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2013 Budget will 'provide Scottish Government with extra £176m'

George Osborne scrapped a planned 3p rise in beer duty tax.

George Osborne: Comprehensive Spending Review.

An extra £176m will be available to the Scottish Government because of decisions made in the Chancellor's Budget, according to the UK Government.

The additional spending power is the result of a £279m increase in capital spending and a £103m reduction in the day-to-day resource budget.

However, the SNP accused the government of setting out a weak budget which will not achieve growth for the country’s economy.

Among the measures unveiled by George Osborne were that a planned 3p rise in beer duty tax was being scrapped and replaced by a 1p cut on a pint of beer, while he confirmed Whitehall budgets would be cut by 1%.

He also said the economy would grow by just 0.6% this year - down from the previous forecast of 1.2% - and would be slower than forecast next year at 1.8% compared to the 2% forecast at the time of the Autumn Statement.

Michael Moore, the Scottish Secretary in the UK Government, said on Wednesday: "Today's Budget shows the coalition Government is building a stronger economy and fairer society to equip Scotland and the UK to succeed in the global race.

"We face many economic challenges but this Government has shown we can deliver, with one million private sector jobs and increasing personal tax allowances to £10,000, taking 224,000 people in Scotland out of tax altogether.

"We are supporting families, individuals, both small and large businesses, and investing in the future with this Budget. It is good news for Scotland and will help us build on the positive changes we are making to rebalance our economy."

The extra money is calculated through the Barnett formula which allocates money to the devolved administration. It will be split, with a £55m increase in 2013-14 and a £121m increase in 2014-15.

About 2.2m taxpayers in Scotland stand to benefit from an increase in the personal allowance, bringing it to £10,000, in line with a Liberal Democrat pledge.

'Flunked' budget

Mr Osborne announced support for the oil and gas industry through "decommissioning relief deeds" which the Government says will give certainty that tax reliefs will be available to support costs of £35bn.

A carbon capture and storage project at Peterhead in Aberdeenshire was named preferred bidder in a £1bn UK-wide programme. The Chancellor cancelled a 3p fuel duty increase planned for September, noting lobbying from rural areas such as Argyll. Scrapping the increase will save a typical motorist £25 and haulier £750 a year, the Government calculated.

Corporation tax will be cut to 20% by 2015, which the SNP has argued should be the level in Scotland.

SNP Treasury spokesman Stewart Hosie MP said: "This is a timid and unimaginative response to the UK's economic stagnation. With the economy flat-lining, the key measures presented by the Chancellor today will add less than a quarter of a per cent to GDP in capital spending. This fiscally neutral budget was a weak response considering the UK’s economic problems.

"The improving unemployment figures in Scotland today as contrasted with the UK, and the recent figures proving Scotland is in a stronger financial position that the rest of the UK, show the difference proper investment by the Scottish Government can make and that independence can bring.

"Osborne has flunked the economy test. This is the day he should have gone for growth. The Osborne-Cameron plan may well set the UK on a path to a lost decade of no growth, to match their decade of failed austerity. This failed Budget is a powerful illustration of why the economic policy levers should be in Scotland's hands with independence - not controlled by a Tory-led government at Westminster."

The scrapping of the beer duty tax was accompanied by a 5.3% increase in spirits duty in the Budget, which the Scotch Whisky Association said would mean the average price of a 70cl bottle of Scotch Whisky jump to £12.89 from £12.42.

Gavin Hewitt, chief executive of the association, said: "This is an unfair and incomprehensible attack on the Scotch Whisky industry in its domestic market, where it is a vital part of the Scottish and UK economy and where it supports many other businesses. It penalises responsible drinkers who like a dram rather than a pint. There is no justification for spirits being taxed more heavily than beer.

"It also damages all the good work done to create fairer tax regimes overseas to provide a fairer playing field for Scotch Whisky. It hinders the government's ambitions for an export-led recovery."

Sarah Speirs, director of the Royal Institution of Chartered Surveyors (RICS) Scotland, said more needed to be done to support the construction industry.

She said: "Despite the Budget outlining a number of measures aimed at growth, particularly the shift from current to capital expenditure, further infrastructure investment is vital to give the economy the boost it requires and not to recognise this in the Budget is a missed opportunity."

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