Budget Resolutions
Debate between Blair McDougall and Dave Doogan
Dave Doogan (Angus and Perthshire Glens) (SNP)
Four months ago the people took the Labour party at its word and voted for change. It did not take long for it to become clear that the Labour party was offering not change for the better, but change for the worse. Pre-election there was no mention of pushing 900,000 pensioners in Scotland into fuel poverty, yet here we are. The Chancellor said that she would not raise taxes on working people, yet we now find due to Labour’s absurdly one-dimensional yet infinitely flexible definition of “working people” that people are in line for five years of fiscal drag on their incomes and tax allowances.
The Chancellor said that she would not put up national insurance, but after the election she qualified that with “on employees”, as she now raids payroll accounts for charities, care homes and local businesses for her 1.2% national insurance hike. During all that, where were Scottish Labour MPs? Where were their howls of indignation defending their Scottish constituents and the Scottish economy? They were silent, with a mere seven Labour MPs rebelling on the two-child cap, and not one of them from Scotland.
The national insurance increases are a direct assault on Scotland’s businesses, workers, and growth plan. Scotland’s vital hospitality sector—our pubs, hotels and cafes—are already hamstrung by Brexit, and will face an increased burden as a result of the changes today. This punishing tax hike will hit many of Scotland’s 340,000 SMEs hardest—the very companies that drive growth, that reinvest locally, that sustain 1.2 million Scottish jobs and 42.4% of all private sector turnover in Scotland and that sponsor local groups and clubs. They are caught in the crosshairs of this anti-small business Labour Chancellor.
Like much else, raiding employment taxes was not in Labour’s manifesto, and many ordinary self-employed people with modest incomes from local businesses—they deliver essential economic activity where the capital generated remains local, turning an average profit of £23,000 a year, and many of them may well have voted Labour—will fall foul of Labour’s rank duplicity in this change to tax orthodoxy, unlike those working for public limited companies or the public sector earning six-figure salaries.
The national insurance hike, with the threshold down to £5,000 and the rate up to 15%, represents a £25 billion double whammy tax on jobs—plain and simple. The resources that will fund the Chancellor’s raid on payroll are the same resources that businesses would have used to recruit more people into work, reducing unemployment, growing their own business and assisting in the ambition of greater growth in the wider economy. The Chancellor has just torpedoed that. It is the same resource that would have delivered pay rises for ordinary working people next year. Where will that resource come from now? The Chancellor notes that she is not putting up taxes on working people, and that may technically be true this year, but with next year’s pay claims guaranteed to be suppressed by her raid on employers’ NI, she is baking in lower wages for workers next year and in subsequent years.
The Scotch Whisky Association has described the duty on whisky as “a hammer blow”. The Prime Minister promised to
“back Scotch producers to the hilt.”
He should have told his Chancellor, because she has just taxed Scotch whisky to the hilt. It is completely unacceptable, and it is part of Scotland’s burden.
None of this is acceptable. We are not content to continue footing the bill for decisions that we had no part in. We went into this election with the highest taxes in living memory, and they have just gone up again. Ten years ago, we were implored to lead the UK, not leave the UK, and what have we got now? We have Government Benches awash with Scottish Labour MPs, while Scotland waits with bated breath for just one of them to stand up for their constituents, where their interests lie at odds with Westminster. The Scottish Labour MPs have backed the Chancellor’s two-child cap, snaring 87,000 of our constituents’ children in poverty, and voted to strip the winter fuel payment from 900,000 Scottish pensioners in ours, the coldest part of this island. If that is a local Labour champion, I do not fancy meeting a local Labour villain on a dark night.
All of this is justified by the fabled £22 billion black hole. With all this black hole hyperbole, I would like somebody in the Treasury to put the lights on, because it might shine the white light of truth on the black holes that Labour fears to mention. They include the £30 billion black hole where, by ripping ourselves out of the EU, we have been mortgaged to the twin burdens of increased administrative costs and the lost opportunities of membership of the world’s largest trading bloc. There is the black hole of nuclear energy sucking billions from the taxpayer, producing the most expensive energy at some time indeterminate in the future, and the Bank of England’s £24 billion black hole for quantitative tightening, which has not been discussed once in this House.
I welcome the £12.21 minimum wage. It falls short of the £12.60 Scottish living wage, but it is a start. I welcome the £2.9 billion for defence, but I would be interested to know if any of that is ringfenced. Alarm bells will be ringing on farms across Scotland about agricultural property relief, especially as Labour has said consistently—it was specifically said by the Secretary of State for Environment, Food and Rural Affairs prior to the election—that it has no plans to review agricultural allowances. It is deeply worrying.
It is good that Budgets will now be annual. Investment in capital investment should be 3%, and that should be a floor, not a ceiling, but long-term certainty is needed for the devolved nations.
Blair McDougall (East Renfrewshire) (Lab)
The hon. Member may have seen that the Scottish Trades Union Congress has said that, for the SNP,
“The Westminster blame game is finished. They have the money. They have the powers.”
Will he acknowledge that this Budget ends austerity and that the Scottish Government now have no more excuses for their failures?
Dave Doogan
Indeed I will not accept that. I will get on to that—and to the block grant in particular—in just a minute if the hon. Gentleman will bear with me for a second or two.
Infrastructure is like a sport: if you do not do it very much, you tend not to be very good at it—see smart motorways, Hinkley Point C and HS2. The Chancellor claims that there is no return to Tory austerity, and she is right, because this is Labour’s austerity, plain and simple. It is all the same to Scotland, though. She has called on Government Departments to make 2% efficiency savings. There is literally no precedent for that, ever. No Government have ever achieved that, so those efficiency gains will not be realised, and those 2% savings will turn into 2% cuts.
The hon. Member for East Renfrewshire (Blair McDougall) asked about the Scottish Government’s position. We are led to believe that the block grant is going up by £3.4 billion. Clearly, that is welcome, but let us look at the back story, because that is what is important. The Scottish Government now receive a lower share of UK spending than at any point in the last decade. Total UK Government expenditure has decreased since 2020, and Scotland’s share of that expenditure has decreased faster still. In 2014, the adjusted block grant represented 8% of UK Government expenditure; however, that figure has fallen to 7.6%. That attrition represents a real-terms cut to the Scottish budget every year since 2020, and the Scottish block grant is now worth £6.4 billion less than it was in 2021, a drop of 12.7%. Of course, as we always do, the Scottish Government will put the £3.4 billion to tremendous use, but it still leaves us £3 billion short of where we were just four years ago. That is the problem with this Union.
Moreover, last year the Scottish Government’s capital block grant was cut by 9.6%, a real-terms cut of £600 million, and we face a further cut from Westminster of 3%, or £200 million, to our capital grant this year. That is money not available to build schools, hospitals, roads and so on in Scotland. The Chancellor did not address that in the Budget today.
We have fresh austerity and a fresh cost of living crisis delivered by this Labour Government—a Hobson’s choice for Scotland in broken Brexit Britain, where things can only get worse. Nine hundred thousand Scottish pensioners will have watched today in the vain hope that the Chancellor would U-turn on her winter fuel payment cut. Well, she finished that hope today. The winter fuel payment raid is a political choice with the most serious consequences. Labour’s own figures show that it could result in 4,000 excess deaths this winter, and estimates suggest that the cost to the NHS will be just shy of £1 billion and just shy of £100 million in Scotland.
In leaflets that went out across Scotland and elsewhere in the UK, Labour promised to reduce energy bills by £300; instead, they have risen by £149, so where is Labour’s £449 saving coming from? Speaking to us from Manchester, the chair of GB Energy could not say when any savings would materialise, and last night Labour moved to block any move to put that on a statutory footing in the GB Energy Bill. It is heads Westminster wins and tails Scotland loses. This Budget has done nothing to atone for the 4.3 million UK children living in poverty, a situation that is further entrenched by Labour’s two-child cap impacting over 87,000 Scottish children. Over 100 children a day fall into poverty with Labour’s two-child cap. That is 10,000 children since Labour took office in July. What a record!
This is a know-your-place Budget for children, the disabled and those living in poverty. It is a wait-a-little-longer Budget for WASPI women. It is a kiss-goodbye-to-your-family-farm Budget. It is a hand-over-the-money Budget if you are in Scotch whisky. It is a show-some-gratitude Budget to Scotland, to get a piece of what was already ours to begin with. And it is a grim reaper Budget for the 4,000 pensioners across these islands who will not survive to see another.