UK Spring Budget 2024: letter to HM Treasury

From: Minister for Community Wealth and Public Finance Tom Arthur
To: Chief Secretary to the Treasury Laura Trott

23 February 2024

Dear Laura,

UK Government Spring Budget

The Deputy First Minister is writing to the Chancellor to set out the Scottish Government’s priorities ahead of the UK Spring Budget. However, I also want to raise directly with you some particular issues regarding the UK Government’s approach to taxation.

Despite the Chancellor of the Exchequer’s ‘Autumn Statement for Growth’, the UK economy fell into recession at the end of last year. This is having a real impact on households. The cost of living crisis remains as acute as ever – according to the Resolution Foundation, 22% of households face food insecurity and GDP per capita is now 4.2% down from its pre-cost of living crisis predictions. At a time when public services continue to face an unsustainable squeeze, the UK Government must reconsider the possibility of further tax and spending cuts in this year’s Spring Budget.

The UK Government’s position is even more untenable given the recent comments by the International Monetary Fund (IMF) who have warned against further tax cuts at the cost of further cuts to public services. We agree with this position and encourage you to heed warnings from the IMF rather than continuing with your current spending plans which will
result in below real-terms increases and further damage the services our most vulnerable rely on.

Alongside this, I am concerned about the continued rumours of using the additional ‘fiscal headroom’ to scrap or cut the rate of Inheritence Tax. This would be a regressive move as it would benefit only the very wealthiest in society and would come at the detriment of investment elsewhere. If any changes are made, they should focus on the structure of the tax and reform reliefs to ensure that they provide value for money to all taxpayers and ensure that those who are able to contribute the most do so.

The Scottish Government will continue to do what it can within its limited powers to preserve public services and to build a progressive approach to taxation. With this Spring Budget, we hope the UK Government will use its full range of reserved powers to prioritise long-term investment in public services over the choice of discretionary tax cuts.

I am copying this letter to the Rt Hon Jeremy Hunt MP, Chancellor of the Exchequer.

Yours sincerely,

Tom Arthur