Scottish Budget: Blundering SNP's attempts to fill in £1.5 billion funding gap may end up making things worse – Scotsman comment

Finance Secretary Shona Robison is expected to announce a package of tax increases and spending cuts on Tuesday

Judging by the Scottish Government’s mood music and expert economic analysis, Tuesday’s Scottish Budget is shaping up to be a nightmare before Christmas, as SNP ministers finally face up to a £1.5 billion funding black hole.

Left-wing governments are often criticised for a “tax and spend” approach that those on the right believe hampers economic growth. However, such is the state of the government’s finances, that Cabinet Secretary Shona Robison is apparently considering a “tax and cuts” approach, the worst of both worlds.

The idea of a new 44p tax rate for those earning between £75,000 and £125,140 has been heavily trailed, while NatureScot, the public body responsible for natural heritage, has been warned to expect a 15 per cent funding cut. This seems likely to be just a snippet of the bad news.

Humza Yousaf’s unexpected announcement of a council tax freeze – “fully funded” by the Scottish Government at a cost of hundreds of millions of pounds – during the SNP conference now looks even more foolish. For the price of a feel-good headline, the First Minister made his budget problem significantly bigger. Councils fear that “fully funded” could prove to be a slippery term that leaves them short-changed. And with one in four Scottish local authorities at risk of effective bankruptcy and every single one planning cuts to services, according to a recent report, they don't have much room for manoeuvre.

While the Scottish Government’s current financial difficulties aren’t entirely down to its own mistakes – the UK economy is somewhat sickly – it’s fairly clear that expensive SNP mistakes have contributed to its woes. With their track record, the concern is that their supposed solution to the problem could end up making things worse.

For example, according to the Fraser of Allander Institute, that new 44p tax rate might end up raising just £41 million. If it also encourages wealthier people to leave Scotland in a so-called “brain drain”, or not to come here, then the overall cost to the national economy could ultimately be significantly more.

There is a price to pay for bad government. On Tuesday, we may discover just how high.