SNP say Osborne’s Budget “fails the fairness test”

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By a Newsnet reporter

The SNP have attacked the main measures outlined in George Osborne’s Budget saying that it proves that the Coalition’s economic policies fail to deliver for Scotland and will not support the Scottish economy. 

The SNP have also criticised the Budget for hitting the poorest and elderly and for raising fuel prices while benefiting the highest earners.

SNP Work and Pensions spokesperson Eilidh Whiteford MP has warned that the Chancellor’s decision to freeze personal tax allowances for the over-65s will hit pensioners hard.  Dr Whiteford contrasted the Coalition Government’s treatment of pensioners with tax cut given to the highest earners.

The decision to scrap income tax breaks for the over-65s will leave Britain’s pensioners worse off by more than £1bn a year by 2015.  News of the measure was not leaked in advance and came as a surprise to pensioners’ groups, who have reacted with anger.

Citing the need to simplify pensions, Mr Osborne also plans to save £5bn by freezing age-related allowances for half Britain’s pensioners, affecting 5 million people by the end of the parliament. The Treasury stressed that no pensioner will be worse off in cash terms.  

The higher personal tax allowances for those over the age of 65 – £10,500 for people aged 65 to 74 and £10,660 for those aged 75 plus (2012-13) – will be frozen until they come into line with the basic personal tax allowance.  It is believed that existing pensioners will lose £63 a year because of the measure while new pensioners will lose £197 annually.

Dr Whiteford said:

“The Budget truly fails the fairness test when millions of pensioners are penalised while millionaires get a tax cut from the Tories.

“While, as expected, the Chancellor increased personal tax allowances, his decision to freeze the higher age allowances granted to those aged over 65 will hit pensioners hard.

“The devil is always in the detail with Treasury announcements, and the Chancellor must now say whether any assessment was made of the impact that this decision on pensioner households.”

The SNP’s Westminster Transport spokesperson Angus MacNeil MP criticised the Chancellor’s failure to act on fuel prices at the pump as he used the Budget to confirm that fuel duty will increase in line with inflation.  The 3p rise in fuel duty will come into effect in August.

The fuel duty hike has been poorly received by motorists’ groups.  Quentin Willson, spokesman for FairFuelUK, which launched a campaign to bring down petrol prices, said: “The government has turned its back on families and businesses all across the country.”

Edmund King, president of the AA, also criticised the measure, saying it was a “Budget blow-out which will force drivers off the road,” and adding that it did not take into account the increased fuel costs of people living in rural areas.  

Mr King said: “The increase in fuel duty makes no allowance for car-dependent, rural and disabled drivers.”

Mr MacNeil repeated a call for the introduction of a fair fuel regulator, a longstanding policy of the SNP, and pointed out that the Chancellor himself had pledged to introduce a fair fuel regulator when he was in opposition.  Mr MacNeil said that a fair fuel regulator would prevent high prices at the pump and stop the government receiving a windfall from higher prices.

Mr MacNeil said:

“The country is crying out for action to bring down fuel prices, but the Chancellor has ignored calls to reduce fuel duty and forgotten about his pre-election pledge and establish a regulator.

“It’s a national scandal that, in an oil rich country like Scotland, we are paying the highest fuel prices in Europe.  With the bulk of the pump price made up of tax, the Treasury should stop this highway robbery because soaring fuel prices are hindering economic recovery.

“In July 2008, George Osborne launched plans for a ‘Fair Fuel Stabiliser’, describing it as a ‘common sense plan’.  As well as being common sense, it is unanswerable and fair for Scotland, given that we pay among the highest fuel prices in Europe even as Scottish oil revenues surge into the UK Exchequer.  The problem with the Tories’ plan is that they launched a dangerous smash and grab raid on the North Sea to pay for it – which was the wrong thing to do.

“With record North Sea oil and gas revenues flowing to the Treasury, we need to see some of that money used to bring fuel prices down – and to keep them stable – through a fuel duty regulator.

“The SNP have consistently called for the introduction of a fuel duty regulator, in contrast the only measure Labour introduced was the fuel price escalator that increased the misery for motorists.

“The Tories and Lib Dems promised action before the election.  They have the money – Scotland’s oil money – and the powers to deliver.

“If Westminster will not act, the powers should be passed to the Scottish Parliament so that it can.  If Scotland had control of fuel duty, the SNP government would introduce a fuel duty regulator to lower prices now.”

Meanwhile SNP Westminster Treasury spokesperson Stewart Hosie MP said the Chancellor had failed to deliver for Scotland on the key measures needed to support the Scottish economy.

Mr Hosie said:

“The Chancellor has ignored the needs of Scotland in a Budget which shows the UK government has its priorities all wrong, and that Scotland now urgently needs the real economic powers of independence.

“George Osborne has prioritised a tax cut for the wealthiest, while penalising public sector workers with a regional pay plan and adding to the burden faced by Scottish households and businesses through soaring fuel prices.

“As well as failing the fairness test, the Chancellor has also failed on growth by snubbing Scottish Government demands to support vital shovel ready projects – we urgently need that capital investment to support employment, help small business and promote economic security.

“While the Scottish Government is doing everything that it can to protect household budgets with the economic levers that it has – such as freezing the council tax and protecting free prescriptions – even the positive measures announced by the Chancellor, like the increase in personal tax allowances, will be swallowed up by higher fuel prices and VAT.

“The devil is always in the detail with the Treasury and we need to look very closely at the announcements made by the Chancellor on support for small businesses. While the announcement on the National Loan Guarantee Scheme is welcome, we must have assurances that more small businesses in Scotland will be able to access affordable finance given the issues with Project Merlin where only 4.8% of gross lending went to SMEs in Scotland.

“It is a tribute to the sector and to the Scottish Government that the Treasury have announced plans for Enhanced Capital Allowances to apply at Nigg, Irvine and Dundee, which means that new, low carbon technologies and industries will now bring investment into these areas. And, as a Dundee MP, I am particularly pleased that the Chancellor has listened to our long-standing calls for the introduction of video games tax relief.

“After the uncertainty created by the UK Government’s damaging tax raid on our offshore sector last years, I do welcome the commitment to support oil and gas decommissioning and new field allowances west of Shetland.  However, the UK Government should go further to restore the sector’s confidence and introduce a statutory consultation period for future tax reforms.

“It is clear that Scotland needs the same financial and economic powers as other nations have, so that we can grow our economy and revenues as the only alternative to a decade or more of Westminster-dictated cuts.  We have used the powers we have wisely – we now need the same powers as other countries have in order to sort this mess out.”