Chancellor George Osborne has used his pre-election Budget to boost Scotland’s key oil and whisky industries.
The Conservative Chancellor – whose Budget will provide the Scottish Government with an additional £31 million next year – pledged a £1.3 billion package of support for the North Sea, including slashing the headline rate of tax for the sector.
As well as cutting the supplementary charge on oil companies’ profits from 30% to 20%, he promised to bring in a “simple and generous” tax allowance to stimulate investment in the North Sea from the start of April and to boost offshore exploration by investing £20 million in new seismic surveys of the UK continental shelf.
The package is expected to result in more than £4 billion of additional investment over the next five years and increase production by 15% by the end of the decade, according to the UK Government.
Meanwhile, alcohol duty on whisky is to be cut by 2%, meeting demands from the industry.
Scotland’s Deputy First Minister John Swinney said Mr Osborne continued to pursue austerity rather than invest in public services.
Mr Swinney also claimed that, based upon figures published by the Office of Budget Responsibility, Scotland will see another £12 billion of cumulative cuts in real terms over the period to 2019.
“The Chancellor had every opportunity to end the damaging cuts from the UK Government and has instead turned his back on investment in public services,” said Mr Swinney.
“We face the same £30 billion of unfair and unnecessary cuts today as we did yesterday. That is despite the clear admission from the Chancellor that there is headroom to invest to protect our public services.
“If we are to believe the Chancellor that the economy is making such a successful recovery, then there is no justification for the destructive cuts that impact on the most vulnerable in society. That tells you everything you need to know about the values and priorities of this Chancellor.”
David Frost, Scotch Whisky Association chief executive, welcomed the move and said: “This is a historic decision and only the fourth time whisky duty has been cut in a century.
“The Chancellor’s announcement will be toasted across the whisky industry and by consumers who are getting a fairer deal on tax when they have a drink of Scotch. The move is a major boost to our industry as we look to grow again in the UK, and equally sends out an important signal on fair taxation to our export markets.”
As well as efforts to help whisky and oil, the computer games industry – much of which is based in Dundee – should benefit from measures aimed at assisting the creative industries.
Mr Osborne also used his Budget to announce the opening of negotiations for city deals for Aberdeen and Inverness, while Scotland’s Charity Air Ambulance is to upgrade its helicopter after it was handed £3.3 million, with the cash coming from bank fines.
Scottish Secretary Alistair Carmichael highlighted changes to the tax regime which will see the income tax threshold increased to £11,000 in 2017-18.
This will benefit 2.33 million people north of the border, the UK Government said, with 287,000 removed from paying the levy altogether.
Mr Carmichael said: “Today’s Budget is another positive step forward for Scotland in the wider journey to economic stability which has taken place over the past five years.
“It gets the important things right, with a focus on helping create a fairer and more generous personal tax system which will benefit thousands of people in Scotland, and giving a helping hand to some of our key business sectors, securing jobs and prosperity for the future.
“This progress has been hard-won by this Government and builds a strong base for Scotland’s economic future as part of the UK.”
Scottish Conservative leader Ruth Davidson said measures to help the oilindustry should “ensure a secure future for the North Sea”.
Ms Davidson said: “The Chancellor has listened to the oil industry and come good on the pledge we made to help.
“These tax breaks will aid investment and ensure a secure future for the North Sea.”
She added: “I met with Oil and Gas UK last week and I know £1.3 billion will be a huge boost to North Sea operators. The Conservatives have listened to this vital industry and acted decisively.
“Today’s announcement won’t be a cure for all of the North Sea’s ills, but it’s a strong start.
“This is yet more proof that the North Sea is best served within the strength of the UK, which can deliver assistance a separate Scotland simply would not have been able to.”
She also welcomed the cut in duty for whisky as a “historic milestone” which she said would “reduce the tax on one of Scotland’s most famous exports”.
But Scottish Labour leader Jim Murphy said the Chancellor was in “complete denial about the damage he has caused after five years of failing and painful austerity”.
He stated: “After five years of Tory austerity, the choice facing voters couldn’t be clearer. More cuts and deeper austerity with the Tories or a fairer deal with Labour to make work pay for working people. It is a stark choice of two different futures.”
The East Renfrewshire MP went on: “George Osborne’s tax and benefit changes have cost families the equivalent of an 8p tax rise. On average, that amounts to £1,127 a year. He will leave office as Chancellor with the majority of people worse off than they were when he moved into Treasury. It’s a record of failure.
“He gives with one hand and takes with the other. He says ‘Yes’ to the bedroom tax and ‘No’ to the mansion tax. Taxes up for working families and tax cuts for millionaires.
“George Osborne has run out of credibility and now he’s running out of time. In just 50 days we can elect a Labour government to help working families to succeed with a national minimum wage above £8 an hour, reintroducing the 10p tax rate, and ending the scandal of exploitative zero-hours contracts.”
Grahame Smith, general secretary of the Scottish Trades Union Congress, cast doubt over whether the measures announced would be enough to prevent job losses in the North Sea.
He said: “The STUC welcomes the measures to support investment and exploration in the North Sea but, as long as the oil price remains around 53 dollars a barrel, isn’t optimistic that this will be sufficient to safeguard jobs in the short to medium term.”
Overall he argued: “This Budget was clearly designed to meet the political challenge of the forthcoming general election rather than the significant economic and social challenges facing the UK. The windfall provided by falling inflation should have been reinvested in vital infrastructure to further embed the recovery and support good jobs, not pay down debt that is currently being serviced at historically low interest rates.
“There’s little to provide any comfort to the millions of low-wage workers and benefit recipients hit hardest by the Coalition’s damaging and unnecessary economic programme. Another expensive increase in the personal allowance will do nothing for the five million lowest paid workers and will benefit most those in the top half of the income distribution.
“Measures to incentivise saving simply won’t resonate with those for whom saving is impossible. The pain of the massive spending cuts scheduled for the next three years will not be alleviated by the Chancellor’s commitment to increase public spending in the last year of the next Parliament.”