Bill Jamieson: Kezia Dugale has taxing time with Osborne

If George Osborne rings Kezia Dugdale the response might not be the one he hopes to hear. Picture: Hemedia

Politics can make for strange bedfellows. Chancellor George Osborne, campaigning for the UK to remain in the EU, is reaching out to potential allies beyond the Conservatives heartlands (allies here being thin on the ground).

In this strangest of times, he has put in a call to Scottish Labour leader Kezia Dugdale. The Scotsman has obtained the transcript of a phone conversation this week between the chancellor (GO) and Ms Dugdale (KD).

GO: Hallo, is that Kezia?

Automated response: This is the Office of Kezia Dugdale, standing for a progressive, fairer Scotland. For Carer’s Allowance, press 1. For Disability Living Allowance, press 2. For Personal Independence Payment and Attendance Allowance, press 3. For maternity grants and funeral payments, press 4. To speak to Kezia Dugdale, please hold …

KD: Hallo, Kezia here. Who’s calling please?

GO: It’s George.

KD: George who?

GO: George Osborne –

KD: Aye, right. And that’s Cameron with the heavy breathing.

GO: It’s George. The chancellor.

KD: Didn’t you hear? I said press 4 for funeral arrangements –

GO: Kezia, this is a purely friendly, off-the-record call.

KD: Friendly? You’ve got no friends, not even Tory ones.

GO: Kezia, I see you’re planning to raise taxes in Scotland. I can be your best friend here. I’ve got some figures here that will be helpful to you –

KD: Friendly? Helpful? From you? It must be a crossed line. It’s Nicola Sturgeon, your new best friend you’ll be wanting…

GO: No, it’s you Kezia, only you. Believe me, if you could just say a few words about how we should vote to stay in the EU, I can throw you a lifeline...

KD: A lifeline? From you? Like a bicycle bell on a submarine?

GO: Kezia, you’re in real danger. This plan of yours to raise income tax in Scotland by a penny will backfire. It won’t raise you £500 million. Nor will a 50p top rate of tax for those earning more than £150,000 bring in more money. It will bring you misery.

KD: Are you on substances?

GO: Kezia, just look at the figures. I know you want to use the new devolved powers to bring back the days of tax-and-spend. But believe me, this will really send you backwards. There’s a different way. It could bring you extra millions!

KD: And how’s that exactly?

GO: Cut taxes! That’s all you have to do, Kezia – cut taxes!

KD: Excuse me. You’re speaking to the Scottish Labour Party.

GO: Kezia, look at the figures. Remember when we cut the top rate of tax from 50p to 45p and Labour said the move would cost £2 billion a year? Well guess what? The tax take from those earning over £150,000 didn’t go down – it went up – by £8 billion!

KD: You’ve been breathing in your hair spray again.

GO: These are HMRC figures, Kezia, not mine. And even they predicted that the tax revenue here would fall. Now they’ve been proved wrong.

KD: No way I’m going to fall for this! It’s fantasy figures, Tory Loony Tunes. Bring in a tax bonanza for the rich? Who do you think we are?

GO: Kezia, you want more money for all those welfare benefits – Disability Allowance, Carer’s Allowance, Attendance Allowance? You’d win back thousands of lost Labour voters – all those client dependants – and have the SNP’s Alex Neil stotting with envy! All the SNP can offer is higher council tax on top band homes.

KD: If you think for a minute I’m going to be cutting cut taxes here, dream on. We’ve got proud traditions to maintain and a fine record in municipal services. Labour knows best how to spend folks’ money. And as for your fancy figures, it’s coincidence you’re talking about here, not consequence.

GO: It’s no coincidence, believe me. People don’t like paying more tax, and they’ll look for ways around it. But if you cut taxes you boost incentives and discourage tax dodging. That’s why revenues went up.

KD: You’ll be telling me next the economy grew faster!

GO: You said it! There’s the broader damage that tax rises cause. The academic literature is consistent. The vast majority of researchers have found that tax rises have a negative effect on economic growth. The negative impacts range from small effects on GDP growth to more significant downturns in investment levels, output per worker and growth rates – up to two per cent annually. Believe me, Kezia, the problems you’ll have when you raise taxes and then discover they bring in less than you think! And it would be no coincidence!

KD: Blither blather blether! I’m talking income inequalities here, Tory boy. You won’t understand those. Folk here will be happy to pay another penny in tax for better public services.

GO: Funny, that. Didn’t I hear Alex Salmond say the same thing once?

KD: Take a hint. Next time you’re on the hairspray, stand back and don’t breathe in. Maybe Salmond did, but that was before all your austerity cuts.

GO: Tell you what, Kezia. I might just go for a penny cut in income tax in my budget in three weeks. It will be a wonderful fillip for entrepreneurs, help household budgets and boost the economy. You can go for the penny increase. Let’s see who wins. And I can’t see any sign of a Labour revival. You’re trailing way behind the SNP. In fact, the Scottish Conservatives could knock you into third place! Ruth Davidson’s on a roll!

KD: Aye, jam roll more like.

GO: We’re offering happiness economics. You’re offering misery.

KD: It’s a con! You call it happiness? It’s austerity by another name. And no, I won’t be helping you out on the referendum. I’ll leave that to your new pals in the SNP.

GO: Not even a teeny weeny, itsy-bitsy soundbite on how the EU is good for Scotland, then? Come on, Kezia, P-l-l-l- e-e-e-s-e-

KD: This has to be a crossed line. You’re sounding desperate, chancellor, goodbye! (Pause: automated response: ‘You’re through to the office of Kezia Dugdale, campaigning for a fairer, progressive sustainable Scotland with higher welfare and lower inequalities. For a penny on income tax, press 1, for a 50p top rate of income tax press 2, for higher council tax, press 3…’