What the Pre-Budget Report means for Scotland
You can read more about the Pre Budget Report on the Treasury's special micro-site.
You can read comments from Scottish Labour spokespersons here.
Temporary reduction in standard rate of VAT
As part of a fiscal stimulus package, there will be a temporary reduction in the standard rate of VAT to 15% from 1 December 2008 until 31 December 2009 to provide further support for growth and incomes during the economic downturn. This is the equivalent, for the average household, of £275 a year for extra spending. The Government is also bringing forward £3bn of capital spending from 2010-11 to 2008-09 and 2009-10. Bringing forward valuable public investment will impact directly on economic activity in the UK, in particular supporting the construction sector, which is expected to be disproportionately affected by the economic downturn. This will be of benefit to businesses and consumers in Scotland.
Supporting small businesses
PBR announces a package of measures targeted at supporting small businesses access the capital and manage the cash flow they require to endure the challenging economic climate. Elements of the package include:
- more generous tax relief for businesses now experiencing losses, by allowing temporary additional carry-back of up to £50,000 of losses to be set against taxable profits from the last three years;
- a new HMRC Business Payment Support Service to allow businesses in temporary financial difficulty to spread payment of their HMRC tax bills over a timetable they can afford, with no additional surcharges or penalties; and
- a new Small Business Finance Scheme to support up to £1 billion of bank lending; a separate £1 billion guarantee facility to support bank lending to small exporters; a £50 million fund to convert businesses’ debt into equity; and a £25 million regional loan transition fund.
These measures will be available to all UK-based business, and may be of particular benefit to the 292,330 SME's in Scotland.
Changes to the North Sea fiscal regime
PBR 2008 announces the publication of a consultation document on a package of proposed changes to the North Sea fiscal regime. These will encourage investment through incentivising production from marginal fields, supporting asset trades and simplifying the regime. The Government also proposes a number of measures to remove fiscal barriers to the re-use of North Sea infrastructure for activities such as carbon capture and storage. The proposed changes are potentially of benefit to over 160 oil exploration and production companies, many of which have their UK headquarters in Aberdeen, and who employ a substantial number of people in Scotland.
Promoting long-term stability in the housing market
PBR announces a package of housing measures to support Govt’s objectives of promoting long-term stability of the housing market while supporting homeowners facing difficulties. Measures include: 1) Additional funding to ensure access to free and independent debt advice at the earliest possible opportunity for all householders in financial difficulty; 2) Establishment of a Home Finance Forum bringing together Government, regulators, industry and consumer groups to help protect borrowers from repossession, alongside commitments from mortgage lenders on fair treatment of borrowers facing difficulties; 3) Further strengthening of the Support for Mortgage Interest benefit and extension of the Government Mortgage Rescue scheme; 4) Bringing forward spending to stimulate the economy and increase housing supply through investing in social housing, the Decent Homes programme, regeneration projects and housing infrastructure.
Helping job seekers
PBR announces a substantial package of measures to ensure that those facing redundancy and those seeking employment are helped back into work as quickly and efficiently as possible. In October, there were 33,511 job vacancies notified to Jobcentre Plus in Scotland.
Working Tax Credit
PBR 2008 announces measures to increase the take up of Working Tax Credit among childless people across the UK. Ongoing work has been targeted on areas where research has shown that take-up is not as high as elsewherw. In Scotland, Dumfries & Galloway, Dundee City, Greater Glasgow, Clackmannanshire and Eilean Siar are being targeted.
Uprating of the basic State Pension
The Government announces that it will make a payment in the New Year of £60 for each pensioner, equivalent to bringing forward uprating of the basic State Pension from April to January. A £60 payment will also be made to 2.5m individuals who are in receipt of certain other benefits. Eligibility will be the same as for the annual Christmas Bonus. Around 1,300,000 pensioners will benefit in Scotland.
The Saving Gateway
PBR 2008 announces that the match rate for the Saving Gateway will be 50p for every pound saved in the scheme. The Saving Gateway will be available to 750,000 people in Scotland.
Child Tax Credit increase
Govt will bring forward its commitment to increase the child element of the Child Tax Credit by £25 above indexation in April 2010 to April 2009. The child element will therefore increase by £75 above indexation to £2,235. Over 800,000 Scottish children will benefit.
Child Benefit increase
Govt will bring forward its commitment to increase Child Benefit from £18.80 to £20pw for the first child, and from £12.55 to £13.20pw for subsequent children to January 2009. This will benefit 601,515 families in Scotland.
Capital spending of the Scottish Government
Treasury rules mean that devolved administrations in Scotland, Wales and Northern Ireland may, if they wish, reprofile capital spending as a fiscal stimulus. Scotland will also receiving Barnett consequentials of other PBR spending decisions. There will be up to £260m reprofiling for the Scottish Government.
Reform of air passenger duty
The Government has decided to reform the air passenger duty regime rather than proceed with a per plane tax. The decision to reform APD rather than proceed with the per-plane tax will impact customers of the 28 airports and aerodromes in Scotland.