Joyce McMillan: Scotland’s choice – endless austerity or higher taxes

Capita, another outsourcing firm in difficulty, is further evidence of the pressure public services are under. (Picture: PA)
Capita, another outsourcing firm in difficulty, is further evidence of the pressure public services are under. (Picture: PA)
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Scotland faces a choice between a happier, Scandinavian-style society or never-ending austerity, writes Joyce McMillan.

Here’s a proposition, fit for discussion at some old-style university debating society: British public spending, as a percentage of GDP, has been too low, is too low and ought to be increased. The evidence is everywhere, from former minister Tessa Jowell’s heartrending speech in the House of Lords last week about the under-funding of brain cancer care and research, to the recent collapse of outsourcing company Carillion, a victim of over-optimistic low bids to deliver essential services from a declining pot of public money.

This week Capita, another of the UK’s handful of big “parasite” companies mainly dependent on government contracts, reported some similar difficulties. And then there is the NHS. This week, a new report showed that the UK’s cancer survival rates are once again beginning to lag well behind European averages, as our spending on health care - which peaked at 8.8 per cent of GDP just before the 2008 crash – slips back to just over 7 per cent, a long way short of the EU average of 10 per cent.

The truth is that the UK has been on a dismal diet of austerity for a decade now, ever since the 2008 crash; for most of us, wages have flatlined in real terms, some public services and benefits have deteriorated, and although employment is at record high levels, millions are now trapped in ‘junk jobs” – low pay, no guaranteed hours, no security, no prospects, poor working conditions – that offer them no future.

Yet even though public spending in the UK peaked at a good European average figure of 45 per cent of GDP just after the crash – when public money was miraculously found for the giant banking bailout – it is now once again back down near the 40 per cent mark.

READ MORE: Councils get £160m as Scottish Government strikes Budget deal

Conservatives, of course, think this is a good thing; in their book – as in Donald Trump’s – cutting tax and spending is always good. There is, though, voluminous evidence that they are wrong. Well-targeted infrastructure spending helps economies to grow, as even Trump himself acknowledges. Spending on education is essential for the creation of the high-value jobs of the future. And wage increases for low-paid workers, including those in the public sector who have been subjected to a brutal pay freeze for almost a decade, represent one of the fastest and most direct ways of boosting local economies, particularly in the areas that need it most.

So why don’t sensible UK governments of all stripes – at Westminster, or elsewhere – just get on and do this, healing our stressed-out public services, brightening up our communities, and restoring to workers the security, respect and job satisfaction they need? In a nutshell, it’s because if they try, they risk being subjected to the kind of howl of rage that enveloped the Scottish Government this week, after they successfully negotiated a budget deal with the Green Party that will slightly increase the standard and higher rates of income tax in Scotland, while setting the threshold for the higher rate slightly lower than in the rest of the UK.

To be precise about the proposal, what it means is that people earning around £43,000 a year, who are already better off than seven out of 10 British workers, will have to pay an extra £6 or £7 a week beyond what they would pay elsewhere in the UK – the price of a couple of coffees at Starbucks, or a single large glass of wine. The idea that people bringing in more than £800 a week in gross earnings will even the notice the difference is far-fetched; and for that tiny sum, they receive all the free universal benefits the Scottish Government is so often criticised for providing, including free university education for their children.

Yet just look at the absurd language used about this minimal change by Scotland’s main party of opposition and some sections of the media. Responding to the news of the SNP-Greens budget deal, Tory spokesman Murdo Fraser said that the Scottish Government was putting a “tax on aspiration”, effectively saying “don’t bother trying to get a pay rise, or get a better paid job, because we’re coming for your pay packet”.

It’s a thought that reflects nothing so much as the vulgar – and completely inaccurate – right-wing notion that people are motivated by nothing but money, when in fact survey after survey shows that ambition and performance at work are more strongly influenced by many other factors.

READ MORE: Poll: Most Scots back SNP’s tax rise plan

Even if it were true, though, that people seek better jobs only for cash, the sums involved here are so small – little more than 1 per cent of total income, even for the wealthiest – that it is hard to imagine what kind of mindset would be seriously affected by them, in terms of deciding where to live or work. Yet the Conservatives, steeped in four decades of taxation-bad ideology, carry on as if the nation were about to be plunged into a nightmare of high-tax, low-enterprise misery.

Those who embrace the low-tax ideology are worried, of course, that it may finally be losing its grip; that people can see with their own eyes that public services like the much-loved NHS now simply need more money, which will have to come from tax, and are perhaps becoming more aware that other countries which pay more tax often have a higher quality of life.

And in the end, it’s because of that panicky attempt to defend an increasingly discredited neoliberal consensus that the Scottish Government, trying to use its new tax powers to inch its way back towards the social-democratic settlement the people say they want, has to weather this synthetic storm of petulance and outrage, on behalf of people who might – oh horrors – occasionally have to forego the odd glass or two of wine. It reflects an ideological position that has always been driven by the self-interest of those who are both wealthy, and financially obsessive. The question, though, is why anyone in the remaining 90 per cent of the population has ever given that ideology the time of day; and that remains one of the sad mysteries of the last 40 years, only to be fully understood when this strange age of dogmatic neoliberalism has finally passed into history.