As Income Tax is devolved to Holyrood...
Bravehearted call for a fairer society, but who pays for Nicola’s dream?
It was a typically polished performance, smoothly articulated and free of any sense of personal triumph. Nicola Sturgeon delivered as she always delivers with a potent cocktail of gentle understatement and conviction. As a result she had the parliament in the palm of her hands.
To that extent the will be an able successor to her former boss and mentor, but she is not a political clone. She may share some of Alex Salmond’s self-assurance, but her programme for government over the next year was most certainly her own.
Her ambition is to create a fairer, more inclusive society that widens opportunity and ownership. It will be a “Scotland of all the talents” freed from elitism and privilege, a society that is healthier and better educated.
But uttering promises to make everyone better off and rid the country of the evils of discrimination is the easy bit. The tough questions come later: how does she do it, and who pays?
To be fair, the new First Minister’s maiden speech gave enough detail and substance to ensure it could not be dismissed as empty rhetoric. She announced 12 bills and some specific commitments on achieving a living wage, targets on apprenticeships, and gender balance in top jobs.
These are admirable targets and fairness as an over-arching ambition would be ridiculous to challenge. The issue is how to achieve it, and whether in the process, society moves together upwards, or in the other direction. To put it another way, without growth in the economy to pay for living wages, equal gender pay and more benefits we must pay more in taxation. This will be a concern today when the Smith Commission reports and is expected to recommend full control of income tax.
Ms Sturgeon rightly avoided getting into the tax debate, but she will be the first FM to have to deal with its consequences, particularly if her government is re-elected in 18 months time.
Of course, she wants control of more taxes and there is an understandable reason why. New tax powers come in next April, but any change in the rate of tax must move all bands upwards or downwards in proportion: the net result will simply be higher or lower receipts, but no redistribution. The only way she could achieve that would be to cut regressive taxes such as VAT which hit the poorer disproportionately and there will be a limited opportunity to do this.
If Ms Sturgeon was biting her tongue yesterday because of the speech she may have wanted to make then she at least maximised the tools currently at her disposal. That may also explain why it was laced with a heavy social agenda with a few token references to building a “strong economy”.
Her bills were specific and targeted when it came to health, communities (a word used liberally) and education. But on the wealth (business) agenda – apart from commitments to retaining support for small businesses – the main innovation was a Scottish Business Development Bank on which there were no details.
In fact, business was mainly at the receiving end, a sign perhaps of things to come: business leaders are to be summoned to a living wage summit and directed to obey a Scottish Business Pledge on meeting more targets on youth training and helping communities (that word again).
Politicians repeatedly claim that building the economy is the top priority and that businesses are encouraged to flourish. But there is an ever-present worry among business leaders that they are viewed as a cash cow to fund the politicians’ pet projects.
In the main they are resistant to more disruption between Scotland and the rest of the UK and continue to fear they will be punished for setting themselves against the independence campaign. Calling them to account on wages, boardroom diversity and help for communities may be the precursor to tougher controls and demands.
To avoid a showdown with the government they must therefore work with it and accept that the new FM wants them to play their part in creating her new society via what she called “a shared endeavour”.
At this early stage in Ms Sturgeon’s tenure she must be given the benefit of the doubt, and time to prove she can create a fairer society.