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19/03/14 15:30

UK Budget can’t hide continued cuts

Chancellor fails to deliver for Scotland.

Independence is the only way Scotland can properly create opportunities and secure the investment in public services and the economy Scotland needs, Scotland’s Finance Secretary John Swinney said today, following the UK Chancellor’s final budget before the referendum.

Whilst the budget included some welcome but overdue support for key Scottish industries, Mr Swinney said it had failed to meet Scotland’s needs and showed that there were significant cuts still to come from Westminster.

The Scottish Government’s discretionary budget is being cut by nearly 11% in real terms over the five year period to 2015-16, reflecting the UK Government’s plans, confirmed again today, to make a total of £37bn of cuts across the UK in 2014-15 and 2015-16. The Chancellor also confirmed his intention to continue his austerity drive until at least 2018-19.

Commenting on the Chancellor’s Budget, John Swinney said:

“Scotland is a wealthy country and we can more than afford to be independent. In each of the last 33 years Scotland has paid more in tax per head than the UK and in the last five years Scotland would be £1600 per head better off than the UK – money that could have been invested in the economy, in public services and reducing debts.

“This was Westminster’s last chance to show it could create opportunity for Scotland and reject the diet of austerity. Once again Westminster has failed to deliver for Scotland.

“This budget confirms a further squeeze on public spending and a further austerity plan

“The £63m added to the Scottish budget today is small beer compared to the significant cuts Scotland has faced since 2010. The Chancellor is planning a further £37 billion of cuts across the UK over the next two years and tens of billions to come afterwards. These cuts would be worse still if Scotland does not vote for independence and Westminster takes the knife to the Barnett formula.

“The reality is Westminster has presided over the weakest recovery in living memory, and since the downturn began the UK has had the weakest performance of any G7 country outside of Italy.

“UK public sector debt is now set to reach £1.5 trillion, its highest level in history, confirming that the Chancellor’s economic strategy has failed.

“Despite the Chancellor’s claims of improved economic performance by the end of next year, the UK economy is now expected to have grown by 5% less than he projected when he first came to office – forcing him to borrow an additional £190bn beyond his original forecast.”

The Finance Secretary continued:

“While I welcome the Chancellor’s choice of whisky as his referendum tipple, sticking with the Westminster system will leave Scotland with a severe hangover.

“The changes on APD simply do not go far enough to solve the problems faced in Scotland and with independence we will reduce rates of APD by 50% with a view to abolishing them completely when conditions allow.

“Help for savers and pensioners is long overdue but with real incomes being squeezed very few families in Scotland will be able to take full advantage of what is on offer.

“And with the welfare cap set to include pensions credit and savings credit which currently offer real help to poorer pensioners and will continue in an independent Scotland the Chancellor’s claims to protect pensioners do not stack up.”

Commenting on the latest projections from the Office of Budget Responsibility and the Chancellor’s claims on North Sea oil, Mr Swinney added:

“Westminster and those opposed to independence cannot simultaneously accept in full the Wood Report with its projections of higher production and at the same time cite the OBR forecasts of lower revenues from declining production.

“Increased investment in the North Sea will lead to increased production with a further 24 bn barrels of oil still to come from the North Sea.

“The Scottish Government has shown the progress that can be made in Scotland with the few powers we currently have. Figures today show Scotland is continuing to outperform the UK across all headline labour market indicators, with a lower unemployment rate, higher employment rate and lower economic inactivity rate. In addition, the latest surveys show business is both investing in Scotland and hiring in Scotland.

“In just under six months’ time voters in Scotland can choose to put all the decisions on taxation, spending and job-creation in the hands of the people of Scotland, not Westminster politicians, build on our success and escape from the poor decisions of Westminster governments we didn’t elect.”

Notes to editors

By the end of 2015 the UK economy is forecast to have grown by five per cent less than projected in June 2010 (the Chancellor’s first Budget).

That missed opportunity means borrowing will be around £190 billion higher than projected in June 2010.

UK debt is now expected to reach £1.5 trillion in 2018-19 – highest ever in cash terms.

In his speech the Chancellor claimed “we’re now growing faster than Germany, faster than Japan, faster than the US – in fact there is no major advanced economy in the world growing faster than Britain today."

However, the UK has had the weakest recovery to date of all its G7 partners, with the exception of Italy. The UK may be growing faster in one or two quarters but France, Canada, Germany and the US are now all above their pre-recession peaks - see table below.

G7 COMPARISONS

Total recessionary peak to trough GDP decline

GDP Q4 2013 compared to pre-recession peak

Canada

-4.2%

7.3%

France

-4.4%

0.1%

Germany

-6.8%

3.0%

Italy

-7.2%

-8.9%

Japan

-9.2%

-0.3%

UK

-7.2%

-1.4%

United States

-4.3%

6.2%

Euro area

-5.7%

-2.7%

G7

-5.2%

3.3%

SOURCE: OECD, ONS