Fond farewell
Tears and tributes at Philip’s funeral
The message is: vote Yes and you might never have to work again. What better inducement to make people think positively about independence? However, UBI is one of those great-sounding policies that starts to come apart once you ask awkward questions about who would pay for it.
Reform Scotland, with Nicola Sturgeon’s recent support, proposed a universal basic income of £5,200 a year, given to every adult irrespective of need. This would cost around £25 billion a year, and yet it isn’t nearly enough to live on. It’s little more than universal credit after all – so seems rather pointless. Germany is planning a trial of a £12,000 per annum UBI.
But that is still poverty pay in most people’s books, and such a scheme would cost more than the entire Scottish budget. Savings would be made on social security, but it would still be hugely expensive.
The idea of taxing basic rate taxpayers in order to give millionaires money they don’t need is unlikely to be an election winner.
We actually have a kind of universal basic income at present: it’s called furlough – and the cost of paying people not to work is proving ruinously expensive. The UK’s budget deficit has risen this year to £400bn – its highest level ever. This can’t go on and foreshadows a collision in the next few years between the Scottish Government’s spending ambitions and the fiscal limits of the Union.
In short, there is going to be a spending crunch, combined with a dramatic rise in unemployment after the Coronavirus Job Retention Scheme is wound up. This may shred many of the SNP’s manifesto promises. It might shred the Union itself.
It is arguably unwise to plan any significant spending increases right now because we are living in a pandemic never-never land.
The Scottish budget is being cushioned by well over £8bn in Covid payments from the UK Treasury over and above the block grant. That 4% increase in nurses’ pay – which the Royal College of Nursing has rejected as too small – is four times the pay offer to nurses in England.
The suspicion is that the Scottish Government has been using pandemic cash to help buy political votes.
That is denied by the Scottish Government. However, they are as miserly with their costings as they are generous with universal benefits.
Tory and Labour MPs in Westminster – especially those in the north of England – have long believed that Scotland gets overgenerous treatment in spending from the UK Exchequer, despite being one of the most prosperous regions in the UK.
The SNP has been able to claim that it’s been hard done by by Tory austerity, even though spending has been around £1,500 higher per head in Scotland than in England according, to the Office for National Statistics.
The row over the Barnett Formula has been going on for many years. UK governments have always avoided fiddling with it because of the fear of stoking Scottish nationalism.
But it is hard to imagine a better way of fuelling nationalism than continuing to finance its social ambitions.
There has been talk of the Prime Minister heading off independence by offering a snap referendum next year.
That seems about as likely as Boris combing his hair. He remembers what happened to David Cameron in 2014. Johnson doesn’t want to go down in history as the prime minister who took the UK out of the EU only then to take Scotland out of the UK.
But there is the possibility of a new financial bargain being struck as a part of quasi-federal repositioning of the nations and regions of the UK. At least, this is worth thinking about.
An offer of fiscal autonomy to Scotland would meet one of the SNP’s political demands and also redefine their spending ambitions. It might weaken the fiscal ties that bind the UK.
But giving Scotland full tax and spending powers – with a subvention to the UK for common services – would be a worthwhile fiscal reality check, and might actually strengthen the Union.
At any rate it would demonstrate whether or not the SNP’s retail politics is affordable.
Supporters of independence say that Scotland’s nominal 8% budget deficit – crudely the difference between how much is spent in Scotland and how much is raised in taxes – is a unionist myth.
Perhaps it is. We may be about to find out.