Budget 2016 and What it Means For Scottish Enterprise

George Osborne is set to unveil his proposals for this year’s budget later today, which could have huge impacts for several key Scottish industries.

This afternoon’s speech is expected to announce an additional £4 billion in spending cuts, and will place an emphasis on “long term” investment within UK enterprise.

However, Scotland’s Deputy First Minister John Swinney has warned the chancellor that if he fails to support Scotland’s oil and gas enterprises in his new budget, the sector as a whole will fail to prosper in the UK.

Mr. Swinney has described the oil and gas industry as one of Scotland’s “main economic and industrial success stories”, however the sector in the North Sea has been facing notable challenges as prices around the globe continue to fall.

In light of these issues, employment prospects and future investment within the oil and gas industry has been severely affected, and Mr. Swinney claims that any “indecision and inconsistency” from Mr. Osborne will only further exacerbate the situation.

Mr. Swinney has called for “immediate action” from the chancellor and Westminster to ensure that the industry’s full potential is met: “Today I repeat my calls for immediate action from the chancellor in his March Budget to ensure the significant potential of the North Sea is realised.

“The Scottish government has been engaging with the industry, unions, and the Oil and Gas Authority to address the challenges facing the Oil and Gas sector.

“There is consensus across stakeholders that the loss of highly-skilled workers and critical infrastructure could be realised if urgent action is not taken.”

Scottish Labour Leader Kezia Dugdale has also demanded that the chancellor set out a plan of action within this afternoon’s budget to aid the industry: “Thousands of jobs have already been lost with a devastating effect on the Scottish economy.

“That’s why Labour have called for a new UK oil agency to invest in infrastructure and prevent assets such as platforms and pipelines being decommissioned earlier than planned.”

A report released in February of this year laid bare the full extent of the “North Sea Oil Crisis”.

The damning document revealed that the price of oil per barrel has now steeped to roughly $30 per barrel. By comparison, the price per barrel just two years ago was set at over $100.

As a result, it is estimated that 10,000 posts within Scotland’s oil and gas enterprises have been cut.

In Aberdeenshire, an area heavily reliant on the offshore oil and gas industry in terms of employment, it was revealed that the amount of people claiming out of work benefits has risen exponentially by 92 per cent in just over a year.

Scotland’s whiskey enterprise has also called for Mr. Osborne to assist the industry, which was shown to still be Scotland’s largest net contributor in trade goods, by calling for a further two per cent in excise duty.

Mr. Osborne announced a similar cut for the industry in 2014, and while The Scotch Whisky Association (SWA) confirmed that the situation has gradually improved, duty for the average bottle of whisky still stands at around 76 per cent.

David Frost, Scotch Whisky Association chief executive, said: “Given the scale and impact of the Scotch whisky industry, we believe the Government should re-double its efforts to support distillers.

“At home, in the short term, a further 2% duty cut in next month’s Budget would be a major boost, supporting small businesses that rely on the home market and further investment in the sector.”

Similarly, the Scottish tobacco industry has claimed that a lack of support from Westminster has resulted in the industry being “demonised”, and that they fear their industry will largely be ignored in today’s budget.

The proposed budget has also drawn controversy in Westminster, with Shadow Chancellor John McDonell dismissing it as a “publicity stunt to hide his [Mr. Osborne’s] failures.

The budget for 2016 is set to be delivered at 12.30, following Prime Minister’s Question Time.

Scottish minsters and local councillors remain hopeful that the speech will highlight the importance of the country’s enterprise to the UK infrastructure as a whole, and that substantial investment will be awarded accordingly.