We’re set for a battleground Budget
The finance secretary’s statement on Thursday will be a fight for the social democratic vote, writes Lesley Riddoch
The Scottish Budget may seem like a relatively low-key affair compared with the mighty issues and surreal politics at work elsewhere.
But unlike the smoke and mirrors which still beset Brexit, Derek Mackay’s budget on Thursday will be a tangible thing with clear winners and losers. It must set out different tax and spend priorities to Westminster or leave Nicola Sturgeon open to the accusation she’s presiding over a “Dickensian Scotland”. But since the SNP has rejected Green proposals on compulsory purchase, land tax, council tax reform and ending the 100 per cent exemption on vacant and derelict land, Mackay will find it hard to tackle the high price of land and thus the shortage of affordable housing in his budget.
But the Finance Secretary does plan to scrap the pay cap and raise Scottish income tax – making this budget a battleground for the social democratic vote, which, until now, has clung steadfastly to the SNP. But for how much longer if the SNP appears to be passing Westminster cuts down the line to local government?
In 2015 many felt the SNP made a mistake by cutting council budgets, renewing the council tax freeze and opting not to raise income tax.
Then, the SNP could have been excused for thinking the local domain was so fragmented and under-reported that local cuts might seem like a relatively victimless crime or at least one that could be convincingly laid at the Tories’ door. If that was ever true, it’ll be different this time – not least because local government elections mean the SNP is involved in running around half of the country’s 32 councils. If council leaders refuse to stand up to a local budget-cutting Scottish Government run by their own party, the SNP will soon be held in the same contempt as Scottish Labour for trying to manage away democratic dissent. But will that happen? Mackay has moved to assure businesses that his budget will prioritise “growth and innovation”, which probably confirms tax hikes for middle and high earners are on the cards. Business leaders have warned that could cause economic damage.
And yet, Scottish voters might be ready to accept that creating a society with a real living wage, genuinely affordable housing, transport and free childcare could be advantageous when it comes to attracting and retaining staff. Similarly, giving a pay rise to the poorest public sector workers may also seem like a pump-priming investment as well as a long overdue bit of social justice, if the policy is argued convincingly. The Institute for Public Policy Research, for example, has estimated that a 2 per cent pay rise would cost the Scottish Government £380 million but would recoup half that amount through higher tax and national insurance payments and reduced benefits costs. Sturgeon would undoubtedly prefer that extra tax receipts from higher pay don’t leak from the Scottish economy to Westminster. But the public can see what years of self-defeating, demand-side destroying, belt-tightening austerity have done and may now be ready to see Scotland head off in a distinctively different political direction, as long as it is bold enough to make a difference.
The latest Survation opinion poll gives the SNP an 11-point lead in Holyrood voting intentions and puts the Scottish Tories back in third again. It’s not surprising Ruth Davidson’s honeymoon with voters has been fairly short-lived – voters have witnessed the Tories’ callous disregard over universal credit payments and calamitous cackhandedness around Brexit and seem unwilling to disconnect the Scottish Tory leader from these Westminster policy failures. Likewise, voters know the Scottish Government is paying millions to mitigate the bedroom tax and will use new welfare powers to simply block other Conservative excesses north of the Border.
So the test for Mackay is not Davidson’s response to his modest tax hikes, but whether any small shifts in pay and tax will amount to a hill o’ beans, or leave him open to the charge he is yet again robbing Peter to pay Paul. Much of that is a trust thing – and though levels of trust in the Scottish Government are higher than in any other arm of government in Britain, they are nowhere near Nordic levels where 40 per cent personal taxation seems like a fair trade for public services of such a high quality that no one feels forced to pay twice and take out individual private insurance guarding against reliance on basic “safety net” services as middle-class voters do here.
Recent statistics also suggest the Scottish Government’s determination to limit the marketisation of public services is starting to pay off – a BBC investigation last week found Scotland is the only part of the UK performing better against the NHS fourhour waiting times target for A&E patients than it was four years ago. The NHS in England has seen a 155 per cent rise in “long waiters”, while numbers in Scotland fell 9 per cent. But one indicator doth not an economic transformation make and new Labour leader Richard Leonard will be keen to dent the SNP’S record on social justice and put clear red water between the Scottish Government and his Corbynfriendly Scottish Labour Party. That could be difficult if Mackay comes up with inflation-busting pay awards for the poorest workers and heads off threatened strike action by nursing, civil service and teaching unions. As usual, the devil will be in the size of the pay awards and the number of workers helped.
In any case, Leonard has a lot less clout in budget preparation than Holyrood’s smaller parties because the minority SNP administration must court the Greens or Lib Dems to get its budget through.
But Scottish Labour and the Tories should beware: the public expects clear, bold, viable alternative tax and spending from them, not weary old taunts about “the day job” or a preoccupation with independence. One thing’s for sure – it won’t just be the SNP who are on trial this Thursday.