THE TORY LEADERSHIP contest is well under way. It could well be an episode of The Magic Roundabout given the surfeit of drug-fuelled characters.
First there’s that bloke on coke Michael Gove. Then there’s opium panjandrum Rory Stewart. A few more have confessed to the odd spliff or two and then there’s Boris Johnson who it seems snorted then aborted a few lines of not quite icing sugar.
We’re told this was all in the distant past but then the frontrunner came out with quite an interesting idea. A tax policy no less. With all the sense of, well, someone on quite a lot of drugs.
He has decided it is best for Conservatism and for the Union that England and only England raises the threshold for the higher rate of income tax to around £80,000. It will carry no Barnett consequential because that, of course, it based on spending not taxation.
This is has always been the danger of partially devolving tax policy to Holyrood.
It was only a matter of time for someone in England to start playing games of their own. Commentators have already reacted in terms on marginal rates of tax and that National Insurance Contributions will end up funding the tax cuts but I prefer to set out the argument in simple terms.
Cutting the tax from 40 to 20 per cent for an additional £30,000 in income gives a £6000 cash bonus for every GP in England while either increasing NIC or cutting UK-wide spending. To match that in Scotland we’d need to find about £12,000 for every GP. There is no way we can do that. Cue a mass exodus of skilled healthcare workers as well as financial professionals who have traditionally “Worked in London, Lived in Edinburgh” or as the local cabbies call them, “Oor Willies”.
This would lead to a brain drain from one territory to another of the same language on a scale last seen before the Berlin Wall went up.
We cannot escape the truth and that is that different parts of England and of the Union have subtly different taxable economies. The South East and London earn more. They are of course far more pampered with London receiving about SIX times the investment in transport infrastructure than the North East of England but it is particularly in the West End of London where much of this tax cut will end up. Including in Uxbridge and South Ruislip, Boris’s own constituency. Fancy that!
No one likes high taxes but in terms of increasing growth of the economy while funding our health services an isolated, uncompensated tax cut on high incomes sends out many wrongs messages. It shifts the tax burden north when it is clear to many the Union is already very imbalanced. It shifts an increasing share of costs onto people of middle and lower incomes, the Just About Managing whose votes will be essential in heading off a Corbyn government and all this to give effectively a tax cut to the well off in the West End.
This West End Tax policy will execute the NHS in Scotland.
There is no point underestimating the massive impact of sucking healthcare workers out of Scotland with higher effective wages in England when we have seen the effects of over a decade of similar brain drains blighting EU countries such as Romania and Greece.
We have a serious staffing shortage in Scotland. We don’t train enough of our own because of a bankrupt tuition fee policy, while poor morale has made retention of key staff very difficult. We now have a proposal for a tax policy that will have a double impact without compensation. High NICs of graduate doctors carrying student debt causing a brain drain south.
A shift from the poorer to the rich and from north to south will destroy the Tory vote in Scotland if it is implemented and there is precious little within our partially devolved tax powers that we have to meet this challenge. For a wounded SNP snarling in the corner this is red meat and they will waste no time chewing into it… and into our Union.
