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Living Standards in Scotland: UK Fiscal Policy

Volume 688: debated on Tuesday 26 January 2021

What discussions he has had with his Scottish Government counterpart on the effect of UK fiscal policy on living standards in Scotland. (911354)

What discussions he has had with his Scottish Government counterpart on the effect of UK fiscal policy on living standards in Scotland. (911371)

I have frequent discussions with the Scottish Government’s Finance Minister, and may I take this opportunity to add my congratulations on the announcement yesterday of her engagement?

I think every Member will join me in congratulating Scotland’s Finance Minister, Kate Forbes, on her happy news. A decade of UK austerity delivered unprecedented declines in living standards and incomes, especially to those already struggling. Now even the OECD says that making cuts instead of investment after the financial crisis was the wrong approach. With the Scottish Budget set for Thursday, will the Minister confirm that this time the UK Government will invest to stimulate economic recovery, or will more Tory cuts put Scotland’s recovery at risk?

It is a little odd, in a year when Scotland has received £44 billion through the Barnett formula, to be talking of cuts. The hon. Gentleman refers to the Scottish Budget, and he will be aware that there are opportunities with the powers that the Scottish Government have, whether that is to exercise their flexibilities on elements of universal credit, to top up benefits and create new ones, or to introduce new tax powers. The Scottish Parliament has powers, and we wait to see how the Scottish Government use them.

In asking the public to stay at home, protect the NHS and save lives, there must be an understanding that in doing so consumers are running up higher electricity and gas bills. Does the Minister understand that 2.1 million people are behind in their energy bills at the moment, and that one way to help them would be to reduce VAT temporarily on home energy bills?

The hon. Gentleman makes a fair point; there are household costs. That is why my right hon. Friend the Chancellor, through the package of measures, has supported the incomes of the poorest. The distributional analysis from the Treasury shows that the poorest working households have benefited most from the measures introduced by my right hon. Friend. The best way of supporting those families is through schemes that the UK, through its broad shoulders, is able to offer, such as the furlough scheme and the self-employed income support scheme, which have supported so many jobs across Scotland.

The Chancellor’s chaotic stop-start approach to furlough last autumn undoubtedly cost jobs. Failing to continue the £20 universal credit uplift and extend it to legacy benefits is set to plunge struggling families into hardship, and now the Conservatives are signalling tax rises and a return to austerity. To what extent does the Minister believe that that approach has contributed to 20 consecutive polls in favour of Scottish independence?

There is a factual error in the hon. Lady’s question, in saying that there was a stop-start approach to furlough—

It continued throughout; that is just a statement of fact. In terms of the wider package, I would refer the hon. Lady to the fact that the UK Government have provided £280 billion-worth of support and that bodies such as the International Monetary Fund have said that the UK’s economic response has been one of the best examples of co-ordinated action globally. We are able to do that because we are working as one United Kingdom acting together and using the broad shoulders of the UK.