Financial plans set out in yesterday’s Budget are worth £1.5billion to Scotland.

Chancellor Jeremy Hunt said that the Scottish Government would receive the extra funds over the next two years.

However, First Minister Nicola Sturgeon said Scotland essentially had a flat budget because its value had shrunk by £1.7billion as a result of inflation.

The Chancellor has announced a £55billion "plan for stability" - half of which would come from tax rises and the rest from deep spending cuts.

Mr Hunt said: "Scottish families will receive billions of pounds of UK Government support, such as inflation-matching increases in benefits and the state pension."

The BBC says UK Government forecasters have predicted the biggest drop in living standards since records began.

Household income fall

The Office for Budget Responsibility says household income will fall by 7% over the next 18 months.

The chancellor said tax rises and a spending squeeze would help tame inflation which he said had caused the drop.

But Labour said he had picked the nation's pockets with "stealth taxes".

Shadow chancellor Rachel Reeves described the Budget measures as "an invoice for the economic carnage" created by the policies of former Prime Minister Liz Truss.

In a sombre statement lasting just under an hour, Mr Hunt undid much of the tax-cutting mini-Budget unveiled by his predecessor as chancellor, Kwasi Kwarteng, only 55 days previously.

It was deliberately stripped of surprises and political theatre, with many of the announcements having been trailed in the media beforehand.

BBC economics editor Faisal Islam said the statement was comprised of two halves - the first covering the years until the next General Election in which there would be further support for households, and the second coming after 2025 when spending cuts would kick in.

Apart from the UK Government's enormous tax grab on the energy industry, other key measures in the Budget included:

  • The state pensions triple lock will be kept, meaning pensioners will see a 10.1% rise in weekly payments
  • The household energy price cap has been extended for one year beyond April but made less generous, with typical bills capped at £3,000 a year instead of £2,500
  • Legally-enforceable minimum wage for people aged over 23 to increase from £9.50 to £10.42 an hour from next April
  • Main National Insurance and Inheritance Tax thresholds frozen for further two years, until April 2028
  • Tax-free allowances for dividends and Capital Gains Tax also due to be cut next year and in 2024

Mr Hunt has denied that he had been forced to raise taxes and reduce spending because of the turmoil caused by Ms Truss's mini-Budget.

He said there had been mistakes, but insisted the government had "corrected those within weeks".

He argued that other countries, such as Germany, France and America, were all facing similar problems as a result of the conflict in Ukraine and rising energy prices.

But, Mr Hunt denied he had postponed difficult decisions, with the squeeze on government departments yet to come.

  • Car makers have expressed dismay over plans to make electric cars subject to vehicle excise duty, in line with petrol, diesel and hybrid vehicles. The tax will apply from April 2025.

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