Scottish Budget: Here’s what Shona Robison is planning

Given the parlous predicament currently afflicting the UK Conservatives, it was scarcely surprising that the Chancellor was impelled by political considerations.

All finance Ministers from all parties in all polities are similarly motivated. But this week’s pronouncements from Jeremy Hunt were particularly shameless, albeit delivered with occasional droll wit.

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The prime clue lay in the timing of the 2p cut in National Insurance. Forget the standard fiscal year, beginning in April.

Mr Hunt said folk deserved the bonus from January. Just in time for the prospect of an election in the first half of next year.

Me, I still expect that UK election to be in October – although it could be deferred until January 2025.

But one senior UK Government source set out a rival timetable for me. NI cut in January. Budget in March or even February – with a promise to cut income tax, conditional upon the Tories retaining power. Election in May or June.

An intriguing prospect – although, right now, I would guess that 2p off NI, even sweetened by an income tax offer, might not be enough to rescue the troubled Tories.

Back to Holyrood. Where, as noted, Shona Robison, the deputy First Minister and Finance Secretary, has a substantial dilemma.

She gazes at the Chancellor’s handiwork in despair. Yes, she may applaud, for example, the freeze on whisky duty (other spirits are available.). But it makes no difference to her own sums.

Ditto most of the other decisions. That NI move. The rise in pensions. The rise in benefits – accompanied by the prospect of sanctions. The £20bn capital tax relief for business.

The tax take has been growing (Image: PA)

All notable, all issues that can be discussed. But no direct assistance to Scotland’s Finance Secretary in framing her own plans.

In fact, she discerns fiscal tightening, making her dilemma worse.

Look for example at the cash made available in England to cope with NHS pay deals. There is money there – but sources note it is not baselined.

It is not recurring. That is, not guaranteed in the budget for subsequent years. It is short term.

Now, the UK Treasury could opt to act in year. But Ms Robison is not party to that thinking. She can only plan with what she has before her, in writing.

Then there is the point that Scotland has more NHS staff per capita – and pays them more generously than in England.

Those are Scottish choices – although the numbers are partly driven by geography. But it adds up to an enhanced problem for the Finance Secretary.

One senior Holyrood source suggested I might turn my eyes from the NHS to benefits. Scotland, I was reminded, is already spending beyond base because of politically understandable efforts to mitigate Westminster welfare curbs.

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But the money for that choice has to be found from a budget which expert analysis says is about to enter still tighter constraints.

Plus Scotland has a more proactive policy of encouraging benefit take-up. Again, arguably laudable – but costly.

There is another big announcement from the Chancellor which poses a challenge for Ms Robison That is the move to prolong a business rates discount affecting retail, leisure, hospitality and other firms.

The Chancellor first introduced this measure last year. It was not replicated in the Scottish Budget. Frankly, I do not think that will change this year.

For one thing, Scottish Ministers are unsure about the detailed stats. They fret that differentials in rateable values, particularly between Scotland and London, may impact the cash available to Holyrood to match the Chancellor’s offer.

For another, they may make a different choice. They may, in short, divert some cash from this pot of money into spending upon the NHS.

Will business complain? You bet they will. And the Tories are already planning a campaign. Liz Smith opened the attack this week – and promises much more.

I expect that Scottish Ministers will feel the need to produce a business support package of their own. Tailored, they would argue, to Scottish needs.

We already have the small business bonus. Stand by for more.

Then there is the philosophical conundrum confronting Ms Robison. Does she tax and redistribute, to relieve poverty? Or does she curb intake to boost the economy? And so, over time, relieve poverty.

She has already castigated the Autumn Statement as the worst case scenario. She argues it threatens services – while failing to do enough to mitigate the cost of living.

Which might signal tax rises to relieve poverty. Except.

Except the scope for action is limited by the powers available to Holyrood. Insiders say the income tax basket is too narrow to permit a flexible response while Block Grant Adjustments limit the gain.

Plus there is that competing pressure to do something for business. That is not just political rhetoric: key Ministers believe that growth must be stimulated.

Plus it might be argued that the theoretical pass was sold when the First Minister announced a freeze in council tax. That suggested his government was ideologically in tune with the need to curb the cash taken from household income.

Scottish Government sources insist the council tax move stands alone. But they also concede that it will be difficult to hike income tax, given the state of the economy. And, presumably, the competing direction taken by the Chancellor.

There is, of course, another factor. Ever present and highly significant. That is the popular mood.

Clint Eastwood once inquired, on screen: “Do you feel lucky?” Well, do you? Lucky or prosperous or optimistic?

Has the Chancellor’s Autumn Statement improved your mood? When economic growth is still sluggish, the cost of living is still punitive and the tax take is still relatively high?

Shona Robison’s decisions are not shielded from the answers you give.

Quite the reverse. Rather, she is part of a multi-dimensional chess game in Scottish politics. A contest that is still in progress.