Wednesday was a big day for John Swinney. With a working majority in Holyrood, gone was the need to win opposition support to get his budget approved. For the first time in his five years he could do exactly what he wanted.
Alarming constraints still apply of course. The funding at his disposal is increasing in cash terms, but after inflation falls by some twelve per cent over the next four years and with over half of that in the next year – with capital spending hardest hit.
The idea, however, that Mr Swinney has been dealt a poor hand by George Osborne is Big Lie Number One.
We should remember that, when John Swinney became Finance Secretary in May 2007, Tony Blair was still Prime Minister and Gordon Brown was still Chancellor of the Exchequer. The economic reckoning that was about to come, although being talked about by some merchants of doom such as myself, had still to happen.
John Swinney has had many years to make the necessary changes in public spending that would have made the recession easier to handle, four more years than George Osborne to be exact.
It is not as if he hasn’t been warned. With the startling regularity of an alarm clock, Scotland’s auditor general, Bob Black, has pointed to savings and reforms that had to be made. Most have been ignored as politically too difficult.
Even the SNP’s own Beveridge Committee gave notice of the high cost of the many “free to all” policy commitments, but the ploy of the SNP is to soldier on and blame Westminster (code for England), or blame Labour (also code for England), and now blame Osborne (code for Tory England – even worse).
Big Lie Number Two is that John Swinney is not making it hard for local authorities in the same way that Westminster is making it hard for him. This is only true in the respect that he is actually making it far worse for councils as he is squeezing them from two directions.
Not only is he cutting their budgets and robbing their capital spending of some £200 million, he is blackmailing them into a Council Tax freeze that of course means a real terms drop in income.
While many readers will welcome this tax freeze, the reality is that the only way it can be sustained is by compulsory redundancies and poorer services.
What’s more, the suggestion that councils use their own borrowing powers to finance their capital spending means that they should take on more debt when deficit levels are already a serious problem, and it also means that the debt repayments (including interest) have to be funded out of a shrinking pot of money. After all, Council Tax can’t be put up to pay for the extra debt. For example, Edinburgh Council has the trams to fund while Midlothian and Borders councils have the Galashiels railway to fund.
Governments and councils can’t go on living like this – something has to give – and it will probably be workers jobs that will be the first to feel the pain. It would make better sense to cancel or delay some projects indefinitely.
Big Lie Number Three is to say that the SNP believes it can bring about a private sector recovery that will push Scotland’s economic growth up and create new jobs. It sounds good, but why then do Mr Swinney’s budget forecasts show increased business rates revenues over the next three years of nearly a billion pounds? As the Tories have pointed out, either he has some unannounced plans for taxing businesses or his forecasts are wildly optimistic – or both.
The private sector has already seen the transitional rates relief that helped businesses cope with changes to their rateable values abolished (while it still exists in England) – what next? A supermarket tax?
Well, yes, Son of Tesco Tax has in fact been born and will place a levy on all large retailers that sell booze or tobacco – for which read anything from Aldi, Lidl and the Co-op to Tesco, Sainsbury’s, Morrisons, M&S and Waitrose. Other big stores such as Debenhams, BHS, and Primark etc will escape the hit. It is being sold as a way of penalising those that abuse alcohol and fags, but that’s Big Lie Number Four as it does not touch off-licences and the cost will be born by everyone whether or not they drink or smoke.
Faced with the additional minimum pricing law on alcohol from the SNP that will also force up the cost of drink, the supermarkets will have to recover the levy across the rest of their goods.
This means that elderly ladies that haven’t so much as even looked at a glass of sherry will find scone mix costing more, drivers that don’t smoke will pay extra for petrol and kids will find their Ricicles going Pop!
Swinney’s new tax will add to the weekly shop when people are losing their jobs, wages are being frozen and inflation is climbing towards five per cent a year.
The idea that this is a fair budget is Big Lie Number Five.
Like Labour finance ministers before him, John Swinney is trying to fool us and pin the blame on others. It’s the coward’s way – and that’s no lie.