Chancellor Philip Hammond accused of ‘penalising’ Scots

Chancellor Philip Hammond is “penalising” Scots by shortchanging Holyrood ministers of billions of pounds of cash, Finance Secretary Derek Mackay has claimed.

He said that “Scotland is once again losing out on vital funding”, calling on Mr Hammond to rectify this when he makes his Spring Statement to the Commons on Wednesday.

The Finance Secretary demanded Scotland receive cash to mitigate the impact of Brexit and also to “unequivocally end the decade of austerity which the UK Government has imposed on Scotland”.

With the Spring Statement taking place at the same time as a number of key Brexit votes in Parliament, Mr Mackay also urged the Chancellor to immediately rule out any prospect of the UK leaving the European Union without a deal in place, and to extend the Article 50 timetable for negotiations.

Britain is due to quit the EU on March 29, and Mr Mackay noted Scotland had been allocated more than £5 billion in the current European budget round.

He said: “It is crucial that the UK Government urgently commits to replacing all funding streams in full, and that we receive our fair share of this to ensure that decisions can be taken in the best interests of the Scottish economy and Scottish people.”

The £1 billion funding deal for Northern Ireland after the Democratic Unionist Party agreed to support Theresa May’s minority government should have resulted in £3.3 billion for Scotland, if the Barnett formula had been applied, the Finance Secretary added.

Finance Secretary Derek Mackay (Scottish Parliament/PA)

He went on to urge Mr Hammond to repay £175 million in VAT payments made by Police Scotland and the Scottish Fire and Rescue Service after the unitary authorities were set up.

Other demands included the Scottish National Investment Bank being granted the same financial flexibility as the British Business Bank, and for the UK Government to fully match the investment the Scottish Government is making in city region deals.

In his letter Mr Mackay told the Chancellor: “I strongly encourage you to use this fiscal headroom to ensure that the Scottish Government has the resources at its disposal over the coming months to mitigate the damage that the UK Government’s approach to Brexit is causing to our economy.

“I also urge you to use the Spring Statement to confirm that additional funding will be provided through the next Spending Review to unequivocally end the decade of austerity which the UK Government has imposed on Scotland.”

Overall the Finance Secretary claimed: “Scotland is once again losing out on vital funding and being shortchanged by the UK Government. The Chancellor must use his Spring Statement to address this imbalance which is penalising people across Scotland.

“The decision in 2017 to allocate £1 billion exclusively to Northern Ireland without consequentials to the other devolved administrations is yet to be resolved, and it is unacceptable for the UK Government to continue to provide additional funding for devolved services in Northern Ireland without applying the Barnett formula.

“This, along with the latest funding for Northern Ireland, has meant that Scotland has lost out on equivalent funding of around £3.3 billion.

“In addition, analysis by the Scottish Government shows that a disorderly no-dea’ Brexit has the potential to generate a significant economic shock and tip the Scottish economy into recession.

“The UK Government must rule out no deal at any time and request an immediate extension of Article 50.”

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