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10 December 2021

Scotland’s Budget dodged the tough choices – but the SNP can’t hide behind Boris Johnson’s shenanigans forever

For all the trouble caused by Westminster, the Scottish economy is hardly succeeding on its own merits.

By Chris Deerin

The incompetence and misbehaviour of Boris Johnson and his team doesn’t only affect politics at Westminster – it wafts north, wrinkling the nose and spoiling the day of Douglas Ross, the Tory leader at Holyrood. He is repeatedly sabotaged by the endless scandals being served up by the Prime Minister.

The Conservatives are the official opposition at Holyrood, but Ross’s job of holding the powerful SNP/Green administration to account is made all the harder by Johnson’s pratfalls. An SNP minister can simply sidestep or ignore difficult questions by referring to whatever mess is engulfing Ross’s “boss” 400 miles to the south.

Ross has long had enough of this Westminster lunacy. He was among the first this week to suggest Johnson should resign if he had misled MPs over various lockdown Christmas parties. There may be a ceiling on potential Tory support in Scotland, but the Prime Minister brings that ceiling ever lower. The Scottish Tories desperately need a new face in Downing Street.

It was amid this chaos in Number 10 that the MSP Kate Forbes, the SNP’s economic secretary, most commonly tipped as a likely successor to Nicola Sturgeon when the time comes, delivered her Budget on Thursday 9 September. At just 31, Forbes is proving herself a skilled and intelligent operator. She took no risks or even ventured any big-ticket wheezes – nothing, in other words, to knock Johnson off the front pages. Never interrupt your enemy when he is making a mistake.

Indeed, much of Forbes’s Budget statement doubled down, focusing on the failures of the British government. The Treasury had withdrawn too much Covid spending too soon, she said; it was attacked for cutting Universal Credit; its spending review had “hindered rather than helped” attempts to create a fair recovery from the pandemic; there would be reduction in day-to-day Scottish funding compared to last year; Westminster was dangerously intent on unpicking the devolution settlement.

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All this was by way of explaining her “hard choices” in restricted circumstances, the minister said, though she was more willing to explain what she had chosen to spend money on than what she had chosen not to, or where she had decided to cut. The latter will emerge over the next few days. Income tax, which is already marginally more progressive north of the border, will have its bands increased by inflation for the starter and basic rates, while those for the higher and top rate thresholds will be frozen, ensuring anyone who comes to earn £44k and above is newly captured by these brackets, a small but handy payday for the Scottish exchequer. The Scottish Child Payment will be increased to £20 a week for poorer families, compensating some for Rishi Sunak’s Universal Credit cut.

Forbes was careful to praise private sector innovators and entrepreneurs – this is a government that often seems highly suspicious of wealth creators – and said the hard-pressed hospitality and retail sector will see rates relief continue at 50 per cent for the first quarter of 2022/23. But it is public sector workers who will feel the benefit of her largesse. Public sector pay will rise by £775 for those on less than £25k; £700 for those earning up to £40k, and £500 for everyone else. There will be a £10.50 minimum wage floor for social care workers in an attempt to plug a worrying jobs gap in the sector.

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All in all, there were few surprises. The imprint of the Scottish Greens – recently taken into government by Sturgeon – was visible in a variety of footling environmental announcements. Forbes hinted at greater “autonomy” for local authorities, which have been desperate to escape the tight reins of the Scottish government, and there will be an end to the council tax freeze after a decade of Holyrood-imposed restraint. That is likely to be accompanied by a real-terms cut in central government funding, however.

It’s undoubtedly the case that Westminster looms large over the Scottish government’s spending options. Brexit is having an impact on the workforce and the performance of key sectors, and reductions in Covid spending dictate tough choices. But then the generous, crisis-driven UK government funding over the past two years had perhaps given a false sense of luxury. Belts must now be tightened – and it’s interesting that, yet again, the SNP decided against significant tax rises on the better off.

Figures released by the Scottish Fiscal Commission on 9 December suggested that, for all the trouble caused by Westminster, neither is the Scottish economy succeeding on its own merits. There was slower growth in Scottish employment compared to the UK as a whole, and growth in income tax revenues has slipped back.

The Commission predicts that the economy will return to pre-pandemic levels by the second quarter of 2022. But it seems likely that we are in for several years of tight, dull spending rounds with little opportunity for producing rabbits from hats. As the SNP gears up for its latest push towards another independence referendum, it could so with finding some magic from somewhere. It won’t be able to rely on the slapstick of Boris Johnson forever.