A £2billion windfall, but SNP is still overdrawn at the bank of grievance

WHEN is a £2billion windfall a cause for righteous indignation? When you are the SNP and eternally overdrawn from the bank of disgruntlement.

Philip Hammond unveiled the additional money to Tory cheers during yesterday’s Budget. Three hundred miles north, Derek Mackay seethed. The Finance Secretary tweeted: ‘£2billion budget figure for Scotland is a con! #Budget2017 Financial Transactions account for half that sum, which due to the strings attached means you can’t build roads/school/hospitals! These sums have to be repaid to the Treasury.’

It was a profoundly thankless statement, not to mention a dishonest one. In previous years, the SNP has used financial transactions to support affordable housing, the construction industry and the alleviation of fuel poverty. If effrontery were a currency, the Scottish Government could bankroll the Treasury instead of the other way round.

A more fitting response would have been gratitude because Mr Hammond imparted two gifts: hard cash and a case study in constructing a credible financial statement in straitened circumstances.

Mr Hammond told MPs he was driven by his belief in ‘a prosperous and inclusive economy where everybody has the opportunity to shine’ and ‘where talent and hard work are rewarded’.

Invigorating

What an invigorating, forwardlooking contrast with Derek Mackay, Scotland’s de facto chancellor. Under his unsteady stewardship of our economy, talent and effort have not been rewarded but discouraged. His top priority is not to ease the squeeze on the struggling middle but to tighten the tax vice.

He was already straining to make the case for hiking income levies, but the addition of £2billion to the Holyrood kitty represents a devastating blow to this enterprise. Mr Mackay’s tax discussion paper outlined four options, the most confiscatory of which would raise at most £290million in 2018-19. Even if we accept the SNP’s rationale for tax increases, the Chancellor’s allocation has removed the need for them.

This throws up an explanation for Mr Mackay’s snippy comments. If the Finance Secretary had decided on tax hikes as a necessary evil to fund public services, surely he would have jumped for joy at yesterday’s Budget. The Chancellor would have got him out of a tight spot.

Unless, of course, it isn’t about tough choices but easy ones and Mr Mackay is pursuing a tax grab for its own sake. Then it would make perfect sense for him to gripe over £2billion on a plate, for the Treasury would have exposed his tax blueprint as a political rather than a fiscal document. It would mean he has once again been found in rank ignorance of what produces prosperity and utter disregard for those who produce it.

Mr Mackay, like too many of the Holyrood time-servers, is far removed from the world of private enterprise. His sixfigure salary is not earned through risk, innovation, and creativity; he has no sense of the daily grind that makes higher-rate payers resent politicians who lecture them from afar about the need to pay their ‘fair share’. As far as they’re concerned, they already pay their fair share and then some.

Yet Mr Mackay can still convince Middle Scotland that he is on their side rather than on their back. Next month he gives his own Budget at Holyrood. He could learn from the Chancellor’s example and turn in a financial plan that rewards rather than punishes aspiration.

Mr Hammond has alleviated the pressure on small firms by switching from the retail price index to the consumer price index to calculate business rates. It is estimated to be worth more than £2billion to British business across the coming five years.

Compare this to the revaluation of rates in Scotland which proved so ruinous that one of Nicola Sturgeon’s own economic advisers, the brewer Petra Wetzel, has been forced to shutter her pub in Glasgow’s West End. To save other businesses going the same way – and save face for the First Minister – Mr Mackay should copy the Treasury and extend rates relief.

The Chancellor’s sums also afford first-time buyers a reprieve from stamp duty on the first £300,000 they spend. That means a cut for 95 per cent of people looking to snap up their dream home. Mr Mackay should act to reduce the SNP’s Land and Buildings Transaction Tax accordingly or he will condemn Scots to higher house prices, snatching the dream of home ownership from thousands.

Those browsing at the top end of the market are now confronted by a potential £4,600 disadvantage compared to Londoners. It’s would be an odd Scottish Nationalism that preferred to see the well-off buy houses in London than in Eastwood or Morningside.

Opportunity

Yes, Mr Mackay should abandon plans to shunt up taxes but he should do more than that. In February, he froze the starting salary for the 40p income tax rate at £43,000 in a sop to the far-Left Greens in exchange for votes. This might have got the SNP out of a political bind but it delivered a sucker punch to 400,000 higher-rate payers who were left worse off than they would be if they lived in England.

Next month’s Budget is an opportunity to rectify this disparity. This is no theoretical debate. Those hardest hit by Holyrood’s tax regime are the very people who have the means and motivation to up sticks for friendlier fiscal climes. And when they go, they take their money, businesses and jobs with them.

Bearing this in mind, there is one more thing Derek Mackay could do. Instead of forgoing a tax raid, he could reward industrious Scots with a tax cut, allowing them to keep more of their own money. It would generate wealth, make Scotland competitive with the rest of the UK and send a signal the SNP was finally putting the country’s interests first.

It might even encourage the best and brightest from south of the Border to settle in Scotland, bringing jobs and increased national wealth. To fund public services and support the most vulnerable in society, you must attract the high earners necessary for a booming economy.

There may be another reason for Mr Mackay’s displeasure at the Chancellor, an irritation echoed yesterday by Nicola Sturgeon and other senior Nationalists. Philip Hammond’s Budget drew sharp contrasts between the SNP benches and the 12 new Scottish Tory MPs opposite them.

The Chancellor noted wryly: ‘I am getting used to the new experience of having my ear bent by my 13 Scottish Conservative colleagues.’

Ruth Davidson’s baker’s dozen had convinced Mr Hammond to scrap VAT on the emergency services, adopt ‘transferable tax history’ for the North Sea, extend a fuel duty rebate for the islands and hand more than £3million to Scottish charities.

The SNP once boasted it alone would ‘stand up for Scotland’ at Westminster. As the Budget showed, 13 Scottish Tories have achieved more in five months than 56 Nationalists did in two years.