Now that the UK Chancellor, Jeremy Hunt, has published his Spring Budget, it will, of course, have knock on effects to both the Scottish and Orkney Islands Council Budgets, because those are intrinsically linked to the UK one.
The announcement that caught the attention of OIC was the awarding of an endowment style 10 year funding of £20million to Kirkwall. This funding will require the formation of a Board to manage the projects which are part of this deal. You can read more about that here: Reaction to £20million Levelling Up Funding for Kirkwall
Jeremy Hunt declared it a ‘Budget for Long Term Growth’. The independent Office for Budget Responsibility (OBR) have concluded that ” the medium-term economic outlook remains challenging”, and “our forecast for the level of GDP in five years virtually unchanged from the autumn, and the level of GDP per person slightly lower.”
Amongst the announcements were:
- Employee National Insurance tax cut from 10% to 8% in April
- High Income Child Benefit Charge to be assessed on a household-basis by April 2026.
- 5p cut and freeze to fuel duty until March 2025.
- The ‘non-dom’ tax regime will be abolished from April 2025 where new arrivals to the UK pay the same tax as everyone else after four years.
- The oil and gas sector’s windfall profits from higher prices are expected to last longer, the sunset clause on the Energy Profits Levy will be extended by a year to March 2029
Deputy First Minister and Finance Secretary in the Scottish Government, Shona Robison said:
“The National Insurance cut fails to offset the crippling effects of the Cost of Living crisis. There is also little detail of the spending cuts needed to pay for it. Even before today’s Spring Budget the Institute for Government described its spending plans as a ‘fantasy’, with no detail on where cuts will fall. “
How will public services in Scotland be affected by the UK Chancellor’s Budget ?
Although Scotland has its own National Health Service, if there is a lack of investment or a real terms cut in funding to the NHS in rUK, then there will be a similar % cut in the money coming to Scotland for its public services.
Shona Robison explained that the UK Budget :
“is nothing short of a betrayal of public services across the UK. Our hope had been the Chancellor would have eased pressures on services – not least by providing more funding for capital. This would have helped support our NHS and the delivery of more affordable housing, but it would also have created jobs and economic growth, as well as helping secure a just transition to net zero.
“When more support is desperately needed for public services and infrastructure, for greater cost of living measures, and for money to aid our efforts to reduce carbon emissions – Scotland has been badly let down by the UK Government.
“Today’s statement provides not a single penny more for capital funding. And the Barnett consequentials from health that were signalled by the Chancellor are actually less than the in-year health consequentials of 2023-24 and less than what is needed to address the pressures we face. I can guarantee that this Scottish Government will not be passing on this UK Government cut to our NHS.”
The UK Budget has also been criticised by Anas Sarwar, the leader of the Labour Party in Scotland who called for a General Election. He said:
“The Tories’ cynical attempts to distract voters from their woeful record reek of desperation – but they’re not fooling anyone.
“This budget doesn’t even begin to undo the damage this Tory government has done to our economy – families are still struggling, food prices are still going up and annual mortgage payments are still £2,000 higher.
“The Chancellor’s decision to follow Labour’s lead and extend the windfall tax on the profits of oil and gas giants exposes Douglas Ross’ irrelevance in his own party and leaves the SNP to the right of the Tories on this issue.
“Scotland deserves better than Rishi’s recession with the Tories, or an SNP that thinks that oil and gas giants should pay less tax while a nurse should pay more.
“For 14 years working people have been forced to pay the price for Tory chaos – it’s time for change. Labour is ready to deliver the change Scotland needs by making work pay, growing our economy and renewing our public services.”
The UK economy, will also be affected by world events especially if the Bombardment of Gaza by Israeli forces continues and spreads. The OBR state:
” Inflation could rebound and remain higher for longer if the conflict in the Middle East were to widen or if domestic wage pressures do not subside as quickly as we assume.”
The UK also has a persistent problem, since the start of the pandemic, with inactive working age people, a result mostly of Long Covid.
“The number of inactive working-age adults is no longer declining from its post-pandemic peak,.” It now stands at 9.3 million people, the highest level in over a decade and 700,000 more than before the pandemic.
“Around one third of the working-age inactive population cite long-term illness as their principal reason for not being in the labour force. “
Orkney Islands Council will have its first full meeting of councillors on Monday 11th of March when perhaps we will know more about how the islands will be impacted by the latest Budget measures by the UK Government.
Fiona Grahame