Sturgeon on Budget: More smoke and mirrors than substance from Chancellor

First Minister Nicola Sturgeon.

Philip Hammond’s Budget pledge of £2 billion for Scotland has been dismissed as “smoke and mirrors” by First Minister Nicola Sturgeon.

The SNP leader also said it was “disappointing” that the UK Chancellor had not refunded VAT payments made by the police and fire service north of the border, after confirming these will be scrapped.

Police Scotland and the Scottish Fire and Rescue Service (SFRS) have had to pay the levy since they were created in April 2013, and are the only such services in the UK that are required to do so.

Ending the payments will save the forces £35 million to £40 million a year.

Mr Hammond insisted SNP ministers had always been aware the two organisations – formed from the merger of the previous regional forces – would be subject to the charge.

“The SNP knew the rules, they knew the consequences of introducing these bodies and they ploughed ahead anyway,” he told the House of Commons.

But he said the 13 Scottish Conservative MPs elected in June had persuaded him that “the Scottish people should not lose out because of the obstinacy of the SNP government”.

Meanwhile he said that spending decisions made in the Budget would mean £2 billion for the Scottish Government in what is known as Barnett consequentials.

Ms Sturgeon said both the scrapping of VAT for the police and fire service in Scotland and the announcement of a new tax break for the North Sea oil industry were “very welcome, if overdue”.

But on the VAT charges she said that not backdating the measure to cover earlier payments was “disappointing and unfair to emergency services”.

She also said that “the headline £2 billion ‘extra spending’ figure for Scotland has much less to it than meets the eye”.

The First Minister tweeted: “Firstly, it is spread over this and next three years.

“Second – and more important – more than half of the headline £2bn (£1.1bn) is in the form of Financial Transactions – money that can be used for limited purposes only and has to be repaid by {M0scotgov.

“Taking account of today’s announced changes, next year’s (2018/19) {M0scotgov revenue budget still facing real terms CUT of £239 million – imposed by the UK government.”

She also said the “Chancellor’s announcement of extra £350m for NHS in England this year translates into net increase in {M0scotgov budget of just £8m”.

Meanwhile she criticised the Chancellor for failing to announce spending “or any real commitment” to lifting the public sector pay cap.

Ms Sturgeon has already pledged the Scottish Government will end the 1% cap on wage rises that has been imposed on public workers.

She said: “Lots more to mull over – but early indications are of more smoke and mirrors than substance. #Budget2017.”