THERE will be an “additional” £3.4 billion for the Scottish Government as a result of the Labour Budget, the Chancellor has claimed.
Rachel Reeves told the Commons that the funding must be used by the SNP administration to improve public services north of the Border.
It came as she delivered the Labour Government Budget for 2025/2026.
Reeves told the Parliament: “We will drive growth in Scotland, a key priority for Scottish Labour and our leader Anas Sarwar, including with the city and growth deal in Argyll and Bute.
“This budget provides the devolved governments with the largest real-terms funding settlements since devolution, delivering an additional £3.4bn to the Scottish Government through the Barnett formula, funding which must now be used effectively in Scotland to deliver the public services that the people of Scotland deserve.”
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Reeves also said that the UK Government would fund 11 green hydrogen projects across the UK, including one in East Renfrewshire.
She further added that the Budget would see an additional £1.7bn for Wales and £1.5bn for Northern Ireland.
She told MPs: "I said that there would be no return to austerity, and that is the choice that I have made today."
The growth deal for Argyll and Bute which the Chancellor announced had been put on hold by her UK Government in September, with the local authority warning it left the area as the only one in Scotland without some form of growth deal in place.
In her response to the Labour Budget, the SNP Finance Secretary Shona Robison said it was a “step in the right direction” – but warned that her Scottish Government still faces “enormous cost pressures”.
The Finance Secretary said: “By changing her fiscal rules and increasing investment in infrastructure, the Chancellor has met a core ask of the Scottish Government. But after 14 years of austerity, it’s going to take more than one year to rebuild and recover – we will need to see continued investment over the coming years to reset and reform public services.”
She added: “As ever, the devil is in the detail, and we will now take the time to assess the full implications of today’s statement. I will be announcing further details as part of the Scottish Budget on December 4.”
Elsewhere in her Budget, Reeves said she will increase taxes by £40bn and she promised to “fix the foundations” of the economy, a phrase which has become a mantra for the Labour Government.
The Chancellor said: “Together, the black hole in our public finances this year, which recurs every year, the compensation payments which they did not fund and their failure to assess the scale of the challenges facing our public services means this Budget raises taxes by £40bn.
“Any Chancellor standing here today would face this reality. And any responsible Chancellor would take action.
“That is why today, I am restoring stability to our public finances and rebuilding our public services.”
She confirmed a £25bn raid on employers’ national insurance contributions, with higher rates and a lower starting threshold.
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The rate will increase by 1.2 percentage points to 15% from April 2025, with payments starting when an employee earns £5000, down from the current £9100.
“I know that this is a difficult choice. I do not take this decision lightly,” Ms Reeves said.
The Chancellor announced a £2.5bn increase in capital gains tax by increasing the lower rate from 10% to 18% and the higher rate from 20% to 24%.
She also confirmed changes to inheritance tax, including bringing pension pots within the tax from April 2027, and reforms to agricultural and business property reliefs, raising a total of £2bn a year.
The Office for Budget Responsibility’s forecast suggested gross domestic product growth will be higher in 2024 than expected in March – upgrading it from 0.8% to 1.1% and from 1.9% to 2.0% in 2025.
But there are downgrades in subsequent years – down from an expected 2% in 2026 to 1.8%, from 1.8% in 2027 to 1.5% and from 1.7% in 2028 to 1.5%.
Before the election, Keir Starmer had said that his government would target annual growth rates of 2.5%.
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