Highland drivers and businesses likely to welcome fuel duty freeze
The Budget yesterday had some historical significance - the first female Chancellor and the first Labour Budget for 14 years. A previous Labour Chancellor, Roy Jenkins, famously remarked that: 'A Chancellor's work is very much washed away by the next high tide - the high tide of his successor.'
During my time in Westminster, I witnessed first-hand eight full-blown Budget speeches as well as a flurry of mini Budgets and endless sessions of Treasury questions. Gordon Brown was Chancellor during my time as the local MP. Gordon's Budgets were marked by his zeal to reform monetary and fiscal policy. The Bank of England was given interest rate setting powers within days of the Labour victory in 1997. Banking supervision was passed to the Financial Services Authority. He also outlined the five economic tests which effectively ruled out the UK adopting the Euro.
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Rachel Reeves faced a difficult task on Wednesday morning, as she lined up outside Number 11 Downing Street with her red Treasury box, alongside her Treasury ministers. How can she steer through her Budget, sticking to Labour's manifesto commitments in a post-Covid environment where Britain's record debt level has not been equalled since the dying embers of World War II? Could she protect 'working people', invest in infrastructure and the NHS without penalising small and medium businesses?
The Chancellor gave a confident and self-assured performance at the dispatch box, befitting the importance of the occasion. Rachel Reeves made it clear in her introduction that the scale of tax rises necessary to steady and grow the economy was £40 billion. To put this in context, this is greater than all previous budgets since the early 1990s.
Where would the tax hike fall? How would public services be improved? There were fears in advance of the Budget that front-line public sector staff would be hit by National Insurance increases. Their fears were set aside by the Chancellor, who focused on raising employers’ National Insurance contributions by just over one per cent from next April. This will result in an increase to tax raised of £25 billion by the end of the parliament.
Workers on the Living Wage had good news, with a 6.7 per cent increase to £12.21 per hour and younger employees received a bumper 16 per cent boost, to £10 per hour.
I did have fears in advance of the Budget that fuel duty might go up – more expensive fuel is a real problem in the Highlands, with higher dependency on cars. The decision to freeze fuel duty will be welcomed by north drivers and businesses.
The Chancellor outlined plans to improve spending in areas such as education, health and transport in England. This provides a direct boost to finance for services devolved to the Scottish Government through the mechanism of the Barnett consequentials. This will provide the SNP administration with an extra £1.5 billion this year and £3.4 billion next year. It will be for the Scottish Government to allocate these new funds, whether transforming the NHS, our education services - or perhaps we could suggest speeding up the dualling of the A9?
This was an impressive first showing by a new Chancellor in a new government. The focus on long-term investment in education and health, and the objective of rebuilding the nation’s finances and infrastructure were of particular note. Looking ahead to the next Budget, I would like to see more transformational work done in partnership with the Scottish Government to protect our poorest pensioners in the Highlands.
