THIS NEW TAX RAID PUNISHES FAMILIES
YESTERDAY’S Scottish Budget was totally overshadowed by events at Westminster – and I don’t just mean the hugely regrettable vote of no confidence in the Prime Minister. I mean October’s UK Budget, delivered by Chancellor Phillip Hammond last month.
It was thanks to the decisions made in that Budget that Finance Secretary Derek Mackay was able to present himself as a tartan Santa Claus yesterday, spraying money across Scotland at will.
Not that you will have heard the SNP admit it was only thanks to Westminster – or more accurately, the spending power of the entire United Kingdom – that Mr Mackay was able to don his red suit.
Let us simply recall the facts. In that Budget, Mr Hammond quite rightly decided that, after a decade of spending restraint required following the financial crash of 2007, now was the time to inject extra funding into our public services. He was able to do this because the public finances are in a far better state than when Labour left office in 2010. He was also able to do it – and cut taxes – because the prospects for the UK economy are now better than forecast.
Look at the jobs miracle in the labour market figures this week: Britain is working again, and wages are rising. Mr Hammond therefore increased spending – and handed over £950million to the Scottish Government as a result, to do with as it wishes. Neither Nicola Sturgeon nor Mr Mackay welcomed this extra cash. Bizarrely, they tried to claim Scotland is still being ‘short-changed’, a theme they continued yesterday.
Nothing must get in the way of the SNP in search of a grievance. Instead, the party yesterday pulled off its usual hypocritical trick: pocketing cash from Westminster, miraculously transforming into ‘Scottish Government investment’ and then patting itself on the back for spending it.
Don’t let Mr Mackay trick you – the cheques signed yesterday came straight from Bank of Hammond.
It provided Mr Mackay with a huge opportunity. The great pity is that this opportunity was largely wasted.
Of course everyone on the Opposition benches welcomes the extra spending that Mr Mackay decided to put into the NHS – not surprising given the fact Ruth Davidson and the Scottish Conservatives lobbied hard for exactly that. We will also support focused effort to boost economic development in Scotland, such as lower business rates.
The problem is that, once again, the SNP failed to find the right balance between spending and taxation.
In the UK Budget, Mr Hammond sought to do just that: low-paid workers were all given a tax break of £130 thanks to the increase in the personal allowance. Meanwhile, the Chancellor ensured that the higher rate of tax was paid by the people for whom it was intended: higher earners, earning over £50,000.
Mr Mackay, unfortunately, has a craven attachment to the six hardLeft zealots in the Green party who sit in the parliament. As a result, he decided yesterday to drag yet more people into the higher rate of tax.
So, in Scotland, earnings over £43,430 will fall into that higher rate. What does this mean in the real world? Let us imagine a family of four, with one earner bringing home £50,000. Thanks to the decisions of Mr Mackay yesterday, that family will have £1,544 less to spend a year than somebody elsewhere in the UK.
That family – if living in Newcastle, or Coventry, or Cornwall – could use that money to pay for repairs to the house, or a few extras for their children. Or to save for retirement.
IN other words, it’s money that may go back into their local economy, or help families provide security for themselves for the long term. In Scotland, however, it’s money that the SNP Government believes is better spent by itself.
Mr Mackay insists that the higher taxes in Scotland won’t lead to families and businesses leaving Scotland or setting up elsewhere in the UK.
The truth is he can’t know that. And the truth is that Scottish industry and commerce is worried.
Firms in Edinburgh, Glasgow and Aberdeen are hoping to attract talented people to work for them and are in competition with Manchester, Liverpool, Bristol and London. If we are to persuade young, ambitious people to stay or move to Scotland, we need to do everything we can to make Scotland attractive to them. A tax gap of £1,500 a year is not going to do that.
What Mr Mackay is doing is risking Scotland’s reputation as a place to do business, risking the jobs that go with it, and therefore risking the tax revenues that go with those jobs.
Yesterday, the Scottish Fiscal Commission revised its estimates for tax revenue in Scotland next year from £12.5billion to £11.6billion – £1billion that could have gone to hospitals and schools gone. That is the potential cost of failing to grow the economy and the number of well-paid jobs that boost government coffers.
The Scottish Conservatives supported the decision to hand tax powers to the Scottish parliament because we believed it was right for Holyrood to have responsibility for raising some of its money as well as spending it. We believed that would give voters a clearer choice about the kind of government they want.
In the SNP, it’s now perfectly clear what kind of government they are getting. Despite a leg-up from the UK, despite that extra £950million, the SNP is taking the workers of Scotland for granted – and taking their hard money too.
Yesterday was a huge missed opportunity. We are being led by a government putting the short-term goal of an independence referendum above the long-term need to get the economy growing again. Enough already.