On 15 March, Chancellor of the Exchequer Jeremy Hunt will deliver the Spring UK Budget. While many of the specific measures will not apply to Scotland due to devolved powers, they will impact the Scottish economy and the financing of public services through the fiscal framework. The Jimmy Reid Foundation has published a briefing on some of the critical issues for Scotland.
Civil servants and others will strike against further real-term pay cuts on Budget Day. In this briefing, we challenge the Treasury’s view that public sector pay awards are inflationary. Consumers do not pay for public services directly, so they do not affect the inflation statistics. Moreover, the wage-price spiral theory fails even in the private sector because price rises are driven by supply shortages rather than pay.
We also argue that the focus of the UK Spring Budget should be investing in public services and the workforce that delivers them. The Chancellor is already attempting to sneak hidden cuts in department budgets through over-optimistic inflation assumptions. This could cost the Scottish budget nearly £3bn. Higher public spending and taxes are essential to improve productivity; they are not holding it back.
The cost of living crisis also needs to be addressed. There should be no increase in the energy price cap, and energy efficiency measures should be boosted along with energy market reform. Universal Credit should be increased with an ‘EssentialsGuarantee’ of at least £120 a week for a single adult and £200 for a couple.
Reid Foundation Director Dave Watson said:
“The Chancellor needs to focus on boosting pay across the economy and building strong public services funded through fair taxation. The budget should also protect low-income households from hardship by cancelling the energy bill hikes and increasing social security.”
For Further Information contact:
Dave Watson, Director – email@example.com