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MP welcomes parts of budget but says economy & public sector pay remain concerns

Northern Isles MP Alistair Carmichael. Photo: Shetland News/Hans J. Marter.

NORTHERN Isles MP Alistair Carmichael has welcomed aspects of Chancellor Philip Hammond’s UK budget, including freezes in alcohol and fuel duty, but noted public sector pay was “conspicuous in its absence” while economic growth figures were “very disappointing”.

He said an extra £2 billion in funding for Scotland would “empower” the SNP government to “deliver many of their commitments including on ferry fares”.

Carmichael hailed the freeze in fuel duty, which he had called for in advance of the budget, and the freeze on alcohol duty for everything aside of cheap, strong cider was “another good move”.

Other announcements from the under-fire chancellor included a rise in the minimum wage to £7.83 an hour – some way short of the £10 an hour national living wage called for by Labour – and a rise in the personal income tax free allowance to £11,850 a year.

Carmichael described the personal allowance rise as “the best way of putting money back in the pockets of people on low-paid jobs”, while he also accepted the Low Pay Commission’s advice on the minimum wage level.

The decision not to reduce the VAT threshold for businesses below £85,000 will also come as a relief to many small firms in the islands, the MP noted.

A £500 million package for 5G mobile, faster broadband and artificial intelligence, with the money set to go directly to local authorities and bypass the Scottish Government, “could be good depending how it’s divvied up”.

He did feel the figure seemed to be “plucked out of the air” and he “would have expected the need to be greater than £500 million”.

The Liberal Democrat MP was critical of the lack of anything on public sector pay – which has fallen exponentially since 2010 amid a wage freeze – other than a “vague commitment to negotiate a pay deal with nurses”.

“The silence on the public sector pay cap being lifted makes me think that’s going to have to be contested sector by sector,” Carmichael said. “It would have been better if he’d accepted a need to do something more comprehensive on that.”

Fiscal watchdog the Office for Budget Responsibility (OBR) has downgraded the UK’s economic growth forecast from 2 per cent to 1.5 per cent this year and 1.4 per cent next year.

Against a backdrop of the troubled Brexit negotiations, the OBR also forecasts productivity to be lower than expected amid slow wage growth and lethargic investment.

When it introduced austerity the UK Government had hoped to eliminate the UK’s post-crash spending deficit by 2015, but under Hammond’s latest projections that is now not expected to happen until well into the 2020s.

Carmichael said the growth forecast had been “slashed quite dramatically, and whatever the chancellor does today could still be brushed away by Brexit. There’s been a loss of confidence, and the fact that the government has shown no real understanding of how they’re going to manage this has only made that worse.”

He added: “It would be churlish not to say that he [Hammond] had managed to produce a better budget than most people had expected, but he’s still hamstrung by the determination of David Davis, Boris Johnson and Liam Fox to drive the country off a cliff with a hard Brexit – aided and abetted by the Labour party voting against one of their own backbenchers trying to keep us in the customs union.”