Response to Chancellor George Osborne’s Autumn Statement from BfS director Ian McDougall
Ian McDougall is a partner in McDougall Johnstone and a director of Business for Scotland. He said:
“We welcome the business friendly actions announced today, such as the abolition of National Insurance contributions for apprentices aged under-25, making it cheaper for small businesses and other employers to take them on, and the additional £500m of bank lending plus £400m for government-backed venture capital funds which invest in SMEs.
“But we feel there are certain things, like the increase in R&D tax reliefs from 225% to 230%, that just don’t go far enough, and that’s not devolved so we can’t improve this in Scotland. And the extension to the Funding for Lending scheme, although welcome, simply does not deal with the lending crisis for small business, where the banks in 2014 expect to reduce borrowing to the SME sector by an eye watering £2bn. Without investment in jobs and businesses the economy will continue to stagnate.
“We believe today’s Autumn Statement is evidence that Westminster’s austerity programme has failed.
“If you look at the downgrading of growth projections, even from the numbers presented in the budget in March 2014, they show that the UK is set to continue to under-perform in comparison to its peers, and put further pressure on tax receipts for the rest of this decade.
“Osborne promised to reduce the current account deficit to £20bn in 2015/ 2016 and wipe it out by 2016/2017; we now know the deficit will be £75bn in 2015/2016 and will not turn in to a surplus until 2020 at the earliest. In reality, this will be 2022/2023 and then the debt has to be repaid. This failed policy means anyone born into austerity will still be living in it as they enter the workplace – almost a generation of failed economic policy driven by incompetence in Westminster.
“In addition to failing to manage the UK debt, Osborne has delivered another £3bn cut in tax credits. The average employee is already worse off by £1500 since 2010 and this is a further reduction to the pound in their pocket. This continued strangulation of wage levels is yet another blow to Scottish SMEs as our customers simply have less money to spend.
“Ballooning national debt, reduced growth, stagnating wages levels and ripping the pounds from the pockets of the poor, together with the confirmation that the powers that Scotland needs to deliver economic growth and create prosperity have been denied to Scotland and given to others, make this a pretty black day for Scottish business.”
Today’s Autumn Statement was used to announce that Northern Ireland should have control over revenue-raiser Corporation tax and the setting of business rates would be devolved to Wales. Yet Scotland still lacks the financial levers necessary to grow the economy, create jobs and deliver real social justice. You can listen to Gordon MacIntyre-Kemp of BfS on Scotland Tonight responding to Lord Smith’s suggestion that Scotland should “stop coveting corporation tax”.