Devolved nations call on Treasury for billions in extra spending

The Treasury has failed to quell demands from finance ministers in Scotland, Wales and Northern Ireland for billions in extra spending despite an offer of a further £1.6bn.

The devolved governments welcomed some of the chancellor’s initiatives, including a temporary cut to VAT for tourism businesses and fresh incentives to reemploy furloughed staff, but said Rishi Sunak’s package fell far short of the stimulus needed.

The finance ministers – Kate Forbes in Scotland, Rebecca Evans in Wales and Conor Murphy in Northern Ireland, called on the chancellor to loosen the Treasury’s strict rules on how their money could be spent – and to authorise much greater borrowing.

Forbes said her additional calls for an £80bn green stimulus package had also been ignored. “There is no new capital spend, no extension to the furlough scheme for hard-hit sectors and no further support for households in financial difficulty. A half-price meal out does not help those struggling to put food on the table,” she said.

Under the Barnett formula – the Treasury’s complex method for giving devolved governments a share of any new public spending – the Scottish government is due to get an extra £800m, Wales £500m and Northern Ireland £300m following Sunak’s announcements.

Those sums exclude the Treasury’s funding of the VAT cuts, re-employment and apprenticeships grants and other UK-wide programmes which cover the devolved nations. Edinburgh, Cardiff and Stormont have already received an extra £8.9bn in total to fund stimulus and relief programmes to combat the impacts of the pandemic.

Alister Jack, Westminster’s Scottish secretary, said Nicola Sturgeon’s Scottish National party government had now received an extra £4.6bn to spend on its services and policies, including health, education and business rates. He urged her to suspend Scottish property sales taxes to mirror the temporary stamp duty cuts Sunak set out for England and Northern Ireland. The chancellor raised the threshold for the property purchase tax to £500,000.

“The chancellor has set out a fantastic package of support. The devolved administration now needs to play its part and show they are serious about Scotland’s economic recovery,” Jack said.

The Welsh government said it wanted further clarity on what Sunak’s package meant for Wales, but a spokeswoman said: “We do know that it did not pull the macro levers needed to support the recovery. It ignored the joint calls from devolved nations to ease the rigid fiscal rules that limit our response and made only a passing reference to public services.

“We do, however, welcome the kickstart scheme [to help under-25s into employment] which clearly mirrors the Jobs Growth Wales programme we’ve offered to support 19,000 young people in Wales.”

Green groups, Scottish Labour and some business groups criticised the package for failing to offer significant long-term reinvestment in bolstering green investment, secure jobs and support for fragile industries threatened by the next widely anticipated recession.