Autumn Budget 2021: 'UK Government has shortchanged Scotland'

The Autumn Budget has been branded an ‘embarrassment’ and has ‘short-changed Scotland’, Scottish politicians have claimed, as the Chancellor unveiled a cut in aviation taxes and an increase in minimum wage which critics warned was still below the poverty line.

Chancellor of the Exchequer Rishi Sunak delivering his Budget to the House of Commons in London. Picture date: Wednesday October 27, 2021.

The Scottish Greens said that a cut to domestic aviation taxes was “embarrassing” from the host nation of the upcoming COP26 climate summit. Meanwhile, the SNP warned that the “piecemeal measures” would not offset cuts to Universal Credit, National Insurance hikes or rising inflation and would leave millions of families worse off.

Chancellor Rishi Sunak unveiled a package of measures which he said increased funding to Scotland by £4.6 billion – the largest public grant given to Scotland and the other devolved nations since the devolution settlements of 1998.

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Under £172 million of funding allocated to Scotland through the Levelling Up Fund and Community Ownership Fund, Aberdeen will see £20 million ploughed into a new marketplace and there will be a renovation of Inverness Castle, among other projects.

Chancellor of the Exchequer Rishi Sunak holds his ministerial 'Red Box' outside 11 Downing Street, London, before delivering his Budget to the House of Commons.

However, Holyrood finance minister Kate Forbes claimed that the Scottish Government would receive less grant funding in every year of the spending review than it has in 2021-22, when Covid-related funding was included.

She said: “Indeed, while the Chancellor today announced what he described as an increase in the block grant, in reality the Scottish Government will receive less grant funding in every year of the spending review than it has in 2021-22, despite the continuing challenges presented by Covid. Meanwhile the Chancellor has refused to extend last year’s Barnett Guarantee, which provided certainty on the amount of consequential funding we receive and was supported by the devolved governments in Scotland, Wales and Northern Ireland.

"This was a simple, cost free step the UK Government could have taken at a time when significant operational decisions are required. Instead, we must continue to drive Scotland’s recovery from the pandemic and meet our climate targets with one hand tied behind our back.”

Meanwhile, the beleaguered tourism industry welcomed domestic reductions in Air Passenger Duty (APD), but said that an increase in tax on long haul flights could hit international travel long term, while the hospitality industry urged the Scottish Government to follow Westminster in its plans to cut business rates south of the border.

SNP Westminster leader Ian Blackford said that the UK Government’s plans would “make families poorer” and were “robbing Scotland of investment”.

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He said: "No amount of smoke and mirrors can disguise the fact that the UK Budget has short-changed Scotland, and left millions of families hundreds of pounds worse off next year due to Tory cuts, tax hikes and the soaring cost of Brexit.

"Under the Tories, the UK has the worst levels of poverty and inequality in north west Europe and the highest levels of in-work poverty this century. Yet, this Budget did nothing to tackle the Tory cost of living crisis. The piecemeal measures won't even offset Tory Universal Credit cuts, National Insurance hikes or rising inflation, let alone boost incomes.

"The Tory government has short-changed Scotland by billions of pounds. It has broken its pledge to invest in Scottish carbon capture projects, failed to match the Scottish Government's £500m just transition fund, failed to fully replace EU funding for Scottish local authorities, and failed to compensate Scotland for the damage of Brexit.

Scottish Greens finance spokesperson, Ross Greer, described the budget has having been “written for the Tories' corporate donors", rather than for the public.

He said: “It certainly wasn't written with the planet's future in mind either. To cut aviation taxes just days before hosting COP26 has confirmed the UK Government's reputation as an international embarrassment. The investment in green tech does not go far enough, and the plans to spend £21 billion on roads while cutting air passenger duty for domestic flights, as well as freezing fuel duty, take a wrecking ball to the UK's climate obligations when we are only days away from COP.”

He added: "The negative effects of the pandemic are still being felt by families across the country. Far too many people have been forced into debt and have had to work multiple jobs on low pay just to make ends meet. Many of these workers have been hit hard by the Tories' cruel Universal Credit cut which these changes do little to mitigate.

"The minimum wage rise and spending increases that have been announced will not compensate for an increased inflation rate that even the Chancellor has said he is concerned about. The minimum wage should be set at a level above the poverty line, not below it and it should be the same for all workers, regardless of their age. It is long past time for young people to get equal pay for equal work.”

Scottish Labour shadow Scottish Secretary Ian Murray said: “The budget today shows how out of touch the Chancellor’s priorities are with the rest of the country.

“A week before the global climate conference in Glasgow, he is cutting taxes on flights and champagne while working people face the highest taxes since the Second World War.”

Joanne Dooey, president of The Scottish Passenger Agents’ Association (SPAA), the professional body for travel agents and the travel sector in Scotland said: “The reduction in domestic air passenger duty (APD) is to be welcomed, although it won’t come into effect until 2023.

“The increase in long haul APD which will come into effect at the same time won’t help Scotland’s economic recovery. It’s vital that businesses are able to trade globally from their Scottish bases.

“As a small nation, Scotland needs its connectivity, so this planned increase is disappointing not only for the travel industry but for Scottish businesses. We hope that the tax raised by this increase will be ring fenced to support developments in sustainable fuels and other measures to move towards net zero.”

Marc Crothall, chief executive of the Scottish Tourism Alliance, said that the simplification around alcohol duty and announcement of the new draught relief will give a “much-needed boost” to the supply chain and hospitality sector.

He said: “The move to implement a new one year 50 per cent discount on business rates for the retail, hospitality and leisure sectors across England, Wales and Northern Ireland offers encouragement that the Scottish Government may follow suit by extending the current business rates discount for the sector and again go further than the UK Government.

“There is clear recognition of the fragile state of the tourism and hospitality sectors across the UK in today’s Budget; we would hope that our discussions with the Scottish Government over the coming weeks will shape and influence a similarly positive spending announcement in the coming weeks, with further support being allocated to the sectors within our industry which have been hardest hit and will take longer to recover.”

Pro-union business group Scottish Business UK (SBUK) said Scottish ministers had been dealt “a strong hand” by Westminster.

Chief executive Struan Stevenson said: “Scottish businesses are seeing the continued economic benefit of our place in the United Kingdom, with record levels of funding through the Barnett Formula serving up an extra £4.6 billion a year for Scottish ministers to invest in business support and public services.

“The Chancellor has dealt Scottish ministers a strong hand ahead of the upcoming Holyrood Budget and we now need an increasingly collaborative approach from the First Minister and her team to tackle the challenges ahead and help businesses invest, grow and create new jobs. They must seize the opportunity to make the most of the potential for faster recovery presented by better-than-expected economic growth. That means listening to businesses by putting recovery and growth first and side-lining plans for independence which are now looking more recklessly distracting than ever.”

Scottish Secretary, Alister Jack said: “The Budget ushers in an era of real devolution, ensuring money is spent on projects that matter most to people in Scotland. The UK Government made a clear commitment to maintain Scotland's level of funding following the vote to leave the EU, and we have delivered on that promise. We are taking decisions in the UK rather than in Brussels and dealing directly with local authorities who know their communities best.”

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