Sturgeon on budget: More smoke and mirrors

22 November 2017, 19:11 | Updated: 22 November 2017, 19:12

nicola sturgeon

Philip Hammond's Budget pledge of £2 billion for Scotland has been dismissed as "smoke and mirrors" by First Minister Nicola Sturgeon.

The SNP leader also said it was "disappointing" that the UK Chancellor had not refunded VAT payments made by the police and fire service north of the border, after confirming these will be scrapped.

Police Scotland and the Scottish Fire and Rescue Service (SFRS) have had to pay the levy since they were created in April 2013, and are the only such services in the UK that are required to do so.

Ending the payments will save the forces £35 million to £40 million a year.

Mr Hammond insisted SNP ministers had always been aware the two organisations - formed from the merger of the previous regional forces - would be subject to the charge.

"The SNP knew the rules, they knew the consequences of introducing these bodies and they ploughed ahead anyway," he told the House of Commons.

But he said the 13 Scottish Conservative MPs elected in June had persuaded him that "the Scottish people should not lose out because of the obstinacy of the SNP government".

Meanwhile he said that spending decisions made in the Budget would mean £2 billion for the Scottish Government in what is known as Barnett consequentials.

Ms Sturgeon said both the scrapping of VAT for the police and fire service in Scotland and the announcement of a new tax break for the North Sea oil industry were "very welcome, if overdue".

But on the VAT charges she said that not backdating the measure to cover earlier payments was "disappointing and unfair to emergency services".

She also said that "the headline £2 billion 'extra spending' figure for Scotland has much less to it than meets the eye".

The First Minister tweeted: "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.

"Taking account of today's announced changes, next year's (2018/19) @scotgov revenue budget still facing real terms CUT of £239 million - imposed by the UK government."

She also said the "Chancellor's announcement of extra £350m for NHS in England this year translates into net increase in @scotgov budget of just £8m".

Meanwhile she criticised the Chancellor for failing to announce spending "or any real commitment" to lifting the public sector pay cap.

Ms Sturgeon has already pledged the Scottish Government will end the 1% cap on wage rises that has been imposed on public workers.

She said: "Lots more to mull over - but early indications are of more smoke and mirrors than substance. #Budget2017."

The headline announcement in the Budget was the abolition of stamp duty for first time property buyers on homes worth up to £300,000.

However this will not apply in Scotland, where ministers have introduced the Land and Buildings Transaction Tax - which applies a levy of 2% on property sales between £145,000 and £250,000, with this rising to 5% from £250,000 and £325,000.

Scottish Conservative leader Ruth Davidson said it would "make a massive difference" if Scottish Finance Secretary Derek McKay followed the Chancellor's lead in next month's Holyrood budget.

Mr Mackay claimed the Budget deal for Scotland was "disappointing" in comparison with the £1 billion given to the Democratic Unionist Party in Northern Ireland for supporting the Tory minority government at Westminster.

He said: "Scotland's resource block grant for day-to-day spending will fall by over £200 million in real terms next year and while money for the NHS in England should see a proportionate share come to Scotland, cuts in other UK departments mean that instead of receiving over £30 million this year, the Scottish Government will receive only £8 million - a fraction of that spending.

"The reality is that over £1.1 billion of the money being promised to Scotland over the next four years are loans that the Scottish Government cannot spend directly on frontline public services and that have to be paid back to the Treasury."

He added: "The reality of today's budget is that Scotland continues to be hit by UK austerity and the decision to leave the EU. Compared with the £1 billion awarded to the DUP, the funding settlement for Scotland unveiled today is disappointing.

"I have consistently argued for a better settlement for Scotland, and this budget does not reflect that."

But Scottish Secretary David Mundell said that with measures to help whisky and North Sea oil, the Budget "backs Scotland's great industries".

Duty on spirits was frozen again, making a bottle of whisky £1.15 cheaper than it would otherwise have been since the duty rise ended in 2014, according to the UK Government.

Karen Betts, chief executive of the Scotch Whisky Association, welcomed the freeze but stressed tax on the drink was still "very high", adding that the Budget was a "missed opportunity" to address this.

While much of the control over income tax in Scotland has been devolved to Holyrood, the UK Government said that 2.4 million people north of the border would benefit from an increase in the personal allowance .

The amount workers are allowed to earn before they become liable for the charge is being increased from £11,500 to £11,850 in April 2018.

With Mr Hammond also stating progress is being made on two more city deals for Scotland, Mr Mundell said: "This Budget demonstrates the UK Government is delivering for Scotland.''

He added: ''From support for city deals and some of our finest charities to landmark tax measures on oil and gas and whisky, this Budget backs Scotland's great industries.

''This is in addition to the £2 billion of extra spending power the Scottish Government will have as a result of this Budget.

''This Budget will directly benefit people right across Scotland as we work to create an economy fit for the future.''

New Scottish Labour leader Richard Leonard said the Chancellor had "delivered a failing budget, on a failing economy from a failing government".

He said of the Conservatives: "They are rudderless and without a plan to grow our economy, help our industries and create the work of the future. This Tory Government is a driverless vehicle. This budget is insufficient, inadequate and insincere."

Mr Leonard added: "This budget reminds us how years of Tory failure have damaged our economy. We urgently need a long-term industrial strategy which will invest in Scotland's future and investment in our public services."

Scottish Green co-convener Patrick Harvie said further tax breaks for the North Sea would damage environmental efforts from the UK Government.

He said: "Yet another round of tax breaks for the fossil fuel industry will undermine any effort the UK Government intends to make on cutting plastic pollution, while support for self-driving cars is likely to benefit the wealthiest people while public transport fares keep rising."

Scottish Liberal Democrat leader Willie Rennie said: "It speaks volumes when this government plans to spend more money on Brexit than the NHS. The Brexit juggernaut is careering towards us at great speed."