Unlike the UK Chancellor at the CSR who had a new electoral mandate to deliver upon, Finance Secretary, John Swinney, is at the end of parliamentary cycle and has a ship to sail steadily through to the Holyrood election. The SNP hold a formidable lead in the polls and are destined for a third successive term – why take any risks now? Mr Swinney stayed true to form, but there were hints and teasers of reform to come and how he might use the new powers at his disposal.
The headline measure – newly delivered under the Scotland Act 2012 – was the Scottish Rate of Income Tax (SRIT) which allows the Finance Secretary to set a uniform increase or decrease in income tax, applied equally to all three income tax bands. Mr Swinney said: there will be no change, but teased the gallery. He would set out “longer term intentions” in March in line with the more substantial income tax powers to come under the Scotland Bill 2015. Scottish Conservative, Murdo Fraser, summed up John Swinney’s decision to leave income tax alone, adding that he is now not confined by UK spending decisions – “he has been given the key to the door of his cell; he has chosen not to use it.”
A rabbit pulled from the hat (a rare trick for the Finance Secretary) was the decision to consult with local government on assigning “a proportion of income tax receipts” to them, thereby incentivising local economic growth. Usually it’s the stick, but this time it was the carrot for local authorities. It’s ‘wait and see’ to find out how this shapes up.
Whilst recognising the work of the Commission on Local Taxation, he pushed any decision into the “new year” on reforming Council tax, but pledged another freeze for the ninth consecutive year. Coupled with the freeze, limiting Councils’ power to boost revenue, the most substantial cut in the budget came in the form of a £320m reduction in local government spending. COSLA president, Councillor David O’Neill, blasted the decision, describing it as “totally unacceptable”, stating that the decision “cannot be laid at Westminster’s door” and was a budget written by someone “who clearly does not understand the reality on the ground”.
Sticking to the usual script, the Finance Secretary stated his budget would tackle inequality and boost productivity for inclusive growth. But there was a new overt tone. Mr Swinney would be investing in public services to reform, to deliver the services everyone depended upon. He said a 6.5% increase in NHS spending would partially be used for transforming primary care, creating new models of care and building additional elective capacity. This is the start of turning a tanker worth £13bn of annual investment, but the increase also helps shelve criticism that increases on NHS Scotland spending is relatively low compared to England.
This Scottish Budget was unprecedented in its opportunity to control revenue-raising powers, Mr Swinney opted for a cautious and austere approach reverting to the traditional formula which is, in-essence, a spending plan. The Finance Secretary has further teased the Scottish public with the potential for a bolder redistributive income tax policy, radical council tax reform and public service transformation, but like many SNP budgets built on the safety of the centre-ground, we will have to wait to find out how difficult decisions will be made and where the SNP’s priorities really lie.