SNP budget moans show need for a full review of how our money is spent

Back in 1998, it is now largely forgotten, there was a second question on the devolution ballot paper: “Do you agree that a Scottish Parliament should have tax-raising powers?”. Almost two-thirds of voters approved and since then, of course, these powers have been extended.

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The referendum question was a late effort to address an obvious problem in the making: that no matter how much money arrived in the form of block grant, enhanced by Barnett Formula, it would never be enough and Westminster would be blamed.

Tax-raising powers were supposed to address that. If Holyrood wanted more money, it could increase taxes and take the political responsibility. That proved wildly optimistic, particularly once Holyrood was in the hands of people who had not the slightest intention of taking responsibility for anything.

The need to raise taxes is now presented as just another symptom of Westminster’s parsimony, rather than the conscious act of a Government which is itself prepared to defend the principle of higher taxation. And that, I’m sure, is what we will hear more of tomorrow.

Yet look at the events of the past few months alone. “In May,” according to the Fraser of Allander Institute, “the Deputy First Minister set out a challenging situation for 2024-25, with a projected £1bn funding gap on resource spending, rising to £1.5bn when capital commitments are included.

“Since this announcement, there have been improvements from better-than-expected income tax revenues, and more funding from the UK Government.” So far so good. Surely these must mean a substantial reduction in the £1.5 billion gap?

Not a bit of it. Fraser of Allander continues: “However, spending on pay awards has been much higher than was budgeted for in May (and) fully funding local authorities for the freeze in council tax will most likely cost over £300m”.

The result is that, in spite of the additional UK Government funding and better-than-expected tax receipts, the black hole is back to where it was through conscious spending decisions taken in the interim by the Scottish Government and nobody else.

I am not arguing against their right to make these political choices but the responsibility element lies in accepting that the costs involved will result in savings elsewhere. Pretending otherwise is a pure abrogation of responsibility on the basis that there is always someone else to blame; a strategy now past its sell-by date.

The ex cathedra announcement by Humza Yousaf of a council tax freeze was a particularly shallow piece of opportunism in return for a day’s headline. Now councils need £300 million in compensation for freezing a tax which is disproportionately paid by the better-off. Where is the logic in that?

All Scottish council s expect to be making cuts next year (Image: Newsquest)

Even as things stand, all Scottish councils expect to be making cuts next year; a quarter are concerned they will not have enough money for statutory services and won’t be able to balance books; four-fifths think adult social care is the greatest single challenge which the Scottish Government is not taking seriously.

Depending on today’s statement, things are either going to get worse or much worse for local authorities,  and that means for services on which the least well-off depend disproportionately. Under cover of “tax increases for the better off”, services for the poorest are again being attacked.

As we survey the state of public services, the question surely should be: “Where does all the money go?”. Why does the £2000 per head that we get more than England not translate straight into services? Where do all the Barnett consequentials go?”. Surely it would not be too much to expect a clear balance sheet between income from that source and expenditure.

Instead, we have obfuscation. Why, if all the Barnett consequentials intended for the NHS go into the NHS, is per capita spending on it in Scotland now only three per cent more than in England, compared to 22% at the dawn of devolution? Where does the money go?

Part of the truth is that it pays for “universal” policies which do not succeed even in their own terms and are long overdue for fundamental review. Higher education is an obvious example. “Free tuition” for all, rather than being targeted on those who need it, has not widened access but it has created a distorted model in which teaching budgets have been cut by 20%, with more to follow, while Scottish student numbers are capped to make way for fee-payers from elsewhere.

The Institute for Fiscal Studies has just done a paper on this subject and pointed out that, due to changes in repayment thresholds, “a high-earning Scottish graduate will have gone from repaying £647 more per year than an English graduate in 2020–21, to repaying £369 less per year by 2024–25”. Where does that fit into any redistributive model?

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Whatever make and mend emerges from the hapless Ms Robison’s statement tonorrow, it will not address the fundamental problem that the Scottish Government has been cavalier about living beyond its means because it assumes political responsibility will never land at its doorstep.

Increasing income tax for middle-earners in a cost of living crisis may help to concentrate minds. What’s really needed is a root and branch review of how the Scottish Government’s budget is spent, with every silo of expenditure broken down and every past assumption challenged.

From the outset of devolution, the Scottish Government has been well-funded. There was no need for us to become the land of higher taxes and dismal services.

Brian Wilson is a former Labour Party MP and Energy Minister