Budget 2017: Chancellor touts £2bn '˜extra' for Scotland

Philip Hammond claimed that the influence of the new bloc of Scottish Tory MPs was instrumental in his budget as he unveiled a series of measures that affect Scotland in his annual statement.

Chancellor Philip Hammond delivers his Budget. Picture: PA Wire

The Chancellor said he was ‘getting used to having his ear bent’ by the 13 Scottish Tory MPs elected at the snap General Election in June as he confirmed that VAT will no longer apply to Scotland’s national police and fire services.

Blaming the SNP for the VAT charges that had been levied against the recently centralised emergency services, saying they knew Police Scotland and Scottish Fire and Rescue would be eligible for VAT.

To cheers from the Scottish Conservative contingent, Mr Hammond also announced that there would be £2bn of ‘extra’ funding for the Scottish Government, which has claims its bloc grant cut since 2010.

A Treasury document clarified that this money was over the five years until fiscal year 2020/21.

Among other news that will affect Scotland was the Chancellor’s announcement that he would work towards two new ‘City Deals’ in Scotland, a ‘Tay Cities’ deal and a City Deal for Stirling.

There was more tax relief for the recovering North Sea oil and gas industry, as Mr Hammond confirmed that the tax history of transferred assets would also be transferred.

Britain’s fiscal watchdog revised down its predictions for the broader UK economy, as the nation looks set to struggle with “stubbornly flat” productivity growth and weaker business investment.

In its independent forecasts, the Office for Budget Responsibility (OBR) downgraded gross domestic product forecasts (GDP) from 2% to 1.5% for this year.

It also cut the GDP outlook from 1.6% to 1.4% in 2018, from 1.7% to 1.3% in 2019, from 1.9% to 1.3% in 2020, and from 2% to 1.5% in 2021, before expanding by 1.6% in 2022.

Nicola Sturgeon, Scotland’s First Minister, accused the Chancellor of using the £2bn figure to hide behind a real terms cut to the Scottish budget.

She wrote on Twitter: “The headline £2 billion ‘extra spending’ figure for Scotland has much less to it than meets the eye. Firstly, it is spread over this and next three years.

“Second - and more important - more than half of the headline £2bn (£1.1bn) is in the form of Financial Transactions - money that can be used for limited purposes only and has to be repaid by @scotgov.”