Scottish government calls for chancellor to 'end austerity'
Autumn statement: Scottish budget to receive extra £800m
(about 2 hours later)
Scotland's finance secretary has urged the chancellor to use his first Autumn Statement to end the UK government's "damaging austerity agenda".
Scotland's capital budget is to be given an extra £800m over the next five years as part of an investment package, the UK Chancellor has said.
Derek Mackay said "real terms cuts" to the Scottish government budget were harming its efforts to build a "fairer country".
Philip Hammond made the announcement as he unveiled his Autumn Statement in the House of Commons.
Chancellor Philip Hammond will make his statement in the Commons at 12:30.
He also confirmed City Deal agreements for Edinburgh and the "Tay Cities" of Perth and Dundee.
He is under pressure to deliver some help to the so-called "jams" - people who are "just about managing".
And Mr Hammond said talks would begin on Stirling's bid for a City Deal, which also includes Clackmannanshire.
Mr Hammond will announce changes to Universal Credit - the flagship single payment currently being rolled out across the UK - to reduce the "taper rate" from 65% to 63%.
The chancellor said this meant every city in Scotland would be on course for a City Deal, which gives local areas greater powers and freedoms to help support economic growth, create jobs or invest in local projects.
This means benefits will be withdrawn at a rate of 63p for every pound of net earnings - which the government says will benefit three million families.
Mr Hammond announced a new National Productivity Investment Fund of £23bn, which he said would be spent on innovation and infrastructure over next five years.
The first major economic statement since the Brexit vote will also unveil forecasts which are expected to show higher borrowing and slower growth in the UK economy.
The Barnett Formula means that Scotland's share of the money will be £800m, the chancellor said.
The chancellor has vowed to ensure the UK economy is "watertight" for the "sharp challenges" of Brexit and described the UK's debt - national debt stands at £1.6trn - as "eye-wateringly" large.
Mr Hammond added: "Economically productive infrastructure directly benefits businesses. But families, too, rely on roads, rail, telecoms - and, especially housing."
'This is unacceptable'
It will be up to the Scottish government to decide how to spend the increase in the capital budget is spent.
Mr Hammond has also warned of "turbulence" and "an unprecedented level of uncertainty" as the UK leaves the EU.
An increase in capital spending had been a key demand of the Scottish government ahead of the chancellor's statement.
Speaking ahead of the statement, Mr Mackay said the Scottish government was facing real terms cuts from the UK government every year until at least 2019-20, which would further reduce funding for the country's public services.
But Prof Graeme Roy, director of the Fraser of Allander Institute, said before the announcement that the Scottish government's overall budget was likely to fall in real terms over the next five years regardless of any increase in funding for infrastructure projects.
He added: "Our discretionary budget will have been cut by £3.3bn in real terms, or 10.6%, since 2010-11 and within this, our capital budget will have fallen by £600 million or 15.7%.
Meanwhile, Mr Hammond said growth next year will be considerably slower than was expected before the vote to leave the European Union, according to the Office for Budget Responsibility (OBR).
"This is unacceptable. I have written to the chancellor and urged him to end the damaging austerity agenda when he sets out the Autumn Statement later today."
Abandon its target
What will the Autumn Statement mean for Scotland?
The OBR expects the economy to grow by 1.4% in 2017, down from the 2.2% it predicted in March.
by Prof Graeme Roy, director of the Fraser of Allander Institute and former senior economic adviser to the Scottish government
The growth forecast for this year has been raised slightly to 2.1% from 2.0%.
This is the first time that we are dealing with an Autumn Statement in the new world of Scotland having substantial tax powers.
But it expects growth to be 2.4 percentage points slower in the next five years as a result of the Brexit vote.
Today we are really only going to get half of the story about what the Scottish budget might look like over the next few years.
Mr Hammond stressed that the forecast for 2017 was still equal to the International Monetary Fund's prediction for the German economy, and ahead of its forecast for France.
We will get the consequentials and we will get the overall envelope that the Scottish government will face.
He also confirmed that the government would abandon its target to spend less than it earned in 2019-20, and is now expecting to borrow £21.9bn that year.
But what we really need to wait for is what the Scottish government will forecast Scottish tax revenues to be, and that will not happen until the Scottish Budget in December.
I think what the Scottish government will be looking for is what are the potential implications for capital investment?
That is obviously something they have been calling for, and that is probably the thing that has been alluded to over the past few days as something the UK government will go for.
So you could see a couple of hundred million or a hundred million coming through that, either in housing or in roads.
But overall the Scottish budget is still likely to face real-terms cuts over the next few years, and again the Scottish government will start to think over the next few weeks about how they will wrestle with that and what choices they will have to make in a world where the budget continues to decline.
Read more analysis from the Fraser of Allander Institute
Scottish Conservative leader Ruth Davidson said the Autumn Statement came at the same time as a "massive change in the way Britain will work in the future".
She stated: "As of next year, the Scottish Parliament will be one of the most powerful and accountable devolved Parliaments in the world.
"The SNP will no longer just be making decisions on how to spend money, it will have to decide how to raise it from Scottish taxpayers too."
'Working families'
She said people would want to see a "positive reaction" from the Scottish government instead of "griping and sniping", and called on the SNP to "stop dithering in government and get on with governing."
Scottish Labour leader Kezia Dugdale also called on Mr Hammond to call a halt to spending cuts in his statement, as well as provide more support for the struggling North Sea oil and gas sector.
Ms Dugdale said: "When she first took office, Theresa May claimed to be a different kind of Tory. Today we will find out whether or not the Prime Minister really is on the side of working families after all."
