Derek Mackay has one of the most challenging jobs in politics. He has to construct a budget which not only balances the books, but defends against Tory austerity and meets rising demand for public services. He has to respond to the competing demands for investment in the future and also to the different views across a parliament of minorities.
He also has some advantages that no Finance Secretary has ever had before. With both borrowing and tax powers that his predecessors never had available, he has the chance to make choices which will have a bigger reach and a deeper impact on the Scottish economy.
Of course there are those who urge him to follow Tory policies every step of the way, copying every cut and letting inequality soar as never before. Even last year, he signalled the willingness to reject those right wing demands. Under pressure from the Greens he dropped a small tax cut which would have benefited high earners and also used some of the flexibility in the budget to cancel a planned £160m of cuts to local services.
That Green approach, of offering positive ideas and working constructively, has got results over many years. Whether the old Labour/LibDem coalition, or under minority or majority SNP governments, we’ve stuck to that style of engagement; always willing to find common ground where it exists, but always willing to vote against a bad budget.
This year, a lot of that positive Green influence was felt even before the draft budget was published yesterday.
We pushed the Government on reform of income tax, now that the powers are there. While other parties mostly argued about whether to put a penny on the basic rate, which would have affected people on low incomes, for over a year we were the only party making the case for a real reform. By adding additional rates and bands, we showed that it was possible to raise more revenue while protecting low earners, or even cutting their tax bill. It’s people like me and Mr Mackay, on high incomes, who can afford to pay more.
I’m delighted to say that this positive Green pressure has shifted the whole debate on income tax. Not only the SNP but also Labour are now open to the idea of a more progressive tax structure. The rates proposed yesterday include five bands, rather than the current three, and would raise enough revenue from those on higher than average incomes to bring the Scottish budget back into real terms growth.
So the principle is right, and the direction of travel is right. But is the scale enough? Well it’s not enough to prevent all the cuts to services, and many parts of the budget are still being squeezed, or not seeing the investment that’s needed to deliver even on policies that have political consensus like climate change and tougher energy efficiency goals. And even though the rates are going up on higher incomes, the thresholds are also rising. To give one example, an MSP whose salary is due to rise to £62000 next year will only pay around £33 per year more in income tax. I can’t accept that this is the limit of what someone on this very high income can afford. So the Greens will continue to make the case for more progress, and we can’t accept that any cuts must happen while high earners are protected.
We’ve also challenged the public sector pay freeze, which has cut the real terms wages of people delivering our public services relentlessly for years. When austerity began there was agreement even with the unions that a pay freeze was preferable to job losses, as those were the only choices at that time. But with inflation now rising and the tax powers available to make a different choice, it’s no longer defensible. Over recent months we’ve made the case for an inflation-based offer, and the policy announced by Mr Mackay yesterday comes pretty close. It will be up to the unions now to enter negotiations and I hope we can work with them to push the offer further where necessary.
Finally, we’ve made the case for local government once again. Our councils deliver critically important services and the decision not to provide a real terms increase to their funding must be challenged. Even a standstill budget would be hard to defend, if they need to stump up for the public sector pay increase from their existing resources. Unless that policy is fully funded by the Scottish Government, from fair income tax instead of unfair Council Tax, the result can only be service cuts, job losses, or continued pay cuts.
This is of course only the draft budget. There is time to make the case for changes over the coming weeks and months. Be assured that the Greens will do so as we always do – constructive but challenging, willing to drive a hard bargain, but willing to vote against a bad budget if needs be.
This article first appeared in the National