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£1bn UKG Budget hit for Scotland

Published: 16 Mar 2016 16:34
Part of:
Economy

Chancellor’s hidden UK cut of £3.5bn to public spending yet to be announced.

The UK Budget conceals a cut of £3.5 billion in public spending across the UK, Deputy First Minister John Swinney said today, as he condemned the UK Government for pressing on with measures that will see a real-terms reduction of over £1 billion in Scotland's budget.

Mr Swinney said the cut, buried in the detail of the Treasury budget document, has not been allocated yet to specific departments, leaving Scotland in the dark about how much will fall on public services north of the border.

The real-terms reduction in Scotland's budget continues: even after the consequentials from today's budget are factored in, the budget will see over a £1 billion cut by 2019-20 compared to 2015-16, and a reduction of 4.7 per cent in the day-to-day budget funding for public services.

The Deputy First Minister also warned Scotland can expect to see the increase in public sector employer pensions contributions almost certainly wipe out the consequentials Scotland will receive from 2019 as a result of today's budget.

The UK Government's Budget confirmed:

  • a real terms reduction in the discretionary Scottish Budget in every year to 2019-20
  • Scotland's Capital budget in 2019-20 will be lower in cash terms than it was in 2010-11 – the equivalent of £550m in real terms

The measures for the oil and gas sector take on board some of the actions that the Scottish Government has been calling on for some time. Mr Swinney welcomed these but warned that more action was urgently required to address the short term challenges facing the sector.

Mr Swinney said:

"The Chancellor has continued with ideologically driven austerity of choice. Scotland will see over a billion pounds real-terms cut in the day-to-day budget that pays for public services – and that is before the hidden £3.5 billion further cut to public spending across the UK is applied.

"The Scottish Government has consistently demonstrated that the UK's deficit and debt can be brought down without the need for huge public spending cuts.

"The Budget statement today will deliver very little for Scotland – the modest consequentials that Scotland will receive are almost certainly wiped out by the increase in public sector employer pension contribution costs from 2019.

"We will continue to do everything within our power to protect the most vulnerable from the UK Government's austerity measures – austerity of choice, not necessity – but we want to use our powers and resources to lift people out of poverty, not just continually mitigate as best we can."

Mr Swinney continued:

"This support for the oil and gas sector announced at the Budget is welcome.

"While the reduction in the headline rate will improve the long term prospects for the sector, it does not fully address the short term challenges facing the industry.

"Further clarity is now urgently required on how the commitment to consider loan guarantees and improve access to decommissioning tax relief will be able to support the sector in the short term."

Notes to editors

Information on the £3.5 billion cuts still to come can be found on page 90 of the Budget document, section 2.6 under Public Spending: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508193/HMT_Budget_2016_Web_Accessible.pdf