Budget: Sturgeon warns of ‘frightening’ impact of cuts in Scotland

Sixty per cent of Scottish children could be affected by Osborne's latest round of cuts


Scottish frst minister Nicola Sturgeon has warned of the devastating impact chancellor George Osborne’s budget is likely to have on families and children in Scotland.

According to new research by the Scottish government, if George Osborne were to cut child tax credits back to levels seen in 2003 in real terms, as has been reported, it would impact the poorest 20 per cent of families with children in Scotland, losing on average nearly 8 per cent of their income.

This would amount to a cumulative loss north of the border of £425 million, with 60 per cent of Scottish children in some way affected by the changes.

Warning that such figures represent a “frightening indication” of the likely impact of the budget, Sturgeon said:

“Tax credits form an important part of the tax and welfare system, designed particularly to support working families on low incomes.

“More than 500,000 children in Scotland benefit from tax credits. Two-thirds of the £2 billion expenditure on tax credits in 2013-14 went to low-income working families with children and only 5 per cent to households without children.

“If, as we expect, the UK government targets tax credits for cuts…it will hit Scotland’s poorest children and families hard. It is a frightening indication of the potential impact of the expected cuts.”

Meanwhile Welsh finance minister Jane Hutt has warned that Wales should brace itself for further pain from the UK government today.

Speaking ahead of the chancellor’s first Conservative-only budget for 20 years, Hutt has warned that the austerity agenda means “Wales is expected, yet again, to suffer.”

Noting that the cumulative impact of the cuts already faced by Wales means the budget that ministers in Cardiff have to play with “is lower by £1.4bn in 2015-16 in real terms than it was in 2010-11”, Hutt warned of the impact on businesses in Wales:

“The squeeze on our capital budget has made it more and more difficult for us to support and develop crucial economic development projects – that is bad news for business and bad news for communities.”

Warning of the impact that the UK government’s planned £12 billion of savings to the welfare budget will have on the most vulnerable in Wales, Ms Hutt noted that the proposals “are not properly worked through”:

“We already know that welfare cuts have a disproportionate effect on people in Wales and place our services under greater pressure.

“We will do all we can to try and mitigate the effects of these changes and are already working across government to protect our most vulnerable and disadvantaged.”

In Northern Ireland, the spectre of further welfare cuts will loom large over Stormont, which continues in a delicate state as a result of ongoing friction between the parties on the executive over how to implement welfare reforms.

PwC’s chief economist in Northern Ireland Dr Esmond Birnie has said ahead of the budget:

“Welfare reform has stalled political progress, sidelined implementation of the Stormont House Agreement and may well threaten the reduction of corporation tax.

“If the chancellor goes ahead with a £12bn cut in welfare spending…[it]…will show just where then axe will fall, with tax credits and housing benefit expected to bear most of the pain.

“And with the Barnett formula determining how much new money comes to Northern Ireland, severe cutbacks in spending across England may not deliver good news for the executive.”

Ed Jacobs is a contributing editor to Left Foot Forward. Follow him on Twitter

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