SNP spending spree is paid for by the UK
It feels like the kitchen sink, the fridge and the dishwasher have been thrown at the electorate, says John Mclellan
It’s Chriiiiistmaaaas…! Perhaps Slade’s Noddy Holder wasn’t available for the SNP’S manifesto launch, but with free laptops, free bikes, free school food, free music lessons and free dentistry, SNP strategists certainly did their best to create the impression that if you vote for them then, to mix festive favourites, it really can be Christmas every day.
As has become the norm in the Covid age, numbers which aren’t followed by “billion” seem small beer, so there was £10bn for hospital buildings, £0.8bn for social care, £3.5bn for affordable homes and £1.6bn to decarbonise domestic heating. There will be £33bn investment over five years in a new “National Infrastructure Mission”, £0.5bn for job training, and another billion for the bank that likes to say “naw”, the Scottish National Investment Bank. Unfortunately, it turned out the £2.5bn for frontline health services was a worse deal than for NHS England.
The manifesto did not give an estimate of how much all this will cost, but there was the promise of an income tax freeze and a reduction in business rates for the biggest premises, so without any indication of how any of these bills will be paid the presumption must be that this is the equivalent of a Black Friday binge with someone else’s credit card.
The name on the card is United Kingdom because, without a plausible budget plan, it’s reasonable to conclude the manifesto is a punt on the Bank of England continuing to manage money supply though quantitative easing, and Chancellor Rishi Sunak continuing to spend and so keep the Scottish government’s coffers swollen with Barnett consequentials.
Never mind a budget plan, it didn’t attempt to tot up the bill, something the Institute for Fiscal Studies described as “disappointing”. Conservatives have put it at £90bn, and the IFS warned: “Paying for this in the context of what will likely be a tight fiscal environment… would require tricky tradeoffs, and potentially either tax rises, or cuts to at least some other areas of public spending.”
With an array of promises, particularly the raft of grants and benefits aimed at low-income families, once again local authorities will probably bear the brunt and potentially put the Scottish Government
on yet another collision course with Whitehall, with direct UK Government funding for Scottish local authorities likely to feature in a new, robust approach to spreading the financial benefits of union without an SNP respray.
Not, I suspect, without inside information, No. 10’s former “Union Unit” head Luke Graham used an article for the Spectator magazine to argue Scottish councils should be able to participate directly in UK programmes. “The SNP will scream ‘power grab’ but when community leaders start having more levers to improve long-neglected areas, the narrative on the ground starts to change,” he wrote. The stage is also set for another row over borrowing powers, in which Scottish Finance Secretary Kate Forbes says there is an electoral mandate to deliver the promises, then blames Conservative intransigence for her inability to honour them.
More borrowing is at the heart of the SNP’S economic paper, and indeed the recent Oxford Economics paper for the Hunter Foundation argued for a relaxed approach to more borrowing, but to boost economic growth and only if accompanied by a strong industrial strategy, significant tax reform and a competitive landscape.
Instead, the SNP recommends a four-day week, a ruinous Universal Citizens’ Income, which would cost £20bn to give everyone around £5,000 and put income tax up by eight per cent, and won’t produce a business strategy until after the election.
A promise to impose a “legal duty on businesses to consider a wider range of economic and environmental outcomes” should kill off any notion that an independent Scotland run by the SNP could be a new Singapore.
It feels like the kitchen sink, the fridge and the dishwasher have been thrown at the electorate to land an absolute majority and keep hold of voters unlikely to be troubled by the lack of a plan to balance the books. But what is on offer is a dependency state which is hard to unpick. When the Scottish Conservatives now accept free tuition fees and prescriptions, new benefits like universal free dental care will be politically impossible to scrap.
But however much it all costs, it’s guaranteed to push up Scotland’s £15bn fiscal deficit that the SNP is keen to make voters believe is unimportant, even as its Growth Commission chair Andrew Wilson was on Radio 4 talking about how much debt burden an independent Scotland would take, while the First Minister had to admit to Channel 4 that the assumptions Mr Wilson and his team had made were now “completely out-of-date” because the public finances had been “turned upside-down”.
The more the SNP spends now thanks to the Bank of England’s ability to feed the bond markets, the more difficult it makes the job of delivering the same benefits after independence; without a credible currency position, central bank or credit reputation to keep interest rates low, the stronger is the argument it shouldn’t happen.
“The tougher fiscal situation an independent Scotland would face in at least its first few years would make the challenge of delivering these commitments even harder,” said IFS associate director David Phillips.
If political manifestos are always over-inflated, the SNP’S is the Hindenburg, but the polls repeatedly show this is not a wish-list but a programme for government. Yet so disengaged has Ms Sturgeon appeared at times that perhaps she does not expect to be around to account its shortcomings.
“They sold me a dream of Christmas,” sang Greg Lake. “And they told me a fairy story.” The government we get, we deserve.