UK budget delivers £295 million more for Scotland and whisky industry boost
Chancellor Jeremy Hunt delivered his Spring Statement in the House of Commons revealing that the Scottish Government will get an additional £295 million in Barnett Consequentials.
There was a raft of measures typical for a budget of this size and political importance because it may prove to be the last ‘fiscal event’ before a general election is called.
The results for Scotland were very mixed depending on where you stand, there was good news for the drinks industry and hospitality more generally but not so much for oil and gas.
Whisky Galore
First, the whisky industry warmly welcomed the news that the Chancellor was extending the alcohol duty freeze until February 2025 which is also expected to benefit thousands of pubs too.
The Scottish Whisky Association said: “The decision by the Chancellor to extend the duty freeze until February 2025 shows he has recognised that a rise in duty would be detrimental to the Scotch whisky industry and its supply chain, consumers and the wider economy at a time when the UK is still struggling to bring inflation down.
“In the Budget, the Chancellor announced a duty freeze across all four alcohol categories. The duty rate on spirits remains at the current level of £31.64 per litre of pure alcohol, meaning that of the £15.63 average price of a bottle of Scotch Whisky, £11.40 is collected in taxation through duty and VAT – a tax burden of 73 per cent.”
Scottish Conservative leader Douglas Ross was named-checked as advocating heavily for the freeze to benefit businesses in the Highlands but he was unsuccessful in arguing against extending the windfall tax on oil and gas.
Mr Hunt extended the surcharge on enormous profits until March 2029 raising another £1.5 billion. The policy was introduced due to high energy prices and had been scheduled to end in March 2028.
Mr Ross has already said he will not support the legislation needed to pass the extension.
'Attractive investment tax regime'
There was also a lesser recognised measure which could have a major impact on industrial development – the “permanent full expensing” will allow businesses to write off 100 per cent of the cost of investment in plant and machinery.
It is seen as potentially giving the UK a very attractive investment tax regime but it is pricey as it takes in £10 billion but those investing in areas like the Inverness and Cromarty Firth Green Freeport could significantly benefit.
Mr Hunt confirmed that as part of "further steps to boost investment" in the UK "full expensing to apply to leased assets".
The chancellor said: "In the autumn statement I announced we would introduce permanent full expensing, a £10 billion tax cut for businesses that gives the UK the most attractive investment tax regime of any large European or G7 country.
"It was welcomed by over 200 business leaders with the CBI saying it was a game changer and the single most transformational thing we could do to fire up the British economy.
"Today I take further steps to boost investment. Having listened to calls from the CBI and Make UK, we will shortly publish draft legislation for full expensing to apply to leased assets, a change I intend to bring in as soon as it is affordable."
'A failing Tory Government to win over voters'
Drew Hendry, SNP Economy spokesperson hit out at the budget proposals saying: "This budget is clearly a last-ditch attempt by a failing Tory Government to win over voters.
"Still, you don't have to dig too deep to find the usual serving of benefits for the richest, regressive investment in nuclear at the cost of investment in just transition to renewables and for those who need help the most - more austerity.
"The Chancellor thinks the cost-of-living crisis is a thing of the past and that's a slap in the face for those struggling to pay their rent or afford to put on their heating. Where are the measures to support them - or do their votes not count to the Tories."
Also responding to the budget was Secretary of State for Scotland Alister Jack said: "This Budget keeps Scotland and the whole of the UK on the right path for the future, with a clear focus on economic growth, jobs and prosperity.
"The UK Government's direct investment in Levelling Up projects has now risen to over £3 billion and that is fantastic news for communities right across Scotland.
"The Budget freezes spirits duty for another year to boost our biggest export, whisky, and it also puts Scotland ahead in the new space race, with £10 million made available for Shetland’s SaxaVord spaceport and the exciting prospect of a first satellite launch before too long.
“On top of this, the Scottish Government will receive an extra £295 million funding, in addition to the largest block grant since devolution began. There can be no excuses for not providing excellent public services in Scotland.”
