Inequality and a reality check for the SNP

On one level this was fair enough, proof, as Alex Salmond once said, that the Scottish Government doesn't enjoy a "monopoly of wisdom", while constituting a welcome break from the centralist, top-down approach of recent years.

It also demonstrated that as First Minister, Nicola Sturgeon is open to new thinking when it comes to promoting social justice, as demonstrated by her recent exploration of different approaches to reducing educational inequality in both London and Brooklyn.

On another, however, it was staggeringly unambitious. Not only can Scotland's communities only do so much when it comes to tackling "the scourge of intergenerational poverty", but it's not as if potential solutions do not exist: the problem is more a lack of political will.

In the past week alone figures have shown that wealthy Scottish children are more than twice as likely to leave school with qualifications than the poorest, while if they make it to university they'll end up with the highest levels of debt in the UK. In that context removing the charitable status of independent schools, as suggested by Scottish Labour leadership hopeful Kezia Dugdale, wouldn't achieve very much.

Of course the problem of inequality (or reluctance to reduce it) isn't specific to Scotland. Last week the economist Sir Tony Atkinson visited Edinburg University to talk about his recent book, "Inequality: What Can Be Done?", a tome he said arose from his "frustration" at the gap between political rhetoric and reality.

He quoted President Obama and Christine Lagarde acknowledging that widening inequality was one of the most urgent problems facing the modern world, yet they had not gone on to say "what they intended to do about it". But like the Mikado, Atkinson had a little list.

To illustrate the extent of the problem Sir Tony pointed out that returning the UK to 1975 levels of equality would mean increasing each rate of income tax by 20 points, and although he didn't propose that, he did suggest increasing the upper rate to 65 per cent, while replacing Council Tax with something more progressive based on revised property valuations.

Atkinson seemed content the Scottish Government had local taxation, as he put it, "under control", by which he meant the Commission on Local Tax Reform which stops gathering evidence today. There were also other aspects of his list that are already supported by the SNP, i.e. a Living Wage and the creation of a sovereign wealth fund.

At the David Hume Institute last week, David Bell and David Eiser concluded that the Scottish Government already has "or will soon gain - significant fiscal policy levers with which to address inequality", not least when it comes to taxes on land and income.

But here is where the gap between rhetoric and reality becomes more obvious. "Tackling inequality", said Alex Neil on Friday, should go "hand in hand" with "building a prosperous and competitive economy", and in general terms he was correct, for in the view of many leading economists high levels of inequality act as a drag on economic growth. But the trouble is that the SNP seems much more concerned with competition.

Take John Swinney's recent submission to the UK Government, which repeated his demand for "priority" devolution over employment policy, the minimum wage, welfare, business taxes, national insurance and equality policy. In a short document packed full of the usual jargon, the Finance Secretary spoke of altering "tax allowances", "corporate tax reliefs" and "targeted tax incentives" in order to "boost entrepreneurship".

In other words, Eckonomics is alive and well, the Salmond-era belief that the key to economic growth lies in tweaking business rates. Nowhere did Mr Swinney address the likely shortfall in revenues, nor how a proposed increase in the minimum wage to £8.70 an hour by 2020 would be funded. In essence, Nicola Sturgeon's administration remains committed to the same voodoo economics of high spend and low tax.

You wouldn't think it judging by the rhetoric. Addressing the SNP Trade Union Group (which, remarkably, now has more members than the Scottish Labour Party) at the weekend, the First Minister spoke of the need for a "new, progressive approach" to tackling inequality and closing "the gap between rich and poor". She also referred to making "common cause" with business, but omitted to mention anything in the Swinney submission.

Ms Sturgeon also made common cause with the recent STUC march against what she called "harsh, deeply unfair Tory cuts...causing real pain for many in Scotland and across the UK". That is undeniable, indeed just yesterday the Chancellor and the Work and Pensions Secretary restated their intention to slice another £12 billion from the UK's welfare budget.

That they have a manifesto commitment to honour will be of little comfort to those effected, although Messrs Osborne and Duncan Smith claim it's about "changing lives, supporting families to move from dependence to independence". Without social mobility, they argued in a Sunday newspaper article, "there can be no social justice."

The SNP's response, however, is still largely defined by what it's against rather than what it's for. Reversing recent Conservative reforms is all well and good, but Scottish ministers appear reluctant to commit to anything beyond that. Do they envisage increasing benefits or not? It's not really been clear for some time.

Yet more generous welfare would have to form part of any serious strategy for tackling inequality, for example many of the Scandinavian countries (despite a recent drift to the right) provide benefits that put tabloid descriptions of the UK's being overly "generous" in some context. But there the top marginal tax rate is generally 10p higher, while the threshold at which it kicks in is set considerably lower than in Britain.

This, as I've written many times before, is something that eventually has to be faced, only for the SNP - whose modern electoral success is built upon middle-class votes - it presents an obvious dilemma. Having sold various perks, i.e. free tuition fees and a Council Tax freeze, as "progressive", any serious assault on Middle Scotland would most likely lose Ms Sturgeon next year's Holyrood election, or at least her party's overall majority.

The historian David Marquand identified this many years ago as the "progressive dilemma", i.e. the long-standing difficulty of convincing voters to support a genuine programme of "social democracy" they claim to desire. Even if that's possible in 21st-century Scotland, it would take considerably longer to achieve than an inherently short-term political culture permits.

Last week Alex Neil claimed the Scottish Government wasn't looking for "quick fixes or temporary measures", but rather "long-lasting change". In his lecture, Sir Tony Atkinson implored politicians to "abandon political orthodoxies" in order to tackle inequality, but judging on current form - or indeed on its past eight years in government - the SNP has a considerable way to go.