planned cuts to welfare budgets, and I am particularly concerned with media reports that the budget will include measures to significantly reduce tax credits.
“It is vital that we support people in work as well as into work – by tackling low pay, by creating jobs and by removing barriers – rather than cutting tax credits or work allowances.
“Since the March budget, the economic outlook has remained broadly positive in both Scotland and the UK as a whole. However, challenges around the nature of the economic recovery remain. Therefore I urge you to use this budget to focus on measures to boost the recovery, improve productivity and support those in low pay.
“You had indicated that securing improvements in productivity was the key challenge currently facing the UK economy and that, as such, a renewed focus on investment in skills, planning and transport – along with ongoing efforts to repair the banking sector – would be priorities for the UK government.
“These are priorities that I would broadly endorse, although it remains the view of the Scottish Government that such policies must be backed up by genuine investment, coupled alongside a more measured approach to deficit reduction.
“The UK government’s approach to austerity has damaged the economy and undermined attempts to improve public finances. The deficit needs to be reduced, but this should be done in a more gradual manner in which more focus and resources are allocated to a programme of additional investment in our economy.”
Labour also warned against cutting tax credits, with shadow Scottish Secretary Ian Murray claiming the move would affect 296,000 families in Scotland who receive tax credits, including more than 522,000 children.
A UK government spokeswoman said: “In Scotland, as across the rest of the UK, the proportion of individuals and children in relative poverty are at their lowest levels since the 1980s.
“We know that work is the best route out of poverty, with children in workless families around three times as likely to be in poverty than those in working families.
“That’s why, as part of our long-term economic plan, our reforms to the welfare system are focused on making work pay, while our reforms to the tax system are allowing people to keep more of what they earn.”