“For Scotland, today’s Budget was a damp squib,” he said. “There was some positive news in the founders relief for those in Scotland trying to move their business from start-up to scale-up, but little of further significance.”
His assessment chimed with the Fraser of Allander Institute, where deputy director Emma Congreve described the Budget as “fairly low key”.
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“With relatively little room to manoeuvre given the adherence to fiscal rules, this Budget was more about rearranging rather than reimagining,” she said.
Some of the sharpest criticism came from Scotland’s national drink industry after the Chancellor announced another increase in alcohol duty.
The Scotch Whisky Association said the rise represented the fourth consecutive increase in spirits duty and claimed that tax would account for 74% of the average price of a bottle of Scotch.
Chief executive Mark Kent said: “Nobody wins when hard-pressed businesses are taxed to the hilt.”
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The Scottish Licensed Trade Association was similarly downbeat, arguing there was little to celebrate for pubs and other licensed hospitality businesses. Managing director Colin Wilkinson expressed disappointment that a reduction in VAT for hospitality was absent and raised concerns about the effect of higher wage costs.
The national living wage is to increase by 3.9% to £13.21 an hour, with the national minimum wage also increasing by 3.9% to £11.27. Mr Wilkinson said the resulting higher wage and employers’ national insurance costs were “the last thing employers need without any mitigation to cover the increases”.
“The licensed hospitality sector employs a lot of young people and would employ more, but these increases will not only jeopardise job creation but also put current jobs at risk,” he said.
Hospitality bodies also urged the Scottish Government to use its budget on December 3 to provide further help on business rates after measures announced for England.
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Leon Thompson, executive director of UKHospitality Scotland, said additional funding flowing to the Scottish Government strengthened the case for rates support, including for hospitality businesses with rateable values above £100,000.
The Scottish Tourism Alliance also called for action at Holyrood after expressing disappointment over VAT and warning that employment and operating costs continued to constrain businesses’ ability to invest. It did, however, welcome backing for a new outdoor arena at the SEC in Glasgow.
There was a markedly more positive response from Scotland’s investment community to measures aimed at entrepreneurs.
Edinburgh-based Archangels described the Budget as “nuanced” for entrepreneurs, welcoming founders’ relief and greater funding for the British Business Bank, although joint managing director David Ovens expressed disappointment at the reduction in Business Asset Disposal Relief.
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“Today’s measures are, on balance, positive and the real test will be whether government builds on them to give founders and investors across the UK the long-term confidence to start, scale and stay,” he said.
PXN Group chief executive Dave Foreman also welcomed the emphasis on growth outside Westminster and measures encouraging investment in founders.
“Every successful exit is a chance to fund the next generation of businesses, and keeping that capital circulating in the regions that produced it is how strong ecosystems are built,” he said.
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Accountants gave a more qualified welcome. Susan Love, strategic engagement lead at ACCA Scotland, said there had been “little sign of tax simplification – quite the opposite”, while warning that changes affecting payments of self-employed income tax could become a significant burden for small businesses.
James Paterson, BDO partner and head of tax in Scotland, said businesses had been looking for “confidence, stability and investment”, and welcomed access to capital and founders’ relief while also urging the government to simplify the tax system.
Attention will now shift quickly from Westminster to Holyrood. Mr Drummond said the Scottish budget, particularly its decisions on income tax, would be the “real moment” for Scottish taxpayers and the economy.
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