Parliament

Autumn Statement Resolutions

Published date : 27 November, 2023
Against a pretty horrendous economic backdrop, it was with bated breath and no little trepidation that we on the SNP Benches waited to see what the Chancellor would drop. The backdrop is certainly about as far removed as anyone could ever have hoped it would have been going into such a crucial period. Not only is GDP per capita still not above 2019 pre-pandemic levels, but the UK is expected to suffer the biggest fall in living standards since records began in the 1950s. Most people are expected to be worse off in 2027 than they were in 2019. Real incomes are also expected to be lower in 2027 than they were in 2019. A typical household will be worse off by approximately £694 per annum by 2027-28 as a result of the policies of this Conservative Government who are so adamant, in the face of all outcomes and facts, that they get the big decisions right. That is certainly not borne out by the outlook for the economy under their stewardship.

Sadly, there was nothing at all in the Chancellor’s statement that offered any kind of meaningful change for the millions of people in Scotland and elsewhere who are really struggling right now against that economic backdrop. Last week’s announcements were a clear reminder for people in Scotland, if any were needed, that we cannot hope to build a fair, dynamic economy while being tied to UK Governments who, through their actions, do not reflect the preferences, choices or values that people consistently express at the ballot box when they go to vote.

On the statement, there is the old proverb about the couple who stop for directions and are told, rather unhelpfully, “I wouldn’t be starting from here.” Let us not be in any doubt: we certainly would not wish to be starting from here. We would not wish to be labouring with the aftermath of Brexit, which has permanently given the UK economy the effect of trying to drive a car with the handbrake wedged firmly on. We certainly would not be coming off the back of the catastrophic Budget driven by the right hon. Members for Spelthorne (Kwasi Kwarteng) and for South West Norfolk (Elizabeth Truss), which blew up the economy. Despite that, and in spite of everything, the Chancellor did have slightly more headroom—about £20 billion—than had been forecast. The question was: how would he seek to put that to work?

I will start with the few positives I can find. The uplifting of benefits by 6.7% in line with the higher rate of inflation really is the least the Chancellor could have done. It will still leave too many people struggling and wondering how they are going to pay their bills. It was the very least that should have been done on uplifting the rate. Uplifting the local housing allowance was important. My party called for, and we welcome, allowing rates of housing benefit to be paid at rates that more closely match where the market actually is. A freeze in whisky duty certainly does not undo the damage of the spring Budget, where a 10.1% levy was whacked on the spirit, but at least it makes things no worse.

If the House will permit me, I would like to take the opportunity, while I have a captive audience on the Treasury Bench, to explain why whisky duty matters. The Scotch whisky industry supports 10,000 jobs in Scotland and 42,000 jobs across the whole of the UK. It also represents 25% of total UK food and drink exports. One would think that this is an industry that the Government would want to look after, nurture, take care of and give every possible opportunity to succeed. The level of duty affects domestic consumption and also affects the investment that goes into supporting those jobs. But here’s the rub: it also impacts how other jurisdictions in key markets, particularly the Asian markets, react, because many of them take their cue from the level of duty set by the UK Government. If they see the UK Government setting a rate of duty where there is a gigantic differential between indigenous spirits such as Scotch whisky and other drinks in the market, then they have absolutely no qualms about following suit. That depresses potential sales in key emerging markets and reduces the opportunities we have to drive growth and innovation in that key sector at home.

As for the bigger picture, nothing in the Chancellor’s statement offered meaningful change to the millions of people out there who are suffering at the moment. What the statement did offer was a clear reminder that, as I have said, the key powers over the commanding heights of the economy will do nothing for Scotland while they continue to remain under the control of Governments who do not share the values that people vote for. Sadly, as the soaring cost of household bills outpaces the limited help that was on offer in the statement, the reality is that what was offered is far too little, coming far too late for the squeezed majority of households.

The SNP set what I thought were some pretty basic fundamental tests for the statement: a relatively small number of asks that could nevertheless have made a big difference. We asked for a £400 energy rebate, something that the UK Government have sadly failed to provide although energy bills continue to be roughly double what they were in 2021—and moreover, the day after the statement the energy price cap was increased by a further 5%. We challenged the UK Government to match the council tax freeze by the SNP Government in Edinburgh, which will put a disproportionately high amount of money into the pockets of the lowest earners. We also challenged them to match the game-changing Scottish child payment of £25 a week, another measure that is putting thousands of pounds into the pockets of those who need it most. That payment was highlighted in a recent blog by the London School of Economics as one of the key reasons why the level of child poverty in Scotland—although far too high—is still significantly lower than it is in any other part of the UK.

The UK Government could also have given some respite to hard-pressed homeowners, many of whom are looking down the barrel of significant increases in their mortgage payments as a result of higher interest rates. They could have done that by introducing mortgage interest rate relief, but they chose not to do so.

For my part of Scotland, the north-east, we challenged the UK Government to match what the Scottish Government are doing in kick-starting the energy revolution, the green transition that we need—to match the £500 million set aside purely for the north-east—but we got nothing, although we know how crucial that energy transition is to ensuring fairness, retaining human capital and prosperity, and delivering the changes that not only our economy but our planet needs.

We are invited to believe that the goal of the statement was growth. Let me draw attention to two key areas in which the UK Government have, in my view, been found to be badly wanting. The first is capital spending. There are obviously pressures to maintain existing assets, as we all know from the emergence of the problems that reinforced autoclaved aerated concrete has caused in many public sector buildings constructed over the past 40 years. We can see the waste caused by overspending: the horrendous waste of money represented by some of the stations in central London on the Elizabeth line, a railway that did go ahead, and by the cancellation of HS2 and the bits of that line that did not go ahead. However, we need to recognise the importance not just of private sector capital expenditure, but of the key driving, galvanising force that capital expenditure from the Government and the public sector can have. It drives and encourages investment from the private sector, and, crucially, it increases the productive capacity of each and every one of us. It is therefore unfathomable that the UK Government should cut the Scottish Government’s capital budget by 6.7% between 2023-24 and 2027-28—a figure that will potentially become even higher if inflation persists at its current levels—all the while refusing to devolve long-term borrowing powers.

Secondly, there is a persistent negative when it comes to research and development. There are parts of the UK that punch pretty well above their weight in that regard, most obviously the south-east of England and London but also Scotland. However, there are other parts, such as the regions of England and also Wales, where R&D spending is significantly below the share of GDP, and also below the share of the population that might be expected to be able to attract it.

Beyond that, the UK’s investment in research and development consistently lags that of EU competitors such as France and Germany, which is a major drag on long-term growth and economic opportunities for all our constituents.

Looking through the additional spends and revenues forgone as a result of the statement, it seems to me—I am happy to be proved wrong—that the Government are committing more to returning full business rates to the combined authorities in Greater Manchester and the west midlands than they are to research and development or anything that might drive that forward. Lest anyone assail me, I have absolutely no grudge against the west midlands of England or the Greater Manchester combined authority—more power to them! I do not know whether the Greater Manchester combined authority extends to Chorley, Mr Speaker—

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Perhaps some reflected benefit will come through. Those authorities are entitled to every penny that they can get back from this Government, and I wish them well in that endeavour, but it pales in comparison with the strategic importance of research and development, in policy terms and numerically. Until the Government get to grips with the long-term lack of investment in our public sector, our human capital, our physical capital and our R&D, we can expect the country to lag behind.

It is no secret that I come here as a supporter of Scottish independence. I would dearly love to see Governments in Scotland being able to make their own budgets, constrained only by the limits of their own resources, their own choices, their own imaginations and their own political mandates, and with restrictions placed on them by nowhere else. But until that day comes, we are stuck with what this Government and potential UK Governments come forward with, which, I have to say, we find badly wanting.

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Will the Minister give way?

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