The ‘Pay More, Get Less’ Budget

The ‘Pay More, Get Less’ Budget

by Murdo Fraser
article from Friday 2, February, 2018

THE CHOREOGRAPHY was worthy of The Greatest Showman, P.T. Barnum. Just two hours before Derek Mackay was due to stand up in the Scottish Parliament Chamber to present the Budget Bill at Stage 1, it was announced that a deal had been done between the SNP and the Greens. It was almost as if it had been planned all along.

There was never any serious doubt that once again Patrick Harvie’s merry band would be propping up the SNP minority government, and allowing a budget to pass. A bit more cash for local government was found, some gestures towards the low carbon economy, and the price was paid once again by Scottish taxpayers, with an extra £55 million being raised by those earning over £43,000.

The SNP fought the 2016 Scottish election on a manifesto pledge not to increase the basic rate of income tax. This was a pledge repeated 53 times in the past two years, by SNP figures from Nicola Sturgeon down. At that same election, nearly two-thirds of Scots voters backed parties, the SNP and Conservatives, opposed to a basic rate income tax rise. And yet all these voters have been betrayed by the SNP’s broken promise.

And, at the same time as taxes are going up, people across Scotland will see local services cut. Despite the extra cash that has been injected into local government, across the country councils will have to deliver service cuts, reducing classroom assistants, scrapping school crossing patrollers, reductions in services for children with disabilities, reductions in older people’s services, and reducing waste collections.

There was similar bad news elsewhere in the budget. The provision for constructing motorways and trunk roads is down some £130 million. And on digital connectivity, supposedly a priority for the SNP government, the funding has been cut by more than half, down £76 million.

This was a pay more, get less budget. It is a budget where the SNP broke their promise to taxpayers of Scotland not to increase income tax for those paying the basic rate, and it was a budget which nonetheless delivers cuts in services across the country.

And it didn’t need to be like this. The Westminster Block Grant to Scotland is up in real terms compared to last year, according to both SPiCE and the Fraser of Allander Institute. This point has been acknowledged by the Finance Secretary himself in evidence to the Scottish Parliament’s Finance and Constitution Committee.

And the Fraser of Allander Institute have calculated that in real terms the discretionary spend of the Scottish Government is equivalent to what it was in 2006-07, the year the SNP took office. So over ten years of this SNP Government there has been no real terms cut in their discretionary spending. Despite all the wails about Tory austerity and Westminster cuts, the reality is that in real terms they are no worse off today than when they first took office.

The real story of the budget came not in statements from the Finance Secretary, but in the publication last month by the Scottish Fiscal Commission of forecasts for economic growth in Scotland. What they told us is that the SNP-run economy in Scotland will fail to match UK growth in each of the next five years. In 2018, the SNP-run economy in Scotland will grow at only half the rate of the UK as a whole.

Over the next three years, the Scottish economy is projected to have the lowest growth of any major economy, the lowest of any in the EU, in the G20, or in the OECD. And that failure to match even average UK economic performance for the period from 2007 to 2022, will amount to a growth gap for Scotland worth a staggering £16.5 billion in cash terms.

This is a budget which should have put growing the economy first. That is the way to generate the tax revenue that is needed for our public services. That was the message from every business organisation in advance of the budget – the Federation of Small Business, Scottish Chambers of Commerce, the CBI in Scotland, Scottish Engineering, and the Scottish Retail Consortium. All warned that income tax rises would take money out of people’s pockets and reduce consumer spending at a time where we need to be kick-starting economic growth. Even the pro-independence Business for Scotland group opposed income tax increases.

This is a budget which should have produced a programme for growth. It should have concentrated on cutting out the waste in Scottish government spending - £132 million on delayed discharge in the NHS, £170 million spent on agency staff due to poor workforce planning, £180 million spent on an IT system for farm payments that doesn’t work. It should have cut out the vanity projects such as baby boxes and the unworkable policies like the toxic and discredited Named Person. And, above all, it should have concentrated on growing the economy.

Two weeks ago, in its now notorious Party Political Broadcast, we were asked: “What has the SNP ever done for us?” We now have the answer – they have broken their promise on tax, cut services, and ignored the interests of the business community and the Scottish economy.

Derek Mackay’s ‘pay more, get less’ budget is bad for business, bad for the economy, bad for taxpayers, bad for families, and bad for services. It is only thanks to the ever-loyal Greens that Parliament was able to pass it when it should clearly have been rejected.

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