16/03/2016 Politics Scotland

the biggest fit -- figures in the City are saying the deficit is now

at manageable levels, it doesn't make sense to take more money out of

spending. Good afternoon and welcome

to a special edition The Chancellor sets out

a cautious Budget - We said our country would not repeat

the mistakes of the past and instead live within our means. We repeat

that commitment to economic stability in difficult times.

Here at Westminster the Chancellor has had his say, we'll guaging

the political reaction to his handiwork.

As ever, and as we've been hearing, a good number of announcements

from the Chancellor today - an extra ?3.5 billion

worth of cuts by the end of the decade,

a new sugar levy on the soft-drinks industry, a continuing freeze

on fuel duty and cuts in capital gains tax.

We'll be bringing you analysis and reaction over the next

I'm joined in the studio by Professor David Bell,

who is Professor of Economics at Stirling University,

and the Daily Record's political editor, David Clegg.

Let's just go through some of the main Budget

The Chancellor announced changes to taxation for the North Sea oil

and gas industry, which has been hit by falling prices.

He's cutting the supplementary charge on oil and gas from 20%

to 10% and abolishing petroleum revenue tax.

He said the UK Government was opening negotiations

Fines from banks caught up in the Libor scandal will pay

for new community facilities for local people in Helensburgh

and for naval personnel at nearby Faslane.

And throughout the programme we'll be hearing from the four main

political parties at Westminster as they react

David Bell, in overall terms, what do you make of this? In big economic

terms, was there anything really there? Not a huge amount. We have

had lots of Budget two in the last little while so this was more

fine-tuning than the spending review. -- Budgets. The overall

economic situation has worsened in the last while. On the back of that,

to meet the target that the government has set out, there is an

overall cut of ?3.5 billion but the government is acknowledging that is

not being able to cut debt as a sharer of GDP, the second of its

main target, because of the weakness in public finances in the last few

months. With no disrespect to some of the terribly earnest debates

going on there about where this ?3.5 billion is going to come from, it is

all rather airy fairy, numbers on spreadsheets. All it needs is for

the economy to bump up by a quarter of half a percent and they can say,

due to our stewardship we don't need to do this. The UK is a ?1.8

trillion a year economy, so in that context ?3.5 billion is small here.

A change in the inflation rate, bad news or bad trading figures, an

increase in the interest rate, all of that could easily shift more than

?3.5 billion into or of the government balance sheet. -- F. --

off. The sugar tax, it is not a tax, it is a levy. It is a surprising

policy because fairly recently the UK Government said they were not

going to be able to do sugar taxes as part of the childhood obesity

strategy so it shows some courage that they have. In Scotland the main

measures we will be talking about is the support for the oil industry. We

saw jobs figures published today as well that saw that the fall in oil

prices causing real problems in the north-east of Scotland so that will

be welcome. On the political aspect, changes to income tax, one of the

new powers being evolved. For the first time Nicola Sturgeon and John

Swinney have a decision to make, whether they follow the changes to

income tax. I am glad you say that because we can bring you a shocked

develop men, David Bell has calculated how much it would cost

the Scottish Government to follow George Osborne. I reckon around ?190

million to increase the personal allowance is a bit faster than was

originally planned and to move where the higher rate kicks in a bit

higher more quickly than previously planned, so that will mainly benefit

working families, particularly families with children, so it will

be a tough political choice for the Scottish Government as to whether

they follow what George Osborne has done or leave the allowances and a

higher rate threshold where they are, in which case more people will

be paying tax than would have been the case had they followed George

Osborne. You would have a double effect, wouldn't you? More people

paying 40p and as time goes on what they call fiscal drag, so more

people would get into that bracket more quickly in Scotland. There was

always this problem about fiscal drag when inflation was fast, you

had people getting into tax rates because the tax rate had not been

increased as fast as their wages increased. We are in a situation

where wage increases are pretty slow so it is difficult to be sure of how

many extra people would be dragged in. It is an insight into how

Budgets are going to work, with these extra moving parts caused by

devolution. Let's go to London and our

Westminster correspondent. What did you make of this? It was

interesting. We were told at the beginning that because of what the

government had done Britain was in a far better placed than most other

countries to weather the storm and we were told by George Osborne that

there would be further storms ahead so there would have to be some belt

tightening but the key issue perhaps was that package of tax reductions

for the rural industry. That is something that will -- and the sugar

tax will affect not just Scotland but the whole of the UK. There will

be a lot of reaction to that in Westminster. Joining me now is the

Secretary of State for Scotland. I presume you are pretty happy with

what your Cabinet colleague has done for Scotland. Obviously the Scotland

we have the package for the oil industry but we have seen fuel duty

frozen, really important for rural Scotland, duty on Scotch whiskey

frozen, and the Scottish Government going to get ?658 million that they

did not expect for their Budget. The really important thing for the

Scottish Government is obviously the package for the oil industry, ?1

billion, one tax halved, the other tax, revenue tax, effectively

abolished, and that comes in addition to a package in the last

Budget of around ?1.3 billion and the Aberdeen city deal about

improving infrastructure and employability in the north East.

Large figures being banded around for the oil industry, some saying

this will amount to ?1 billion of tax cuts. Is this a recognition of

how serious things are in the north C? The Prime Minister and the

Chancellor recognises the situation in Aberdeen, he went there himself

and heard directly from the industry the sort of measures they want to be

taken and these are exactly in line with, probably beyond, what the

industry asked for. The government can't control the oil price, that is

the fundamental issue in terms of the probability of the industry in

the North Sea, but even that they are backdated and in relation to

what has gone on with the city deal this is a substantive package to

help the North East. You say you can't affect the oil price. Whatever

you do on taxation, the North Sea will still be a very expensive place

to produce oil and gas, won't it? There is still tremendous potential

for extraction but there are also job opportunities from

decommissioning, making sure that Aberdeen is a global energy Centre

that can send schools and businesses around the world, so I remain

optimistic for the industry. This government has demonstrated that we

see it as a vitally important industry for Scotland and the whole

of the UK and we have given it the support I believe it needs to help

it through this period. The stuff that comes out of the North Sea ends

up as petrol and diesel. Fuelled duties have been frozen again.

What's that partly because George Osborne knew how unpopular it would

be with his own backbenchers and may not have got it through? I think he

has always recognised the importance that fuel prices play in everybody's

day-to-day lives, not only -- especially people in rural areas, it

affects day-to-day costs and also day-to-day goods prices. This is

such a contrast to what we saw under the Labour government, continual

rise in fuel duty and bleeding of the motorist. This is good news for

everybody living in rural Scotland. A freeze on spirits duty. The Scotch

whiskey association had wanted a repeat of last year's cut. The

Scotch whisky Association have welcomed the announcement because

Scotch whiskey duty is being frozen while duty on wine and other drinks

are going up, so it is a recognition of the importance of the whiskey

industry to Scotland and the UK and that is why the Chancellor has made

this move. I think the industry welcomes it, of course. They made

their bid for a bit more but they welcome this move warmly.

You have mentioned the Aberdeen city deal. The Chancellor talked about

the negotiations which are going on for a city deal with Edinburgh. Yet

he didn't say anything about the next one in line, Inverness. A

detailed announcement on the Inverness deal is imminent. The

documents around the Budget make that clear, that there's been very

good progress in finalising the deal, and I am sure that we will

hear the detail of the deal in the very near future.

So it is coming, but not today. The detail of the deal has not been

announced today, but in the documents around the project, it is

clear good progress is being made again I anticipate a deal is in a

minute. The Chancellor made reference to it

in his Budget, talking about the European Union and how he thought it

was wise that the UK would stay within the European Union. How much

of this Budget was framed with that in mind? . The Budget wasn't about

the EE you referendum, it was about dealing with the issues that the

country faced in relation to issues like the oil and gas industry,

filling manifesto commitments to increase the personal allowance,

increase a higher rate of tax band, that is what the Budget was about.

But I think it was perfectly appropriate that the Chancellor

pointed out that the OBR, the independent body, made quite clear

that it would be beneficial for the United Kingdom to remain in the EU.

The Chancellor is very clear on that, I am very clear about that. A

little but history, this will be the last time that UK Chancellor names

income tax rates and bands for the whole of the UK. Indeed, this was a

historic Budget because with the transfer of the new powers over

income tax to the Scottish Parliament, next year's Budget

effectively for Scotland in relation to income tax on earned income will

be held in the Scottish Parliament. They will determine what the rates

and bad start and an interesting question for John Swinney is whether

he will stick with the Chancellor's commitment to raise the higher rate

threshold to ?45,000, he doesn't need to do that, but of course if he

doesn't taxpayer 's in Scotland will be paying more tax than the rest of

the United Kingdom. Thank you very much. You would've us think there

was an election coming up, wouldn't you! For the moment, back to you.

Our political editor, Brian Taylor, is at Holyrood this afternoon -

What did you make of it? Intrigued about a couple of things, the

reference to referendums, a reference back to the referendum on

Scottish independence with the Chancellor announced new measures to

assist the North seas come only possible under the broad shoulders

of the UK Government, and that is his backbenchers were cheering the

SNP, he had a real go at the calls for independence off the back of

that announcement. Secondly, David Mundell saying it is not in the

context of the EU referendum, well, maybe, I think everything in the UK

Government packages in the context of the EU referendum, so it is

difficult when the Chancellor was for the OBR on growth, which are

down, the OBR forecasts on deficit and debt which he set out in some

detail, he said without entering the political arena, he had noted that

they would be a period of uncertainty in the event of a

European Union exit. -- the OBR said. Oh, I don't think Brian is

hearing me. I was just asking, is there any specific reaction from the

Scottish Government? Presumably they will be mildly pleased at least with

the oil and gas stuff. No reaction yet in detail from the Scottish

Government. I hope to speak to John Swinney in the next hour or so. The

tax one is the one that will be intriguing all of the parties with

regards to their proposals to go into manifestos for the Holyrood

elections. First of all, I think the Conservatives at best will match the

proposals for the UK as a whole. They said Scotland will be

disadvantaged. I think Labour and Liberal Democrats already suggesting

that the Chancellor's increase the threshold for higher rate taxpayers

is an error and they look to reverse that. I expect the SNP to do the

same with the power is transferred. Using the SNP will not increase the

threshold? No, I think they will leave well alone at the present

rate. The option was open to them, Nicola Sturgeon said, and I think

they if they are not to increase the rates, they're not doing the

standard rate, I do not think they will increase the rate for 40 and

45. I think there are arguments against that, but I think it likely,

although we might find out later, when you get will be likely that

they will leave the threshold in Scotland as it is, which means there

will be a proportionately higher take from higher rate taxpayers in

Scotland in comparison to England and the rest the UK. You heard David

Mundell making much of the 600 million pounds extra because the

Scottish Government was complained about ?1 billion over five years,

they said, was good to be cut, so if you take that out, you're only left

with about 400 million over four five years. While not great, it is

hardly enormous. There are to be ?3.5 billion of cuts in the UK

Budget between now and the remainder of the Westminster Parliament, but

at the same time, the Chancellor is, says he's protecting health and

announcing protection for the education Budget. Those two are

devolved budgets and therefore to Scotland there was relative

protection within that. Protection for the Scottish Government Budget,

I'm sure you'll hear John Swinney Saint over extended period, Scotland

has suffered real terms cuts. Thank you very much indeed for that.

Labour have been risk bond into the budgets in the comments. Jeremy

Corbyn said that it has unfairness in its core and some the most

honourable and poor society will be bearing the brunt of the

Chancellor's failure to meet the economic targets.

David Porter is with the Shadow Scottish Secretary, Ian Murray.

Yes, what you make of it for Scotland? This is the sixth time out

of six the Chancellor has made an Autumn Statement within a few months

that has unraveled, we have growth down, the deficit up, debt is up,

much more difficult financial edger over the next five years than he

painted just a few months ago. There are welcome things, the oil and gas

industry, the could've gone much further. We asked them to take in

public hands well could be decommission early because of the

oil prices. We welcome the fees and Scottish whisky because it it

welcomes 40,000 jobs in Scotland, but we don't welcome him balancing

the Budget on the backs of the poor. He is done that again. We will deal

with the specifics in a moment, but a macroeconomic level, he seems

fairly confident that he can get into surplus by the end of this

Parliament, and his argument is if we are a country that are paying our

own way, that is good for everyone, rich and poor.

We have heard this before, in fact, in the Conservative manifesto for

the 2010 election, this very Chancellor said he would eradicate

the deficit by 2015. He doesn't look like evil eradicated now by 2019.

His argument is projected from the Autumn Statement last year, the end

of November, a few months ago, when he spent 27 LE impounds and now he

is ?18 billion worse off. The deficit profile is incredibly

challenging and to meet those challenging, he has to cut well for

the deponent services again. That a function of what is happening

in the world economy, as much as he would like to make the economic

weather, any UK Chancellor has to react to what the world economy is

doing? We were warning about the headwinds

in the Autumn Statement and he didn't take into account active. For

the Budget of -- opposite Budget response ability said taking the you

out of the EU would take significant applications for the Budget. So

there are arguments in terms of headwinds with the economy all over

the world, but the key one for the Budget this time around is keeping

the UK within the EU. Let's do with the oil industry and

the specifics. The Government argues that what they are doing is is the

way back in effect reducing taxation on the North Sea by ?1 billion. They

are backdating it. You say they are not doing enough?

Of course we welcome it, but if you look at the Budget book, rather than

the oil industry conjugating almost ?9 billion to the UK Exchequer in

previous years, actually there was a net cost of the UK exchequer now, ?5

billion over this period, so does very much welcome that he's putting

this into the oil and gas industry to help. Anything that helps at this

stage, particularly with pre-1993 taxation, what are the key things

the oil industry ass for... What we asked for was to look of the assets

of the North Sea, set up a separate company run by the Government I

could take some assets into public ownership, keep them running until

the oil price rises so we are not getting premature decommissioning in

the North Sea which will close on the North Sea earlier than the shed,

lose will supply chain can be devastating for the Northeast and

the wider country. -- North Sea. But the North Sea has

and always is going to be a very expensive place to get oil and gas

out of. Absolutely because it is an aging

field. The oil and gas industry say that themselves, when I met with

them a few weeks ago to get the briefing on what the oil and gas

industry is actually doing, they are blowing their own costs.

They are making sure they are fit for the future, confident in the

North Sea, they think the North Sea has a bright future ahead of it, but

there is short-term difficulties with regards to the oil price being

so low, it looks as though that Rice might sustain below for a long time.

What we were asking for is to look at this much more strategically, not

just about taxation but looking at expiration taxes on whether or not

assets could be owned by the Government in the short term in

order to see over this minor and short term problem in order for

these plans not to be decommissioned before their true life span has been

truly exhausted. Another headline from the Budget,

the so-called sugar tax which will be phased in over two years.

Particularly with Scotland and the reputation Scotland and the historic

reputation Scotland has for health issues, this can only be a good

thing we welcome this and we welcome the campaign which was run by Jamie

Oliver and many people both in Scotland and the wider UK to try and

get it to sugar tax. I can get is sensible that the

Chancellor has given a two-year lead-in time to give and a great

Scottish iconic brands like iron brew to reduce the sugars they have

in their drinks to be able to comply with any rules. It has been sport

education in England, there is a barn or consequential of ?22 million

a year, so hopefully that will be spent on children's health and sport

and education, a direct correlation between that tax on sugary drinks

and children's health. It is the right thing to do and I'm glad the

Chancellor came up with that particular tax.

As it so happens, Jamie Oliver is just mind you being interviewed,

cecum bank and personally. But as regards the money that goes to

Scotland from the stacks, if you would like to see it ring fenced for

sport and health ministers? They don't have the authority to spend

that, that would be in the hand of the Scottish Government and Scottish

Labour Party in terms of bringing proposals, and the UK level it is

being hypothecate it for school sport and I think that is a good

thing to do. We've only had the Budget and our

half ago, as much as I like to spend money, spending ?50 million in an

hour and a half is not my responsibility, it's out with my pay

grade. I'm sure the Scottish Parliament and the Government and

the Labour Party will come some exciting proposals on how to spend

that money. Thank you very much. For the time

being, act EU. -- back to you. The Chancellor was keen

to point to turbulence With the referendum approaching, he

said that it had been predicated on the UK remained.

In the OBR correctly stay out of the political debate and they do not

assess the long-term costs and benefits of EU membership. They do

say this and I quote them directly, a vote to leave in the forthcoming

referendum that could usher in an extended period of uncertainty

regarding the precise terms of the UK's future relationship with the

EU. They don't want to say, this could have negative implications for

activity via business and consumer confidence and might result in

greater volatility in financial and other asset markets. Citing a number

of external reports, the OBR say this, there appears to be a greater

consensus that a vote to leave would result in a period of potentially

disruptive uncertainty, while the precise details of the UK's new

relationship with the three not -- EU is made.

Britain would be stronger, safer and better off inside a reformed

European Union and I believe it you but not put at risk all the hard

work of his people have done to make our economy stronger again.

David Bell from Stirling University and David Clegg from

It is interesting, wasn't it, because I presume and dairy George

Osborne could've said, I'm asking the OBR to do an assessment.

Yes, and I think although we had to make the point about the European

Union as it is the biggest issue in British politics at the minute, he

didn't really say all that much about in the grand scheme of things

and there was an interesting reference to the retiring prime to

this treasure, who played eight crucial role in the Scottish

referendum and there was some jeering on the SNP backbenchers when

they praised his impartiality. I think it is quite clear that, given

the divisions within the Conservative Party, the same

infrastructure of Government is not being assembled in the U referendum

in the same way it was in the Scottish referendum. The OBR is

slightly different from the Civil Service, per se, isn't it? Because

the Chancellor himself has to make great play of its independence.

It might have concluded we would be better off leaving! True! It

cherishes its independence and it would be unwise for the Chancellor

to be seen to be interfering in that independence. The Irn-Bru tax have

you had -- as you have dubbed it, you could I suppose put a tax at

point of sale, so it would be a straightforward sugar tax, or you

can have this levy on revenues on each can that don't meet the

criteria. Are there any particular advantages of doing it that way?

Having the levy may be administratively more easy. Small

producers will be excluded so it is only a small number of relatively

large firms producing sugary drinks that you will have to collect from.

Whether there would be an interaction of VAT at point of sale

I am not sure that it looks to me like the Treasury has taken a

decision that the levy is better. It gives a direct incentive to Kokes

and Pepsis to get the sugar content down. Absolutely. Whether they can

do this with artificial sweeteners is an interesting debate. It is not

like the increase on alcohol, attempting to drive consumer

behaviour, it is about trying to change the behaviour of the

companies. They will have to reduce sugar to not fall foul of the levy.

The question is, when they talk about revenue being generated from

it, if the idea is to stop these companies being in this position you

wonder what will happen to the revenue. It is going to be

hypothecated to sport in schools but presumably it will be up to the

Scottish Government to do what it feels fit. He was saying it is ?52

million for Scotland so that is a substantial amount of money that you

presume the Scottish Government would be under a lot of fresh to

almost inevitably do something similar with that money. I don't

understand what happens if the companies actually do lower their

sugar content, and we don't get the cash. It is a bit like taxes on

fags, they don't get them if people stop smoking. You will have a lot of

disappointed youngsters if the money isn't coming across the border to

support sport in Scotland, if that is what the Scottish Government

choose to do and the companies managed to reduce the sugar content.

You have been looking at some clarification on the oil and gas

thing. The PRT abolition, that is what David Mundell was rather

cryptically... Or was it Ian Murray, referring to as 31993 taxation. Yes,

Fields commission before 1993. -- commissioned. Profits on the big

fields producing before 1993, and it has tended to diminish over time.

This tax reduction is not a particularly big hit. The

supplementary charge, which is being cut in half, that is an extra tax on

profits. Most of the revenues came from corporation tax, didn't they?

Somebody made a joke, David Clegg, before our programme, that it is a

no-brainer for the Chancellor Bickers there are no revenues so 10%

of nothing is nothing. -- because. But people might start to think of

getting going again. What we could have seen more of perhaps is tax

breaks for investment for harder to reach oil fields. Instead they have

said, if you get to a point where you are making profit, we won't take

as much away. One thing against that, it sounds great but at the

moment the futures price of oil for 2024 is $50 a barrel, so it has to

be a huge incentive to get people to invest because -- the futures price

the 2024? That is extraordinary. Back to Westminster and more

political reaction, this time Let's rejoin our correspondent,

David Porter. I am pleased to say I am joined by a

man who has been very busy today because he has been reacting to his

party in the House of Commons, Deputy Leader for the SNP, Stewart

Hosie. Presumably you are happy or at least pleased that there was

something for the oil industry but you are not too keen on other

aspects. There are small measures which we welcome, the actions on oil

and whiskey are good, and there are other small measures we think might

have good positive effects. But the big picture was the mind-boggling

failure of the Chancellor on all of the big targets. He told us today

with a straight face you doesn't expect his rowing figures to be as

low as he promised for this year for another four years, an admission of

abject failure for the Tories' long-term economic plan. Isn't it a

case that whatever fiscal party you are from, a UK Chancellor has to go

with what the world economy is doing? Every economy is global these

days, every economy to a greater or lesser extent is buffeted by

external shocks, I think everybody understands that. It is what one

does about it that matters. This Chancellor has been warned time and

time again if he slashes investment, doesn't raise capital expenditure,

he risks falling behind, and that is what has happened. Borrowing will

not be on track for when we expected it to be for this year for another

four years. That is the black economic pitcher. Looking

specifically at Scotland, reduction of taxation for the North Sea oil

industry, is it a boon, or is the North Sea industry paying any tax?

Receipts are very low but I support this nevertheless. If I have one

criticism it was the lack of any strategic language, no help for

production or investment, but the tax cuts are welcome. Is it not a

case that what ever he had done on North Sea oil the industry probably

would have wanted more still and the fundamental fact is that the North

Sea is very expensive place to get their oil and gas out of? It is, and

a lot of credit has to go to the industry for bringing their costs

down. It is the cost base of the sector and of course the fiscal

regime. You had the doubling of the supplementary charge, it came down

last year and has come down again, but the government should have

reacted far more quickly to the difficulties the sector is facing.

The North Sea has delivered ?300 billion of tax revenue to the UK,

they should have stepped up much more quickly but this is welcome

nonetheless. You don't seem to think it will help the sector turn a

corner? It is part of a package of measures. The fiscal regime, cost

ways, it is a combination, so I hope it does, I would have liked him to

have done more by way of allowances for exploration of there and

production but that may be happening behind the scenes. Your thoughts on

another issue he raised, the so-called sugar tax, which will be

brought in. How important you think it will be as health measure for the

UK but specifically Scotland, with the Scotland has with health issues?

It is quite a bold measure. It doesn't bring in a lot of money and

it gives Scotland two years to reduce the amount of sugar they have

and thus reduce the tax. I hope it works, I hope it leads to less

obesity and via Beatties, and some of the small measures school sport,

great stuff, let's hope it works. ? -- diabetes. ?50 million or so for

Scotland. Do you think the Scottish Government will look favourite on

doing what the UK Government says it wants to do and put the money raised

for health and education projects? I think George Osborne was rather

silly to say that. We have just announced the opening of the 150th

school sports projects in Scotland, we are already doing a lot of the

activities he was talking about, but in terms of any Barnett

consequential that may come, he also put up national insurance, and

immediate cost on Scottish have meant and local governor, so we have

to look at the whole balance of tax and spend. Stuart Hazell -- Stewart

Hosie, thank you very much for joining us. Back to you in the

studio. In cash terms the national debt is

lower than it was forecast to be in the autumn. So is the nominal size

of our economy. If we measure the fiscal target against debt to GDP,

debt as a percentage of GDP is above target and set to be higher in

2015-16 than the year before, according to the forecast the actual

level of our GDP is in cash ?9 billion lower.

We're joined now by Carl Emmerson, the deputy director of the Institute

Before the Budget there was a lot of talk about how one of the problems

George Osborne is facing is that the economy is smaller, the tune of

about ?80 billion, than we thought it was a while back. Where is there

a reflection in that rather located statement from George Osborne there

that that that was in fact the case? It has caused him to miss the second

of his three fiscal rules, he wanted to make sure the amount of debt

public sector holds as a share of the annual economy falls every year.

It looks like the economy last year was a bit smaller than we thought so

the amount of debt he is holding has not fallen, it has gone up a bit.

The economic consequences not very much if anything but politically and

presentation elite it means he has broken a fiscal rule. Presumably

there is a long-term consequence if the British economy is smaller than

we thought it was six months ago. It is 1% smaller, in part because of a

lower level of inflation, a lower level of real activity. It means

combined with the fact that the outcome for how the economy is going

to grow over the next few years on average we not going to have much

money to spend in future. Mr Osborne had to respond to that and he wanted

to be on track to meet the rule of having overall control of surplus

buying. If he hadn't done anything today he would have missed that one

as well. He announced a package that involves in particular changes to

revenue and spending, meaning he still expects a surplus in that

year. We were talking a bit earlier about how meaningful some of these

extra cuts are. He said he had to cut another ?3.5 billion, but we

were talking about public finances in 2019-20. Presumably all sorts of

things could happen before then which would either mean the cuts

wouldn't have to be made or that in order to balance the Budget you

would have to make a lot more cuts. The numbers will not turn out to be

completely correct, they will be revised again and again. They are

the OBR's best guess at the moment. There is a chance the numbers would

be better than his numbers imply, meaning we don't have to do the

spending cuts he implied today. Presumably we should hope that is

the case -- the case, but there is a 50% chance that things will turn out

worse, and so if we are to have a Budget surplus in that year a

statement could involve big cuts or further tax rises. Can I ask you

about capital spend, because I think we can assume from today that George

Osborne will be in lots of photo opportunities in hard hats in the

Peak District and all of the rest of it and he has made a big thing about

the Northern powerhouse, but actually is capital spending as a

percentage of GDP rising or falling and how does it compare to the last

few years? It has certainly been cut a lot since 2010, so Mr Osborne cut

capital spending dramatically in the last parliament. In broad terms my

understanding is that that period has come to an end, it is staying

constant as a share of the economy, it is nowhere near the -- the rate

in 2008-9 but it is not being cut any more. As a result of today's

statement we will spend a bit more in the next few years and a bit let

in 2019-20. Right, but in his speech that he referred to, the statement

made about backing him up, but economists at both the OECD and the

International Monetary Fund have said that because of the spheres of

a slowdown in the world economy they would like to see an internationally

coordinated programme of infrastructure spending to shore up

a weakness in the economy. -- the fierce. So this doesn't count as a

British contribution to it? It is important to know that as a

temporary thing, it is doing this many earlier, rather than doing more

spending overall. I ask you something I have asked our

guests here, the sugar levy, a could've been a sugar tax, couldn't

it am at point-of-sale? Is there any particular advantage of doing a one

way or the other? I think about levying it on the

companies, and it will help get their attention to the tax very

dramatically, try and encourage them to formulate lower sugar content

products. You might get a bigger effect there. If you don't, then get

passed on in prices no doubt anyway, the same as attacks at point-of-sale

what. So I can see some advantages and how it might affect behaviour,

it might also be much easier to implement if you're taking money

straight for the companies. Thank you very much indeed for

joining us. Some further reaction

from Westminster's opposition parties now, with our

correspondent David Porter. Thank you very much. One say to say

I am joined from the Lord Mandel Bruce who said from the Liberal

Democrats who saw the Budget close-up and personal on the

benches. What you think of Osborne's handiwork was not he's made a choice

that is good to balance the books. He hasn't really explained out on

earth it's going to come right, having not come right so far, and we

already know he's cutting benefits to disabled people whilst cutting

taxes for the high earners. Or you can just see in all its tooth

and claw, this is a Tory Budget designed to ease the burden on the

rich and make the poor pay for it. I think that is predictable and

disappointed, I hope it will make people appreciate what a difference

the Liberal Democrats made in the previous Coalition Government as

topics kinds of things. But now there is no check and this is what

they can do. Patty was assessed as for Scotland

consent was not there are questions for the parties in Scotland who had

now have tax powers, which could see a departure and on Scotland and

England, which could have positive or negative effects both on the

economy and public services. We need to have a debate about this.

George Osborne knows it is an issue, if you don't agree with the way he

is tackling it in England. I think that is a fact, the oil industry has

a huge impact on the Scottish economy. I think if you take the big

one or two construction project that of Scotland and look of the downturn

in the oil and gas, the Scottish throne is in it situation, this

Government cannot get the oil industry back in its fee in terms of

the price of oil, but it's got to be seen to try and help the industry to

prepare for the ability to invest again when some economic recovery

appears. So reducing the taxes and reforming the tax system is

absolutely necessary, although personally, getting the revenue at

all, it seems they could've got rid of the charge altogether without any

real pain. But knowing the Northeast as you do,

those to work and are involved in the North Sea oil and gas industry,

if things pick up a little bit, the taxation productions that he has the

nuts, could those be of real benefit?

They give a signal that the Government is saying we want you to

invest, they haven't given incentives for exploration or new

field development, so I think they will have to do more than that. The

industry itself, as Stewart Hosie said earlier and I agree with them,

have done enormously good job and try to get the job done, it is a

high-cost area. If they can get the cost down an appraiser covers 260 or

$70 and looks stable at that level, but I hope with the Government has

done is enough for the industry to feel confident to start investing

again. But, governments of all colours have different awful or

damage to the industry by consular chopping and changing. We need a

long-term commitment that says we are behind us industry, it's about

life in it, but it's facing global competition in a very expensive

environment and it needs all the help we can get.

The temptation for any Government is if the oil price starts to recover,

they may think there was more tax to be had for her.

I'd like to think they've had their fingers burnt. As you may know, I

voted and spoke out against the first Coalition Budget the first

time I party was in Government. We didn't give revenue, it cost the

Government revenue, it lost the confidence of the industry and set

it back a long way. I worked with the Government, the Treasury and

others at the time to build things back together in my colleague Ed

Davey got the review going, the oil and gas Authority going, so we now

have an infrastructure in place thanks to the initiatives we took a

Government that actually create a partnership to get chilly investment

in new infrastructure and the tax regime to encourage that. So it like

to think the Government have taken the steps necessary not to make the

mistakes they've made in the past. But we will only know that after

we've had frankly a few years of stable pricing and recovery.

This industry has not been badly hit as it has in the last 12 months.

Another had to come out of the Budget, the imposition of the

so-called sugar tax. In health terms, how important is

this going to be? It has been widely welcomed, it's been called for by a

lot of people, obesity and diabetes are real issues. These got to be

realistic. Taxing sugar does not solve the problem. You've got to

educate people, but it does give the industry opportunity to make

products with less sugar, perhaps less damaging. I hope also we will

use the money not just the fund, as the Government wants to do, spore

and other activities in schools, but to educate people on the dangers of

sugary drinks in excess of sugar consumption, which is actually

killing the rising generation, literally killing them, with both

disease and weight problems. So I think it's only valuable if it

seemed to be in a much bigger context into the back of attacking

the scourge if you like, in despite of the poverty that exists, the

affluent Society, and often it is the poorest suffer the most.

They do very much for joining us with your thoughts as afternoon.

Back to you. David Bell and David

Clegg are still here. David Bell, can I ask you possibly

the biggest question about all this, which is that we have heard the

opposition party they're lining up to say, oh, yet again, boring is not

as Osborne said it was good to be a few months ago, yet again he's had

to take extra measures to balance the deficit, a target that seems to

move off into the ever distant future, but the other side of this

is that the Government can say we have had the fastest growth in the

OECD, unemployment in Britain is that the levels it was at in the

boom years, before the great financial crash, and so there are

all these economist to said George Osborne policy was wrong, balancing

the Budget at a time or recession was misguided, it should actually

borrow more and spend on infrastructure and create jobs, are

wrong. He is right. Not, not entirely sure

take a few. When they came in 2010 - 11, they introduced very restrictive

Budget at that time and the economy then dipped, so they then kind of

took off the reins a bit and it's gradually got better.

The economy now is quite a different beast to what it was prior to the

great recession. What we have seen is the Labour market has done

particularly well in the sense of getting people into jobs. There are

lots of people who would like to work more hours and wages have been

increasing at a snails pace over this period of time. It's taken a

very long time for output to recover. So the way that the economy

has been behaving as in some respects been pretty good and George

Osborne can take some of the credit for that, but... But you're also a

subscriber to one view that doesn't allow the hearing that actually you

think after about 11 or 12, George Osborne didn't do what he he said he

was doing, the cuts went ahead to departmental spending, firms have on

welfare, but they took their foot off.

Yes, so the reduction, the first target was to have a Budget surplus

at the end of the last Parliament. Well, they are miles away from that.

They've continually taken the foot off the pedal as far as the cuts are

concerned. Yes, but the kind of did that

insecure, didn't they? The politics of this is that George Osborne to

take, I might not have done exactly what I said when I said it was doing

it, but look at the other lot, what would they have done? I am balancing

the books and look at the way the economy is doing.

I have my doubts that when he says when we are surplus we look at the

surplus, it looks like a lot of jiggery-pokery to make us in the

surplus for 2020. Time will bear that, we will find out. What else of

think this point about the jobs is the important one and the point that

David makes about pay in that most of the jobs that are being created

are low-paid and insecure work. The people who are... But George

Osborne claims the arc. I would say that there was a serious

doubt about what George ours for missing there. -- George Osborne

says they are not. I think two things will tell here.

But if you are part of the 50% of young people in Spain who are out of

work, you would say you would like to live in Britain. They can get a

job at all. It is a bit of a false comparison.

And it has been revised downwards again.

We will be back to you shortly. There was some good news.

It's been backdated, so it's effective from

The oil and gas sector employs hundreds of thousands of people in

Scotland and around the country. In my Budget a year ago, and made major

reductions to the taxes, but the oil prices continued to fall, so we need

to act now for the long-term. I am today cutting in half the

supplementary charge on oil and gas from 20% to 10% and I am effectively

abolishing petroleum revenue tax as well. Backing this key Scottish

industry and supporting jobs... And I'm joined now from Aberdeen

by the Chief Executive of Oil First of all, what is your response

to what George Osborne has just announced?

So we certainly welcome it. We see it as a positive step forward in

terms of helping the industry reduce the fiscal burden that is on the

industry at a time when it is struggling and having to really

focus on improving its costs and operations.

Right, can you just explain to us, petroleum revenue tax is really a

historical thing, it was going down anyway. Which is of most benefit to

the oil industry? Is it the tax being abolished or the cut in

supplementary charges? So they are both of benefit. The PRT

is from a much older fields in the supplementary charge will actually

send out positive charge the message to the industry that the Government

is listening, does understand the issues that they are facing, and

wants to do something about it. This is in line with her driving

investment plan. They look to reduce the burden in fight the regime going

for the meeting that is very helpful this point.

Why is it helpful at this point? If someone was saying earlier on in our

programme, the Redbook figures and the OBR figures show that, far from

there being any revenues from oil and gas at the moment, it's actually

a net cost to the taxpayer. So presumably the cut in the

supplementary charge is really a cut to zero. It's a 10% cut to nothing.

Yes, but it does send out... What it does is reinforces that this is a

much more competitive fiscal regime. So given that a lot of the money has

gone out of the industry with a drop with a dramatic drop in the oil

price, we are looking to look to Leader of the House make sure that

investors, with a look with their global poor for alleles, they look

at the UK and think this is actually a good and fiscally competitive

regime into which to put their money. So the reduction in this is

helpful in putting a message forward. But obviously that would

only work in the future, so have you been given any sort of guarantees

that this cut in the supplementary charge is now permanent? This is not

just for a couple of years? I think, I'm not sure any Government

is going to put any permits on that. We do understand that the PRT

element will be abolished effectively going forward.

We understand that, but as I said, this is just a positive step forward

and very well timed, given the struggles that the industry has

faced at the moment. One possible problem that I can see with what is

announced today, it doesn't specifically, does it, address,

encourage companies to get involved in new projects and make new

investments. Would you have liked to see something in that department?

Our understanding is that we are going through the small print, we've

had the headline announcements from the Chancellor, as we are greeting

the small print we also understand that the investment allowance on

infrastructure is to be increased. So that will be helpful in helping

to stimulate activity in the and there are other elements which we

understand our part of the Budget in terms of helping around

decommissioning liabilities. So there are a package of measures,

it's obviously early days, we are straight out of listening to the

Chancellor. But we think that, as a package, it is a good step forward

at this point in time. Obviously the other point it should be making of

course comes a time when industry has been very focused on improving

its performance and reducing its cost. We will continue to do that so

this is helpful in giving us the confidence that there is an industry

worth supporting and that the Government does understand that.

All right, thank you very much indeed for joining us.

David Bell, can we come back to some of the broader economic 's or even

the politics. There was a piece in the Financial Times the other day

suggesting that to fulfil his goals that he set down when he became

Chancellor George Osborne needs to balance the Budget, but if he wants

to become the next Prime Minister he would be better off easing up on

that because when it comes down to it middling and would choose not to

have higher taxes and don't really care whether he balances the Budget.

This balancing the Budget has become a political symbol that he is

sticking with, he is the main disciple of that religion at the

moment. Economists are kind of pretty... Well, some say this is a

good idea but I would guess the majority would argue that if it

looks like the economy is going into a downturn and your deficit is

around 3.5% of GDP that is not catastrophic, particularly at a time

when the cost of borrowing is at a historic low rate. This could be the

time to expand capital spending. As Carl Emmerson told you, actually the

share of GDP that is public spectacle capital spending has

fallen dramatically. There are these great projects, the Northern

Powerhouse, Crossrail and so on, but the overall spend... Economists at

the IMF and the OECD are saying what is needed is an internationally

coordinated programme of public works to create demand in the

economy to head off deflation. What those two bodies are saying is

closer to what the SNP and Labour have been saying that what George

Osborne is saying. There is some truth in that. It looks like the

main sources of growth in the world economy, China and so on, are

stuttering, and in the absence of such stimuli one way to move things

forward is to look to the public sector, especially when spending on

capital expands the productive capacity of the economy as a whole.

The other side is, George Osborne could have been made Prime Minister

before we get the chance to know whether he ever does meet his Budget

forecasts. Quite possibly, but may be I think David Cameron will stick

in for as long as he can during this Parliamentary term. George Osborne

has very firmly put his foot down on the side of Remain in the EU

referendum. If the vote is to leave, all bets are off. What indications

did you see, David, for the European referendum? He put fuel duty of but

it was suggested he didn't want to offend rural Tory MPs who might be

inclined to vote Leave. I don't think all that much. There was a bit

of tinkering around and disguised measures which don't look all that

much in the first instance, for example the 2% increase in public

sector pensions. It is actually going to hit public sector costs

quite high, but in terms of appealing to the European debate I

think he just wanted to keep a low profile, not antagonise people and

just hope for steady as she goes. One thing we have noticed, reduction

in capital gains tax. A huge incentive for higher rate payers to

take capital gains. You pointed out that should the Scottish Government

go up to the 50p there is a massive incentive not to leave the country

but to take capital gains tax. There is some research a friend at LSE bid

around what happened when the additional rate was raised to 50p

and then dropped to 45p and what they found was that there was no

extra... There is no serious evidence of extra revenue being

raised when the additional rate went up to 50p. There was a lot of legal

tax avoidance and much of that involved taking your income as

profits rather than wages. Thanks for that. The Chancellor also

addressed welfare spending, albeit in a less high profile manner than

previous budgets. A representative of the Poverty Alliance is in the

newsroom. What did you make about what there was on welfare? There was

not a lot but an important thing was cuts being confirmed to Personal

Independence Payment so we are looking at substantial cuts that

people on disability allowance are going to receive, for some people as

much as ?3000 a year. Others will see their income dropped from ?82 a

week to ?52 a week. It is a lot for people to be losing, particularly

those on low incomes. It is made worse when we contrast it against

the tax cuts for higher rate taxpayers. We have to think about

the message that is sending the people. -- to people in receipt of

these Personal Independence Payment is about how we value their

participation. George Osborne said at one point that this government is

now spending more on the disabled than the last Labour government did.

You have just described some of the effects of the cuts. How do we put

these things together? Is other help coming through that can explain why

the budgets are apparently rising? I can't explain it. The people we work

with are not telling us they are feeling any benefits. When we speak

to people about Personal Independence Payments they talk

about the difficult assessment process, the hoops they have to jump

through to qualify for anything. These changes coming from 2017, or

now for new claimants, mean we are putting an additional hurdle in

their for new people. We are talking about changes in how we assess

people who need help going to the toilet or getting dressed they are

simple things but they have a massive impact on people's lives and

their ability to act independently. We are seeing that taken off them.

While we are hearing from the Chancellor that there might be more

money being spent on it, people on the ground say they are not feeling

that. You mentioned the difficulty of claiming. Explain that. Is it

your view that people who administer these things are being told, what,

to make it more difficult for people to claim or make the whole process

more difficult to get through? The whole process is quite daunting and

one thing we have seen with people going to Personal Independence

Payment assessments is that they are coming back and finding they are no

longer eligible and they are going through the appeals process and

being told in fact they are. People are saying they are maybe being

judged on their ability to walk across a room and being judged on

their ability to work, even though they know they are not. There is a

lack of mental health being taken into consideration and stupid things

like whether you are able to lift a cup. People are finding that the

assessment process is not reflecting their disability. They are being

found fit for work when they know they aren't and having to go through

a long appeals process, and additional stress on people who are

already finding things difficult. Let's talk to David Bell and David

Clegg. Picking up on what you said about higher rate tax, is this going

to be a limitation on any Scottish Government, not just the current

one? The famous statement, somebody in private equity said they were

paying less tax than a cleaner. That is because they invest in companies,

they make ?1 million profit, they take the million pounds and they pay

20% capital kick -- capital gains tax on it and they pay themselves a

salary using that. Given that has become even more attractive, is that

a limitation on what the Scottish Government can do? It is a

limitation. We don't know what will happen if the Scottish Government

raises the marginal rate. It is 45p at the moment. If they raise that we

don't know. There maybe some people who just grin and bear it, some

people may move, some people may decide to take income as capital

gains rather than earnings. -- take the income. It is suddenly a risky

environment for the Scottish Government and they probably will

proceed with caution because it is difficult to calibrate what will

happen should you make a change... Brian Taylor was suggesting they are

likely not to increase the threshold for 40p. Zoom agree that is minor

enough that people are unlikely to leave the country. -- it would seem

that is minor enough. John Swinney and because sturgeon but said at the

weekend that they did not think it was the right time to lower the tax

bill of the well off. I think that means they will mock -- they will

not match what is happening in the UK, but also if that there was a

lower band they wouldn't match that either. What we just heard was a

reminder that although the tax credits, they didn't go ahead with

that, there are still cuts in welfare, and they are affecting some

of the most vulnerable people. The spokesman from the Poverty Alliance

set it out pretty clearly. Saying they are reducing the burden on the

better paid is problematic for the SNP because they are taking money

off people who are struggling to afford it. If they don't keep the

rate as it is at the moment they are lacking credibility whenever they

attack disability cuts, because these two things have to be seen in

the round. What are the politics of this? We talked a bit about how

George Osborne can claim that the British economy is doing

fantastically well. If you are Labour, and the SNP don't worry

because they have won everything in Scotland, but if you want to

challenge intellectually across the UK, how do you do it? The Labour

Party are starting to put together a more coherent macroeconomics story,

which goes back to Gordon Brown, that the government should borrow to

invest. That seemed to come out last week from the Labour Party. George

Osborne says, yes, I am, I am building a motorway and a railway...

As we have established, you can have these headlines that look very good

at in the round the amount of capital spending by government is

quite considerably down on where it was ten years ago. Would you agree

that there has to be something more intellectually substantial on the

opposition's part than moaning about cuts all the time? Yes, and they are

struggling to get a hearing largely because of their internal battles

within the Labour Party. They are letting George Osborne get away with

murder because they are fighting each other. On the capital

investment thing, with the new powers we are getting on borrowing

in Scotland, we could have a test case on that were John Swinney might

be investing a higher proportion of the Budget. Some would say that John

McDonnell and a few others are putting together a better critique.

It doesn't seem to be coming across. There are a lot of areas in the

Budget with a traditional social justice brief that you could go at.

I am not sure we saw Jeremy Corbyn do that. It is always difficult as

Leader of the Opposition to reply to a Budget because they don't know

what is in it in advance. That is all we have time for.

Reporting Scotland will have further coverage of the Budget