'Poor Scotland': National columnists give verdict on Labour Budget

William Thomson, Scotonomics

The Budget analysis once again overlooks key issues. While all eyes are on the £40 billion tax increase, which pulls money out of the economy—often hitting those who can least afford it—the larger context is ignored. Just between June and September, £45 billion was paid in interest on government bonds, benefiting the already wealthy. There's little conversation or scrutiny around this: spending that enriches those at the top is never questioned.

George Kerevan

Listening to Rachel Reeves's first Budget I felt I was back in 1931 hearing Ramsay MacDonald lecture us on why the first duty of a Labour government is to balance the books. And you thought it was to deliver social justice.

A rather wooden Reeves promised more growth. But the official OBR forecast published alongside the Budget indicates the UK economy will be limping along at a pathetic 1.6% in five years’ time. And this after Reeves claimed to spend £100bn on investment.

What’s the problem? Reeves wants to fund investment principally by raising the employer National Insurance levy, rather than placing higher taxes directly on wealthy individuals. This only increases the tax burden on businesses (by £25bn). Additionally, raising employer NI leads to lower wages in the long run as employers pass on the cost. Together with keeping the freeze on income tax thresholds another four years, that will squeeze consumption, depressing growth.

READ MORE: Martin Lewis offers verdict on the Budget and 'very big' tax rises

Plus all that new government borrowing is going to bump up interest rates, meaning a lot of Reeves’s extra tax revenues will be recycled back to the private investors who lend to the Treasury. She sugar-coated this by claiming she was ending Tory austerity. But her new fiscal rules actually worsen austerity.  

The new rule to fund current spending (wages and consumables) only from taxation rather than borrowing sounds reasonable. But filling the deficit on current spending bequeathed by the Tories will mean running a budget surplus for several years, ie devoting more taxes to debt reduction rather than extra services. Meanwhile, the windfall tax on North Sea oil producers gets bumped up from 35 to 38% and extended by a year. This brings the headline tax rate to 78%, among the highest in the world. Poor Scotland.

Caitlin Logan

Chancellor for the Exchequer Rachel Reeves began her budget announcement by marking a historical moment – this was the first UK Government budget to be delivered by a woman.

"To girls and young women everywhere: I say, let there be no ceiling on your ambition, your hopes and your dreams,” Reeves said. I wish I could have felt the way I’m sure those words were meant to make me feel as a woman and as a feminist – inspired, uplifted, triumphant.

Instead, it only drove home just how empty representation can be if it isn’t matched with solidarity.

READ MORE: Scottish Labour MP asks Keir Starmer to roll back devolution

Yes, there were some positive announcements which will be sure to help women, like raising the Living Wage and increasing investment in public services (albeit not enough).

But with Reeves’ decisions to remove the Winter Fuel Payment from most pensioners, to push ahead with the Conservatives’ cruel plans to make it harder to access sickness benefits, and to keep the two-child cap on benefits (and the associated “rape clause”), she has left some of the most vulnerable women in our society to founder.

So long as the new Chancellor holds onto policies which plunge women and children into poverty, she can miss me with the girl boss chat.

(Image: Colin Mearns)

Ellie Gomersall

Underwhelming, unambitious and yet totally unsurprising, this was a Budget that – despite its baby steps forwards in some regards – will brutally punish some of the most vulnerable in our society. Pensioners will freeze while Labour take away their Winter Fuel Payments. The two-child cap will continue to punish some of the most impoverished children in the country for the crime of being born. Those in England living from penny to penny will find it impossible to get around as their bus fares skyrocket by 50%. Meanwhile the super-rich continue to get off scot-free.

The decision to increase tax on private jets should be welcomed, as should increases to the minimum wage, but neither go anywhere near far enough. Similarly the additional revenue raised by tax increases will be vital for crumbling public services, but after years of austerity, far more ambition is desperately needed.

Fare hikes for public transport, an end to Winter Fuel Payments and the passing on of austerity to local services, the Scottish Government has thus far chosen to emulate much of Reeves’s approach. While the role of Holyrood should be so much more than just mitigating the worst of Westminster, all eyes must now be on the Scottish Government who can choose to use their powers to take a different approach this December.

Cameron Archibald

Labour's first budget in 14 years guarantees one thing: Austerity lives on for the many.

Labour will attempt to deny this with increases to departmental spending of 1.5%. What they won't tell you about their 2% "efficiency and savings target" for those same departments. That's code for austerity.

Our poorest will continue to be left behind. Labour will implement a real-terms cut to working-age benefits, increasing them by 1.7%, less than the forecast inflation of 2%. Changes to the Work Capability Assessment will also leave over 400,000 with mobility or mental health problems receiving less Universal Credit than they need. On top of this, the Budget keeps hundreds of thousands of children in poverty with Labour's two-child benefit cap and could push nearly two million pensioners into destitution with the cut to the winter fuel allowance.

Can they rely on growth? Very unlikely. For Labour to rely on growth for spending, it would need to magically jump from 0.5% to 3% within a year and sustain this for another five years to even start reversing 14 years of austerity. Even if they reach 2% in growth—an exceptionally hard task—it would only bring over £20 billion annually, not the hundreds of billions required to restore functioning public services. Furthermore, Labour's aim for the UK to have the "highest growth in the G7" would only be possible if every other nation suffered a recession all at once. Labour's growth plans are fantasy economics.

Labour had the opportunity to ditch the conservative fiscal rules, instead targeting productivity output gaps to fight inflation. They could have used public money from the Consolidated Fund to unleash the real investment so desperately needed, whilst reducing overnight interest rates for families. They failed in every regard.

We cannot end austerity without ending the bad ideas that lead to it.