Holyrood Handed £213m Funding Boost

3 December 2014, 17:13 | Updated: 3 December 2014, 17:24

The Scottish Government has been challenged to "crack on'' and spend a £213 million funding boost on vital public services it has been handed by the Chancellor in his Autumn Statement.

Scottish Secretary Alistair Carmichael said the Holyrood administration would get the additional cash as a result of George Osborne's spending announcements.

Mr Carmichael declared: "These measures will give the Scottish Government an extra £213 million of spending, taking the total of additional spending power to over £2.3 billion since we came to office.

"This means they can crack on and spend more money on funding for the NHS, more childcare places or more funding for schools or colleges.''

There was no mention of corporation tax being devolved to Scotland - although Mr Osborne signalled that powers over the levy would be devolved to Northern Ireland.

Scottish Deputy First Minister John Swinney hit out: "While the Chancellor gives Northern Ireland the power to cut corporation tax, his government is continuing to block the job-creating powers Scotland needs.''

Mr Swinney said while additional funding was "always welcome'', he added: "The consequentials of around £200 million we have received today cannot compensate for the £2.7 billion of real terms cuts we have faced since 2010.

"And with a further £25 billion of cuts in the future, the Westminster Government is locking Scotland into austerity against our wishes.''

The centrepiece of the Chancellor's Autumn Statement was a root and branch reform of stamp duty, promising to save homebuyers thousands of pounds.

Mr Osborne branded the existing levy a ''tax on aspiration'' and said he would scrap the "cliff edges'' which distort the property market.

While the Scottish Land and Buildings Transaction Tax (LBBT) - which is being brought in by the SNP - will replace stamp duty north of the border from next April, the UK Government pledged homebuyers in Scotland would not miss out on a potential tax cut before the new charge came into place.

Scottish Conservatives claimed the introduction of LBBT would leave many homebuyers in Scotland worse off, claiming that under that system the charge on a home worth £395,000 would be £16,800 compared to £9,750 in the rest of the UK.

Scottish Conservative finance spokesman Gavin Brown MSP said: "The UK Government has done the right thing by making homes more attainable for first-time buyers and hardworking families further up the ladder.

"However, the fact the SNP has chosen to punish those aspiring to own a family home is now even more apparent.''

Mr Brown stated: "Before today, there was an extremely strong case for having a far lower rate, after today the case is truly overwhelming

"The SNP seriously needs to reconsider its assault on aspiration, and reducing the tax burden on families instead of increasing it.

"We are now seeing Scotland lurch starkly to the left, where anyone who dares to work hard or aspires to do better is immediately penalised by the state.''

Scots will benefit from the increase in the income tax threshold, which will rise by £600 to £10,600 from 2015/16.

Mr Osborne also announced that youngsters under 12 would no longer be subject to air passenger duty charges on flights from next May, with the charge abolished for all under-16s from March 2016.

Scottish families will benefit from this when flying, but with the charge due to be devolved to Scotland in the wake of the Smith Commission review of devolution, it will then be up to Holyrood.

Mr Carmichael said the Autumn Statement "sets out the next steps in the UK Government's long-term economic plan to secure a sustained recovery and a more resilient economy''.

He added: "By backing businesses, helping more people into work and supporting families in communities across the country, Scotland is benefiting from the action we are taking to help our economy grow.''

The Liberal Democrat Scottish Secretary said: "Scotland chose to retain a shared currency, pensions, single market and the economic stability and security that comes from being part of the UK.

"With more funding provided to the Scottish Government today and more powers and great responsibility for the Scottish Parliament on the way, Scotland is strengthened by today's Autumn Statement.''

In his statement Mr Osborne was forced to admit that weak tax revenues mean the deficit is not falling as fast as hoped and will be more than £90 billion this year.

"Today's budget shows the failure of the UK Government's austerity policy and it is clear that we in Scotland are paying the price,'' Mr Swinney said.

"In 2010 the Chancellor embarked on his austerity programme and instead of putting the finances on a sound footing, we are seeing borrowing this year of over £50 billion higher than expected, lower tax revenues and austerity extended by at least a further two years.

"Just last week I wrote to the UK Government to ask them to use the Autumn statement as an opportunity to ensure that the benefits of economic growth are not only sustained but are made accessible to all. The Chancellor has not listened.

"The lowest earning households in Scotland will be among the hardest hit by the UK Government cuts.''

Mr Swinney also claimed the Chancellor had followed in his footsteps by reforming stamp duty.

Holyrood's Finance Secretary said: "I am delighted to see on the first occasion I've had to design a tax system for Scotland, the UK Government copies it instantaneously and applies it across the UK - imitation truly is the sincerest form of flattery.''

But he added: "Under the original Scottish Government proposal, over 80% of home buyers in Scotland will be better-off under our Land and Buildings Transaction Tax, a system that has been designed for Scottish circumstances, not London house prices.

"Under our proposals no tax will be paid on any property purchase up to #135,000, taking 5,000 properties our of taxation.

"The Chancellor has had years - and ample opportunity - to redesign the old, outdated stamp duty system which caused unfair tax hikes and distorted the market. However, the Chancellor has waited to be guided by Scotland and is now following our lead.''

Mr Swinney claimed: "Scotland's proposals to reform stamp duty have brought reform to the whole of the UK system and we will ensure that taxation in Scotland is proportionate to the ability to pay.''

Labour's shadow Scottish secretary, Margaret Curran, also attacked the Conservative Chancellor, saying his party had "failed Scotland with their broken promises''.

Ms Curran said: "In 2010, George Osborne said that he would balance the books by 2015, but today we see that the deficit next year is still forecast to be close to #80 billion. On this simple test the Tories set for themselves, they have failed.

"Prices are rising faster than wages and families across Scotland are being squeezed because of it. The Tories should have taken action today to solve the cost-of-living crisis that is hitting ordinary Scots, but instead there was nothing in this Autumn Statement for them.''

After the Office for Budget Responsibility downscaled its forecasts for oil and gas revenues, Ms Curran said that "the SNP's economic credibility is in tatters''.

She said: "Next year alone, oil revenues will be £1.6 billion lower than planned. That's more than the total budget for the Scottish police service. And over the next five years, revenues have been forecast down by £4.5 billion.''

On this Chief Secretary to the Treasury Danny Alexander said: "If Scotland was independent this £4.5 billion downgrade would have meant severe cuts to schools and hospitals. With the broad shoulders of the UK, we can effectively steward our resources whilst shaping our own domestic agenda in Scotland. This is the real benefit of home rule.''

Grahame Smith, the general secretary of the Scottish Trades Union, was also critical of Mr Osborne, claiming it was a "low-key statement that included almost nothing of significance that hadn't already been widely trailed or previously announced''.

Mr Smith added: "I did confirm that the Chancellor continues to fail in his primary objective of cutting the deficit and none of the supply side measures announced today are likely to revive the Chancellor's failed programme of economic rebalancing.

"As we've come to expect, there was nothing whatsoever to assist people on low wages and benefits. Raising the personal allowance is an expensive measure that delivers three-quarters of its benefits to people in the top half of the income distribution. It is simply misleading for the coalition to continually promote this measure as targeted at helping low-paid workers.''

Business leaders welcomed the capping of business rates rises at 2% next year, with Liz Cameron, the chief executive of the Scottish Chamber of Commerce, saying this "should signal a mirroring of this policy in Scotland, which would deliver a marginal boost to businesses across the country next year''.

She added: "That said, it is disappointing that the Chancellor did not take the opportunity to freeze business rates for the next two years, and we would urge the Scottish Government to go further while it has the opportunity.''

Ms Cameron welcomed the additional cash that will come to Scotland, saying: "With regard to capital spending, we would like to see the UK Government's ambitious long-term strategy for spending on repairing and improving roads to be implemented by the Scottish Government here in Scotland. We have numerous transport bottlenecks in urgent need of allocated funding, including the A9 Berriedale Braes in Caithness and the Maybole Bypass in Ayrshire.''

That was echoed by Andy Willox, the Federation of Small Businesses' Scottish policy convenor, who said: "The state of many local roads in Scotland simply isn't good enough. If there's new money going to the Scottish Government, the smart move would be to set up a local infrastructure fund to fix our broken roads and deal with local traffic problems.''