Ian Swanson: Dugdale deserves credit

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KEZIA Dugdale stole a march on the SNP at the weekend by announcing that Labour would use 
 new powers coming to Holyrood to compensate the victims of the Tories’ tax credit cuts.

At the Scottish Labour conference in Perth – her first as leader – the Lothians MSP spelled out how the party would find the money by scrapping the SNP’s plans to abolish air passenger duty and cancelling the Tories’ planned increase in the threshold for people paying the higher 40p income tax rate.

In short, cash currently earmarked by the Nationalists and the UK government for tax cuts would instead go to help the thousands of people across Scotland hit by George Osborne’s 
welfare cuts.

It was a bold move. The SNP has made no similar commitment – indeed, Finance Secretary John Swinney has said Scotland could not afford to reverse the Tory measures.

Ms Dugdale’s announcement alters the dynamic between the parties in the run-up to next May. It means Labour can claim to be more radical than the SNP on a high-profile issue.

And it makes it difficult for the Nationalists to pursue two of their favourite themes – that Labour is too similar to the Tories and that Scottish Labour takes its orders from London.

The plan to reverse tax credits also undermines the SNP’s key claim that the latest set of powers being devolved to Scotland falls short of anything that can really make a difference. Reversing controversial Tory policies that hurt the poor is exactly what Scotland needs powers for – and Ms Dugdale is committing Labour to doing just that. Many in the SNP may well be disappointed they did not get there first.

Labour is seeking to press home its advantage today by having a debate at Holyrood, calling on the Scottish Government to use the new powers to restore tax credits to families.

It could be the SNP will decide in the near future to follow Labour’s lead and make a similar promise over tax credits, but it would have to find the money from somewhere and it seems unlikely the party would want to go back on its long-held ambition to end air passenger duty.

It will also now come under growing pressure to explain how it plans to use the new powers expected to come into effect within a year of next year’s elections.

So far, none of the parties has been clear what they will do with the latest extension of devolution. The Tories are widely expected to come up with a promise to cut income tax. And the Liberal Democrats have left the door open to a 1p tax increase to help boost funding for the National Health Service.

The UK government’s 100 amendments to the Scotland Bill, published this week, have been hailed by Labour – and Gordon Brown, in particular – as delivering on The Vow, the cross-party commitment on more powers made in the closing stages of last year’s referendum.

The Tories insist they are just clarifying and underlining what they always proposed. But although the SNP is still not satisfied, the other parties now feel they are successfully shifting the argument from what powers Scotland should have to what it will do with them.

Ms Dugdale’s tax credit proposal – and another to restore the top 50p income tax rate and use the money for education – positions Labour well to take the initiative in that debate, which will be a central focus of next year’s Holyrood elections.