Scotland gets extra £213m but austerity fears loom

The government said Scottish homebuyers would not miss out on a tax cut before LBBT is introduced. Picture: Esme Allen

Measures announced by Mr Osborne include a reform of stamp duty, scrapping air passenger duty for children and extending a broadband scheme from small businesses in Edinburgh.

Scottish Secretary Alistair Carmichael said the extra cash meant the Scottish Government could “crack on” and spend more money on funding for the NHS, more childcare places or give more funding to schools or colleges.

But Mr Swinney said: “The consequentials of around £200 million we have received cannot compensate for the £2.7bn of real terms cuts we have faced since 2010.

“And with a further £25bn of cuts in the future, the Westminster government is locking Scotland into austerity against our wishes.”

Mr Swinney said the £125m received from frontline NHS spending in England would be directed to Scotland’s NHS. The centrepiece of the statement was a root and branch reform of stamp duty, promising to save homebuyers thousands of pounds.

The Scottish Land and Buildings Transaction Tax (LBBT) will replace stamp duty north of the Border from next April, but the UK Government pledged homebuyers in Scotland would not miss out on a potential tax cut before the new charge came into place.

Lothian Tory MSP Gavin Brown claimed LBBT would leave many homebuyers worse off.

He said a charge on a home worth £395,000 would be £16,800 compared with £9750 in the rest of the UK.

“The UK Government has done the right thing by making homes more attainable for first-time buyers and hardworking families further up the ladder,” Mr Brown said.

“However, the fact the SNP has chosen to punish those aspiring to own a family home is now even more apparent.”

Mr Osborne announced children under 12 would no longer be subject to air passenger duty from next May, with the charge abolished for all under-16s from March 2016. APD is due to be devolved to Holyrood under the Smith Agreement and the SNP wants eventually to abolish it. Edinburgh Western SNP MSP Colin Keir said ending the charge for children would have minimal effect.

He said: “Everything makes a bit of a difference, but we have been looking for this tax to be scrapped. People from Scotland are affected disproportionately by it, especially if they have to link to flights at another hub.”

Mr Osborne also announced the Super Connected Cities Programme, offering capital funding for small businesses, charities, social enterprises and sole traders in Edinburgh to upgrade their broadband connection speeds, will be extended to March 2016.