A winning message for Miliband?

The Labour leader should pledge to scrap the VAT increase, not merely condemn it.

Like 2010, 2011 begins with Labour and the Conservatives at war over the economy. Last year it was Alistair Darling attacking the Tories' £34bn "black hole", this year it's Ed Miliband condemning tomorrow's VAT rise. The Labour leader will take to the campaign trail in Oldham East and Saddleworth (the first big electoral test of his leadership) and attack the increase as the "wrong tax, at the wrong time".

On paper, this should be an easy win for Miliband. The VAT increase is unfair (as David Cameron noted in April 2009, "it hits the poorest the hardest"), unnecessary and economically reckless. In his campaign against the rise, Miliband can also count on the support of some unfamiliar allies, including the Taxpayers' Alliance and the Daily Mail. And he can handily remind voters that it was the Lib Dems who warned of a "Tory VAT bombshell" (before joining the assault) and Cameron who insisted during the general election campaign that he had "absolutely no plans" to raise the tax.

Miliband will say: "Today we start to see the Tory-led agenda move from Downing Street to your street. At midnight VAT goes up, hitting people's living standards, small businesses and jobs. The VAT rise is the most visible example of what we mean when we say the government is going too far and too fast."

But if he's to win over the voters, he will need to rebut the charge that Labour's profligacy made the tax rise "unavoidable". Miliband should point out that the VAT increase was only required to pay for tax cuts elsewhere: £12.4bn of the £13.5bn to be raised could have been saved, had the government not cut other taxes including corporation tax, council tax, National Insurance and income tax.

As Robert Chote noted in May, while he was still director of the Institute for Fiscal Studies: "When Mr Osborne said that 'the years of debt and spending' made the £13bn increase in VAT unavoidable you might just as well say it was his desire to cut other taxes that made it so."

After this, Miliband should pledge to scrap the rise, not merely condemn it. On too many issues, from the Spending Review to tuition fees to education, Labour's attack has been blunted by the lack of a clear alternative. This mistake must not be repeated.

George Eaton is political editor of the New Statesman.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.