UK Government tax U-turn should be welcomed, says Scottish Secretary

UK Government tax U-turn should be welcomed, says Scottish Secretary

The Chancellor’s decision not to scrap the top rate of tax should be welcomed because he “listened” and “acted swiftly”, Scottish Secretary Alister Jack has said.

Kwasi Kwarteng announced on Monday morning that the UK Government would not go ahead with scrapping the 45% rate of income tax, describing it as a “distraction”.

His initial announcement of the measure – paired with a cut in the basic rate of tax to 19p in the pound – saw markets plunge, with the pound falling to its lowest level against the dollar in history.

The announcement also prompted interventions from the Bank of England and a statement from the International Monetary Fund.

Speaking in Dunfermline on Monday as the King and Queen Consort visited to bestow city status, Mr Jack said politicians are often criticised for not listening to concerns and the shift should be welcomed.

“We recognised for a number of quarters that it wasn’t universally welcomed,” he told the PA news agency.

“And he’s listened to that, he’s taken the decision to drop the plans for the 45% tax rate, but he’s stuck to all the other growth measures that he had in there, particularly helping businesses and people with their energy crisis, which is very important – so that’s what he’s done.

“And politicians are often criticised for not listening, so we should welcome the fact that he has listened and he has acted and he has acted swiftly.”

The Scottish Secretary also addressed the Cabinet not being told about the cut, saying ministers had been told of and discussed the “broad measures”.

Speaking at the Conservative Party conference in Birmingham on Monday, Scottish Tory leader Douglas Ross said the Chancellor had made the “right decision”.

“This morning, the Chancellor has confirmed a change to the budget that was presented 10 days ago,” he said.

“I think he has made the right decision. The best parts of the Government’s growth plans remain and the area that caused most concern has gone.

“Politicians have to listen and respond – and that’s exactly what the Chancellor has done.

“But let’s look at this package of measures in the round.

“It’s right that helping families through the cost-of-living crisis has been at the forefront of the political agenda.

Conservative Party Conference 2022
Douglas Ross at the Tory conference (Jacob King/PA)

“I welcome the capping of energy bills for both households and businesses announced by the Prime Minister.

“The energy cap and the other measures are the largest package of support delivered by the Government to families in my lifetime.

“Yes, they are major spending commitments, there is no getting away from that.

“However, we have to respond to national and international challenges and that is exactly what the Government have done.”

Meanwhile, Scotland’s First Minister hit out at the “utter ineptitude” of the UK Government after the U-turn.

Nicola Sturgeon tweeted: “UK gov U-turns on top tax rate abolition because it’s a ‘distraction’.

“Morally wrong and hugely costly for millions is a better description. Utter ineptitude.

“Perhaps those who slammed @scotgov for not immediately following suit should also be reflecting this morning.”

Speaking to the BBC after the 45% tax reduction was scrapped, Scottish Tory chairman Craig Hoy backed the cut to the basic rate of tax – which will still go ahead – and called for reform of the Scottish equivalent of stamp duty.

Asked if the Scottish Government should go ahead with the cut to the top rate of tax regardless of Monday’s climbdown, Mr Hoy said that was “not an objective of the (UK) Government”.

Newly elected MSPs arrive at Holyrood
Craig Hoy (Jane Barlow/PA)

“The question now for Nicola Sturgeon and the SNP is are they going to continue with a tax system in Scotland that is less competitive than the rest of the UK,” he said.

“They should be doing something on Land and Buildings Transaction Tax (LBTT) to make sure our housing market is as competitive as the rest of the UK.

“And they should be doing something on the (basic rate) of tax, because ultimately, 2.3 million Scots could benefit from a tax cut and that would lead to a huge boost in the economy.

“I look forward to Nicola Sturgeon explaining how she is going to put growth into the Scottish economy.”

Mr Hoy said he did not think the Chancellor was “finished”, adding that Prime Minister Liz Truss and Mr Ross would still be in post by Christmas.

Reports have suggested dissatisfaction with Mr Ross’s leadership in recent weeks but the Scottish Tory chairman said such “mutterings” are usually “blown out of proportion” by the time they are reported by the media.