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Chancellor lays down gauntlet

Holyrood urged to invest in tartan jobs deal

Cockburn Street Edinburgh pubs

Pubs and restaurants will get a tax break (pic: Terry Murden)

The Scottish Government has been urged to use additional funding from the Treasury to invest in creating jobs and cutting the cost of buying a home.

Chancellor Rishi Sunak set out a plan to underpin employment as Britain emerges from the devastation caused by the coronavirus.

A headline-grabbing temporary cut in VAT from 20% to 5%, and a catchy scheme offering discounted meals at restaurants, is aimed at supporting the hard-hit hospitality industry.

There are new subsidies to ensure young furloughed workers are retained by companies, and cuts to the cost of buying a home in England and Northern Ireland.

The UK Government is now providing the Scottish Government with a total of £4.6 billion in extra support through the Barnett formula. Scotland’s share of the overall spending is £800m, while the Scottish government says it receives an additional £21m.

Delivering his summer economic update, Mr Sunak said: “Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.”

Rishi Sunak

Rishi Sunak: ‘strengthening the union’

Mr Sunak said the plan for jobs was the second of a three-phase plan to secure the UK’s economic recovery from coronavirus.

The first phase, beginning in March, focused on protection with a £160bn package of support – one of the largest and most comprehensive economic responses in the world. In Scotland this package has so far protected more than 620,000 jobs, helped thousands of businesses and paid £425 million to 146,000 self-employed people.

The Chancellor said that following the second phase focusing on jobs, there would be a third phase focusing on rebuilding, with a Budget and Spending Review in the autumn.

Tory and Labour politicians urged the SNP government in Edinburgh to adopt a similar strategy to ensure jobs are safeguarded north of the border and that home buyers do not miss out.

The SNP will face added pressure after indicating this week that it would not amend the Land and Buildings Transaction Tax, the Scottish equivalent of stamp duty.

Scottish Conservative leader Jackson Carlaw said: “This announcement by Rishi Sunak will get the housing market moving again immediately, and that’s vital on a number of levels.

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“The SNP must do the same, otherwise the consequences for families and the wider economy will be dire.”

Business groups felt the package of measures were well targeted, if temporary and with no certainty that they might only defer rather than resolve challenges ahead.

There was a general acceptance that statement prepared the ground for the Autumn budget when decisions on infrastructure spending and potential tax rises may be on the agenda.

Speaking about the impact his package of support on Scotland, Mr Sunak said: “I’ve set out our plan to protect, create and support jobs across Scotland – to level up opportunity, safely reopen our economy and strengthen the Union.

“With a massive funding boost for Jobcentre Plus, doubling the number of work coaches, more people will now benefit from personalised and tailored job support. We’re investing £800m through the Barnett formula, giving Scotland the funds to create green news jobs.

“And we’re protecting the thousands of existing jobs in the hospitality sector with a cut to VAT and the Eat Out to Help Out scheme.”

Ian Blackford Commons

Ian Blackford: ‘one hand tied behind our back’

Scottish Secretary Alister Jack said: “The measures announced by the Chancellor to support the country’s post-coronavirus economic recovery delivers for all parts of the UK.”

However, SNP Westminster Leader Ian Blackford said the Tory government was leaving the Scottish Parliament to tackle the unprecedented economic crisis with “one hand tied behind its back” by withholding the financial powers, in particular extra borrowing capabilities, requested by the Scottish Government.

He said the Chancellor was putting people’s “jobs and livelihoods on the line” by cutting off the Job Retention Scheme and Self-Employment Income Support Scheme too soon.

“While there were announcements we welcomed, the Chancellor’s package lacked ambition by failing to deliver the scale of funding needed for an investment-led recovery,” he said.

We need good jobs and jobs for good – not low-paid, part-time employment for just six months

– Richard Leonard, Scottish Labour

“It didn’t come close to meeting the £80billion of new money proposed by the Scottish Government or the four per cent of GDP investment that Germany has delivered.”

The SNP criticised the Chancellor for not outlining any targeted measures or support package for the oil and gas sector, warning that the Treasury’s silence would deliver a hammer blow to the industry and economy.

Scottish Labour leader Richard Leonard said his party has been calling for a quality Jobs Guarantee Scheme, “but we need good jobs and jobs for good – not low-paid, part-time employment for just six months, delivered through a scheme which cuts off everyone over the age of 24.”

He added: “Neither the Tories nor the SNP have shown they appreciate the scale of the economic catastrophe we are facing. The Scottish Government cannot create the jobs and industry we need if it clings onto its failed hit and miss approach to intervention.”

Business reaction

Comment: Sunak’s meal deal is just for starters

Summary of measures:

– Temporary cut to VAT on food, accommodation and attractions from 20% to 5%

– “Eat out to help out” vouchers that will give diners 50% off their meals out, with conditions, for August

– Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021

– a £2bn Kickstart scheme to create thousands of job placements for young people

– a cut in the Stamp Duty Land Tax (SDLT) for England and Northern Ireland, raising the threshold from £125,000 to £500,000.

– A £2bn green energy plan to help make homes more energy efficient

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