Shock U-turns set to save SNP budget

Published on Thursday 29 January 2009 21:02

ALEX Salmond was last night on the verge of rescuing his government's battered Budget by making enough concessions to bring all the opposition parties on board.

Just a day after seeing it thrown out by the Scottish Parliament, the First Minister believed last night he could secure the unanimous backing of every MSP for the Budget just by making a series of simple changes.

After a day of back-room talks and U-turns by parties and politicians on all sides, Mr Salmond was offered three different ways of getting a deal through – one by the Liberal Democrats, one by Labour and one by the Greens. But The Scotsman understands that, instead of playing one off against the other, Mr Salmond will try to win the backing of all three parties by agreeing to each of their demands.

That way, he would achieve the unprecedented result of being in a minority government but securing the unanimous backing of all MSPs for his Budget.

That would be a major coup for the SNP, putting the Scottish Government in a very strong position in any future debates on finance policy or tackling the economic downturn.

Even if Mr Salmond does not secure the support of all the parties, he is now virtually certain of enough MSP votes to get the Budget passed.

The Lib Dems were the first to move yesterday in a day of political manoeuvring. They had been adamant that they would accept nothing less than a 2p cut in income tax in return for their support. That cut would cost 800 million in public sector funds, and it was rejected by the SNP.

But yesterday afternoon, it emerged that the Lib Dems had decided to drop this demand and instead offered the Scottish Government their support in return for moves to try to secure borrowing powers for the Scottish Parliament.

The Lib Dem U-turn drew derision from political opponents, the SNP initially accusing them of "pure gamesmanship" and the Tories claiming that they had sold out for the price of a "second-class stamp". Senior Lib Dem members were adamant that they had not abandoned their principles and were merely reacting to the changed circumstances of this week's defeated Budget.

But it was clear at Holyrood last night that the Lib Dems saw an opportunity – presented by the failed deal – to extract some late influence in the process, to achieve something tangible and to distance themselves from Labour. It was for these reasons that they dropped their commitment to an income tax cut.

Tavish Scott, the Lib Dem leader, spent an hour and a half locked in private discussions with Mr Salmond yesterday afternoon.

There was no official response from either politician afterwards, but The Scotsman understands Mr Salmond believes he can accede to Mr Scott's demand without too much trouble.

The next move came from the Scottish Labour leader, Iain Gray, who said he was willing to soften his stance on apprentices in return for his party's support of the Budget.

Previously, Labour had demanded 7,800 new apprentices every year for three years. Yesterday, Mr Gray said he would reduce that to 7,800 apprentices every year for two years.

Andy Kerr, Labour's finance spokesman, discussed the issue with John Swinney, the finance secretary, yesterday afternoon, and again nothing official was released from either politician about the meeting.

But The Scotsman understands that on this offer, too, Mr Salmond is willing to do a deal. It will cost between 45 million and 90 million to grant Labour's request but, with the goal of achieving unanimity on the Budget, ministers believe they can find the money.

"That is a reasonable interpretation of our position," said a government source, although nothing has been agreed yet.

The Scottish Green Party is still opposing the Budget. The Greens wanted 100 million for a nationwide home insulation scheme.

They were first offered 22 million by Mr Swinney and, after they refused to accept that, the offer was increased to 33 million – but without the guarantee the Greens wanted that the money would not come from existing fuel poverty budgets.

It is understood that the Greens want "clarity" from the Scottish Government about the funding of this project and, if they get that, they will back the Budget, too. A source said: "Clarity was what was lacking."

Ministers will work over the next few days to give the Greens the assurances they want and, with the Tories and the Independent MSP Margo MacDonald already on board, they are hopeful of getting full support in the chamber for a Budget that was defeated just two days ago.

There is also a strong chance that the Budget process will be streamlined even further, allowing ministers to get the bill approved next week – a remarkable turnaround for an administration that appeared to be on the ropes and close to calling an election 48 hours ago.

WHAT THE PARTIES WANTED

Labour

LABOUR was holding out for 23,400 new apprenticeships to be created in Scotland over the next three years to tackle the recession. The finance secretary offered 7,800 apprenticeships for next year, arguing he could not commit himself beyond the three-year cycle that ends in 2011. Yesterday, Labour dropped its demand to 15,600 over two years in the knowledge that the SNP would bring forward the other 7,800 in 2011-12.

Conservatives

THE Conservatives won their gains in the Budget and voted for it.

They kept the reductions in business rates and extra police, and got 60 million for a town centre regeneration fund and guaranteed outdoor education for schoolchildren.

There is a rumour that one of the problems Mr Swinney had in trying to find extra money for the Greens was that Tory demands on the Tuesday before the Budget forced him to bump up the regeneration fund sum.

Lib Dems

THE Liberal Democrats made a dramatic U-turn by dropping their demand for a 2p income tax cut that saw them vote against the Budget on Wednesday.

They claim they will put forward a package to stimulate the economy. It is under wraps for now, but the main item would cost the SNP some pride by making it acknowledge the Calman Commission and send it a submission on borrowing powers.

Greens

THE Greens had wanted a 1 billion free insulation programme spread over ten years at around 100 million a year. They were offered 22 million in the first year with an extra 11 million from social partners.

The Greens voted against because they want the full 33 million to be guaranteed.

They claim this is the minimum for them to back a budget with "anti-environmental" measures such as extending the M74.

Independent

INDEPENDENT MSP Margo MacDonald voted for the Budget and got most of what she wanted in terms of extra capital city funding for Edinburgh.

She also won limited support for more affordable housing in Edinburgh and Glasgow. John Swinney indicated he would talk to the councils about setting up pilot schemes to create and release more affordable housing. Ms MacDonald had warned of a "social tragedy" if nothing was done on housing.

• Robert McNeil's Sketch: Eck goes ape as Iain fires him up and Annabel fears parliament might become a laughing stock

• Analysis: Big question is: Why did the Lib Dems change their tune?

• Get all the latest Holyrood news and gossip from our politics blog: The Steamie

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