Lesley Riddoch: Did SNP lose nerve in Budget?

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The SNP opted to bodyswerve making inroads into tax and that may be an error, writes Lesley Riddoch

Has the SNP made a political mistake by cutting council budgets, renewing the council tax freeze and opting not to raise income tax?

Obviously, opposition parties think so. They had a field day last week accusing John Swinney of producing a Tory budget, despite having no plans to do anything very different themselves – with the exception of the Greens. Normally the demonstration of such double standards during a choreographed-looking attack by Murdo Fraser, Jackie Baillie and Willie Rennie would be enough to persuade SNP voters – currently the majority of voters – the Scottish finance secretary must be right.

But not this time. Not entirely.

After Swinney’s statement, Cosla president David O’Neill described the cuts as “catastrophic” for jobs and services and “totally unacceptable” in their impact on children in care, the elderly and the vulnerable, all of whom rely heavily on council provision.

Within days, the veteran nationalist Jim Sillars joined in, predicting education will be damaged by these “agonising” cuts.

A letter to newspapers by the Scottish Association of Social Work went further saying: “Many social workers would rather pay more tax than see the increasing destitution and misery. Can we really ‘get it right for every child’ never mind families and other adults if we don’t equalise our society a bit more? That means higher taxes for some and more security for everyone.”

On Shereen Nanjiani’s weekend Radio Scotland phone-in, journalists Peter Ross and Jane Graham surprised their host with the strength of their feelings on the council cuts issue. Graham attacked the SNP’s “obsession” with the council tax freeze, described the cuts as “cowardly and morally wrong” and expressed her willingness to pay more so she could feel comfortable about standards of social care.

Ross questioned the received wisdom that raising income tax is politically impossible.

“It’s become an article of faith that raising tax is a vote loser – but is it?

“Treat us as adults. Paying more tax on higher incomes could be seen as a sign of status,that you are doing all right in life. Look at how much fuel in the tank the SNP has – they could do the right thing now and not suffer politically. [As it is] the SNP is simply managing decline.”

If they are wise, the Scottish Government will pay attention. Ironically, it’s the very questioning attitude the SNP encouraged amongst Scottish voters during the indyref that’s coming back to haunt them now. What’s sauce for the goose is sauce for the gander. Many folk aren’t buying Swinney’s explanation for failing to raise the new Scottish rate of income tax (SRIT) because they expect action from the SNP – not empty-sounding promises.

Savvy voters do realise the new Calman powers for tax-raising come with a major snag – they force Swinney to raise tax at the same rate for everyone. That’s partly why Calman will be replaced by the Scotland Bill, which will doubtless lie behind the curve of popular opinion when it becomes law.

But one calculation suggests the council cuts could have been cancelled out by a one pence rise in income tax, costing the lowest earners the equivalent of a second-class stamp every week. Not brilliant but maybe manageable because higher earners would contribute much more. The author of the Predictable Paradox blog points out such an “across the board tax increase” would only last until April 2017 when the Scotland Bill should allow the Scottish Government to set differential bands and rates of Income Tax.

So was Swinney’s package, council tax cuts, a council tax freeze and no use of the Scottish power to vary income tax, really the best under the circumstances?

It’s true that raising tax at the same rate for every tax-payer is not ideal, the council tax is regressive compared to income tax and does currently finance fat-cat salaries for executives in remote councils whose enormous size, by European standards, has been criticised by the councils’ own lobbying body Cosla. And yes the council tax works so poorly as a way to fund local government, its future is currently under review.

There’s also disagreement about the amount a Scottish penny on income tax might raise and uncertainty over the administrative cost. It’s possible the costs of collecting that extra penny might outweigh most of the cash advantage. But maybe not.

SNP supporters say the average Scot has saved £1200 thanks to the Scottish Government policy of freezing council tax. But that saving has been over a ten-year period. Does it really seem like a worthwhile saving given the parlous state of local caring services?

As the Predictable Paradox blog concludes, the present imperfect set of powers “doesn’t stop John Swinney being progressive now with the power he has; it simply means he can be more progressive later. The notion you should eschew progressive politics until you’re given the power to be perfectly progressive is frankly an abdication of governmental responsibility”.

Many former Labour and Lib Dem voters would agree. They switched to the SNP during the general election precisely because of the party’s unrelenting focus on social justice. I’d imagine they’re getting a bit uncomfortable about the wisdom of giving a blank cheque to the SNP with both votes (constituency and list) in May.

Yet, apart from the Greens, there is not a viable, mainstream political alternative for independence supporters – apart from RISE which will be too radical for some.

None of this dents Nicola Sturgeon’s authority or personal popularity.

No-one’s arguing with Diane Abbott’s bleak assessment of Labour’s chances at the polls in May 2014. There is still no other political issue that commands stronger allegiance than the constitution. But this isn’t the SNP’s only misjudgment. They have also disappointed over land reform and Police Scotland and taxpayer tolerance of expensive IT projects going belly-up is wearing thin.

None of this will lose the May election for the SNP but Swinney’s budget could yet be a turning point – one day there will be rivals with sufficiently strong support to mount a real challenge.