IT IS NOT OFTEN that I feel nostalgic for the presence of the former First Minister Alex Salmond in the Scottish Parliament. But that was exactly my emotion during this week’s debate on Finance Secretary Derek MacKay’s draft Budget.
The Finance Secretary had a choice going into the debate. He could have come to the Conservatives, dropped his plans to make Scotland the highest taxed part of the United Kingdom, and worked together with us to deliver an ambitious Budget focussed on growing the economy. Or he could have turned sharp Left, and embraced the anti-growth, anti-business agenda of the Greens. What a pity, what a tragedy for Scotland, that he chose to throw in his lot with the lentil-munching, sandal-wearing watermelons in Patrick Harvie’s Party.
Mr. MacKay was well warned by the business community as to the consequences of going further on tax than he originally intended. The Scottish Chambers of Commerce described such a move as ‘highly dangerous’. Yet, in agreeing to the Green demands to freeze the threshold for higher rate taxpayers he and his Government have shown contempt for the views of Scottish business, and have demonstrated that they have zero interest in trying to help grow our underperforming economy. They might as well put up a sign at the Border: ‘Scotland closed for business’.
Derek MacKay had so many advantages with this Budget. He was a lucky man, firstly, because he had more money to play with than ever before. By his own admission, his budget for the coming year is up, in real terms, by some £501 million. That’s half a billion pounds he had to spend in the coming year more than he had in this one.
We hear a lot in these budget debates from the SNP benches about Tory cuts, and Westminster austerity. But we now know that the reality is somewhat different. The Scottish Government’s own documentation tells us that, both in cash terms and real terms, the total Scottish government budget for the coming year is up on the previous high point of 2010-11. When it comes to Total Managed Expenditure, there is not a cut to be seen.
But it is not just because he had money at his disposal, which his predecessors could only dream of, that Derek Mackay was a lucky man. He was lucky because he has a greater range of powers over taxation than any Finance Minister before, a great opportunity to use these to build an ambitious budget, a budget for growth, a budget that will expand the tax base, a budget worthy of the extensive fiscal powers put at his disposal.
Sadly, in place of that ambition we had a weak, hesitant, dismal set of measures, together mounting to a budget which tells us nothing about the type of Scotland we want to see, a budget which will see local services slashed while Council Taxes are being hiked, a budget which cuts funding to the Enterprise Networks and reinforces reductions in college places when we should be doing the opposite, and a budget that will make Scotland the highest taxed part of the United Kingdom, scaring away investment, and sending out a message that the risk-taker, the wealth creator, the entrepreneur, and the successful are not welcome here.
This should have been a budget to grow the economy. Our growth rates today are one third of the UK average. Our unemployment rates are higher, our employment rates are lower, and our business confidence is well below the UK as a whole. These are the key issues that this budget should be addressing, and instead it will simply make matters worse.
As the economy grows so tax revenues will grow with it. Scottish Conservative research has shown that if Scottish economic growth had matched UK average figures since 2007, our Gross Domestic Product would have been £3.1 billion higher over the last ten years, which equates to nearly £1300 for every Scottish household.
If we simply raised the proportion of higher and additional rate tax payers to the UK average then the Scottish finances would stand to benefit by more than £600 million a year in extra revenue, and what a difference that would make to the Finance Secretary’s spending power.
The SNP used to believe that it could help grow the economy by cutting taxes. Month after month, year after year, in this very Chamber, the former First Minister Alex Salmond lectured us all on the benefits of cutting corporation tax in order to grow the economy. For more than a decade, it was a central tenet of SNP economic policy.
Where was Derek Mackay when all the rest of us were being bored rigid by his former boss? Why wasn’t he listening? The Finance Secretary might not want to remember, but in election after election he and his colleagues stood on a tax-cutting platform. Alex Salmond at least understood, and it was impossible not to feel a little nostalgic for the time he was in charge.
The budget was a huge missed opportunity. It failed to address the problem of our underperforming economy. It cut support to local government, which will mean that services are being reduced at a time when the council Tax is soaring. And it sends out a message that Scotland is the highest taxed part of the United Kingdom.
The Scottish Conservatives voted against the Budget; a dismal, unambitious Budget that damages Scotland. Now that Alex Salmond is long gone, it is clearer than ever that only we champion the Scottish economy, it is only we who are on the side of businesses, of taxpayers, of hard-working families.
The SNP may have got its Budget through Stage 1 in Parliament with Green support, but in the long run it is the country that will suffer.