Explainer: Is Scotland a winner or a loser in the UK Government’s spring budget?

The 2017 UK Budget has been announced with measures entrenching austerity in Brexit era Britain

CHANCELLOR Philip Hammond’s spring budget, and a screaming House of Commons, made much of a £350m ‘bonus’ for the Scottish Government.

The Speaker of the House had to stop proceedings for the only time during the almost hour long budget reading due to braying from Conservative benches when the figure was announced. But what has this budget actually delivered for Scotland?

CommonSpace asks whether Scotland is a winner or a loser from Hammond’s budget

Austerity vs a one-off payment

Who wouldn’t want a £350m bung? Yet as impressive as the figure sounds, it is completely dwarfed by continued austerity - necessary, Hammond claims, because of the UK’s £1.7trn debt and fend-off possible shocks from the UK’s exit from the EU.

The Scottish Government has claimed that the cuts package will cost Scotland £2.9bn. But whatever the figure, bungs cannot compare to the deep structural impact of austerity. Hammond confessed that the UK’s chronic problems with low productivity were worsening. It’s hard to see how these problems can be systematically countered while austerity continues.

Oil and managed decline in the North-East

Hammond has announced the setting up of a new expert panel to distribute tax relief to businesses decommissioning North Sea oil rigs – a £30bn boom industry.

Of these are funds essentially designed to manage decline of the industry, and bolster businesses profiting from that decline in the North East – a major target area for the Scottish Conservatives in forthcoming local elections and beyond.

The long term economic health of the region, which is tightly organised around oil, doesn’t get so much attention from the chancellor.

Whisky Galore?

Scotland’s whisky industry is on the up, reaching £1bn in export sales. Its success has been fuelled by the growth of large, new foreign markets like China.

The Scotch Whisky Association has attacked the Hammond’s decision to increase excise duty by almost four per cent, putting pressure on the export surge.

Welfare

The Scottish Government’s new social security system, the most substantial development from recently devolved spending powers, is in the delicate early phases of implementation. However, Scotland is in control of just 15 per cent of welfare spending.

But Hammond has ignored the pleas of the Resolution Foundation to divert funds from tax cuts to benefits in order to cushion the impact of rising inflation. Lack of access to the full budget for welfare spend and tax powers as well as the fiscal policy organised by the Bank of England leaves Scotland facing the reality of welfare payments failing to keep up with prices.

The absence of Brexit

There have been widespread warnings about the impact of leaving the EU and especially the European single market on Scotland’s economy. According to the Fraser of Allander Institute (FAI), Scotland could lose 80,000 jobs as a result of hard Brexit.

Oddly, besides forewarnings that the budget would hunker down on austerity partly in preparation for Brexit shocks, Brexit itself was scarcely mentioned during the budget. For instance, no special contingencies were outlined, let alone backed with concrete sums, for dealing with the scenario’s flagged by groups like FAI.

Jargon Buster: Debt, deficit and economics

Picture courtesy of Caitriana Nicholson

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