Budget: Scotland

Christine Jardine Excerpts

Tuesday 7th January 2025 Westminster Hall

[Christine Jardine (Edinburgh West) (LD)]

It is a pleasure to serve under you as Chair, Ms Vaz. I congratulate the hon. Member for Livingston (Gregor Poynton) on securing this debate on the impact of the UK Budget on Scotland.

I welcome the increase in investment for the NHS and the vital cash boost for Scotland, but with all due respect to the hon. Member for Angus and Perthshire Glens (Dave Doogan), it cannot be underestimated how much we needed it, given the mess and chaos that the SNP Government have created in our public services over the past 17 years. Indeed, they have also created chaos in our ferries, as we heard today that the new Glen Sannox is being removed from service again. I agree with the comments from many Members, particularly my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone), about the problems that we are facing.

While I welcome the money in the Budget, we have heard repeatedly from the Chancellor and other Ministers —no doubt we will hear it again today—that the Government have had to take tough decisions since coming into office. Many of my constituents in Edinburgh West are beginning to say, “Yes, every Government have to make tough decisions, but did this one have to make these decisions?”

Before Christmas I spoke to a number of businesses in Edinburgh West, and many of them were concerned about the negative impact that increases in employer national insurance contributions will have on them. Some are worried that they will have to make cuts to staff; others are trying to avoid putting up prices and passing the tax hikes on to the public. All of them are trying to find ways of making it work, and all of them are struggling. Some 40% of Scots now believe that more small and medium-sized enterprises will close in their communities as a direct result of this Government’s decisions. More than half of Scots believe that prices will have to go up. After the worst cost of living crisis in a decade, that is not what any of them needed.

GPs and many social care providers are saying that they do not know how they are going to cope with the tax changes. Private contractors or operators, who will not be eligible for employment allowance, will have to take on those extra costs directly. Within days of the Budget, several GP practices contacted me and estimated that the changes will cost them more than £10,000 extra in the next year. After 17 years of mismanagement under the SNP and 14 years of the Conservatives, our GPs need support and investment, but everywhere we look in Scotland, the impact of this Budget is not positive.

Another tax change that will have direct consequences for my city of Edinburgh is the Government’s decision to impose VAT on private school fees. It is not just because I do not support taxing education or reducing the choice of parents that I do not agree with the proposal and see it as negative, but because it will have a real impact on both the state and independent school sectors in Edinburgh. Edinburgh has the highest proportion of independently educated children in Scotland, at between 20% and 30% every year.

According to the local Labour authority, 16 schools are expected to reach capacity before the end of this decade. If the predicted percentage of children dropping out of independent education into the state sector is true, the system will be stretched to breaking point. Sadly, introducing the change halfway through the school year is causing issues for many parents. I have already had representations from parents who cannot find places in local schools for the children they have taken out of the independent sector.

I would have liked to touch on other issues, including the impact on the whisky industry—I refer Members to my entry in the Register of Members’ Financial Interests—and the farming industry, which was touched on by the hon. Member for Gordon and Buchan (Harriet Cross). However, it is sufficient to say that Scotland, which is already under pressure from mismanagement by the SNP, is now facing a far-from-positive impact from the new Westminster Government in which it put its faith.

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[Kirsty McNeill]

We have made responsible tax choices entirely in line with our manifesto. That is why the rates of employers’ national insurance will increase by just 1.2 percentage points. The smallest businesses will be protected as the employment allowance will increase from £5,000 to £10,500, allowing Scottish firms to employ four national living wage employees full time without paying any employer national insurance on their wages.

[Christine Jardine]

Will the Minister give way?

[Kirsty McNeill]

I will make some progress. This Budget asks businesses and the wealthiest to pay their share while making taxes fairer. Those are Labour choices and they are inspired by Labour values. As my hon. Friend the Member for Glasgow North (Martin Rhodes) has made clear, this is a progressive Budget that values redistribution.

[Christine Jardine]

Will the Minister give way?

[Kirsty McNeill]

I will make some progress. And just as our Budget choices reflect our values, the ways in which the Opposition parties choose to oppose them represent their values, whether that is their opposition to our end to the VAT tax break on private schools or opposing, as the hon. Member for Gordon and Buchan (Harriet Cross) does, our attempts to bring agricultural property relief into balance. As she will know, the latest figures from 2021 to 2022 show that 40% of the value of APR went to just 7% of claimants; that is neither sustainable nor fair, which is why I support the Labour Government’s changes.

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[Kirsty McNeill]

As the hon. Member will be aware, each year almost three quarters of estates eligible for APR in the UK are expected to be entirely unaffected by these fair and proportionate changes. Ours was a Budget, just as this is a Government, squarely for working people. The hon. Member for Angus and Perthshire Glens (Dave Doogan) complained of the tax burden. Unlike the SNP Scottish Government, which simply want to clobber teachers and nurses with ever higher taxes, we have delivered on our pledge not to increase national insurance or VAT on working people in Scotland. That means that they will not, thanks to this Budget, see higher taxes in their payslips.

Hundreds of thousands of workers in Scotland will benefit from an increase in the national living wage and a record increase to the national minimum wage. The Chancellor made the decision to protect working people in Scotland from being dragged into higher tax brackets by confirming that the freeze on national insurance contribution thresholds will be lifted from 2028-29 onwards, rising in line with inflation, so that people can keep more of their hard-earned wages.

We have begun the difficult work of restitching our fraying safety net. Thousands of Scottish households will be £420 a year better off on average, as a result of our change to the universal credit fair repayment rate. Around 1.7 million families in Scotland will see their working-age benefits uprated in line with inflation, a £150 gain on average, in 2025-26. Maintaining the triple lock means an increase in the state pension of £470 next year, on top of £900 this year, for 1 million Scottish pensioners.

Let me pay special tribute to the campaigners and fellow trade unionists who fought for changes to the mineworkers’ pension scheme. Thanks to their efforts and the decisions of this Labour Government, nearly 7,000 retired mineworkers in Scotland will get an extra £1,500 on average in their pension. Finally, that is justice for those who powered our country.

[Christine Jardine]

Will the Minister give way?

[Kirsty McNeill]

I will make some progress. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and my hon. Friend the Member for Na h-Eileanan an Iar (Torcuil Crichton) shared moving testimony about the impact of changes by the Scottish Government on rural communities. My hon. Friend the Member for Paisley and Renfrewshire South (Johanna Baxter) talked about the crisis in NHS and social care. The answer to all those challenges is the same: investment in our public services. That is exactly what this Budget is designed to do.