By Campbell Gunn, 3x1 Group Strategic Adviser
This week’s Westminster Budget will be the last to be held in springtime. From now on, the annual speech on the state of the nation’s finances will take place in the autumn. This is a positive move, particularly for the devolved administrations, who have to set their budgets while not knowing exactly how much money they have at their disposal.
Chancellor Philip Hammond’s speech was one of the shortest Budget presentations of recent years, at just under an hour, and the number of measures he announced was far fewer than usual too.
However, that didn’t prevent him stumbling into trouble. In particular, the National Insurance increase for the self-employed was a clear breach of a Conservative manifesto pledge, despite all the wriggling and counter-claims from ministers afterwards.
A total of 1.6 million people – 15 % of the working population, will pay average additional tax of £240 each, thanks to the increase. Worse still for the Chancellor, it’s seen as an attack on “aspirant and enterprising” individuals, the very people the Conservatives claim to support.
The Scottish Government will receive an additional £350 million in funding thanks to the Barnett Formula. Additional spending on things like education in England and Wales means that equivalent cash must come to Scotland. However, this cash is in two sections, neither of which comes to Holyrood immediately. £260 million in revenue spending will arrive over the next three years, and £90 million in capital spending over the next four years.
There was disappointment too for Scotland’s North Sea oil and gas industry. It had been heavily trailed that the Chancellor would announce help for the sector in his speech. In the event, all he announced was that a panel of experts will be set up to examine the issue and that a discussion paper on helping the industry would be published.
Away from the Budget, there has been some good news on the oil and gas front. Following years of decline, production is on the increase again – up 16% since 2014, and set to rise even further following the massive investments oil companies have made in recent years. This investment, of course, accounts for much of the decline in oil revenues the UK Government has received, as the companies put the investment against the tax they would otherwise have paid.
North Sea oil and gas will never be the cash cow it once was, but neither is it the basket case that some politicians claim – there’s plenty of oil and gas, and plenty of revenue, still to be extracted.