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Recovery plan

Holyrood calls for VAT and National Insurance cut

Kate Forbes

Kate Forbes: the UK Government’s fiscal policies are still key

The Scottish Government is calling for a cut in VAT and National Insurance contributions as part of an £80 billion UK-wide stimulus package to regenerate the economy and reduce inequalities.

It wants a temporary reduction in VAT for the tourism and hospitality industries and calls for a 2p cut in employers’ NI payments to reduce the cost of hiring staff.

In a report entitled COVID-19: UK Fiscal Path – A New Approach it also proposes the UK Government helps kick-start the economy by introducing a jobs guarantee scheme for young people and and extension of sector-specific employment and business support schemes.

It wants to see the creation of a National Debt Plan to help business and household budgets recover from the effects of the pandemic and new fiscal rules which prioritise economic stimulus over deficit reduction in times of crisis.

There is a call for an acceleration of major investment in low‑carbon initiatives, energy efficiency and digital infrastructure, which is likely to form part of Prime Minister Boris Johnson’s announcement tomorrow.

The Scottish Government again calls for greater financial powers to allow it to shape its own response to the pandemic

The report was launched today by Finance Secretary Kate Forbes who said: “We are emerging from the biggest economic shock of our lifetimes. It has hit the most vulnerable in our society disproportionately and presents challenges that the Scottish Government does not currently have the powers to meet. 

“The UK Government’s fiscal policies are still key in determining our budget, so today we set out the principles we believe it should follow to ensure we emerge with a fairer, greener economy that values wellbeing alongside growth.  

“This report recommends bold, practical steps which would provide an immediate boost to our economy, protect existing jobs and deliver new ones. It tackles public debt, employment and proposes measures to further support business.

If the UK Government is not prepared to respond then Scotland must have the additional financial powers required

– Kate Forbes, Finance Secretary

“Crucially, it avoids any return to austerity. Economic stimulus must be prioritised over deficit reduction until the recovery has fully taken hold.

“Germany has already adopted a similar-size stimulus package, representing four per cent of GDP, and the UK Government needs to be similarly positive, proactive and ambitious.

“Action is needed now. If the UK Government is not prepared to respond then Scotland must have the additional financial powers required to secure a sustainable economic recovery.

“Without those powers we will be at a severe disadvantage to other nations. It would be like trying to chart our way to recovery with one hand tied behind our back.”



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