For years, pro-independence politicians in Scotland have pointed to economic injustice coming from successive UK Governments, and demanded the power to do something about it. This is something which the SNP and the Greens have long agreed on.
Even just in the final year of the last session of parliament, Finance Secretary John Swinney described the “Calman powers” as a blunt instrument because they meant that a change to one income tax band would require a change to all of them. He was right. What was needed was the ability to create a more progressive tax system which could fund our public services properly while closing the scandalous gap between the richest and the rest, which decades of UK economic policy have created.
Now, as Derek Mackay approaches the task which John Swinney once undertook of putting together a budget from a minority government position and seeking the common ground which would allow other parties to support him, the Scottish Parliament finally has the chance to act.
We all understand that this isn’t an easy task. It’s difficult for technical reasons; the Scottish Budget was already a highly complex document before the new tax powers were devolved, and there’s now an even more complicated fiscal framework which calculates Scotland’s block grant after taking into account our devolved tax revenues and the performance of the economy. But the task is also difficult for political reasons; it requires parties to change their positions and move toward one another. When there is goodwill and trust, this is not only possible… it can also be a very positive aspect of how proportional voting systems are supposed to operate. All those other small, independent northern European countries we like to compare ourselves with think this is just a normal, sensible, grown up way to work.
The Budget Mackay introduced this week shows very little willingness to find that common ground, so far. He has a little over a month left to do so, but if he wants a majority he still has some work to do.
He is keen to emphasise that he’s not “passing on” a change to the higher rate threshold, which represents a tax cut from the UK Government to the wealthy, at the same time as they cut the incomes of the poorest third of society. But, of course, the idea of “passing on” simply doesn’t apply. The UK Government sets income tax policy south of the Border; Holyrood sets it in Scotland. Let’s compare ourselves with the society we want to be, not with the UK Government.
Mackay proposes a smaller increase in the higher rate threshold – a smaller tax cut for the wealthy, but still a cut. And the UK’s change to the personal allowance also means a tax cut to everyone earning more than £11,500 – which gives a modest benefit to a small proportion of the country’s low earners, but gives far more money to the richest half of society. Mackay could reverse that in Scotland, letting low and middle-earners keep the tax cut, but clawing it back from the rich. Taking this one tiny action would at least show some willingness to move toward a fairer distribution of wealth. So far, he seems unwilling.
At the same time, there’s a continued one per cent pay cap for most public sector workers, while MSPs enjoy a 1.8 per cent increase. That simply isn’t fair. He also proposes a tax break for the highly polluting airline industry, which again mostly benefits the richest, while support for the public transport people use every day is being cut. He has imposed spending cuts on local government, and instead of being straightforward about this, he’s wrapping up other existing budgets and pretending that there are no cuts.
Of course, there are good things in the Budget too. The living wage for care workers is an important step, and investment in childcare should be welcomed by everyone. If we’re serious about maximising that benefit though, it needs to be alongside support for the voluntary sector and other areas where young people, women and disabled people make up more of the workforce. Investing in overcoming one form of inequality won’t achieve all it might, if other forms of inequality continue to get worse.
Derek Mackay, like his predecessor, is a capable and likeable guy. I have no problem in saying that about a political opponent! But Swinney took some time to learn how minority government works, and I hope Derek will learn from those earlier experiences. He says he wants to listen to Parliament, but if he wants to avoid a stalemate with local government, public sector unions and MSPs, he’ll have to do more than listen; he’ll have to act on what he hears, and move toward the common ground.
This article first appeared in the National