HOW MUCH AND WHY?

Critics of Holyrood’s rush to raise taxes call for public spending review to ensure cash is well spent Experts question if rise will secure better services

ALabour MP yesterday called for a comprehensive public spending review before Scots are asked to pay more tax.

Ministers are ready to raise income tax rates for many workers in next month’s Scottish Government budget with every Holyrood party bar the Tories previously backing rises to protect public services.

The move could increase annual revenue by £ 300m but critics fear the cash will do little to improve services and say the priority should be ensuring funds are spent more effectively.

Edinburgh South MP Ian Murray has called for a spending review while experts have warned the planned tax rises might not be enough to cover the soaring costs of big ticket items such as the NHS or free higher education.

Mr Murray said: “Many of my constituents tell me they would pay a little more tax if it wasn’t wasted and if those with the broadest shoulders paid more.

“Given Scotland already receives £ 1400 per head more in public spending but health, education and other public services lag behind that of England, many will rightly question if our taxes are being spent properly.

“There is no point in just raising more money without fundamental analysis and reform of public services to make them fit for the 21st Century.

“Likewise, there is little point in the Scottish Government increasing individual taxes to give massive cuts elsewhere like they intend to do for air passenger duty.

“Governing is the politics of priorities and many will see the state of Scottish public services and conclude that the SNP’s priorities are all wrong.”

Earlier this month, First Minister Nicola Sturgeon published four options for the future of income tax with the steepest increases for those on the biggest salaries.

The move, which would involve a shake- up of tax bands, was part of a bid to get at least one of the SNP’s political opponents on board ahead of next month’s Scottish Budget.

If a deal is struck then the changes are likely to come into force in April next year.

Ms Sturgeon admitted the options posed tough questions but added that “we must consider if the time has come for those who earn the most to pay a modest amount more”.

Economist John Mclaren said: “If we are talking about raising serious money, north of £ 300m, then I can’t see how you do that without raising the basic rate.

“The political challenge is if people say yes, I like the look of Scandinavian- style public services but I don’t want to pay Scandinavianstyle taxes. But that is where we are heading if

The SNP thinks hitting people in the pocket will bring automatic improvement

the current rate of spending and commitments are to be sustained in the context of UK Government cuts.”

Critics say services must be prioritised to ensure those most in need get most help. They say Scotland- only universal benefits such as free prescriptions, which cost around £ 60m a year, concessionary travel, and free tuition give better-off people unnecessary help while vital services for the worst off are under threat.

One of the biggest financial challenges in the coming years will be funding the SNP’s ambitious plans to expand free nursery provision, with spending on childcare set to double to £840m a year by 2022.

Professor Graeme Roy, director of the Fraser of Allander Institute, pointed out that between now and the end of the parliament in 2021/22 Government resources are projected to decline by about 3% in real terms while the amount needed for the health budget, which accounts for almost half its spending, will increase by 3%.

He added: “The Scottish budget faces a substantial challenge. The Government’s own view is clear – they believe that increases in income tax on the top- earning half of taxpayers is an appropriate policy to protect the integrity of public services in the face of ongoing constraint. There remains a gulf between the Government’s spending challenge and the role that income tax changes can play in addressing this.”

Professor David Bell, an economist at Stirling University, said radical changes in income tax would be a hard sell to the Scottish public.

He said: “Public spending per head is already higher in Scotland and there also has to be assessment of whether increased spending makes the intended difference. Is it value for money?”

Murdo Fraser, Tor y Shadow Finance Secretary, said: “The SNP seems to think hitting people in the pocket will somehow result in an automatic improvement in the performance of public services.

“But it hasn’t even stopped to think how that money would be spent, or indeed whether or not the current levels are being well spent.”