John McLellan: Why whacking the better-off is a bad move by SNP

Merry Christmas, Mr Mackay. If you work hard to earn more than average, pay council tax and send your kids to a school with the best facilities your money can buy, you've just been whacked by the SNP's Finance Secretary.

Thursday, 21st December 2017, 6:00 am
George Watson's College is among the private schools hit by the decision to abolish charity business rates relief. Picture: Phil Wilkinson

I doubt very if there will be much sympathy for private school parents such as me now that Derek Mackay has confirmed the end of business rates relief for the schools, but Mackay will be praying the predicted drop in numbers doesn’t happen and the cost of educating more children in the state sector won’t wipe out the income he expects.

The Scottish Government is banking on an additional £5m from the move, but if just three per cent of private school pupils switch to the state sector it will cost the Scottish Government around £8m a year to educate them.

With average fees expected to go up by £200 a term that’s not unfeasible, certainly over time, and in Edinburgh that would leave the council needing to find 400 more places at a cost to the Scottish Government of more than £2m.

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Edinburgh council’s education department will be hoping its most popular schools don’t have to cope with an influx of private school refugees, especially new Boroughmuir which is already too small for the numbers it has to handle before its doors have opened. Meanwhile Trinity Academy still can’t fill its maths teacher vacancies.

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A bit like John Swinney’s Land and Buildings Transaction Tax, which replaced stamp duty, the principle seems to be one of just hoping the better off won’t notice they’re being stung and spending decisions won’t change. But LBTT shows it doesn’t work like that because the hardest hit are those on the margins. People with more expensive homes either couldn’t sell or decided not to move and the resulting tax income has fallen ten per cent short of expected income, some £50m last year.

But council tax is a captive market and home-owners will have no choice but to stump up when the inevitable big increases come next year to pay for the three per cent increase in council workers’ pay Mackay has ordered. Those in bands E-H have already had their bills increased by between 7.5 and 22.5 per cent before the three per cent increase was introduced last year. So for people in the top bands, the three per cent hike this coming year will be on top of a much bigger figure.

And despite the combination of increases in the capital cash flow from Westminster and the income tax hikes, Mackay has still hammered local government with a £153m real-terms cut. Edinburgh’s SNP leader Adam McVey dutifully welcomed the budget because Edinburgh’s cut was only £12m, despite the fact that the council has only budgeted for a two per cent wage increase.

Edinburgh’s administration is therefore celebrating getting less money and being forced to increase salaries by more than it bargained for, which will still mean a reduction in services. Obviously, those reductions will be in the areas which will least affect key services, while increased charges will be aimed at people deemed best able to pay . . . like those who own a car or have a garden.

So the reward for the ambitious and hard-working in an SNP-run Scotland – which is supposed to be big on ambition – is to be taxed harder than anywhere in the UK when you go to work, when you buy a house, if you send your children to schools with the best facilities, and charged more if you drive a car.

And a happy new year to you too, Derek.