Fiscal constitution dictates austerity

PAUL Hutcheon has managed to overlook what matters in his sojourn through the devolution maze (“Brexit has masked the failures of the SNP Government”, December 30).

His introduction applies a gloss to the picture that few who followed events of the time would recognise.

First, it must have come as a shock to the new devolved administration to find that the apparent 20%-per-head funding advantage over England in the block grant would be eroded by the Barnett formula. That was alleviated to an extent by proceeds from Tony Blair’s 2003 1% rise in National Insurance contributions for employees and employers to cover reforms in the English NHS – about £800 million came to us under Barnett. However, that impacted the Scottish economy in loss of consumer spending and loss of business investment prospects.

On taking office in 1997, Labour Chancellor Gordon Brown embarked on a financial policy that, among other things, created record balance of trade deficits. So, the “strong economic growth” mentioned by Paul Hutcheon was a mirage, while private-sector debt rose. Gordon Brown’s expressed concern was about public-sector workers being unable to buy, as inflation hit the housing market.

Brown seemed compelled to embark upon an irresponsible programme of borrowing, despite his mantra, hitherto, that he would borrow only to invest. His action resulted in the budgetary debt accumulating to £160 billion by 2010, when Labour left office.

Why, with all the growth in the economy, did he have to borrow? Why, instead of borrowing, did he not increase the rate on income tax to consolidate the workforce – that would have entailed 6p rise!

As part of the UK, Scotland’s “share” of the debt was about £15bn. So, is it any surprise that our share of the cuts required to fund its repayment fell on our public services, which the SNP Government was obliged to carry through? How did Audit Scotland not recognise this in its critical report on our NHS? The economy is a reserved matter.

An SNP Government led by anyone else, or a Holyrood regime under a different party, would have been similarly constrained by the fiscal constitution.

Is it any surprise that the Union became a four-letter word and that we elected an SNP Government with independence as its aim? Douglas R Mayer Currie