IT is no wonder Scottish Labour types were chuffed with last week’s Budget.
After months of gloom and backfiring since the General Election, the Chancellor has given Anas Sarwar’s party a helping hand in their efforts to oust the SNP in 2026.
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As the dust settles on Rachel Reeves’s first outing with the famous red box, UK Labour still has many problems.
The anger from businesses and fears of workers about employer’s National Insurance hikes won’t go away. There are also twitchy markets, furious farmers, and angry whisky and oil industries to contend with.
Polling yesterday showed Scottish Labour support has been hit, too, though that is probably as much to do with the events of recent months — notably the Winter Fuel Payments debacle.
But Budgets are a balancing act and the idea was to provide sweeteners — like the huge rise in public spending, or the fuel duty freeze — to dampen the anger.
People also get that Labour inherited what’s known in technical terms as an economic s***show, even if they have laid it on a bit thick since July 4.
But the Budget was the opposite of the “austerity” event the SNP warned was incoming.
A £1.4billion boost for the Scottish Government as a result of the uplift in UK public spending has saved SNP ministers’ bacon for the rest of the financial year.
From April, they’re expected to get £3.4billion a year extra. From the point of view of ordinary Scots who care little for naked politics, this has to be good news.
Throwing money at ailing public services may not be the be all and end all, but you’d hope it can help, especially when cash shortages risk exacerbating crises with issues like cop and teacher numbers.
But in purely political terms, the extra cash for Holyrood is marvellous news for Labour — and could be fatal for the SNP as the focus switches to their own record in 2026.
Scottish services controlled by SNP ministers — notably health and education — have been on the decline for years.
Whatever happens before May 2026, Scottish Labour may have a win-win situation.
If there are noticeable improvements to NHS waiting lists, for example, they can say this is due to that £3.4billion boost from Labour ministers.
If there are no noticeable improvements, they can say the SNP have wasted the cash and a chance to better Scots’ lot.
Grudging praise
The wrong choices, at the wrong time, from a government with warped priorities, etcetera.
When that £3.4billion uplift was confirmed last week, the pre-Budget “austerity” warnings from SNP chiefs were binned.
New holding positions were adopted, with grudging praise, such as saying the funding was a “step in the right direction”.
Make no mistake, the SNP and compliant civil servants will have spent days now trying to put the worst possible spin on the £3.4billion. If they possibly can talk it down in the coming days, weeks, and months, they will.
All of which underlines the age-old dilemma at the heart of all SNP government thinking. They don’t know whether they want Scotland — here and now — to be amazing or awful.
But the SNP are not merely a protest party agitating for indy due to a broken Britain. They are in charge of a powerful devolved government.
Say what you want about Alex Salmond, but his strategy as First Minister was to impress voters through good governance and a big tent.
He knew that this could lead to a shot at independence. And it did.
The past decade, however, saw the laziest form of SNP nationalism take hold. Salmondism was replaced by the narrow, inward-looking Sturgeonism, where the focus was on fostering an air of hopelessness.
But the constant moaning, spoiling for fights and decrying Westminster’s every move, regardless of merits, ground people down. Independence drifted down people’s agenda.
People who’d turned a blind eye to the SNP’s constitutional weaponisation of every issue were no longer willing to play along.
What does the Budget mean for Scots?
SCOTLAND is a devolved nation – this means that the Scottish government decides on policies like health and social care, education, transport and a raft of other things.
But the UK government still has a definitive say over reserved matters like defence, immigration and energy.
And when it comes to tax, which the budget pertains to in particular, over half of all taxes collected in Scotland remain under the control of the UK government.
This includes National Insurance (NI), Value-added tax (VAT), Capital gains tax and more.
So, the Budget could have a major impact on Scots’ finances.
The Budget will mainly refer to the changes made in the next financial year – which will begin April 2025.
Labour claims we need an additional £40billion for public services next year.
The Office for Budget Responsibility (OBR) is double-checking these figures, and their report will be presented alongside the Budget.
But the imminent changes to public finances could see hikes in fuel duty in Scotland, employers facing higher NI contributions and increased Capital Gains Tax amongst other things.
Other changes that could affect Scotland include changes to alcohol duty, departmental cuts and capital funding increases.
The scrapping of Winter Fuel Payments has been a controversial move on the government’s part.
Chancellor Rachel Reeves made the announcement to limit the benefit in July – and while it is devolved in Scotland, the Scottish Government said it would follow suit, blaming cuts to its budget.
Labour might also end the two-child limit on family benefits, which would be a relief for many.
There is not an expected shift in the main tax bands.
But instead, a threshold freeze or a “stealth tax” is anticipated whereby the government rakes in extra taxes without actually increasing the rates.
It means that as wages increase due to inflation or other factors, more people’s incomes are pushed into higher tax brackets
Though this would not directly affect Scotland – it could give the SNP Government the scope to follow suit.
Increasingly, Scots have borne the brunt of knackered public services, deteriorating before and after the pandemic.
Into this battered landscape stepped Labour in July. If nothing else, they offered “change” — not just from the chaotic Tories down south, but from SNP drudgery and doom-mongering.
But the post-election narrative of Labour down south had been more miserableness.
Warnings of hard toil to come. The axing of universal winter fuel payments.
Many of Scottish Labour’s new crop of MPs were worried. Mr Sarwar has his sights on the 2026 Holyrood election, now just 18 months away.
They needed a good news story to tell — of a Labour government boosting Scotland — here and now, not in a few years’ time.
Following the Budget and the £3.4billion, they have that — even if it’s blunted by some of those UK-wide measures.
What taxes in Scotland will be affected by the Budget?
Capital Gains Tax
Capital gains tax is charged on the profit you make when you sell something that has increased in value.
Currently basic-rate taxpayers pay 10% on most assets and 18% on residential property.
Meanwhile, higher-rate taxpayers pay 20% and 24% respectively.
Experts suggest the Chancellor could target the income people receive from dividends by increasing capital gains tax rates.
Fuel Duty and Tax Allowances for Oil and Gas
Fuel duty is a tax on fuel including petrol, diesel, biodiesel and bioethanol.
VAT (Value Added Tax) is also charged on most fuel.
It has been frozen at 52.95p for every litre since March 2011.
Changes to tax allowances for oil and gas could also hit Scotland’s industry hard – accelerating its decline and costing jobs.
Inheritance Tax
Inheritance Tax is a tax on the estate – the property, money and possessions – of a person who’s died.
The prime minister and chancellor could make multiple changes to inheritance tax, which currently has several exemptions and reliefs.
Inheritance tax is currently charged at 40% on the property, possessions and money of someone who has died if they are worth more than £325,000.
Fewer than one in 20 estates currently pays death duties as many estates fall below this threshold.
Private School VAT
A 20 per cent tax hike on private schools is set to come into place today.
School and boarding fees will be taxable at the standard rate of VAT as of January 1 2025.
Employer National Insurance Contributions
In its election campaign, Labour vowed not to increase National Insurance (for employees) or VAT.
But employers could see higher National Insurance contributions.
Today, the Chancellor may opt to increase the National Minimum Wage which currently sits at £11.44 per hour for workers over 21 years old.
And the National Living Wage could see a rebrand as the ‘New Living Wage’.
Scotland has a higher share of public sector workers (22.1%) compared to the UK average (17.3%) and so our public services could feel the squeeze more than the rest of the UK.
For years now, the structure of UK and devolved politics has been stacked in the SNP’s favour.
The good stuff? The SNP took credit.
The bad stuff? They blamed the Tories and the fact we don’t have independence.
It’s a potent formula and it’s helped keep the SNP in power.
The boot is now on the other foot. The tables have turned.
The good stuff? Labour can at least try to take credit due to that cash, starting with December’s Holyrood Budget.
The bad stuff? They blame the SNP, and say they are wasting the billions.
Read more on the Scottish Sun
The SNP’s secret weapon — that ‘heads-we-win, tails-you-lose’ ploy — has been handed to their greatest enemy.
The question now is can Labour deploy it as well as the SNP?
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