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Scotland’s poorest will be hit the hardest

Submitted by on 23 Nov 2010 – 15:58

Jim Murphy MP. Photo: Steve Punter Flickr.

By the Rt Hon Jim Murphy MP, Shadow Secretary of State for Scotland and Labour MP for East Renfrewshire

George Osborne’s Budget was not a budget for growth or jobs – it was a vicious assault on Scottish families and an attack on Scottish jobs that will damage the economy. Tragically, the Liberal Democrats have abandoned their principles and now back the Tory desire to cut harder and faster than is safe. The result is a budget that picks on the poor.

Labour set out a plan to halve the deficit over four years, and do so fairly. We would cut unnecessary spending, support measures to grow the economy, and protect frontline services.

The new government’s approach is harsher, harder – and unfair.

The highly respected Fraser of Allander Institute at Strathclyde University calculates that 126,000 public sector jobs in Scotland alone will be cut over the lifetime of this parliament. Mass unemployment on that scale threatens economic growth, risks the growth of the private sector, and causes human misery in a way most thought had been banished from Britain.

The Budget contained many cruel surprises at a tough time for Scottish families. Cuts to tax credits to couples earning just £15,000 each, pregnancy grants taken from new mums, child benefit frozen for years, severely limiting support for disabled people, housing support slashed, even for council tenants, attacks on the public sector – these are the choices of a Tory party that doesn’t understand and a Lib Dem party that doesn’t care.

The rises in VAT is a double whammy. It will hit the poorest people the hardest, adding £400 a year extra to family bills, but equally worryingly it will add a new cost to doing business in the UK. Small businesses, the backbone of the economy, will have a new tax burden on them – a direct impediment to commerce.

There are two pressing requirements for the Scottish economy: helping the unemployed into work, and investing to create jobs of the future. The Budget failed on both counts.

The cancellation of the Future Jobs Fund is a serious strategic error. Government policy should be to get people off benefits and into work. Those employers who received funding to take on unemployment young men and women regard it as a sound success. Before entering government, many Liberal Democrats welcomed the jobs it brought to their communities. In Scotland, when I was Secretary of State, I was pleased to announce over 11,000 new jobs, and we left funding in plans in place for an additional 20,000 places. The people who would have taken those jobs, learnt those skills and got a vital start on the ladder are now told to get on their bike and move to another part of the country. This isn’t just callous – this is bewildering short sightedness from a coalition that regards unemployment as a price worth paying for dogmatic political reasons.

But once people have the skills and experiences that come with being in work, we need to create jobs for our future economy. Scotland has a long and proud tradition of making things, and modern manufacturing can be a critical part of Scotland’s next decades.

Labour’s Green Investment Bank would have poured support and resources into the green economy – a sector that requires careful nurture but can grow into being a great engine of the Scottish economy. Manufacturing of components and supplies for offshore wind coupled with developments in tidal power and other forms of renewable energy can create jobs and prosperity.

In defence, the coalition government refuse to guarantee the future of the two aircraft carriers proudly being built on the Clyde and at Rosyth. With over 5,000 high-skilled, well-paid jobs at stake and a whole industry now uncertain to whether it will exist in two years time, it is increasingly clear that the Tories want to do to shipbuilding on the Clyde what they did to the steel industry in Lanarkshire.

And in a different field, the scrapping of Labour’s tax relief for the computer games industry will hit Dundee, as well as other cities, hard. This Scottish success story is a growth industry but facing serious tax incentives from Canada who are desperate to bring video game publishers to North America. Only weeks after the budget, the world’s largest video games manufacturer Activision Blizzard warned that the new plans could now jeapordise its investment in the UK.

Taken together, these measures will hit Scottish families harder than any budget in living memory, and risk our future economic prosperity on a series of political gambles and strategies that most Scots do not understand or agree with.

With the right plans and policies, the Scottish economy can flourish again. Labour will argue for such policies to be devised and implememented because a strong economy is vital in creating a secure Scotland where people are in work and employers are creating new jobs.