Economic Growth in Scotland: Tax Policies

Treasury – in the House of Commons at on 6 February 2024.

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Photo of Michael Shanks Michael Shanks Shadow Minister (Scotland)

If he will make an assessment of the impact of his Department’s tax policies on economic growth in Scotland during this Parliament.

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury

The Government remain committed to increasing economic growth in Scotland and right across the UK. As part of 110 growth measures in the autumn statement 2023, the Government introduced tax policies that are projected to stimulate economic growth in Scotland and across the country. That includes making full expensing permanent and the largest ever cut to employee and self-employed national insurance contributions, which means more people working.

Photo of Michael Shanks Michael Shanks Shadow Minister (Scotland)

The EY Independent Treasury Economic Model Club forecast published yesterday found that the UK’s growth forecast of 0.8% this year is only slightly outperformed by the even more disappointing 0.7% growth in Scotland. Given this Parliament has hiked taxes 25 times, and the Scottish National party now think that those on modest incomes in Scotland should pay even more tax, does the Minister agree that the people of Scotland are simply paying the price for two Governments with no economic credibility?

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury

No, I do not agree. The hon. Member should be aware that the OECD suggests that in the coming years we will be growing faster than France, Italy and Germany. Of course, the Government have a strong track record against our OECD friends over the last 14 years, and Scotland benefits from this economic growth.

Photo of Virginia Crosbie Virginia Crosbie Conservative, Ynys Môn

As in Scotland, business rates are devolved in Wales. With business rates relief set to fall from 75% to 40%, businesses in Wales will pay almost twice as much as in England. Does my hon. Friend agree that the Welsh Labour Government should be supporting local businesses such as the Kinmel Arms in Moelfre and not increasing the number of Senedd Members by a staggering 60%?

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury

My hon. Friend puts it well. Of course, we have seen the considerable protections and support given in retail, hospitality and leisure business rates relief in England. That has not been extended to the same extent in Wales, and Scotland failed to extend it as well. She makes an important point.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Economy)

Contrary to what the Minister said, OECD forecasts show that the UK will have the lowest growth in the G20 and the highest inflation in the G7. Ministers like to pretend that there is no real cost of living crisis, but there is one, and it is biting hard. How long will Ministers—and their Labour counterparts—continue to peddle the fantasy that Brexit is somehow good for the Scottish people?

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury

I am afraid that the thing that would most impoverish the people of Scotland is separation from the UK. After 16 years of SNP rule—longer than the Conservatives’ in England—GDP per head in Scotland is lower, productivity is falling, employment is lower and inactivity is higher. That is not exactly a proud record.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Economy)

The Minister talks about GDP. The Office for Budget Responsibility forecast that GDP in the UK will be 4% lower in the long term due to Brexit. Meanwhile, independent Ireland in the EU is booming with a giant fiscal surplus. Given that the Tories, Labour and the Lib Dems are all now champions of Brexit, is it not the case that the only way for Scotland to rejoin the EU is through becoming an independent country?

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury

The hon. Gentleman knows that the IMF has forecast us greater growth than France, Italy and Germany over the next few years. If he is so enthusiastic about supporting growth, including helping businesses across the United Kingdom, perhaps Scottish National party Members could have joined us in the voting Lobby last night instead of voting against, for example, full expensing and investment in research and development. They voted against that—how on earth is that in the interests of their constituents?