George Osborne and Ed Balls walk through the Members' Lobby before the Queen's Speech at the State Opening of Parliament on June 4, 2014. Photograph: Getty Images.
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Osborne refuses to rule out raising VAT after promising £2bn for NHS

The Chancellor says he"doesn't have any plans" to increase the tax: the same phrase he used before the 2010 increase. 

George Osborne's promise of £2bn extra for the NHS is an attempt to neutralise one of Labour's strongest attack lines. By providing new money for the health service in Wednesday's Autumn Statement, the Chancellor hopes to render the opposition's pledge to spend £2.5bn extra irrelevant. In a shameless act of political plagiarism, he used his appearance on the Marr show to announce a further increase: the £1.1bn the government will receive in bank fines over the foreign exchange rate scandal will be used to fund improved GP services (Ed Balls last weekend called for the money to be spent on the NHS). By arguing that the £2bn of new funding has only been made possible by the Tories' "long-term economic plan" and their commitment to deficit reduction, Osborne aims to use Labour's weakness on fiscal responsibility to undermine its strength on the health service (the issue on which it polls best). 

In his own interview on Marr, Balls described the extra £2bn as "crisis money" made necessary by the coalition's "mismanagement" of the service. He also questioned whether it was merely a "one-off bung". But the Tory Treasury Twitter account was quick to reply that the money would be "baselined" (i.e. included in new calculations of future NHS spending) making it a permanent rather than a temporary increase (something confirmed by Osborne in his appearance). 

But the awkward question remains: how will all this be paid for? After Osborne's NHS spending promise, it is even harder to see how he will meet his pledge to eliminate the deficit by the end of the next parliament while simultaneously avoiding further tax rises and cutting taxes by £7.2bn (increasing the personal allowance to £12,500 and the 40p rate threshold to £50,000). Most economists believe that he will fail on at least one of these fronts. 

It was telling, then, that Osborne repeatedly refused to rule out raising VAT, stating that he "doesn't have any plans" to do so: the exact formulation used before the 2010 increase. Given the historic tendency of governments to raise taxes immediately after the election, it is right to be suspicious. But Osborne clearly believes that the Tories' polling strength on the deficit means that they can get away with such fiscal recklessness in a way Labour never could. 

After today's high octane politics, the opposition's hope is that Osborne's intervention will only raise the salience of the NHS and ultimately benefit them. The Chancellor's gamble is that it will achieve the reverse. By at least giving the appearance of providing an answer to the funding crisis (Labour would still spend more) he hopes to deny Balls and Ed Miliband any benefit from running on this issue. 

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.