Jim O’Neill examines the Scottish Budget in depth, finding some things to cheer but much to be concerned by.

 

In the spirit of the season, Derek Mackay’s budget can be responded to in three ways. First there are some elements to which I can give an unconditional hurrah. There are those bits for which there are small hurrahs, but substantial reservations. And then the baddies arrive to resounding boos. And then here comes the Scottish Financial Commission, our own OBR, with a shocking bucketful of reality. It’s wet fish across the chops time. Oh yes it is!

Let’s deal with these in turn.

Firstly, I’m cheering wildly about the much needed Carers’ Allowance. My very good friends in the caring community deserve to have the costs on their lives repaid. But they can speak for themselves.

The additional funding for primary care is welcome. I hope, however, that the Trusts will actually use the extra funds for primary care, mental health and social care and not to add to the additional £400m to sort out their black holes.

Further, the additional funding for childcare and for the Attainment Scotland Fund are very welcome. Both work towards improving the lives of our next generation.

Finally, the Scottish Investment Bank and the extra funding for housing address a number of key elements in driving forward the Scottish economy but, without looking at the detail in the budget document, I do not know if he has resolved the issue of land cost, the biggest block on housing development. I suspect not, or he would have been shouting it from the rooftops.

Cybernat alert! I turn now to the areas that I have some issues with. I am glad that the Finance Secretary has created a five-band income tax system. It is how I responded to the consultation. However, I have one concern about the bands. My proposal included a higher band, starting at say £300,000, with a tax band of 50%. But we heard the same weasel words from Mackay as we have heard before from Hammond. I have to say, if a higher rate will cause a mass of wealth people leaving the country, why are we not awash with Germans, French and Scandinavian millionaires who seem quite happy to pay a higher tax rate in return for the better opportunities in their own countries?

Instead the Finance Secretary introduced a piece of political flimflam, to great applause from the seals in the background (led by the ever more ludicrous John Swinney) by cutting the tax liability for the £11,850 to £13,850 group by all of 1%. What he didn’t say was that everyone else gets that too. At least when Gordon Brown made this mistake he actually made a substantial cut to 10%, to the howls, if I remember, of the SNP members among others. We all remember the abuse that he, rightly, took and the band was reversed later. If we are going to sort the tax system out, let’s do it by taking from those who have and giving to those in need.

My next area of cautious welcome is the lifting of the cap on public sector salaries. I did not say remove because all he has done is raise the cap to a new level still under the current CPI rate of inflation and still well below the RPI rate. However, unlike the Westminster Chancellor, he did not offer to fund this increase, especially in the NHS nor in local government. Since these two are the highest employers in the public sector, they have the greatest problem. It is clear that the public services will have to pay for any cost of living increase from their somewhat limited resources.

So, we now turn to the Boooo bits. Yet again there is no plan on Council Tax. If Councils were allowed to increase their own tax bands by another, say, two, this would create the facility to cut the costs of those living in a and b band houses and ask those who have benefited from the great housing price increases over the past 20 years to pay a little more. It would also improve the percentage income raised by councils. Far be it from me to suggest that it suits the nats to ensure finance remains centralised…

Councils waited with bated breath for the announcement. Some SNP-led councils have gone public that they can’t cope. Labour councils, like my own in North Ayrshire, just get on with delivering budgets without cuts, and ensuring that those in most need are focused on. But CoSLA said that the councils’ need was in excess of £550m just to get back to the 2011 position. Thus, with a standstill revenue budget, councils already are facing a 3.1% cut plus the increased problem of facing staff expecting a 3% increase in April.

So the supposed largesse to councils is more flimflam. Even the increase of capital costs are a chimera, because to build you need staff, both at the planning and delivery stages. Wages etc are not covered by capital funding. The poor old councils, providing the majority of public services that touch both you and me, are hit yet again.

But who is this riding to the rescue of young Derek, as the OBR has ridden to the rescue of Chancellors at Westminster? It is our own Scottish Financial Commission, Scotland’s version of the OBR.

Woopsee, Derek is deep in the sticky stuff. We all remember the ridicule that was heaped on the Tories when it was announced by OBR that growth would be low at 1.6% and would stay low for a number of years. Surely Scotland can beat that. There was a stunned silence when it was revealed that growth in Scotland was 0.7% this year and would stay below 1% for at least another 4 years.

The Finance Department have done their sums on a growth figure of 3%. Thus the tax take will be £164m, more than for the past but a bit below the funding removed by Westminster. Over the next few years, if the FSC is correct, the Finance Secretary will underperform on tax raising. Not my words. Read the 300 or so pages of the FSC analysis of the budget.

So in summary I am not greatly impressed by this budget. He says he is limited in what he can do, but he can, for instance, go after the Scottish Limited Liability Partnerships, which are disfiguring our streets, and are nothing more than vehicles to move the ill-gotten gains of Eastern oligarchs into off-shore accounts. Just an idea.

Derek Mackay’s first budget is full of missed opportunities, but most of all is built on the weak and ever-shifting sands of Scots productivity and growth. I do hope that Mackay is right and can work with local organisations to create growth. In North Ayrshire, one of the most deprived areas in the country, it is time for our parliamentarians (all SNP) to demand action and not just vote, like lemmings, for the continued poverty of their constituents. I am sure it is the same elsewhere. If they can do it at Westminster, surely all humanity demands that they can do it at Holyrood.

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10 thoughts on “Built on sand

  1. Good article Jim, I disagree slightly in that I think Derek has done quite a good job overall. I’d be curious to know what the other parties would have done instead. I guess that’s the benefit they have of being in opposition, they can just say the proposed solution is terrible. Lets hope Labour this time are more productive and work with the SNP to lend their support to something they’d agree to vote for.

    I do have issue with one thing: “ask those who have benefited from the great housing price increases over the past 20 years to pay a little more” – people don’t benefit from their house going up in value unless they’re selling it. If people are perhaps renting out a property they might make more money in rent but owner occupiers or renters won’t benefit at all, and really you’re asking people to pay doubly (first in the price or rent they paid) to reside in what could be seen as a “nice area”

    I do believe in a local income tax and I hope this could be extended to monies generated from shares and investments too – this would mean I personally would pay more, but I think it would be a lot more fair (and also drive the Tories mad)

    1. The point is, Mike, at that level you have a choice where you live, but is it fair that someone ina £160,000 home pays the same as someone in a £5 m home. these bands are stuck in the past, we need a bit more progression in Council Tax. It would also ease the burden on those in A and B band housing without a full revaluation. I agree that this is not the ultimate solution, I believe in a land value tax, but it is an easy and quick interim fix

      1. You and Mike have just illustrated one of the major problems of local govt funding Jim. Everyone has their own preferred solution with no consensus to speak of.

        Another is the problem of which ever one is plumped for being utterly savaged by the opposition and rabidly right wing media. Almost certain political suicide for the party that proposes it. Would Labour bite that bullet if they ever got back into power? I very much doubt it given past performance.

        And, by the way, the economy is reserved to Westminster. The Scottish govt can only tinker round the edges while hoping the UK govt doesn’t drive a coach and horses through any attempt to improve things. If the Scottish economy is in trouble, then look to Westminster not Holyrood. If you want that to change, then get it devolved or, better still, vote for independence.

  2. I agree with a lot of things in the budget . But for me Local Government Finance is vital this is only the first stage .
    There will be a lot of talking behind the scenes and I hope the Labour party plays a full part .
    On budget day on Scotland tonight after the Finance Secretary explained his budget .The Tories with their leader the Colonel apparently looking for a way out to Westminster put forward policies Maggie would have been proud of.
    The Labour Party Liberals and the Greens all said their starting point in negotiations would be more money for local government
    Indeed on Friday night the Greens asked for Local Government to be allocated an extra 150 million pounds.
    Local Government services involve everything from Schools to bin collections so it affects all of us.
    I want to see enough money allocated to cover not only pay . But also protect and improve our services .
    So I will wait until I see the final package

  3. A strange thing happened on my local community radio station today run by volunteers .
    They have a Sunday talkin which is really a phone in .
    All the callers including me did not mention the Scottish budget despite the fact it was a talking point suggested by the DJ
    We all went with x mas subjects . One caller Matt even plugged a Japanese band he is promoting in Scotland next year.
    In the New Year though it will be different we will know what the Scottish budget will be .
    And what the Final allocation of resources will be for local Councils
    Then on our Irvine Beat FM Sunday Talkin we will all be phoning in about it

  4. Imagine my surprize today when I read that income tax increases in the draft Scottish budget will only provide relief from public spending cuts for one year .
    The analysis has been carried out by the Institute For Public Policy Research
    They are saying the day to day spending budget is expected to fall by 250 million pounds between 2018 and 2019
    They also claim with commitments to increase NHS spending and protect Police budgets
    Non protected departments will see falls of 350 million pounds in 2019
    Which IPPR Scotland claims is a 2point 7 per cent cut in 1 year
    I totally agree with the decision to increase NHS spending and I want to see local government properly funded to protect our public Services not just pay.
    Unfortunately I have a lung condition which forced me to take an ill health retirement deal arranged by my employers and my union the GMB and Richard Leonard when at the union
    I have a cold on top of it .I have nothing but praise for the NHS .
    It means with a lung condition and a cold on top of it breathing is difficult the doctor has been monitoring me since last Monday .Including today
    Today after speaking to the doctor I picked up the repeat prescription he prescribed. And went next door to the chemist .It was packed to the door all seats taken .
    4 members of staff working flat out to get us our medication. And that was 2 30 pm . Monday afternoon
    My surgery is 2 doctors down they left 1 has taken a year out altogether to get a life . I know this she told me it was sitting in the surgery at 5pm finishing time and the surgery full of patients still to be seen , And not knowing when she would finish , I was one of those patients .The other doctor left same reason transferred to hospital work
    12 hr shifts but she knows when she will finish .
    With another doctor off sick this week they are struggling to cover
    From speaking to other people waiting in the chemist today .Its the same in other Surgeries and Chemists
    I am trying to say the gp system is not under strain its brocken.
    I want the budget to and I think it does start to set in motion action to remedy this .
    That’s my view not very well put but its what I believe

  5. Ok we now have our front bench team. I am really please Monica Lennon has won a place . Very impressive when
    guest speaker at our CLP meeting. Neil Findlay not a career politician I wanted him in somewhere Bags of ability and a working life before becoming an MSP no fool
    And before anyone says it he voted remain . Unlike Alec Neil etc .
    So we know the job . And the first task is to fight like mad for local Government funding and the NHS
    I believe this team will do that
    1 other thing all those meetings on brexit the Scottish Government have had with David Mundell when do the public like me get to see what was discussed

  6. A few things The Leader of North Ayrshire Council Labour Councillor Joe Cullinane has said last Thursdays draft budget .Leaves NAC with a 17million pound deficit . The biggest in the councils history. He has said local services are on life support 73million has been cut from the councils budget since 2010. We have now no room for further cuts he said we have no fat left to cut. Further cuts by NAC will be right to the bone. In Scotland everything from Libraries to Community Centres schools elderly care and Anti Poverty initiatives are all under threat
    Joe has also said early years expansion which Labour supports we were told would be fully funded . Yet the NAC capital budget is being cut to help fund it .This means some local projects will be delayed or Scrapped.
    NHS Ayrshire and Arran facing tens of millions in cuts next year. The pay policy is below inflation it does not include all public sector workers.
    The SNP leader on NAC has welcomed the draft budget with she says a slight increase in our proposed settlement. She has also said the NAC Labour group can raise another 1.863million to support local services by putting the Council Tax up 3 per cent.
    For me that’s a bit rich as the SNP spent years enforcing a Council Tax freeze
    Other news my local papers are now reporting and I am not blaiming the draft budget for this redundancies have been announced in Irvine
    Wilkos in our Rivergate Shopping centre has announced 4 local voluntary redundancies 19 UK wide .
    Even worse GSK has been made 1.5 million to the Scottish Government
    Because they have told the workforce 55 jobs are going 11 new positions created so 44 jobs will definitely go voluntary redundancy is not an option
    Cuts to local government funding Workers being laid off reminds me of the 80s under Maggie
    Also can I say online buying shopping and banking don’t do it .
    People are losing their jobs because you are doing it
    And finally to all bloggers editor and staff all who comment whatever party you are in or none merry x mass

  7. While waiting for relatives to visit .Nothing else on the Telly . I looked at BBC Parliament .It was a conversation with Nigel Lawson remember him I do Maggies chancellor after Geoffrey Howe .
    I only saw part of it bad enough .Falklands War Miners strike sticky moments. He said they had private notice from Joe Gormley and other trade union leaders that Arthur Scargill was a Marxist and they would help to stop him.
    Unemployment and that is what brought me into the Labour Party in 1983 when Michael Foot was leader who I felt was on my side .And was vilified by the press . I came in to fight against unemployment and we did.
    Nigel said Britain was not called the sick man of Europe for nothing . He said the public and private sector were to fat and heavily overstaffed .So measures had to be taken to remedy that .If tory MPS opposed this they were wets .If they supported it they were dry .
    He said unemployment became high and when he left office it was heading down in the right direction.
    He is talking about Millions being thrown onto the unemployed scrapheap .Nationalized industries being sold of or closed .The banks calling in loans and cutting of credit to private companies . It happened to the one I worked for .
    On the Thursday we were being asked to do over time that night and the weekend .
    Then we were told the company with a full order book was going out of business .
    I saw a grown man sitting on a floor crying how was he going to tell his wife and family .
    Me I walked along the bypass at 2am in tears my parents were relying on my wages for x mass
    I swore never again
    I hate the Tory party and I don’t want todays young people to go through that.
    As I watched Nigel today I told the Telly When you talk about Fat and overstaffed its people you are talking about you git.
    People like me you ruined our lives .The unemployment bill and sick note bill and the bill for the long term unemployed was enormous .Norman Tebbit with his get on your bike and look for work jibe .
    What did he think we were doing . I would have liked to have shuved his bike right up his rear end.
    The post man chapped the door one day and asked me because of the volume of letters I was sending out and receiving was I running a business because the post office had special rates for it .
    No I was looking for work .NORMAN YOU GIT.
    Today when I see people being laid off and people worrying about their benefits we are back in the 80s .
    And that tv programme I only saw part of it . Just as well because you can see how much it upset me
    As I spoke to my nephews both in well paid good jobs .And I see other young people at university and going into apprenticeships etc . I tell them you are going to change the world for the better and I believe that.
    Me I thought Neil Kinnock would win. But he did not .Every day after that I knew and believed within myself Labour would win the next election and we did.

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