Scots referendum looms large over Budget

19 Mar 14
Scottish reactions to the Budget were coloured by the prospect of the independence referendum, just six months away.

By Keith Aitken in Edinburgh | 20 March 2014

Scottish reactions to the Budget were coloured by the prospect of the independence referendum, just six months away.

In his statement yesterday, Chancellor George Osborne announced a downgrading of oil revenue forecasts, which he claimed would leave every adult in an independent Scotland £1,000 worse off.

While North Sea oil and a gas was a ‘key British export’, he noted that the Office for Budget Responsibility had revised down forecast tax receipts by a further £3bn.

‘These further downgrades in the tax receipts would leave independent Scots with a shortfall of £1,000 per person,’ said Osborne. ‘Britain is better together.’

Scottish Secretary Alistair Carmichael added that the Budget allowed Scots to contrast a fast-growing UK economy with the ‘uncertainties’ of independence. His Labour shadow, Margret Curran, claimed that the new forecasts left a £3bn fiscal gap in the Scottish National Party’s economic case for independence.

But Scottish Finance Secretary John Swinney said it was ‘curious’ that Osborne had backed Sir Ian Wood’s proposals for boosting future North Sea development, and in the next sentence downgraded the sector’s prospects. More than £14bn was invested in North Sea development in the last financial year, Swinney said.

He pointed to yesterday’s monthly figures, which showed that Scottish is employment higher and unemployment lower than for the UK as a whole, and said it demonstrated how the Scottish Government had managed to make a difference even within the constraints of devolution by boosting public investment and helping more people back to work.

But there was a widespread welcome for the ending of the alcohol price escalator and the freeze on whisky duties, which the industry argued have been choking off home sales at a time of rapid export expansion. David Williamson of the Scotch Whisky Association called the measures ‘really positive steps in the right direction’.

Scottish Conservative leader Ruth Davidson, who had been pressing for a freeze, said: ‘This tax boost will not only benefit the big players, but also the small independent distilleries right across Scotland who rely on our domestic market for sales.’

Business lobbies were generally pleased at the increased support for investment, exports, energy costs and new air routes. Andy Willox, Scottish policy convener for the Federation of Small businesses, said: ‘A sustainable recovery won’t be built on the shaky foundations of consumer debt.  Rather, it has to build on investment and, by doubling the Annual Investment Allowance, the chancellor has shown that he understands this.’

Ian McKay, chair of the Institute of Directors in Scotland, said the support for investment would encourage companies with cash in the bank to have the confidence to invest.

But the Scottish Trades Union Congress was less impressed. General Secretary Grahame Smith said: ‘With the majority of spending cuts yet to be implemented and the unprecedented decline in real wages ongoing, there was nothing in this Budget to help the low paid or those out of work. This government is clearly intensely relaxed about falling living standards.’


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