Tax breaks will take Â£2bn from Scotland, says Labour

Scotland will lose around Â£2 billion over the lifetime of this parliament through UK government tax breaks for the richest and social security cuts for the poorest, Labour Party analysis has claimed.

By The Newsroom Sunday, 1st January 2017, 11:33 am Updated Monday, 9th January 2017, 1:02 pm

Chancellor Philip Hammond. Picture: Getty

The figures are contained in a new analysis of UK government policy commissioned by Labour, which shows the expected impact of the two budgets and autumn statements since the last general election. The research, which covers the years 2015/16 to 2020/21, was undertaken by the House of Commons Library.

The reduction in the Work Allowance for Universal Credit, which Chancellor Philip Hammond refused to reverse despite concerted pressure from Labour, will reduce household incomes by around £740 million by 2021.

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The freeze to working age benefits is expected to reduce household incomes by £760m over the same period. However, the true cost is likely to be higher as the UK government’s figures do not take into account the projected rise in inflation.

Reducing the capital gains tax basic rate to 10 per cent and the main rate to 20 per cent – a tax break for the richest – will reduce Scotland’s tax take by £172m.

Ian Murray, Scottish Labour’s Westminster spokesperson, said: “These figures are shocking and Theresa May and Ruth Davidson should be absolutely ashamed of themselves. Tory cuts on this scale will be a bombshell for Scottish families.”

A UK government spokesperson said: “The best way to support people is to help them into a job, so it is welcome that in Scotland there are a near record 2.6 million people now in work.

“Our welfare reforms are incentivising work, while restoring fairness to the system. And across the UK we continue to spend over £90bn a year on working age benefits to ensure there is a strong safety net.