Tom Peterkin: Red line issues and grey areas

Miliband and Sturgeon can agree on demonising austerity from George Osborne but not on the future of Trident. Picture: Royal Navy
Miliband and Sturgeon can agree on demonising austerity from George Osborne but not on the future of Trident. Picture: Royal Navy
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Nicola Sturgeon has named her price for supporting Ed Miliband in government, but is it too steep for the SNP and Labour to find common ground, asks Tom Peterkin

WITH Nicola Sturgeon’s SNP storming ahead in the opinion polls and Labour heading for disaster in Scotland, the gulf between the two parties has never been wider in terms of public support.

‘SNP could combine with Labour MPs to get Miliband to change his stance on Trident’

The SNP’s potential demolition of Labour north of the Border brings with it something of a political paradox.

As the divide between the two parties grows, the greater the speculation about how (and indeed whether) they can come together in the increasingly likely event that the SNP will end up as the third largest party in the UK parliament – thus holding the balance of power in a hung parliament.

Both the SNP and the Conservatives have ruled out working with each other, leaving an SNP-Labour arrangement the most likely outcome of the coalition talks that it is assumed will take place after the 7 May general election.

Sturgeon and her predecessor, Alex Salmond, have been far from shy about promoting the idea that an SNP tail can wag a Labour dog. At the most recent SNP conference, Sturgeon said the SNP would give a Labour government “backbone and guts” as she spelled out the demands her party would make of an administration led by Ed Miliband.

The idea that the SNP could keep David Cameron out of Downing Street while exerting a profound influence on a Labour government is an appealing notion for the nationalists, and many voters.

It gives the SNP an unprecedented relevance in a general election, given that previous UK contests have tended to be regarded by Scottish voters as a straight fight between Labour and the Conservatives.

Miliband, meanwhile, may have said no to a formal coalition with the SNP, but his reluctance to rule out any deal per se has allowed the SNP to talk up their chances of propping up his party at Westminster while remaining its sworn enemy in Scotland.

However, last week’s series of televised debates spawned some interesting developments that raise questions about the SNP’s ability to extract concessions from Labour in post-election wheeling and dealing.

Sturgeon’s three key demands, which the SNP is treating as “red line issues”, are scrapping the renewal of the Trident missile system, ending austerity, and the nationalists’ vision for more Holyrood powers – full fiscal autonomy.

Less than four weeks out from the election, it is worth examining just how “Nicola’s red line issues” are likely to play as the UK goes to the polls.

Trident

In last week’s BBC televised debate from Aberdeen, Sturgeon was quizzed on her commitment to scrapping the nuclear weapons system on the Clyde.

“Let me put it very simply,” the First Minister said. “It is often asked of me: Is Trident a red line? Well, here’s my answer. You better believe Trident is a red line.”

Sturgeon sounded emphatic, but the day after the debate Labour was claiming Sturgeon had backed herself into a corner on this key issue, which is second only to Scottish independence when it comes to touchstone issues for the SNP.

Labour’s claim was based on post-debate broadcast interviews in which the SNP leader said she would not enter a “confidence and supply” deal with the Labour Party while it continued to back a policy of renewing the current Trident fleet by replacing it with four new nuclear missile submarines.

With Labour ruling out a formal coalition, the idea of the two parties working on a “confidence and supply” basis was gaining currency until last week. Such a deal would have seen the SNP agree to back Labour on budget and confidence votes. In return, the Nationalists would get policy concessions from Labour.

With Miliband standing firm on his commitment to renewal, Labour MPs were jubilant following Sturgeon’s remarks and claimed that any sort of formal deal with the SNP was effectively dead.

For weeks, Labour MPs have been privately urging Miliband to rule out working with the SNP. Last week they were delighted that the SNP had taken a significant step towards doing what their leader was reluctant to do.

Yesterday, Labour strategists were of the view that the SNP were now in “a difficult place” on the issue, because its rejection of “confidence and supply” has opened the door to the SNP voting down a Miliband Government – a move with the potential to bring the Conservatives back to power.

As Labour is keen to emphasise, such an outcome has difficult historical connotations for the SNP.

The thought of a large SNP vote triggering a Conservative government would lead to comparisons with 1979 when 11 SNP MSPs voted with the Tories in a hung parliament to bring down Jim Callaghan’s Labour government.

Their actions brought Margaret Thatcher into Downing Street and ushered in 18 years of Conservative rule.

Unsurprisingly, the SNP sees things somewhat differently. According to its strategists, ruling out a “confidence and supply” deal does not preclude Nationalist MPs propping up a minority Labour administration on an issue-by-issue basis.

The SNP takes the view that a minority Labour Government is most unlikely to include a commitment to Trident renewal in its Queen’s speech.

Sturgeon’s party’s thinking is that ordering new Trident weapons does not require legislation. Therefore it does not need to be mentioned in the Queen’s Speech, which, after all, is the government’s legislative programme.

The SNP believes that the presence of Labour backbenchers who themselves are anti-Trident, offers another reason for Miliband to keep the issue out of the Queen’s Speech.

Indeed, SNP strategists believe it could combine with Labour MPs to get Miliband to change his stance on Trident, notwithstanding that Tory support for the weapons system would ensure that a vote on renewal would pass.

When asked if the SNP would vote against a Queen’s Speech containing Trident proposals, Sturgeon said she “would not get ahead of the election process”, adding: “I am making it very clear that the SNP will not vote for the renewal of Trident.”

Should Labour fail to secure enough support to get a Queen’s Speech through parliament, a confidence motion would be triggered.

If lost, under the Fixed Term Act, parties would be given a fortnight to put another government in place. Should that fail, a snap election would be triggered potentially bringing back Tory rule – a nightmare scenario for Labour and a PR disaster for the SNP.

End Austerity

In Aberdeen during Wednesday night’s BBC televised debate, all the six party leaders were asked the same thing by a member of the audience.

The question was: “What policy is beyond comprise?”

Sturgeon’s answer was telling. Before mentioning Trident, she said: “We will not vote for future spending cuts in the next parliament, because they are harming the most vulnerable in our society.”

Her response was consistent with SNP’s calls for an end to Conservative-led austerity. It also confirmed that the SNP’s anti-austerity agenda is one of “Nicola’s red-line issues”.

But with the UK faced with a multi-billion pound deficit and enormous economic challenges, just how realistic is it for any political party to commit to voting against any cuts?

According to the SNP, there should be a modest increase in spending across the UK to stimulate growth. In fact, a study by the Institute for Fiscal Studies (IFS) has suggested that the SNP’s UK spending plans do not differ enormously from Labour’s.

Sturgeon was accused of wanting to “bankrupt Britain” when she originally said £180 billion would be required to meet her proposal for a 0.5 per cent increase in departmental spending.

Her 0.5 per cent increase was then portrayed in a different light by the IFS research, which was carried out after George Osborne’s budget last month.

New figures in the budget saw the IFS suggest that if Labour agreed to the SNP’s proposal then Miliband could still meet its aim to balance the UK’s books by 2020.

The IFS analysis, based on the budget, said Labour could increase spending by £9 billion a year between 2015/16 and 2019/20 and achieve a balanced budget by the last year of the next parliament.

That’s all very well, says a dismissive Labour Party, which believes that there is a third big “Nicola red line issue” that wrecks any credibility that the SNP has when it comes to ending austerity. According to Labour, the credibility wrecking issue is the SNP’s latest plans for the constitution – full fiscal autonomy. 

Full Fiscal Autonomy

After last year’s No vote and the pro-Union promise of more powers through the Smith Commission, the SNP had a constitutional re-think. With the rejection of independence by the electorate, Salmond proposed that the SNP went into the election campaigning for full fiscal autonomy (FFA) – a settlement short of independence, but which would see all tax and spend powers devolved to Holyrood.

Such a settlement would see Scotland make a contribution to the Treasury to pay for Foreign Affairs and Defence, which would still be reserved to Westminster.

While the pursuit of FFA is consistent with the SNP’s drive for Scottish self-determination, Sturgeon’s eagerness to choose this particular route has been identified as a weakness by Labour.

FFA would see the end of the Barnett Formula, the funding mechanism, which determines the size of Scotland’s block grant and currently results in £1,200 more per head being spent north of the Border each year. Pursuit of FFA would also dramatically increase Scotland’s reliance on North Sea oil revenues at a time when the oil price has plummeted and doubts hang over the future of the industry.

Using the Office for Budget Responsibility’s oil revenue predictions, the IFS has calculated that Scotland would be left with an enormous £7.6 billion black hole next year under FFA.

As Labour is only too keen to point out, ending the current arrangement of pooling and sharing resources across the UK would lead to either massive tax rises or enormous spending cuts to plug the black hole. The other option would be increased borrowing.

That is why Labour has renamed full fiscal autonomy as “full fiscal austerity”. It also explains why Miliband came to Scotland last week to argue that the state pension would be hit by the SNP’s plans for the constitution.

The BBC debate last week provided more ammunition for Labour when Sturgeon said that SNP MPs would push for FFA next year.

The Scottish Labour leader, Jim Murphy, reacted by saying that he would not vote for the move, deploying Labour’s argument that FFA would cut Scotland off from money raised by UK-wide taxes such as the mansion tax.

Sturgeon’s commitment to pressing for FFA as soon as possible contrasted with previous signals, which appeared to indicate the nationalists would be prepared to wait for a “period of years” before the powers were transferred.

In the aftermath of Wednesday night’s debate SNP strategists were keen to emphasise that the glacial nature of previous UK constitutional change, such as implementation of the Calman proposals, meant that it would take years for FFA to come to fruition regardless of Sturgeon’s desire to press for it at the first available opportunity.

Privately, they also say it seems pointless for Labour to be “scaremongering” about the impact of the FFA when Murphy, Miliband and Co have said they see it as their duty to protect Scotland from it. Therefore nationalists can have their cake and eat it by voting for a large cadre of SNP MPs to prop up a Labour administration that is committed to retaining Barnett.

Miliband’s party, on the other hand, will argue that Labour is the only party that can stand up against Conservative-led initiatives to cut Barnett.

With Labour making its attacks on the SNP’s constitutional position an absolutely fundamental part of their election strategy, there are those who believe expecting voters to latch on to the complexities of full fiscal autonomy is a big ask.

In a similar way that there isn’t much funny about a joke that needs to be explained, there are those who think there is limited political capital to be made by pointing out the flaws of a relatively obscure economic term, which also requires elucidation. Labour, however, has been testing its strategy on focus groups.

Apparently, Labour’s research suggests the message can hit home, with one focus group participant suggesting FFA was “cutting off your nose to spite your face”.

The bad news for Labour is that its attacks on FFA have so far made absolutely no impression on the opinion polls.

The SNP remains way out in front and it looks as if it is inevitable that the nationalists are going to have an enormous bearing on the complexion of the next UK government.