With an amusing lack of self-awareness, Kate Forbes, the Deputy First Minister of Scotland, has warned that the UK Government’s recent decision to increase employers national insurance risks harming economic growth and lacks “basic competence”.
The worrying thing about this is that Kate Forbes along with Fergus Ewing are normally the SNP MSPs most in touch with economic reality.
Forbes is correct when she says the rise in employers national insurance will harm economic growth. The extra tax will reduce private sector employment, curtail the ability of companies to invest, raise inflation and keep interest rates higher for longer.
As is its usual habit, the Scottish Government rages that the UK Government has not provided enough extra funding through the Barnet formula to meet the full cost to public bodies in Scotland of the increased national insurance. This is like arguing, if petrol were rationed, that you deserve more than others because you have a bigger car. The answer of course is to get a smaller car.
The reason the Barnet formula, usually very generous to Scotland, is unhelpful in this case is that we have a higher proportion of public sector employees than the UK as a whole and they are paid more. Instead of seeking to increase efficiency in the public sector, we ignore the need for reform and just hold out the begging bowl. This is not sustainable, not properly thought through and, frankly, embarrassing.
When ministers in the Scottish Government claim the UK Government has done something incompetent or not thought something through properly, they really should be laughed at and supplied with a mirror.
The Sturgeon and Yousaf-led governments were grossly incompetent and not thinking things through properly was their standard operating procedure. Poor old John Swinney is trying not to make things worse but it is already too late, the damage is done.
When increasing income taxes on middle and higher earners in Scotland compared to those in England, did the SNP government think through properly what that would do? For too long we have seen our best and brightest young people head to London and elsewhere outside Scotland.
We need to get some of them back and stop others from leaving if we are to build a stronger tax base which can pay for the public services we want. Higher income taxes act directly against this objective. The smart thing for the Scottish Government to have done if they wanted to raise more tax revenue would have been to reduce the higher rates of tax but no, petty minded thinking rules that out.
When the Scottish Government reduced fares on Scotland’s ferries but instead of making up the lost revenue chose to stop building ferries was it beyond them to grasp the obvious outcome would be an ageing and less reliable fleet? Unfortunately, it was.
When they finally realised that Scotland’s ferry service was literally falling apart, what idiots decided two gigantic dual-fuelled ferries which could cross the Atlantic were needed for the route to Arran? And that the contract to build them should be awarded before it was properly finalised to a yard which had not built that sort of vessel before? Of course the consequences of this should have been thought through but they were not.
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When in 2011 the Scottish Government promised to dual the A9 all the way to Inverness by 2025 but year after year did not provide the required funding, did they not realise that the target could not be met? Maybe they did, but they hid it.
When formulating and sticking to its policy of not charging fees to students - a policy I happen to agree with - but then not provide sufficient funding to universities to pay for Scottish students to be educated, did they not think through what the results would be? Despite valiant efforts, our universities are falling behind in their ability to attract the best teaching talent and they have had to turn to foreign students to balance the books which means places for Scottish students are, in effect, rationed.
Has the penny not dropped for the Scottish Government that its interference in the housing rental market has not been properly thought through and is causing the opposite of what is desirable? What is needed is an increased supply of homes for rent at a reasonable price. Imposing rent controls and other regulations reduces new supply and gives existing landlords no incentive to maintain and improve their properties.
For a short while those who already rent a home win through lower rent rises, but in the long run they suffer as the housing stock deteriorates and those who would like to rent a home but don’t have one lose out from day one because there are fewer homes for rent. Not thought through. Incompetent. Again.
The Scottish budget is next week. This is quite a test. What we are likely to get is a regretful wringing of hands that the UK Government has been mean and if only we had full control of all the economic levers all would be fine but sadly your council tax is going to have to rocket and the roads will have more potholes.
The reality is, were Scotland on its own and had full control of all the economic levers, we would have an economic disaster on our hands. But they haven’t thought that one through properly either. A little less lecturing of others and a lot more sound government would be welcome.
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