Mini-budget does ‘nothing for those who need it most’ says Scottish Government
Chancellor Kwasi Kwarteng has announced sweeping tax cuts as he set out the UK Government’s plan to grow the economy.
But the Scottish Government has said the package will do “nothing for those who need it most”.
Opposition parties across the spectrum have criticised plans to prioritise tax cuts over other measures to help those struggling with the cost-of-living crisis.
And third sector bodies and trade unions have also warned Kwarteng’s mini-budget will do little to help the poorest.
The Chancellor, in his first major fiscal intervention, axed the top rate of income tax south of the border and announced a change to benefits rules to create heavier sanctions.
He also confirmed the removal of the cap on bankers’ bonuses, as expected.
Income tax changes will not impact Scottish households as it is a devolved area, but it will open up the gap between what people pay across the UK.
First Minister Nicola Sturgeon said the announcements benefit the “wealthiest over poor/middle income earners”.
And hinting her government would not follow suit on income tax changes at the next Scottish budget – set to be in December – added: “Tories (& right-wing commentators) will demand that [the Scottish Government] blindly follows suit.”
PWC said the Scottish Government will have to consider how to retain a “competitive edge” in light of the changes in England.
Tax director Sharon Blain said: “The removal of the higher rate of tax for top earners will give the government north of the border food for thought as it considers ways to remain competitive in terms of attracting those individuals to Scotland under its own tax framework – particularly when coupled with measures like the reduction of stamp duty.”
Deputy First Minister John Swinney accused the UK Government of “beginning a new and dangerous race to the bottom”.
And on struggling households facing rising bills, he said: “Instead of offering these people support, the Chancellor is threatening to cut their family budgets further, with a new regime of benefit sanctions.”
The Scottish Trades Union Congress described the budget as “a bludgeoning to working people”.
General secretary Roz Foyer said: “This is no longer austerity. This is Thatcherism on steroids. An acceleration of free-market, trickle-down economics that deepens inequality and embeds social injustice throughout the country.”
Anti-poverty campaign group CPAG warned this would harm low-income families most. Director John Dickie said: “It is children in poverty who will pay the price for the Chancellor’s choice to prioritise tax cuts that mainly benefit the better off over additional support for low-income families… It is absolutely vital that the UK government now increases benefits in line with inflation as soon as possible.”
Meanwhile, business groups cautiously welcomed some of the measures including the reversal of the National Insurance increase and plans to help with business costs.
Liz Cameron, director of the Scottish Chambers of Commerce, said: “The string of policy announcements from the Chancellor signal a bold start. As firms continue to navigate unprecedented challenges in the economy, consistent collaboration and partnership will be essential between both governments and the business community if we are to move from survival to growth.”
And FSB Scotland’s Andrew McRae said: “Overall, we’ve been pleased to see a real recognition from the UK Government this week that tackling the cost of doing business crisis is an essential step in addressing the cost-of-living crisis that is plaguing households across the country.”