Rishi Sunak unveils spending spree with Scottish Government to receive extra £4.6 billion a year

Rishi Sunak has unveiled a budget that will see the Scottish Government receive an extra £4.6 billion a year.

Prime Minister Boris Johnson with Chancellor of the Exchequer Rishi Sunak during a visit to Fourpure Brewery in Bermondsey, London, after Sunak delivered his Budget to the House of Commons.

The Chancellor claimed his plans showed the "indisputable fiscal benefit" of being part of the United Kingdom, and that they represented the “largest block grants since 1998".

Mr Sunak told MPs his budget would “level up” across the UK, and see Scottish projects receive around £170 million.

He said: "This is a Budget for the whole United Kingdom.

"Through the Barnett formula, today’s decisions increase Scottish Government funding, in each year by an average of £4.6bn, Welsh Government funding by £2.5bn, and £1.6bn for the Northern Ireland Executive.

“This delivers, in real terms, the largest block grants for the devolved administrations since the devolution settlements of 1998.

"The whole of the United Kingdom will benefit from the UK Shared Prosperity Fund, and over time we will ramp up funding so that total domestic UK-wide funding will match EU receipts, averaging around £1.5bn a year.

"And whilst today demonstrates the indisputable fiscal benefit of being part of the United Kingdom.

"This is and always will be secondary to the simple truth that we are bound together by more than transactional benefit. It is our collective history, our culture and our security.

"We are, and always will be, one family. One United Kingdom.”

Other announcements included more than £172.7million of investment directly into Scotland’s communities.

Scottish Finance Secretary Kate Forbes said that “in reality the Scottish Government will receive less grant funding in every year of the spending review than it has in 2021-22” – though Tories dismissed the comparison as spending this year was boosted by short-term Covid support. Mr Sunak also told MPs that the Office for Budget Responsibility (OBR) had forecast a faster economic recovery, with growth expected to be 6.5 per cent this year.

With the public purse better than expected, Mr Sunak made a series of major investments, with a real terms rise in every Government department.

He said: “Employment is up. Investment is growing. Public services are improving. The public finances are stabilising. And wages are rising.

“Today’s Budget delivers a stronger economy for the British people: stronger growth, with the UK recovering faster than our major competitors.

“Stronger public finances, with our debt under control. Stronger employment, with fewer people out of work and more people in work. Growth up, jobs up, and debt down: Let there be no doubt – our plan is working.

“Today’s Budget increases total departmental spending over this Parliament by £150 billion.

“That’s the largest increase this century, with spending growing by 3.8 per cent a year in real terms.”

There was also a boost for travel, with the Chancellor lowering air passenger duty rates for travellers within the UK, just days before COP26.

Mr Sunak said: "I can announce that flights between England, Scotland, Wales and Northern Ireland will, from April 2023, be subject to a new lower rate of air passenger duty.

"This will help cut the cost of living for nine million passengers. It brings people together across the United Kingdom."

Chief Secretary to the Treasury Simon Clarke told journalists he was looking forward to working with the devolved administrations.

He said: “I am a British minister, I have a perfectly good relationship with Kate Forbes and I’ve been really pleased with the progress we’ve been able to make.

“We are legitimately acting within our powers as the British government to work alongside the devolved administrations.

“We want to make sure that there is the fullest possible dialogue with the departments involved in dispersing these funds.

“We would encourage the fullest possible dialogues about what we are doing and what they are doing.

“This should be a process between grown-up administrations who want the same thing which is in this case the right outcomes for the people of Scotland.”

Universal Credit claimants will now able to keep more of the benefit as they earn more, as part of a £2.2 billion tax cut to help low-paid families with the cost of living and “reward work”.

The taper rate will be cut by 8 per cent “within weeks”, with Mr Sunak labelling it a “hidden tax on work”.

The taper rate is the amount of benefit taken away from every £1 earned above the claimant’s work allowance – meaning claimants will now be able to keep an additional 8p per £1 of net income.

Mr Sunak added: “This is a £2 billion tax cut for the lowest paid workers in our country.

“It supports working families, it helps with the cost of living and it rewards work.”

The changes mean that nearly two million families will keep on average an extra £1,000 a year, though this is less than a third of around six million households hit by the removal of the £20-a-week UC uplift which came into effect this month.

Taxes on draught beer, cider and sparkling wine were also cut as part of a huge overhaul of the UK’s alcohol duty system, though taxes will increase on some higher strength drinks, such as some red wine and “white ciders”.This will include cutting the price of a pint in a pub by 3p as part of a new lower duty rate, and the planned increase in duty on spirits such as Scotch whisky was cancelled.

Mr Sunak added: “We are taking advantage of leaving the EU to announce the most radical simplification of alcohol duties for over 140 years.”

Shadow chancellor Rachel Reeves insisted that in the long history of the British Parliament, never “has a Chancellor asked the British people to pay so much for so little”.

She said: “The highest sustained tax burden in peace time. And who is going to pay for it? It is not international giants like Amazon, no, the Chancellor has found a tax deduction for them.

“It is not property speculators, they already pocketed a stamp duty cut and it is clearly not the banks, even though bankers bonuses are set to reach a record high this years.

"Instead, the Chancellor is loading the burden on working people. A national insurance tax rise on working people, a council tax hike on working people, and no support today for working people with VAT on their gas and electricity bills.

“This Budget did nothing to deal with the spiralling cost of living, it is a shocking missed opportunity by a Government that is completely out of touch."

The SNP Westminster leader Ian Blackford claimed the budget has short-changed Scotland and left millions of families worse off.

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 £500million just transition fund, failed to fully replace EU funding for Scottish local authorities, and failed to compensate Scotland for the damage of Brexit.

"It beggars belief that the Tories expect us to be grateful even though they are making families poorer and robbing Scotland of investment."