FM: ‘We will not emulate Kwarteng’s tax cuts’
Nicola Sturgeon today confirmed that her government will not be cutting taxes in line with the Chancellor’s statement and called on him to reverse his decision.
Addressing MSPs at First Minister’s Questions, Ms Sturgeon tore into the Westminster Government’s minibudget and, in particular the decision to scrap the top rate of tax.
Her comments, made during an exchange with Tory leader Douglas Ross over the latest allegations surrounding the Ferguson Marine ferries contract, was the first clear indication that Scots will have higher tax bills than the rest of the UK.
Ms Sturgeon told MSPs: “People are terrified about the inability to heat their homes, their inability to pay their mortgages… they are terrified about the security of their pensions.
“And all week they have heard Douglas Ross demand I match Tory tax cuts for the richest people in our society… tax cuts that have already sunk the pound, crashed the mortgage market, brought people’s pensions to the brink of collapse, forced the Bank of England into an emergency bailout, tax cuts that will force deep reductions in public spending.
“People might have wanted to hear Douglas Ross explain why he thinks the Scottish Government should emulate those policies.
“For the avoidance of doubt, we will not emulate these policies,” she said.
She said the tax cuts were a result of the UK government choosing to borrow vast amounts of money to give enormous tax cuts to the very richest in society.
This was “morally abhorrent and economically disastrous,” said the First Minister.
She said that abolishing the additional rate would “at least give a signal of some common sense returning to their economic policies”.
Emergency Budget Review
Sir Anton Muscatelli, principal of the University of Glasgow; Professor Frances Ruane, a research affiliate at the Economic and Social Research Institute; and Professor Mike Brewer, chief erconomist and the deputy chief executive of the Resolution Foundation, will assess the impact on Scotland of the UK Chancellor’s fiscal approach and held their first meeting with Deputy First Minister John Swinney today.
Their advice will enable timely consideration of the implications of the UK Government’s fiscal event as work continues to prioritise the Scottish Government’s budget towards tackling the cost of living crisis. The Deputy First Minister has announced he will report the results of the EBR in the week beginning 24 October.
Truss defends policies
Ms Sturgeon’s comments came as Prime Minister Liz Truss insisted that her government has the “right plan” for the economy and gave no hint of a u-turn on tax cuts that have caused the bond and equity markets to crash.
Speaking publicly for the first time since her chancellor’s mini-budget threw the markets into turmoil, she said she needed to take “urgent action to get our economy growing”
She said had taken “controversial, difficult decisions” but added: “I’m prepared to do that as prime minister because what’s important to me is that we get our economy moving.”
She admitted “we’re facing very, very difficult economic times”, but insisted those pressures were global and caused by Russia’s invasion of Ukraine.
“And of course a lot of the measures that we’ve announced won’t happen overnight, and then we won’t see the growth overnight,” she said. “But what’s important is that we’re putting this country on a better trajectory for the long term. Of course there were elements of controversy, as there always are.”
Despite the Bank of England spending billions to buy up government debt, yields were rising again this morning as the pound and equity markets weakened. High yields have big implications for mortgage rates because they affect swap rates which are used by lenders to price mortgage offers.