SUGARY drinks including Irn-Bru are to be hit with a levy to tackle childhood obesity as George Osborne also announced tax cuts for the beleaguered North Sea oil and gas industry in the Budget.

The levy could bring in £520 million a year from 2018, with the soft drinks industry given two years to reduce the sugar content in their products.

The move was condemned by AG Barr, maker of Irn-Bru. Millions of pounds were wiped off the company’s stock market value.

However, the oil and gas sector welcomed a £1 billion tax cut boost in the Chancellor’s eighth Budget. He said the move showed “we are better together in one United Kingdom” ahead of May’s Holyrood elections.

Sweet and sour: Osborne plans sugar tax but cuts growth forecasts

With oil and gas revenues forecast to be negative for the next five years and investment falling sharply due to the slump in the price of Brent Crude, the measure could be regarded as the last throw of the dice for the embattled sector.

As expected, Mr Osborne also announced he was raising the 40p higher income tax threshold to £45,000, removing almost 600,000 people altogether from the tax band.

But the Scottish Government made clear it would not follow suit. A spokeswoman said: “Ministers have been clear that they do not consider this to be the right time for higher earners to pay less tax. We have frozen tax rates for 2016-17 and we will set out proposals for 2017-18 in due course.”

This means, from next year when Holyrood gets more tax powers, some 375,000 high earning Scots will not benefit from an effective tax cut, which their English counterparts will enjoy. In the coming years, this could work out at several hundreds of pounds for each individual.

The Chancellor revised down growth forecasts and said £3.5bn of extra public spending cuts would have to be found to ensure there was a £10bn surplus by 2020.

But John Swinney, the Deputy First Minister, said Scotland was already set to face a £1bn reduction in public spending and the additional cut would leave it “in the dark about how much will fall on public services north of the Border”. Analysts have suggested the extra cuts could see Scotland’s income fall by a further £200m by 2020.

In his Commons statement, Mr Osborne insisted his raft of measures was aimed at “putting the next generation first”.

Britain, he insisted, was well-placed to cope with the “dangerous cocktail” of global economic risks the country faced if “we act now so we don’t have to pay later”. And, sparking controversy, He also warned that the growth figures could be even worse if the UK left the European Union. “Britain will be stronger, safer and better off inside a reformed EU,” he declared.

In his biggest parliamentary test to date, Labour leader Jeremy Corbyn dismissed the Budget as being the culmination of “six years of failures” and having “unfairness at its core” while Stewart Hosie for the SNP said it was a “trail of missed targets and lost credibility”.

Faced with calls from the oil and gas industry as well as from his political opponents to help out the sector that has been rocked by the slump in the oil price with the consequent loss of tens of thousands of jobs, the Chancellor told MPs he would abolish the petroleum revenue tax and reduce the so-called supplementary charge from 20 per cent to 10. The measures are forecast to save the industry £1bn over the next five years.

The Chancellor hailed this as the “biggest package of support any government, anywhere in the world, has given to the oil and gas sector in response to the fall in oil prices”.

In the chamber, Mr Osborne made the announcement with a flourish and, addressing the SNP benches, declared: “We are only able to provide this kind of support to our oil and gas industry because of the broad shoulders of the United Kingdom.”

He went on: “None of this support would have been remotely affordable if, in just eight days’ time, Scotland had broken away from the rest of the UK as the Nationalists had wanted.

“Their own audit of public finances confirms that they would have struggled from the start with a fiscal crisis, under the burden of the highest deficit in the western world. Thankfully, the Scottish people decided that we are better together in one United Kingdom.”

The Office for Budget Responsibility, the Government’s independent forecaster, put the extra money for the North Sea in context, saying that oil and gas revenues were now predicted this year to be negative, -£10m, down from £2.2bn in 2014-15 and from £11bn in 2011-12. Indeed, it noted: “Receipts are expected to be negative throughout the forecast period,” that is to 2020-21.

It added: “The low oil and gas price environment will make it difficult for projects to clear investment hurdles. This is likely to be the case even with lower taxes.”

Deirdre Michie, Oil & Gas UK’s chief executive, welcomed the Government’s announcement, saying it marked “further progress in modernising the tax regime for an increasingly mature basin” and that the measures would build on the sector’s own achievements in improving efficiency to “secure an enduring industry”.

Callum McCaig for the SNP also welcomed the Chancellor’s announcements, claiming he had “caved into SNP pressure”. But the party’s energy spokesman argued it was a “missed opportunity” to bring forward a long-term strategy for the sector.

Oil analyst Ian McLelland described the moves as “encouragingly progressive” but noted: “The future of the North Sea is hanging on a cliff-edge and the UK Government needs to continue to promote exploration, development and infrastructure to safeguard the industry, security of supply and jobs.”

Mr Osborne, who has sought to shore up his support among Tory MPs in his hope of one day succeeding David Cameron, pleased his Conservative colleagues by announcing a freeze in fuel duty for the sixth successive year. There were also freezes on beer and whisky duties.

While he upped insurance premiums for householders and motorists, he gave tax cuts to millions of families by raising the income tax personal allowance to £11,500.

There were also boosts for business with 600,000 small companies taken out of rates altogether and a cut in corporation tax from 20 per cent to 17 by 2020.

A new Lifetime Isa will help those under 40 save for their first homes with a 25 per cent bonus from the Government on up to £4,000 of savings a year.

But the respected Institute for Fiscal Studies think-tank said that overall the Budget delivered “measures that will increase tax revenues and cut spending”.

Gemma Tetlow, its programme director, said: “The big picture is weaker economic performance meaning that the underlying forecast for borrowing increases really quite significantly”.

Shadow chancellor John McDonnell said Mr Osborne’s economic credibility was “completely shot through” because he had been unable to meet his own targets.

He said it was “morally reprehensible” that, of total savings of almost £4.2bn due by 2020-21, £1.3bn would come from the cuts to personal independence payments for disabled people. Labour, he made clear, would restore the 20p corporation tax rate and ditch Mr Osborne’s surplus target.