Political parties

Scottish Labour: Labour's Scotland Office Minister David Cairns MP said that the Budget reinforced the risks and costs that the SNP would pose to hard working Scottish families. "Whilst Labour is introducing a cut in the basic rate of tax, Alex Salmond wants to Scotland to be saddled with the highest rate of personal tax in the UK through his expensive plans for a 'local' income tax.”

Scottish National Party: SNP leader Alex Salmond slammed Gordon Brown for dressing up real tax rises as a tax cut. Salmond said: “As is usual with Brown the devil is in the detail. He has brandished a 2p tax cut, which conceals the elimination of the 10p low rate and the changes to national insurance. In addition if money was available for reducing direct tax then it should have gone as the SNP propose to cut Council Tax which is unfair and hurting lots of people.”

“Indeed the change to basic and starting rate of income tax is a cut of just £85 million compared to the SNP plan to scrap Council Tax, which would see tax bills for Scottish families lowered by £450 million. It is election panic, which has forced the Brown tax con trick. However people will be rightly angry when they realise that the brandished basic rate cut is concealing tax rises elsewhere.”

“Our industry alarm bells should be ringing. Brown has moved onto SNP ground in the reduction of corporation tax. However, this gives no competitive advantage to Scotland. Northern Ireland is to get an industrial renovation fund to revitalise the economy. Scotland was only mentioned in terms of supermarket jobs. That is why SNP proposals to Let Scotland Flourish are so badly needed to boost Scottish growth rate.”

“Brown claims oil revenues are falling. In fact they are on a rising trend increasing from £8.1 next year to £10.1 billion in 2011/12. Over the last six years they have totalled £34 billion compared to £55 billion forecast over the next six years. They are only falling compared with Brown’s incompetent forecasting at the last Budget! This Budget is another desperate move from a desperate Chancellor determined to try anything to hold onto power in Scotland.”

Scottish Liberal Democrats: Nicol Stephen MSP, leader of the Scottish Liberal Democrats said that the Budget would do nothing to turn around the falling popularity of Labour. “I am very disappointed that the Chancellor has done nothing to stop the cuts to Scottish sport and Scottish young people proposed to pay for the Olympics.”

“The Budget missed the opportunity to help householders install microgeneration of electricity in their homes. The Budget doesn’t come close to matching the support we are putting in place in Scotland for green energy and fails to boost the market for this new technology by UK action.”

“The Budget was full of spin and gimmicks. The Chancellor trumpets the 2p tax cut yet the 10p tax rate on lowest earners doubles up to 20p. The lowest earners will end up paying more.”

Conservative Party: David Mundell MP, Shadow Secretary of State for Scotland, said that Brown’s Budget would not bail out Labour in Scotland in the upcoming election campaign – “balancing the books by giving with one hand and taking with the other will not fool anyone”.

“Delivering his 11th and supposedly final Budget, Gordon Brown has missed yet another opportunity to secure a plan for the long-term future of Scotland and Britain, and along with Jack McConnell in Scotland has failed to deliver the public services we deserve.”

“In his stealthiest tax yet, he has paid for his 2p cut in income tax by abolishing the 10p rate and putting national insurance contributions up for professionals like doctors. This is a tax con, not a tax cut and will place a disproportionate burden on those worse off.

“After 10 years the average family in Britain has already paid an extra £1300 in tax thanks to Gordon Brown. His three income tax changes on working families are not a tax cut, but raise £340 million extra revenue.

“With 101 stealth taxes introduced over 10 years and no improvements to public services, people in Scotland have a right to ask Gordon Brown ‘where’s all our money gone?’.”

Green Party: The 2007 Budget will not tackle carbon emissions, putting the economy at greater risk than ever before of suffering devastating consequences as climate change unfolds, Scottish Greens said today. Chancellor Gordon Brown barely mentioned the Treasury-commissioned Stern Review which last year warned of global economic meltdown if climate change is not addressed.

On the Budget in general, Mark Ballard, the Scottish Greens' spokesman on finance, said: "This Budget is a massive disappointment. Gordon Brown may have adopted some green camouflage, but, like David Cameron, his proposals on the environment continue to be little more than gimmicks. For instance, a £200 tax increase on four-by-fours is the price of a few tanks of petrol – it's a token gesture that won't change behaviour.”

"If he is serious about tackling climate change he would back binding annual targets for carbon reductions, stop allowing airlines to dodge fuel tax, divert substantial funding into renewables research and support personal carbon quotas. This is a Budget for business as usual, growth at any cost – certainly, the environment and future generations will pay dearly."

On "eco-taxes", Ballard said: "Trying to use so-called "eco-taxes" to discourage driving or flying, at the same time expanding airports, refusing to tax aviation fuel and building new roads, simply does not add up. What we need is for all policies to be carbon-proofed, and legislation for fair and practical personal carbon quotas and year-on-year carbon reductions."

On abolishing stamp duty on some "zero-carbon" homes until 2012, Ballard said: "We have too many people living in fuel poverty in hard-to-heat homes, meanwhile billions are committed to motorways and lost to the aviation industry through public subsidy - so at best it's wishful thinking to think this very limited measure will see zero-carbon homes being built across the UK."

Unions

STUC: Grahame Smith, STUC general secretary, said: “Public sector workers facing a pay squeeze may legitimately wonder why they are contributing to a cut in corporation tax at a time of record profitability for UK businesses.”

“The two per cent cut in corporation tax must surely signal a challenge to UK businesses. Despite a decade of stability, a forty-year high in profitability and a range of targeted tax incentives business has failed to invest sufficiently in people, plant and research. The Chancellor has now given business the cut it demanded. If investment fails to improve the Chancellor must look for a new approach to ensure that business meets its obligations.”

“But the Chancellor can justifiably take pride in his record of sustained growth and investment in education and health. The STUC welcomes the Budget’s focus on many of the key priorities we had raised in our Budget Submission such as pensions, R&D and the environment.”

“Whilst time is required to properly determine the full impact, abolition of the 10p starter rate means that the two per cent cut in income tax is unlikely to benefit the majority of workers.”

Business

CBI Scotland: CBI director Iain McMillan said the UK’s international tax competitiveness over recent years had been eroded, particularly as other nations had reduced their business taxes to stimulate investment, employment and economic growth. “The reduction in the headline rate of corporation tax announced by the Chancellor is therefore very welcome, and reflects the CBI’s robust lobbying on this issue.”

“While we were not expecting this Budget to be a bonanza for business, given the continuing concern over the public spending deficit, we do remain concerned that the overall tax burden on business remains largely unchanged. The headline cut in corporation tax announced in the Budget should only be the first step to reducing that burden.”

Referring to the Budget consequentials that will accrue to the Scottish Executive as a result of the increased Government expenditure south of the border, McMillan said that new monies should be directed towards GDP-enhancing investments that support wealth creation and the growth of the economy, such as transport infrastructure.

McMillan also pointed out that the Chancellor was silent on the possible introduction of the Planning Gain Supplement. “We remain resolutely opposed to the implementation of PGS, which would add to the business tax burden and in all likelihood decrease the amount of land available for development.”

Federation of Small Businesses: The Federation of Small Businesses Scotland gave a lukewarm reaction to the Chancellor’s final Budget. It welcomed the reduction in the basic rate of income tax from 22 per cent to 20 per cent, but hit out at the hike in small companies’ Corporation Tax. It also welcomed moves to get more people into work and the Chancellor’s response to pressure from the FSB to reduce rates relief for empty property, which unfairly increases rental values for neighbouring properties.

Policy convener Andy Willox said: “Around 60 per cent of small firms in Scotland are owned and run by self-employed individuals who will benefit from the surprise 2 per cent cut in income tax, but the other 40 per cent of businesses will be hit by the hike in small companies’ Corporation Tax.”

“We’ve seen a large number of small firms incorporating to take advantage of recently-abolished tax reliefs and now they are being hit with a 3 per cent tax rise for their trouble. They are now faced with the difficult decision of paying more tax or going through the hassle of declaring themselves self-employed again.

“The only good thing to come of this tax rise, which targets small firms, is the new £50,000 capital allowance, which will allow small firms to write off money investment in their business.”

Scottish Financial Enterprise: Chief executive Amanda Harvie said that SFE welcomed the Chancellor’s commitment to making the UK’s tax regime more competitive to attract and retain long term international investment, and said the measures he announced would help to achieve this goal.

“The cut in the rate of corporation tax is a major signal that the government is serious about making the UK a more attractive, cost-effective place from which to do business around the world, and is very good news for Scotland’s financial services industry. We urge its speedy introduction ahead of April 2008, which seems a long timeframe compared with the rate at which some rival countries are moving to win more financial services business.”

“We look forward to engaging with the government on its open consultation on major reforms to the UK tax system. We would like to see a new strategic approach to fiscal policy that removes the tax system’s complexity and provides companies with the certainty and consistency they need to justify long term, increasing investment in their UK business operations. This is vital for Scotland’s continuing success as an international financial services centre.”

Edinburgh Chamber of Commerce: Chief executive Ron Hewitt welcomed the positives in Chancellor Gordon Brown's Budget speech, but also highlighted areas of concern regarding his treatment of smaller businesses.

Hewitt said: "The fall in corporation tax from 30-28 per cent is a welcome move which has been asked for consistently over recent months. Critics from some quarters that this somehow disadvantages the nation misunderstand that countries who have followed this path have actually increased their tax take as they attract more inward investment and encourage greater profitability. The reduction of basic rate tax from 22-20 per cent and the rescinding of the 10p rate (which this Chancellor introduced) will be welcomed by all wage earners.”

“Business will also welcome the retention of the current fuel duty rate, given the huge hit they have taken over escalating fuel prices over the last year. For those pensioners present or to be handicapped by the collapse of their pension funds the quadrupling of the government's financial assistance scheme fund to £8bn will be very welcome."

"Our concerns, however, are rooted in issues such as the increasing of small company corporation tax. Not just because of the increase itself, but because of the phraseology: 'To reduce the tax difference between self employment and small company incorporation, I will raise the small companies' rate in three stages from 20p this year to 22p in 2009, recycling all these revenues to legitimate small businesses investing for the future.' I wonder who would be considered not legitimate? We must recognise that our smaller growing companies (who are in this band) are the origin of tomorrow's big players. With Scottish SMEs proportionately smaller than the UK whole this is a vital sector for positive support."

Other sectors

British Medical Association: The BMA said the government had missed the opportunity to really help people quit smoking. Dr Sam Everington, deputy chairman of the BMA said: “Reducing the VAT on nicotine replacement therapy is a good way of actively encouraging people to quit smoking. However we are very disappointed the Chancellor didn’t go further and increase the duty on tobacco beyond the rate of inflation. There is strong evidence that higher prices are one of the most effective ways of helping people give up smoking and preventing young people from starting. An 11p rise on the price of a packet of cigarettes is not enough. The government should be doing all it can to tackle the devastation caused by smoking.”

Capability Scotland: While welcoming the general direction of Budget 2007, Capability Scotland warned that more still needs to be done to prevent disabled people from living in poverty. However, Capability Scotland welcomed in particular the Chancellor’s moves to support those on the lowest incomes through increases to working tax credit, child tax credit and child benefit, as well as the Partnerships for Jobs initiative, which will see major firms support local employment opportunities. “We would highlight the importance of ensuring that disabled people are able to benefit equally from the new job opportunities. Disabled people have an employment rate that is less than half that of the rest of the population.”

However whilst welcoming the general direction of Budget 2007, Capability Scotland said it was a missed opportunity to target initiatives specifically at disabled people, such as winter fuel payments, free TV licences and a specific disabled person’s tax allowance.

NCH children’s charity: Chief executive Claire Tickell said that the Budget might lift 200,000 children out of poverty, but that this was a drop in the ocean for the 3.4 million youngsters affected. “If the Government really wants to end child poverty it must think beyond its 2010 target and ensure practical solutions are in place for struggling families.”

“The spending targets for tackling poverty seem to focus on the tax credits system, a very complicated method that many don’t understand. The risk is that this money will not make it to the families who are most in need and it is their children who will suffer.”

Save the Children: Jane Gibreel, Save the Children's programme director for Scotland, said: "While these policies will help all families this is not a Budget for the very poorest children in Scotland. Today's announcements are a welcome step towards the major investment needed to end child poverty. They will benefit many children but there's still a long way to go to give the poorest 240,000 children in Scotland the best start in life. These children can't wait.

As part of the campaign to End Child Poverty, Save the Children calls on the Chancellor to better target the poorest children by building on these policies and introducing seasonal grants as well as making child benefit equal for every child."

National Farmers Union for Scotland: An increase in road tax for essential rural vehicles and a further hike in fuel duties will heavily penalise farmers and others living and working in rural Scotland, according to NFU Scotland President Jim McLaren.

NFUS stressed that 4x4 vehicles are essential for farmers and a doubling of Vehicle Excise Duty, on top of a further two pence increase in fuel duty, is an unacceptably heavy penalty for individuals with no practical alternatives. On top of this, red diesel duty for off-road, agricultural vehicles will also increase by two pence per litre from 1 October, significantly above inflation.

President Jim McLaren said: “Farmers don’t drive 4x4s as a lifestyle choice, they are essential tools for the job. The Chancellor is clearly trying to penalise those driving big cars in city centres, yet by doubling road tax for all these vehicles he is hitting individuals that have no alternatives. Having stressed that point to the Chancellor in my recent letter to him, I am hugely disappointed that he has not sought to exempt essential users.”

“The increase in fuel duty of two pence per litre from 1 October exacerbates the double-whammy of woeful public transport and higher fuel prices already facing rural areas.”

“The Chancellor has announced he will maintain the differential between red diesel and normal road diesel, but this means a rise in red diesel duty of 2ppl as well. The rise is way above inflation and just adds to the dismal fuel news delivered by the Chancellor to rural areas.”

“There is one bright spot though, which is an extension of the biofuel duty rebate until 2010, something we have called for. This is a good move, which supports the Renewable Fuel Transport Obligation, which should see biofuels represent 5 per cent of all road fuels by 2010 and 10 per cent by 2020. This is an opportunity for farmers to be a major part of the solution to climate change by growing energy crops and turning waste into green road fuel.”

Renewable Energy Association: Philip Wolfe, Chief Executive of the Renewable Energy Association, said: "There is clearly a strong appetite for homeowners to put micro-renewables to work in their homes. The new funds announced today should be sufficient to support demand through the next fiscal year and provide the opportunity to lift the monthly funding cap. Many customers and hard-pressed businesses across the industry will welcome the prospect of a return to normality that the new funding offers."

"The Budget sets out the enormous opportunity presented by micro-renewables to cut carbon emissions in our homes and businesses, and signals the need to develop a more mature market. This is a vision that the industry shares. But it is vital that new measures to help householders invest in micro-renewables, when the grant programmes end, provide an enduring and effective stimulus to the market. We will work closely with Government to create the conditions for micro-renewables to realise their considerable potential".

Think-tanks

Institute for Public Policy Research: Director of the Institute for Public Policy Research (ippr), Nick Pearce, said: “The Budget gets Britain back on track to abolish child poverty and to raise standards of education and skills for all. But we need giant strides on climate change, not small steps.”

“Education spending is rightly focused on one-to-one tuition in English and Maths for the lowest attaining children and skills for young people in deprived areas. These are social justice priorities that move us towards two guarantees: that all children learn the 3Rs in primary schools and that teenagers leave school with the prospect of decent training.

“The boost to extended schools should be used to get teenagers into structured, purposeful activities – ensuring they learn the discipline, the ability to plan ahead and to work with others.

“Aligning Income Tax and National Insurance is a major step forward for simplification. It is right in principle and practice.

“The Chancellor has also adopted ippr’s recommendations on helping parents with childcare costs if they are in training but not working. The Budget makes steady progress on early years education and childcare, but we need to go further to reach Scandinavian levels of comprehensive excellence.

“Raising road tax on the highest polluting vehicles sends out a positive signal that people need to start changing behaviour if we are to tackle climate change. But the fifty per cent increase in grants for household renewables from £6 million to £9 million does very little to extend the availability of these important technologies and will only help another 125 people a month. This is a small step for the Chancellor on the green agenda.”

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