Brian Taylor: SNP may freeze income tax rises

Understandable, of course. Change is Labour’s core offer and, like a mantra, bears repetition to reassure the faithful.

Read more by Brian Taylor: SNP conference: What else can go wrong for Humza Yousaf?

Just what can the Tories do in response? When their chief UK rivals accuse them of wrecking the economy?

Perhaps Rishi Sunak could follow his illustrious predecessor, Sir Robert Peel, who in 1834 produced his Tamworth manifesto, endorsing reform and initiating the modern Conservative Party. No, I don’t think so either.

Right now, radical change is pre-empted by a fragile economy and an anxious citizenry. Mr Sunak must simply hope that he meets his self-declared targets on debt and the rest, in order to restore comfort.

This week, the Treasury insisted we are still on track, although the message was caveated by risk. And what of Scotland where change, for Labour, also means targeting the SNP?

The cross-border Labour messages are understandably identical – which could pose a potential challenge if elements of that message, such as benefits, can be depicted as being out of step with a Scottish consensus.

For now, the nationalists know that, like the Tories, they have a problem with a resurgent Labour Party. SNP anxiety was all too easy to discern when I visited Aberdeen for the party conference.

But Humza Yousaf is crafting a change message of his own. We saw it this week, most evidently, in his declaration that council tax rates are to be frozen.

Humza Yousaf (Image: free)

Cue indignation from local authorities who say he failed to consult or even inform them about such a significant change in their financial planning. Certainly, with this step, the First Minister tore up the Verity House agreement with councils which promised a “positive working relationship” founded upon “mutual trust and respect”.

The FM’s destruction of said document was metaphorical, not physical. He is not yet ready to emulate Fergus Ewing. But it was dumped nonetheless.

The “Historic Concordat” between John Swinney and councils lasted years. Verity House survived a matter of months.

Why so? The broad answer is change.

Humza Yousaf’s strategic objective is “reflect, regroup, reorganise.” Rutherglen merely confirmed what he already knew: the current path, including elements inherited from his predecessor, will not do.

Hence, for example, the £300m over three years aimed at cutting hospital waiting lists, with Labour warning this week that the folk on those lists cannot be expected to wait any longer. Hence too that move on council tax.

The calculation is simple. Folk are struggling. Struggling badly. Ministers aspiring to any degree of popularity need to relieve that suffering. So, too bad if councils are unhappy. Tough luck if a deal signed in June has to go. So what if this last-minute switch was made without formal Cabinet endorsement. Bills will be frozen – not just for the poorest but for middle and upper income families who have also been enduring relative pain.

Mr Yousaf said local authorities would be compensated for lost revenue. He can top up the four fifths of council cash which already comes from central government. That is, from income tax.

Which brings me to a core point. I believe that the council tax freeze is a signal of what will happen to Scottish income tax when we get the Holyrood budget in December.

Now, we are not there yet. The Treasury will set out the revised parameters for UK public spending in the autumn statement next month. Scotland will work within that, devising distinctive details. That was all Neil Gray meant when he indicated that the £300m for hospital waiting lists had yet to be identified. The budget, quite simply, has yet to be written.

I do not believe that the starting point of those budget preparations will involve increases in income tax. In particular, not in the established Scottish rates of tax.

To be clear, I am not saying that all change to income tax rates and bands is ruled out. In theory, if bands were to be entirely frozen then that would eventually mean significant hikes in the tax take, depending on wage growth which has now outpaced inflation for the first time in two years.

Rather, I believe that the broad income tax strategy will follow the council tax lead. The central aim will be to lift the burden for struggling families – and to be seen to lift that burden.

Not least because, in Scotland, Labour and the Conservatives have condemned potential hikes in both council and income tax. SNP Ministers want to curb tax. Demonstrably. Where possible. Within limits.

And how about those limits? This week the Institute for Fiscal Studies warned that there was no room for tax cuts or spending increases. The country, they said, was “in a horrible fiscal bind”. They meant the UK, of course, but the message might apply equally to Shona Robison, who is busily drawing up the Scottish Budget.

The watchword is caution. That is why the Chancellor, Jeremy Hunt, is so determined to prevent another outbreak of the market jitters which ousted his predecessor.

That is why Labour promises “change” – while stressing the need for a calm, measured approach to the economy. Change – without change, say critics.

Read more: What next for the SNP?

And the SNP? Humza Yousaf wants to reconnect with the voters. Senior Scottish Government insiders readily concede that they “lost the narrative”. They were seen as focusing upon issues such as recycling and gender recognition reform. Important in themselves – but less than salient for a fretful electorate, worried about gas bills.

Hence the tax moves. Hence too the implementation of a new deal with business, designed to grow the economy and get folk into wage-earning work. There is a further point. The SNP offer has customarily been predicated upon confidence, on Scots taking back control, if you like. Expect a bit more of an escape narrative. More derision aimed at UK economic handling.

But expect it to be delivered without over-promising. As elsewhere, change – but nothing to disquiet, nothing to frighten.