Smorgasbord of tax rises just shows Labour's muddled thinking with UK Budget

In recent days, the government has tried to insist that tough decisions are unavoidable. And yet there was no evidence of that in this budget. Indeed, raising taxes on workers and firms to plug gaps in public spending is not the tough choice - it is the easy one.

Meanwhile, the weeks of pre-budget briefing, counter-briefing and U-turns have already chilled the economy, with businesses delaying hiring decisions, deferring investment and consumers reining in spending at the most economically sensitive moment of the year. At a time when confidence should be nurtured, ministers have succeeded only in deepening uncertainty.

The real challenge facing the government is the need to confront the inefficiency that has taken root across swathes of the public sector. Productivity has deteriorated, outcomes have worsened, and yet the state continues to expand in cost and reach, while persistent tax-and-regulate thinking is driving investment elsewhere. There needs to be an honest acceptance that the public sector financial model is no longer sustainable – it is completely broken. This might be an inconvenient truth for some, but the public sector only exists because of the private sector.

The measures announced today will do nothing to turbocharge growth, increase productivity or stimulate investment. You cannot tax your way to economic growth, and you cannot close the productivity gap by avoiding the structural reforms the country urgently needs. The onus was on the chancellor to match the ambition of the sectors already driving economic success in Scotland and across the UK, but sadly she has failed to do so.

Two areas in particular reveal the government’s muddled thinking and will directly harm key sectors in Scotland’s economy. Capping salary sacrifice will only hit workers trying to save for their future and drive a further wedge between workers in the private and public sectors. But it could also hit the long-term savings industry, which is an area of real strength for Scotland’s vibrant financial and professional services sector.

Meanwhile, the decision to keep the Energy Profits Levy on the North Sea will risk thousands of jobs in Scotland and the UK, as well as choking off much needed investment and growth. Above all, it will continue to accelerate the decline of Scotland’s world-class energy supply chain, risking our status as a global leader in renewable energy and net zero expertise.

Scotland’s Global Investment Summit, which SFE organised in Edinburgh earlier this year, showed the huge appetite that exists among global business to support the major sectors of our economy, including financial services, energy and life sciences. Moving forwards, it is now more essential than ever that ministers positively engage with these sectors, listen to their ideas and concerns, and double-down on their ability – rather than the government’s – to stimulate economic growth, drive investment and create jobs. Anything less will only further harm our economy and global standing.