BLOG: Mind the gap

BLOG: Mind the gap

BLOG: Mind the gap

I would like to take this opportunity to wish everyone across Stirling and the surrounding area a very happy new year and hope that all readers had a peaceful festive period.

This week we return to Holyrood where the top item on the agenda is the SNP’s draft budget for 2019-2020. However before discussing the decisions made by the Scottish Finance Secretary before the Christmas period, we must remember the decisions made by Chancellor Phillip Hammond in October’s UK Budget.

In that Budget Mr Hammond decided that, after a decade of fiscal restraint following the financial crisis and Labour’s disastrous handling of the nation’s finances, now was the time to inject funding into the economy and wider public services. He was able to do that due to the proud economic record of the UK Conservative Government which has led to record low unemployment and strong economic growth in challenging times.

The Chancellor therefore decided to increase spending and delivered almost £1 billion in extra spending to this SNP Government to spend on its priorities.

Derek Mackay therefore had a huge opportunity to go for growth and invest in economic development, introduce measures to rejuvenate Scotland’s high-streets and lower the increasing tax burden on families and businesses across the country. The great pity is that this chance was wasted by an SNP Government who have again decided to hit hard-working families in the pocket- rather than growing the economy.

The Finance Secretary decided to freeze the higher rate of tax which creates a significant tax differential between Scotland and the rest of the United Kingdom.

This means that those earning between £43,430 and £50,000 will pay a marginal rate of tax at 53%. Among the professions trapped will be Police Sergeants who will pay £700 more, senior nurses who will pay £1350 more and principal teachers who will now pay £1500 more than their equivalents in the rest of the UK.

These decisions will have a very real impact on people across Mid-Scotland and Fife and in the real world will mean that a family of four with one earner bringing home £50,000 will now have £1,544 less to spend a year than somebody living elsewhere in the United Kingdom.

The real damage that these policies will do to Scotland’s economy is that the increasing tax gap may will lead to families and businesses deciding to leave Scotland or set up elsewhere in the UK. Not increasing the tax gap was the main ask of virtually all of Scotland’s business organisations.

Businesses in Edinburgh, Glasgow, Aberdeen and here in Stirling are hoping to attract talent from places such as Birmingham, Bristol, Leeds and London. We need to attract young talent to live and work in Scotland if we are to compete and a gap of £1,500 is not going to do that.

Furthermore, figures from the Scottish Fiscal Commission released alongside the budget show that they have revised down their estimates for tax revenues from £12.5 billion to £11.6 billion. A billion pounds which could have gone on public services. This is the cost of failing to grow the economy and the well paid jobs that boost government funds.

The Scottish budget also revealed that once it again it will be local councils who will bear the brunt for the failures of this SNP Government.

Figures published by the independent Scottish Parliament Information Centre show that, excluding ring-fenced funding, Stirling Council face a real terms 3 per cent reduction in its block grant from Holyrood.

This take autonomy away from the local authority and may force the SNP leader of Stirling Council to lobby for yet more punishing tax increases.

As a result of this damaging decision, local services across Stirling are going to suffer badly.

All this at a time when the Scottish Government’s budget is increasing, this funding settlement will show whether this SNP council leader is capable of standing up for Stirling or will he just sit back and take orders from Nicola Sturgeon?

I expect the latter.

This article was orginally published in the Stirling Observer on Wednesday 9th and Friday 11th January 2019.