Sometimes in politics a simple phrase gets lodged into everyone’s consciousness, framing a debate. This is sometimes deliberate, but it can happen by accident too. As Scotland approaches the first budget in which meaningful tax decisions will be made, one example of this needs to be challenged.
I doubt that anyone deliberately decided to start talking about whether the Scottish Government would “pass on” UK tax decisions, in order to narrow the policy options we think about. But that could be the result of this tiny linguistic trap. In reality there is no passing on to be done; the Chancellor sets income tax policy for one territory, and the Scottish Government (or more accurately the Scottish Parliament) sets it for another. We shouldn’t start from the assumption that our choices are limited only to copying Mr Hammond’s actions or declining to do so.
Those actions, of course, do include severely damaging choices. Far from living up to the rhetoric around helping people who are “just about managing”, the Autumn Budget Statement this week gave the lion’s share of benefit to the wealthy. Let’s just consider a few examples.
He has continued the decades-long trend toward ever lower corporation taxes, even as we become more aware than ever of the industrial scale of corporate tax dodging. Some of the biggest corporations, with the highest paid tax accountants, will see their bills go down. Apparently this is designed to send the signal that the country is “open for business”. While the Far Right chatter about the “virtue signalling” of anyone who speaks up for equality, justice or decency, the Chancellor’s disgraceful greed signalling is what really deserves to be rejected.
He has again increased the gap between the minimum wage for older and younger workers, instead of ensuring a real Living Wage for everyone. This will increase the exploitation of young people, and increase the danger that those in the most precarious work will be eased out, given fewer hours or simply not hired once they approach the age of 25, when the upper rate kicks in. This age inequality is fundamentally at odds with the idea that there is a minimum value to human labour, and that it relates to the right of people to live in dignity rather than to mindless market forces.
Apologists for the UK Government may point to the changes to the taper rate for Universal Credit, which affects how quickly people lose their payments if they increase their working hours. But this restores only a tiny fraction of the billions of pounds of cuts which have already been approved, and which the UK Government has refused to reverse.
As for income tax, the latest changes continue a shameful con trick which began with the LibDem/Tory coalition. Steady increases in the Personal Allowance are misrepresented as a social justice measure, “taking more people out of paying tax altogether”. It’s true that a small number of people who are currently paying very little income tax will be spared it. But the vast bulk of the tax cut which the raised threshold creates will go to better-off people, and the poorest will get no benefit at all. In fact, a whopping 85% of the income tax cuts which the Autumn Statement sets up between now and 2020 will go to the richest half of households. Much of this is about the controversial Higher Rate threshold, but even the raised Personal Allowance leaves the wealthiest 10% of households nearly £50 a week better off, while nobody in the poorest 50% of the population gains even half of that – most of them get far less.
In three weeks the Scottish Government will publish its own draft budget. We can’t afford to judge it on the basis of a few popular stand-alone policies. We have to look at the overall impact on poverty and inequality across our society. Our ambition should be to slash the number of people who are really struggling, and that means more than just refusing to “pass on” or copy unjust rUK tax changes.
We can use devolved tax powers to reduce what’s paid by everyone on a lower than average income, while raising the revenue needed from those who can actually afford it. We can top up benefits, such as child benefit, which would lift tens of thousands of children out of poverty. And we can ensure that government support is only available to businesses which pay the real Living Wage to all workers.
These policies would reduce inequality, leave fewer people struggling to make ends meet, and protect investment in public services. Greens look forward to engaging further with Scottish Ministers on the draft budget in the weeks ahead, but we’ll only be able to support it if it’s a bold and creative anti-poverty budget.
This article first appeared in the National