Political reaction to the UK budget – has the chancellor piled the pressure on the SNP? Or has Rachel Reeves devastated Highland farming, whisky, business and employment?
The political views on Rachel Reeves first budget as Chancellor of the Exchequer was always going to attract a hugely diverse range of opinion from local representatives.
From hitting the ball into the SNP’s court to Labour claims that it will be “transformative” to it being a “disaster” for farmers, for the whisky industry, for Highland businesses and pensioners.
We have already covered some of the main issues relating to the Highlands and what the outcome could be for businesses.
Inverness, Skye, and West Ross-shire MP Angus MacDonald
Angus MacDonald responded with a blend of cautious optimism and pressing concerns for how the money will be spent by Holyrood.
The £40bn in tax rises announced by Chancellor Rachel Reeves today represents the biggest hike budget in modern times delivering an additional £3.4 billion for Scotland, which Ms MacDonald stresses must be invested thoughtfully.
MacDonald speaking on the budget’s significance to Scotland highlighted that:
“The SNP Government recently announced a cut of £500m from its budget this year blaming Westminster, this new £3.4 billion funding can be used to make significant investment in desperately needed infrastructure in the Highlands”
“I feel strongly that capital expenditure has been concentrated in the central belt and this considerable one off funding should be disproportionately invested in the Highlands, it's our turn’.”
With that in mind he argued that his constituency investment should now be available to fund two new schools in Inverness and to accelerate the A9 dualling.
“I am worried about the largest business area in the Highlands, our hospitality and retail sector,” he said. “These sectors employ lots of people and are really struggling. Higher National Insurance, wages and increasing bureaucracy are driving firms out of business. Scotland is not following the rest of the UK in giving substantial business rates relief.”
But he remained disappointed that the new government pushed ahead with cuts to the winter fuel allowance which will badly impact some of the most vulnerable pensioners in our community.
He added: “This is a bitter blow for the many pensioners in the Scottish Highlands, who are left choosing between heating and eating this winter.”
Caithness Sutherland and Easter Ross MP Jamie Stone
Jamie Stone said it would prove to be a “litmus test" for the SNP in how it spends the additional £3.4 million as he welcomed the increase in carer’s allowance, the fuel duty freeze and aerospace investment.
Mr Stone is sceptical about whether or not the £3.4 billion ringfenced for public services in Scotland will be spent properly or not.
“I am pleased to see the government commit to the increase in Carer’s Allowance from £81.90 per week to the equivalent of 16 hours at the National Living Wage per week,” he said.
“Carers are the backbone of our ageing rural communities in the Far North and I am pleased to see their value adequately recognised and more money in their pockets. It is heartening to see endless advocacy come to fruition.
“Additionally, I look forward to seeing how almost £1 billion of investment promised to the aerospace sector will contribute to the Sutherland Spaceport and potentially increase much needed flights in and out of Wick Airport.”
Highlands and Islands Conservative MSP Edward Mountain
Edward Mountain said “The first Labour budget in more than 14 years brings cold comfort to people across the Highlands and Islands.
“They have failed to reverse their cuts to winter fuel payments. Furthermore, the increase in National Insurance costs paid by firms will affect workers by limiting the ability of their employers to increase salaries. This will be especially felt by workers in Scotland who pay more income tax than anywhere else in the UK.
“I hope that the additional money that will come to Scotland as a result of additional Barnett consequentials for health will indeed be used by the Scottish Government for health spending.”
Moray West, Nairn and Strathspey MP Graham Leadbitter
Graham Leadbitter focussed on the impact of the duty rises on whisky, saying: “What Keir Starmer and Rachel Reeves have signalled today is that Labour’s word means nothing.
“In opposition they were happy to appear for photo-ops and make grand promises to support the sector, but now they’re in government they haven’t just turned their backs on Scotch Whisky - they’ve slammed the door on the industry.
“This is a move that defies common sense, independent analysis, and Labour’s own promises - and it’ll come back to bite them. Analysis has proved that when Whisky duty is raised, Treasury receipts fall and the industry suffers.
“Successive Westminster governments have had the Scotch Whisky industry over a barrel, and now it appears it’s Labour’s turn to hold back one of Scotland’s key industries and world-class exports.
“I represent some of the finest Scotch Whisky brands in the world, whose success has come from, in some cases, literal centuries of crafting and perfecting incredible products. They’re now being held back by a Westminster tax regime that simply sees the industry as a cash cow.
“The SNP recognise the importance of Scotch Whisky and its role in our economy, history, and our presence on the world stage - we’ll stand against these damaging proposals.”
Highlands and Islands Conservative MSP Jamie Halcro Johnston
Jamie Halcro Johnston said: “This budget is a disaster for the Highlands and Islands and for Scotland’s rural communities. It shows just how little Labour understand rural Scotland, or how little they care about the individuals and businesses that live and operate here.
“The Chancellor has claimed she wants to protect ‘small family farms’, but it’s clear Rachel Reeves has absolutely no idea what a small family farm actually looks like or how Labour’s cut to agricultural property relief will impact on rural Scotland.
“This decision demonstrates a fundamental lack of understanding about the challenges facing farming, or of the consequences this new tax burden will have on farming families and on much-needed future investment in the sector.
“It is a budget that increases the tax burden on key local businesses, hammers rural Scotland, and will damage future investment. It is a dreadful budget for the Highlands and Islands”.
The Scottish Government response
The Scottish Government’s finance secretary Shona Robison delivered an upbeat response to the budget, saying: “This budget is a step in the right direction” but has serious reservations about the national insurance hikes for employers which could impact public bodies.
“We called for increased investment in public services, infrastructure and tackling poverty,” she said. “This budget is a step in the right direction, but still leaves us facing enormous cost pressures going forwards. The additional funding for this financial year has already been factored into our spending plans.
“By changing her fiscal rules and increasing investment in infrastructure, the Chancellor has met a core ask of the Scottish Government. But after 14 years of austerity, it’s going to take more than one year to rebuild and recover – we will need to see continued investment over the coming years to reset and reform public services.
“Indeed, there is a risk that by providing more funding for public services while increasing employer national insurance contributions, the UK Government is giving with one hand while taking away with the other.
“We estimate that the employer national insurance change could add up to £500 million in costs for the public sector unless it is fully reimbursed – and there is a danger that we won’t get that certainty until after the Scottish budget process for 2025/26 has concluded.”
