As I See It

Scottish Budget: new powers, same old excuses

Terry portrait with tieAmid the claims and counter-claims over who won and lost in last week’s Scottish Budget, one thing was crystal clear: however much power the Scottish government is given the SNP will continue to blame Westminster for Scotland’s financial woes.

In a statement issued this weekend the party claims that ‘severe Tory cuts’ to the money allocated to Scotland are responsible for the squeeze on public services.

It says a ‘drastic’ 9% real terms reduction in the Scottish Government’s discretionary budget by 2019-20 equates to Westminster slicing more than £2.6 billion ‘from funds supporting vital public services throughout Scotland.’

The Scottish Government says this money could build one ‘world class’ hospital, and employ 2,000 doctors, 5,000 nurses, 3,000 teachers and 5.000 classroom assistants. It would also pay for 20 secondary and 50 primary schools. There would be money left over to meet the Scottish government’s contribution to two City deals, and upgrade the railways.

That’s quite a list. But the numbers are cloaked in political rhetoric, rather than economic pragmatism.

There is no attempt to say how this £2.6 billion would be raised or, more to the point, acknowledge that it is being denied because the UK’s public finances are too stretched and need to be curbed. Quite simply, we cannot afford the SNP’s shopping list (unless, of course, taxes are raised).

Chancellor Philip Hammond is certainly not in the mood for playing Santa Claus and handing out free gifts. The message from Westminster is that the country has to earn its keep and manage its finances better.

The penny, so to speak, has not yet dropped at Holyrood. It is not just the SNP which fails to get the message. Scottish governments of all hues have a history of treating the pot of money sent north of the border as a spending opportunity.

Of course, this is partly a result of the distortion in the political settlement which has allowed only for spending to be managed in Scotland. It has, however fuelled a culture of spending that has turned into an indignant sense of entitlement.

As such, Derek Mackay’s first Budget statement was billed as a historic moment in rebalancing the political and economic equation and using the new tax powers to raise money. This should inject a healthy, and much-needed, dose of practical politics into Holyrood.

Mr Mackay and his Cabinet colleagues were eager to get their hands on the new economic tools but already there are signs that they are finding them a little hot to handle. A divergence from the threshold on high rate income tax payers was as far as Mr Mackay was prepared to go.

Reality is dawning on the SNP that it cannot risk imposing a tax regime so radically different – or more to the point more punitive – than exists in the rest of the UK. It wants to do things differently, but it has to rely on other parties to push ahead with its plans it.

His opponents know this and were bearing their claws in the Chamber on Thursday ready to taunt the Finance Secretary, on the one hand for potentially putting Scotland at a disadvantage with higher taxes, and on the other for not going far enough by introducing new levies to pay for all those public services they demand.

Amid the noise of Thursday’s debate Mr Mackay at least showed some restraint, and even some largesse through more help for small firms, an easing of the business rates burden and a commitment to key infrastructure projects. The SNP may have shaved £300 off higher rate taxpayers but at least he resisted the hugely damaging effect of hiking the top rate.

However, it was evident that Mr Mackay was just one bitten lip away from a tirade against Tory austerity. It would be more comforting to know that his more considered approach to business demands and tax rises were a result of realising that with new powers also comes greater responsibility for Scotland’s own affairs.

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