Testing time for Swinney’s new-found competence

John Swinney’s reputation as a capable politician, lost during his ill-starred period as SNP leader, has been pretty much restored in his time as finance minister. His steering of the council tax freeze against the opposition of council leaders won his party much of the support that gave Alex Salmond a second term as First Minister, with an unexpected majority. But Mr Swinney’s latest budget is seeing that reputation for competence unravelling remarkably swiftly.

The SNP had won considerable respect for economic competence. Mr Swinney sought to build on this in his budget by emphasising how hard the government was working to put more money into infrastructure building, a classic economic remedy for counter- acting the effects of a downturn. The decision to switch revenue spending on services into construction of roads and other infrastructure was brave, and deservedly won much commendation. But then came the revelation that the small print of the budget contained a tax increase on businesses which amounted to the Scottish Government taking £850 million from hard-pressed companies over the next three years.

SNP spin doctors protested this was triple counting and the bill for non-domestic rates would only have risen by £493m in the third year. This was rightly greeted with scorn as it amounts to a 23 per cent increase in the business local tax bill in three years, an increase which if imposed, say, on income tax, would probably have provoked riots.

Now the Scottish Chambers of Commerce has gone through this fine print with a toothcomb and it is unable to make it add up.

Of the £493m Mr Swinney says will be raised, the Chambers has found £18m in the abolition of empty property tax relief, £40m in the public health levy on large retailers selling alcohol and tobacco (the so-called Tesco tax), and perhaps another £300m which would come from the rates poundage on business property rising by 5 per cent a year, a hefty impost given inflation is running at about half that rate. This comes up some £135m short of the total Mr Swinney says, via his published budget documents, will be raised from non-domestic rates in 2014-15.

So where is this money coming from? And even if Mr Swinney can produce some accounting to fill the apparent gap, what is the justification for raising total local taxes on all but the smallest firms by more than 7 per cent every year for the next three years? Is this what Mr Salmond meant when he urged Westminster to follow the example of the Scottish Government, that businesses should be taxed more heavily?

Mr Swinney needs to explain pretty swiftly how the numbers add up, or risk becoming the SNP’s version of Gordon Brown, whose speeches sounded good on budget day but crumbled under close scrutiny.