Spring Statement fails to properly tackle soaring living costs

The UK Government has not delivered the support and help that families and businesses need today, according to Finance Secretary Kate Forbes.

Responding to the Spring Statement, Ms Forbes said the Chancellor failed to help thousands of worried households facing poverty as a result of soaring energy bills and a cost of living crisis.

In 2018/19, the Scottish Government introduced a more progressive approach to tax, including a 19% starter rate band below the basic rate, ensuring those who can afford to pay a little more do so.

Ms Forbes said:

“The Spring Statement has failed to address the biggest challenges facing households today. With soaring energy bills and a cost of living crisis, the Chancellor has not used his Spring Statement sufficiently to provide lifeline support that could prevent households facing fuel poverty.

“The Scottish Government is providing a further £10 million to continue our Fuel Insecurity Fund into 2022-23, which supports people struggling with their energy bills. Most powers relating to the energy markets remain reserved and Scottish Ministers have repeatedly called for the UK Government to urgently take further action to support households - including a reduction in VAT on household energy bills and support for those on low incomes.

“We are doing all we can to tackle the cost of living crisis - including doubling the Scottish Child Payment from £10 per week per eligible child to £20 next month. The UK Government should have followed our lead and matched the 6% uprate on social security benefits which the Scottish Government is adding to eight of the benefits we deliver. The Chancellor failed to match that commitment which could have provided lifeline support to thousands of households.

“On taxation, we have already acted to introduce a 19% starter rate of income tax below the basic rate, in line with our commitment to progressive taxation, which makes Scotland the fairest taxed part of the UK. We will continue to take that approach when we set taxation policy in future budgets.”

Background

In her letter to the Chancellor, the Finance Secretary called for the UK Government to deliver:

• more targeted funding to business sectors directly affected by the Ukraine conflict
• relief to business on National Insurance contributions
• the removal of VAT from energy efficient and zero emission heat equipment and products
• greater powers for the Scottish Government to implement flexible working, to get more people into jobs
• increased benefits at a higher rate, closer to inflation
• removal/reduction of VAT on household energy bills
• two extra Cold Weather Payments – one immediately and another in winter 2022-23 when energy bills will have risen again

The Scottish Government will set out its plans on income tax and tax policies in future budgets. There are currently no changes to income tax rates or bands.