Calls For UK Budget Refocus

John Swinney says the UK government must boost economic recovery and claims austerity has 'not worked'

Ahead of the UK Government’s emergency budget today, the Deputy First Minister and Finance Secretary has urged the Chancellor to rethink the UK’s ‘broken’ programme of austerity saying it is not just unfair but damaging to the economy and undermines attempts to stimulate growth.

Since the March budget, the economic outlook has remained broadly positive in both Scotland and the UK as whole. However, the Deputy First Minister believes that challenges around the nature of the economic recovery remain and has called on the Chancellor to use this budget to focus on measures to boost the recovery, improve productivity and support those in low pay.

Around half the people in poverty in Scotland live in working households, a situation worse in the UK as a whole. Seven in ten Scottish households who receive tax credits are working households, and ninety per cent of expenditure on tax credits goes to households with an income of less than £20,000. It is vital these people are fully supported in work, as well as those moving into the workforce.

Mr Swinney will also address the Chartered Institute of Public Finance and Accountancy (CIPFA) Annual Conference in London, where he is expected to emphasise the importance of a strong public service for a fair and equal society.

Speaking at the CIPFA conference, ahead of the UK Government’s emergency budget, Mr Swinney said: “The UK Government has already warned that today’s budget will continue the broken austerity programme, which we are clear is not just unfair but damaging to the economy – undermining attempts to stimulate growth.

“The Scottish Government will continue to invest in and prioritise Scotland’s strong public service using the powers and finances available to us. We are currently in a phase of public sector reform: working smarter to deliver vital front-line services to the people of Scotland against ever diminishing budgets from the UK Government. Integrated Health and Social Care and our working relationship with Scottish Local Authorities are major positive steps in our public service reform journey.

“We want to maximise the effectiveness of the Scottish Approach by having the right economic and fiscal policy levers at our disposal. Full Fiscal Autonomy would ensure that public spending decisions in Scotland reflect the needs and preferences of the people and businesses of Scotland.

“These powers would mean that Scotland would no longer be tied to the UK Government’s austerity agenda, which seeks to cut funding to public services and damages the economy.

“Austerity has failed in its principal objective of cutting the deficit. Over the six years to 2016, the Chancellor is likely to miss the borrowing targets he set for himself when he first entered office in 2010 by a staggering £150bn. It is simple economics that a programme of austerity and cuts that reduces household income and damages economic confidence weakens rather than strengthens the public finances.

“I am particularly concerned with the prospect that the budget will include measures to significantly reduce tax credits. This would be a mistake. In the vast majority of cases, these benefits are going to households who have already borne much of the burden of the austerity programme.

“Austerity hasn’t worked and the UK Government simply cannot go on ignoring the fact that their broken programme does little more than hit the most vulnerable the hardest.”