16/03/2016 Scotland 2016

The Chancellor serves up tax sweeteners and spending cuts,

George Osborne's delivered his eighth budget.

In it, he serves up ?3.5 billion of cuts.

There's tax relief for the ailing Scottish Oil Gas

There's a not so sweet surprise for the sugary drink

And there's a warning about where the economy's heading.

This was a high-stakes Budget for George Osborne -

ahead of a referendum on Europe, and the impending contest to replace

And all, against a troubling backdrop - what he called

a dangerous cocktail of global risks.

So there was give and take from the Chancellor.

And surprises, designed to grab the headlines.

So let's have a look at some of the key measures

First - tax cuts to help the Oil and Gas industry -

George Osborne said Petroleum Revenue Tax would be

And what's called the supplementary charge for oil

companies will also be cut - from 20 percent to 10 percent.

All told the UK government say the measures are worth

There's help for another of Scotland's major

But a new sugar tax will be imposed on the drinks industry,

which will come into force in two years time.

AG Barr, who make Irn Bru has seen its share price fall by 2.5

On income tax, we'll see the tax free

personal allowance raised to ?11,500.

And from April next year, he's going to

raise the threshold at which people pay the higher rate of income

Our reporter Andrew Black has been gathering reaction on the impact

The city of Aberdeen is one of Europe's energy capitals. The fall

in oil prices have cost up to an estimate of 65,000 jobs in Britain's

offshore sector, with much of that downturn felt here. Today the

Chancellor announced a much welcomed plan to turn things around, with tax

cuts for the North Sea industry. There are many companies paying tax

because they're not making profits. It's a really challenging time for

the industry but still a positive step to reinforce that actually, the

Government sees this as a sustainable and injuring industry

that is worth investing in. I now call the Right Honourable George

Osborne. That announcement was one of many in George Osborne's budget.

Today he said his spending plans would help the economy while urging

the need for caution after downgrading economic forecasts. This

is a budget that gets the investors investing, savers are saving,

businesses doing business so that we build for working people in low tax

enterprise Britain, secure at home and strong in the world, I commend

today has a budget that puts the next-generation first. Whilst an

extra ?3.5 billion of spending cuts also announced, his opponents said

it would do nothing of the sort. It is a recovery built on sand on a

budget of failure, it is built on the budget deficit, on debt, an

investment, on productivity, field on trade deficit, on the welfare

cap, failed to tackle inequality in this country. It is also important

to note this is the last budget if Chancellor will set for the entirety

of the UK ahead of new financial powers coming to Holyrood and given

today's announcement that the rate at which workers start playing top

rate tax is to be increased raises questions about what Scottish

ministers will do. The big challenge will be whether the Scottish

Government follows the UK Government, if it doesn't follow its

the political danger is that Scotland becomes branded as a high

tax part of the UK. When you're deciding for you want to work, one

thing you look at what is my take-home pay going to be? If we

move to Scotland and we start reducing some of these bindings are

you go into 40% quicker, maybe you might think twice about moving to

Scotland to work. Equally we could use the measure the other way and

increase the band so it takes longer before you hit 40%, so we would

become attractive. What is the Scottish Government planning? We've

reset our tax race for 2016-17 and they will not change. We will

acquire new powers in 2017 with the ability to very many of these issues

and the Government will consider a position and set that out well in

advance of the election to enable people in Scotland to form a

judgment about these plans. What we have set out at the weekend at our

party conference is the fact we are not persuaded this is the moment to

reduce taxes for people on higher incomes. There was another

announcement today, a UK wide tax on sugary drinks to tackle the city.

Scottish ministers will get a share of the takings to spend as they

want. But AG Barr, which makes Irn Bru, said it was disappointed to

have been singled out when it was working to cut calories in its

products. Today's budget may have brought a sense of calm debate is

hit by hard times like Aberdeen but could that be short lived if the

Chancellor is warning of a dangerous cocktail of global economic risks,

could more spending cuts be on the horizon?

Lots of eye-catching announcements in the budget.

Well, the independent Office for Budget Responsibility has cut

Britain's growth forecast for the next five years.

And George Osborne's warned of a "cocktail of risks"

But he's stuck to his target of hitting a budget surplus by 2020.

That where government spending is less than the revenues brought in.

To do that, he's spelled out another ?3.5 billion in spending cuts,

But, according to the OBR, the Chancellor's missed his target

of starting to cut the national debt as a percentage of output

But the OBR said all its forecasts have been made on the assumption

that Britain would remain in the European Union,

And in our London studio now is Stephen Boyle,

who is the Chief Economist at the Royal Bank of Scotland.

Thank you for joining us. We know there is lots of theatre in a

budget, lots of politics, but spell out for us if you would the picture

that has been painted from those figures from the OBR about the state

of the British economy? What they said today is that grows over the

next few years will be materially slow, we selected it to be when the

Chancellor gave his Autumn Statement in November. The most important

factor lying behind that is that they believe the rate of

productivity growth at which we can produce things for every ever we are

at work in this country is slowing. Not by a little, by quite a lot.

That is significant, partly because if we are not growing productivity

as fast as we thought people's incomes cannot ride as quickly as

they might expect. It is important for the Chancellor because slower

productivity growth means there is simply less of an income base from

which he can generate tax income. Pessimistic forecast, but I wonder,

can we rely on these forecasts? Because they seem to change a lot

over time? I suppose I should defend the Economist trade union Begu at --

but I think you have a fair point. Forecasts are part art and part

science, the office for budget was recognises there is a huge amount of

uncertainty in any forecast, which is why, for example, they say they

believe the Chancellor will hit his target of making a surplus in

2019-20 but there is just over 50% chance of that happening. That

reflects the uncertainty underpinning the forecasts. I saw,

the Chancellor that commitment and is aiming to hit a budget surplus by

2020. I wonder how helpful, amid all these concerns, is that target?

Bridge means cuts when many think we should be investing more, is the

strategy right? I think all possible governments need to have fiscal

targets, and the target the Government has at the moment that by

2019-20 total incomes should exceed total spending, has the virtue of

being very clear. You know if they are hated. My concern is that it

treats all spending is being the same and there is a compelling

argument that investment spending should be treated differently from

spending on day-to-day public services because if you are doing

the right kind of investment the new generating additional income for

people and the economy as an entirety for a longer period of time

and it's a good I quench that you could take responsible investment

spending out of that target and in the balance tech -- tax revenue

against data be -- day-to-day spending. The OBR said all of their

predictions about the state of the economy and the future were based on

assumptions that Britain would remain in the European Union. It

appointed George Osborne to say that leaving the EU would usher in a

period of dangerous volatility. It is the jumping to conclusions of

putting a political spin on what is basically a statement of the office

from the OBR? I don't think we should criticise politicians from

making political points. I do think is that while people can have

reasonable dispute about the economic consequences of remaining

in or leaving the European Union, there is a solid consensus that were

the votes to be close in the run-up to it or were we to decide to leave

and there was a period of negotiation there would be

uncertainty about the longer term prospects for the UK, and that would

be damaging for growth. Many thanks. Stephen Boyle, chief economist at

RBS. Just before we came on air,

I spoke to the Chief Secretary to the Treasury, Greg Hands,

who came into our Millbank studio. And amid those concerns

about the state of the economy, I asked him what the Conservatives

were doing wrong? Let me say a little if I can about

the good news in the economy, we just had the employment numbers

across the UK today showing a record number of people in employment, 31

million. We have also had news on the deficit and have brought the

guest sits down by two thirds since its height under Labour in 27. We

also see problems in the world economy that will not leave the UK

immune, one of the reasons why forecasts for economic growth in the

next four years have been downgraded, but that is one of the

reasons we are doing something about it in terms of doing something about

the UK's productivity and making sure we continue to be going strong.

I might add that within those forecasts the UK is predicted next

year to have the strongest rate of growth of any major Western country.

Yet all of these forecasts are heading the wrong way. When Labour

were in charge you said the global financial crisis was all their

fault. Are you trying to have it both ways? It is different to the

global financial crisis and what is going on just now. What I am clear

is that we are doing relatively well, our April the growth is

addicted to be the strongest amongst major Western economies. Clearly we

have to make adjustments for the fact that growth is not predicted to

be quite as strong as it was in November, which is one of the

reasons we are making savings. George Osborne has said the deficit

will be wiped out by 2020, leaving aside the fact he predicted it

should have been wiped out by last year and did that deliver on that,

bearing in mind the slowing economy and concerns that go with it, many

are saying that is not the right priority, that you should be looking

to invest instead and kick-start the economy. Is your obsession with that

target becoming unhealthy? It is we are investing, we have

longed a lot of extra initiatives today in all kinds of different

areas of the economy. But you're making real cuts in real terms?

Bill-mac we are delivering the surplus that we always said we would

deliver in 2019. We are still on track, that isn't just us saying

that, that is the Independent 's office of Budget response ability.

It is important to deliver that surplus to reduce the deficit and to

fix the roof of the Sun is shining and make sure that we start to bring

debt down in this country. What a great record in bringing the deficit

down, now we bring the debt down as well. But there is clear signs that

the growth is stuttering, the obvious way to boost output is to

spend on capital investments and yet you're looking to do the opposite.

I do not think that it's there. I think we are spending a lot of

money. If you look at the way back forward over the next four years, we

are spending something in the region of almost ?4 trillion of public

money, a lot of money is being invested in transport, in schools, a

lot of these things will suit apart a consequence was flowing to

Scotland, there's a lot of investment taking place.

We are able to deliver because of her sound economic management, some

tax, which book benefit the economy as well, and some personal income

tax that are important, company income tax cuts as well, a boost for

70,000 companies across Scotland and I think it will be good things for

the Scottish economy. By me ask you about those tax cuts.

It sets out your priorities and yet when money is short you might expect

those tax cuts to be targeted at those who needed the most, without a

mind, why are you raising the threshold for the higher rate of

tax? That is a hand-out to the better off, is it not?

No, I disagree. We are here, we are talking about raising the threshold

for people earning ?43,000 to raise it to ?45,000. Those are classic

middle-class and middle income earners. This will benefit a lot of

people. I think 14,000 people will be taken out of higher rates of

income tax in Scotland. But also what we're doing is the personal

allowance which really does have a positive impact for those who are

low earners, we are taking across the UK 1.3 million people out of tax

altogether, 60,000 of those are in Scotland. We will taking out of

income tax altogether. That is a big tax cut, critically for the low pay.

, But just focusing on that tax cut, for those on a higher rate of tax,

it grates for some because at the same time you're looking to cut

billions of pounds on public services and reducing health for

people with disabilities. I wonder if you have your priorities

right. We think it is the right thing to do. Thanks to our sound

economic management of the UK economy, we are able to do that and,

by the way, when it comes to spending on the disabled, we will

deliver more on Main disability benefits, so the Disability Living

Allowance, which is now being replaced by the personal

independence payments, the amount spent on the disabled through the

main benefits will be higher in every year of this Parliament than

it ever was under Labour. So we are making a big commitment to

supporting the disabled. There we must leave it. Thank you

very much. On College Green, we have three

Westminster politicians braving the cold for us -

the SNP Deputy Leader and Treasury Spokesperson

Stewart Hosie. For Scottish Labour,

the Shadow Scottish Secretary And for the Liberal Democrats,

Jeremy Purvis, or to give him his Thanks very much indeed for joining

us. Stewart Hosie, the Chancellor has delivered extra help for the oil

industry, on sugary drinks and a tax cut for people on lower incomes. Is

this Budget along the right lines? Well, some of the announcements on

the whisky, fuel, oil, are to be welcomed, not least because the call

for them and that is great as far as it goes, but at its heart, this

Budget was one of unmitigated failure.

Every major number the Government has set for themselves, they failed

him. To hear the chief Secretary

recognised growth is forecast down, productivity is awful, but they are

doing the right things, they are doing precisely the wrong things.

In the business department, which helps business and productivity, has

had its budgets cut again for every year of this forecast.

UK TI to help with exports and inward investment has had huge cuts

to its Budget announced last autumn. I don't think the Government

actually knows what they're doing and the things they are doing, with

one or two small exceptions, are completely wrong.

And yet the Chancellor did spell out that, according to the OBR, the UK

economy is grow and grow and grow at a rate which is higher than pretty

much any other country in Western and industrialised nations.

That is not a pitcher of utter failure, is a?

It is not a picture of glowing good health, because other companies are

doing even worse. The truth is, these are the facts, they are in the

red box, road forecast has been marked down for every single year in

the forecast period. The fact that we're doing marginally better than

some other countries on some measures is no great success for

this Tory government. But speak later, the Barnett

consequential 's mean the Scottish Budget, the Scottish Government

Budget, will get a bit of ?650 million.

Is a figure I've already heard today. I've yet to try to set it up,

it barely does, digs into the cuts we've seen over the past five years,

the past ten years. But if it's there, it's welcome. One thing to

bear in mind, much of that will be gobbled up by the extra national

insurance cost to the Scottish Government and local authorities.

It's a double edged sword. Ian Murray, it's clear that the economy

is not back to where it was before the financial crisis with Labour

were in charge. The Chancellor says he is still clearing up the mess

that Gordon Brown left behind. He's got a point, hasn't he? This was a

groundhog day Budget from this Chancellor, because as Jeremy Corbyn

seven the first EU minutes of his response it, he's bailed on the

deficit, the debt, the productivity, exports, cutting inequality and more

so he sailed on the very poorest in this country. So I don't accept that

at all. He promises country in 2010 that he would eradicate the deficit

by 20 16, he would pour out 20 million this year, 30 billion over

the course of this, and he said back in his Autumn Statement in November,

this is a Chancellor of complete failure who is passing budgets at

the dispatch box, a political Chancellor who was more intent in

getting into number ten that he is on delivering a Budget for the

country. After the global financial crisis,

how can you expect him to deliver an economy which is in glowing health

in just a matter of a few years? This is a decade-long effort or

more. That's what he promised to do in

five years. If you're a member back to 2010, Alistair Darling's plant

when he was still the Chancellor of the Exchequer was too half the

deficit in five years in order to not take all the money out of the

economy that stops stimulus and growth and productivity.

With this Chancellor 's doing, he's on the slippery slope to austerity,

the slippery slope to a decade of us are ready, because he taken far too

much money out of the economy which has struggled growth. That happened

all over the world and all the other countries try to get out of this

particular worldwide economic problems have put stimulus into the

economy to invest and build on the future and to make sure the growth

of the economy as sustainable and long-term.

He has downgraded his growth by 0.3% just since November last year.

That's a damning indictment of his policies and chose the policies he

is pursuing in the economy is making the problem worse.

Jeremy Purvis, Europe party, the Liberal Democrats, was in Government

with the Conservatives until quite recently. -- your party. I wonder if

we are seeing more of the same from the Chancellor, the same tough

measures, the spending cuts when we got used to when you're in office as

well. There was a small part that is the

same. That is with the personal allowance at the start.

But I think this is a Budget where the clear differences can now be

seen. We absolutely would not have raised the allowance for those

earning high wages. In Scotland, we prefer to use the

new powers for a new Scottish zero rate because we think, if there is

to be any tax break, it should be for those who are working very hard

when prices are high and they need a break.

We would also argue, we did separate from the Conservatives that the

general election, we would also argue that there is to be much more

considerable investment, so where the SNP and the Conservatives are

joined together with refusing or considerable investment for the

future of the Scottish economy, we are now signalling that we need to

see that form of investment in the Scottish context, ?475 million

figure with an increase of 1p on an income tax and scholar, so we didn't

see the kind of mechanisms, the kind of investment that is needed to grow

the economy. The very modest forecasts of growth

in the economy demonstrate the fact that austerity simply doesn't work.

To grow the economy to the significant amount that we want to

see. That is why, in a Scottish context, we are signalling for the

future of the Scottish in a different direction.

I wonder if you try to rewrite history, your party back spending

cuts austerity, while you were in power. And have to stay in coalition

with the Conservatives. It is not done very much for the economy. The

economy is still in rough shape, isn't it?

Let you, being the BBC, the accurate about history. When the coalition

started, the personal allowance was just over ?6,000. Now it's double

that because of the Liberal Democrats who were in the coalition

that forced up through. The Conservatives have adopted that,

the Labour Party did not have a policy, the SNP did not support that

policy. The only supported the personal

allowance at the low rate only growing by inflation.

So the biggest ever increase in the personal allowance for those who are

low and middle earners in Scotland is because of the Liberal Democrats,

I'm not rewriting history. I'm only saying that the future requires

investment that is why it is our top priority for the Scottish elections

coming up. Ian Murray, where does your party

stand on these tax cuts for middle income earners, people earning up to

?45,000? Would you like to see them reverse?

We have said and set out already some of their bold plan to use the

income tax powers that are currently at the Scottish Parliament in the

full powers for income tax that are coming in 2017. We would put 1p on

income tax, protect the lowest paid on that basis apply the money into

making sure that we can protect Scotland's future, that's quite

clear. As an MP at Westminster, what would

you do, would you like to see that middle income tax cuts reversed? The

one announced today by the Chancellor, the ?42,000 to ?45,000

tax cut. We have said are ready in the

Scottish context. That was one of the plans we put forward. When faced

with a choice between cutting into Scotland's future or using the

powers that Scotland has, we all fall on the panel to get the

Scottish Parliament degree is power. As Parliament, we should use the

powers to get away from the spine of austerity, to have an honest error

in the Budget, to invest in the future and that is the way you grow

your economy and that is the way you get out of this form of debt and the

deficit. That's the way to do it. At

Westminster, you're not when the change that. You will be that tax

cut for the middle classes in place, that is clear, isn't it?

, I don't know if that is clear, I'm talking about the Scottish context

because Colin will have the entirety of its income tax. It was a historic

day here at Westminster because this is the last time a Chancellor will

come to the dispatch box and actually set the income tax rates in

Scotland because by the 1st of April last year, it will be the entirety

of the income tax at the Scottish Parliament and we will make a bold

choice to make sure we get out of the spinal of austerity

invest in the future of Scotland that's what's important.

Stewart Hosie, with these new tax powers coming soon to Holyrood, it

represents a big political choice. Would you reversed those cuts? We

will publish a manifesto in about a month's time.

But let me be clear today. To increase the 40p threshold, way

above the rate of inflation, many times the rate of inflation, the

same day that the Government are emitted to taking billions from some

of the most honourable disabled people in the country is almost

certainly wrong thing to do. I think today we sought evidence of the,

certainly the return of the nasty party from George Osborne.

There will must leave it. Thank you all very much indeed.

Now with me this evening to give us political analysis on today's

events' is Paul Sinclair, who's a former advisor

and Andy Collier, who is an SNP advisor.

Thank you both very much for joining us. I want to ask you both, first as

people who know how politics works from the inside, it's hard, isn't it

homage to be a Chancellor who has to cut spending and walk this

tightrope? How well has George Osborne managed to?

It was a squirrel Budget. Look over there, don't look at my economic,

don't look at my growth forecast, my boring forecasts and have you seen

the new sugar tax? I think over the next few days, that will fall apart.

-- my Boro wing forecasts. Some the ways you admire George Osborne's

tactics but is taken away disability allowance the exact same amount that

cost him to cut tax from people at 40% to cut capital gains tax. Is the

Tory internal trap and it will be quite interesting to see the

atmosphere of the House of Commons after the way they made them reverse

their working family tax cut and whether they rebel again. There was

that measure, there was also that eye-catching levy on sugary drinks.

We know George Osborne has tried flashing measures before. Sometimes

successfully, sometimes it gone wrong. Where do you think it will

work this time? I think it's quite a good measure in

a sense. One very small thing is diabetic people need sugar medically

quite often and they're not going to be happy about this when it's a

medical need. It's a clever move, I think what he's done here is gone

for the headline grabbing, gone for something which, people say, yes,

this is really good, it's a sensible thing to do, it's helping health,

while the focus on that, to an extent, some of the

Is that part of the trick? Highlight something like that and get the

headlines focusing on that and leave the detail in the undergrowth? Yes,

but members when Gordon Brown in his last budget cut the basic rate of

income tax to undermine the Tories and to do so got rid of the 10p tax

rate, which ended up in a huge difficulty, and I think Osborne is

ending up in difficulty again. He has half an eye on the Prime

Minister to campaign and half and I on the U reference. It is a tricky

one for him. Has he managed to keep everything going? I think he has

delivered a solid if unspectacular typical Tory budget that will appeal

to his backbenchers and will appeal to Tory members and Tory voters in

middle England. If you happen to be looking at the budget and you are on

low pay or benefits or welfare in an urban centre in Scotland it will

look a lot less attractive. More broadly, does it appeal to voters in

the nations and regions and areas where people will have elections

over the next few months? I don't think so, but he has a bigger

problem in that only one of his fiscal rules is standing, that he

will have a surplus in the last year. Look at the red book, it is

very odd. Difficult to see how he could do that, is he presuming he

will be Prime Minister by then? If he does not deliver that or it does

not like that he has shot himself in the foot. There has been a long

narrative that the Conservatives have taken advantage of that the

problems in the economy were caused by Labour as this excess. Gee, how

long can they maintain that narrative? I think it is already

starting to run out because the further we get away, the more the

Conservatives have to take responsibility for the economy as it

stands. 'S from the Brown years. It is looking bleak going forward for

George Osborne and the UK economy and this budget has been an

admission of failure, but some of the real problems will not come home

to roost until the end of the decade. I suspect he is hoping his

political acumen will carry him through and if he becomes Prime

Minister he can send another chance to deal with those things five years

down the line. These choices on tax have a knock-on impact here and I

wonder on income tax, it does leave a conundrum. We thought Stewart

Hosie not committing the SNP to any position on income tax, we do think

they will go with it? I suspect it will fluff the question. You are

talking about a budget in a year's time after the election, I suspect

they will buy themselves time. What this could potentially do is help

Ruth Davidson, because she will presumably say she does not want tax

rates to be different north and south of the border and I don't

think the SNP will give a straightforward answer one way or

the other. What do you reckon? Way to the SNP go with that in promising

to raise taxes, it's never a popular, would they do that? I have

no inside knowledge but I can speculate that they will not raise

basic rate tax, Nicola Sturgeon said that signal strongly last weekend

and my suspicion is when they get the power the 40p rate they will

hold it where the Ark, so you will start seeing a discrepancy on both

sides of the border. And that might help Conservatives? Will have to

wait and see on that. There we must leave it. Thank you both.

That's it for tonight for the Budget special programme.

So join her then, usual time, bye bye.