Craig Dalzell: This is a mitigation Budget - Scotland desperately needs the powers to chart its own course

Craig Dalzell, head of policy & research at Common Weal, gives his take on the Scottish Government’s draft budget for 2019/20 announced today [12 December]

THE first draft of the Scottish budget possibly wasn’t the highest profile piece of news to come out this week, given the state of Brexit and the impending no confidence vote on Theresa May.

The fact that that sentence is able to be written should be an illustration of the relative subordination of the Scottish Parliament in the grand scheme of things. This subordination is felt in other aspects of the budget such as the constant references and comparisons to “the rest of the UK” when setting devolved policy. Derek MacKay’s budget took great pains to show how income tax is more progressive than the rates in the rest of the UK and that business rates would be lower than those elsewhere in the UK.

The political impossibility for the Scottish Government to anything other than to pass Barnett Consequentials generated from English health spending onto NHS Scotland – as sensible as those extra funds may be on their own merits – highlights the limited ability for Scotland, the region, to forge its own destiny.

So much of the budget is also given over to “mitigating” UK policy in areas of Social Security. There is no room for Scotland to do differently rather than simply less worse.

READ MORE: 4 things the Fraser of Allander report tells us about @ScotGov’s Budget challenges

The budget makes reference to increasing investment in infrastructure and manufacturing and a very welcome recommitment to starting the Scottish National Investment Bank – this is, so far, Common Weal’s greatest policy success and we’re very excited to see its first investments.

But the UK’s reliance on financial services and the increasing regional inequality as more and more of the UK’s economy concentrates in the City of London is a real and present limiting factor on what Scotland can do here. Only by breaking away from the UK’s financial regulations and tax system and building an economy based on useful and productive investment, rather than merely speculating on the wealth of others, can Scotland truly build its economy into something that works for all of us. And by this, I don’t simply mean a meagre few more points added to our GDP scores. We need a real wellbeing economy and we will not get there by hanging from the coat-tails of the UK.

But this budget does make a few statements which cannot be linked to UK decisions. MacKay mentioned that “We must act on climate change”. For the most important policy facing our global civilisation and with the IPCC saying that we have merely two or three Parliaments left to make drastic reductions in CO2 emissions, this topic really deserved more than six words. We need essentially ALL policies to be measured now against the extent to which they bring us closer to or take us further away from our IPCC targets. The Government cannot continue to treat climate change as an afterthought.

READ MORE – Analysis: Scrapping Council Tax, not tweaking Income Tax, should be the progressive test of the Scottish Budget

Local Democracy will almost certainly be the major point of contention as the budget negotiations progress. The Liberal Democrats appear to have thrown away the possibility of a soft-ball win to gain some funding for one or two of their priorities all because they wish to be seen to be opposing independence. I have to say that this suits my own goals but had I been in a position to advise that party, I might suggest that this is a strange and short-sighted policy.

The Greens have stuck to their guns regarding the call for Local tax reform which makes this budget look particularly uninspiring from their point of view. The extra money for local authorities is of the amount that would have probably won Green support in the last two budgets but it’s not enough this time and the Greens have been saying so for a year.

It’s curious that there was little mention of reform to local taxation and that while the SNP remains commited to saying that they want to end Council Tax, they don’t appear to be so commited to actually doing it. Between this and no mention at all of widely discussed policies such as a “tourist tax”, there appears to be little to incentivise the Greens to support the budget. Maybe this is a game of strategy and an opening for the forthcoming negotiations. Maybe the Scottish Government is saying to all parties that the minority government will do what they like and if they want to bring down the Scottish Government and add to the UK’s political chaos they are free to do so. I rather hope that it is the former case as the latter would be a risky strategy given that everything that could go wrong in UK politics has gone wrong.

READ MORE: Threats, debt collectors and nervous terror: the reality of Council Tax in Scotland

Brexit, another UK policy, casts its looming shadow over the budget too with contingency funds reserved and the promise of an emergency budget if there’s a No Deal Brexit (though, we’ve heard promises like that from now-former UK Chancellors of the Exchequer, haven’t we?) so maybe all of what was said today will be consigned to the bin as UK politics once more impinges on Scottish affairs. It’s notable that in the previous debate, Michael Russell said that the SNP’s Brexit strategy is that “If we cannot save the UK from itself then we must find a way to save ourselves.”

I find this strategy to be rather curious also. Surely it is not Scotland’s responsibility to ensure that England does not get the future that it voted for? The SNP needs to think about the consequences of doing this as well as the consequences of looking to the rest of the UK when making its policies. Scotland may well be able to save the UK from itself but it will beg the question: “At what cost to Scotland?”

Endless rounds of budgets continually mitigating Scotland against UK politics cannot go on forever, whatever the circumstances. Sooner or later, we need to start building the Scotland that we deserve.

Picture courtesy of the Scottish Government

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