By stewartb

There is more at stake than ‘just’ the number of pro-Independence MPs elected in Scotland, important as that is!

The IFS report referenced below also makes for depressing reading, not least because in brings home (yet again) just how dependent on England’s political choices we are. And in the immediate future, the outcome and impact of this dependency – including on devolved matters – will be little different no matter how well the SNP does in the upcoming general election. That is a seriously limiting, constraining democracy!

Source: Institute for Fiscal Studies (28 June, 2024) How would the parties’ tax and spending plans affect Scotland and Wales?
(https://ifs.org.uk/sites/default/files/2024-06/How-would-the-parties-tax-and-spending-plans-affect-Scotland-and-Wales.pdf )

‘For some of the issues at the heart of the election – such as defence spending and most taxes and benefits – the UK parliament and government make decisions for the UK as a whole. However, other issues – such as health and education – are devolved to the governments of Scotland, Wales and Northern Ireland. Decisions in Westminster still matter though, because funding arrangements mean UK government tax and spending decisions affect how much the devolved governments can spend in their countries via the operation of the ‘Barnett formula’ (which bases changes in funding for the devolved governments on changes in spending in England).’ (With my emphasis) ‘Decisions in Westminster still matter though’ is seriously under-stating matters!

And on the Tory and Labour manifestos, ‘Working out exactly how the policy proposals contained in the parties’ manifestos will affect Scotland and Wales can still be difficult though – especially because the parties sometimes try to blur the boundaries between national and devolved responsibilities when describing their policies.’

The IFS expands: ‘At a high level, while Labour propose slightly higher taxes and spending than the Conservatives, both parties’ manifesto proposals imply cuts to investment spending and modest increases in overall day-to-day spending on public services. It would be up to the devolved governments in Scotland and Wales to determine how to allocate their funding across services, but facing the same pressures on healthcare as England, the devolved governments would likely need to make cuts to at least some ‘unprotected’ services, unless they were to increase their own taxes.’

The Unionists’ designed-in fiscal trap set to be sprung again in the lead up to the next Holyrood election! And with reference to the SNP and Plaid Cymru, the IFS acknowledges these two parties are ‘.. correctly highlighting the austerity implicit in the main UK parties’ spending plans’.

And to example of the spectator sport that is Scotland’s democracy: ‘Labour have pledged to review universal credit and incapacity benefits, which apply across the UK, but make no concrete pledges’ and the IFS adds: ‘‘The Labour party’s manifesto contains no concrete policies on working-age benefits. However, it does say that they would ‘review Universal Credit so that it makes work pay and tackles poverty’ and allude to a plan to reform or replace the assessment that determines eligibility for incapacity benefits. Both of these relate to benefits that apply UK-wide, but what changes Labour have in mind is unclear. Changes to universal credit that affect the numbers and characteristics of those eligible would also affect eligibility for and spending on several of Scotland’s devolved benefits (such as the Scottish Child Payment), where eligibility is linked to receipt of universal credit.’

No doubt Labour will share with us how it will ‘change’ the social security safety-net AFTER it wins power. Until then, we in Scotland should watch and wait patiently, it blissful ignorance.

On more on Labour: ‘.. while they claim there would be ‘no return to austerity’, their plans would only modestly reduce the pace of cuts implied to unprotected day- to-day spending if other pledges – for example, on meeting the English NHS’s long-term workforce plan – are taken seriously. In addition, Labour’s green investment boost would still see overall investment fall in real terms. Thus, for at least parts of the public sector, further spending cuts would appear to be coming unless Labour’s spending plans were further topped up via higher borrowing or taxation.’

The IFS concludes that: ‘The small tweaks to public service spending in the Conservative and Labour manifestos would still likely leave many unprotected areas of spending and investment facing cuts post-election’ and ‘The plans set by the Conservatives and Labour would, on current forecasts, be just about enough for government debt to fall as a share of national income by 2028–29. But the difficulty of forecasting means that in reality, even if the parties’ plans were stuck to in full, there is little more than a 50:50 chance of debt actually falling in that year.’

Adding: ‘Taken together, the Conservatives’ and Labour’s tax and spending proposals have little impact on the overall public finances – relatively small tax changes are largely offset by relatively small spending changes. In both cases, under existing forecasts, debt would continue to rise as a share of national income for the next few years, and fall very slightly in 2028–29. The margin for error is small and uncertainty high though.’

And what benefit to the majority of people in the UK will Labour’s actions aping the Tories to reduce the national debt bring – even if feasible and according to the IFS this is in doubt – if the cost is more Tory-style austerity?

(For perspective, on 29 August 2021, The London Economic had this headline: ‘Who owns our national debt?’ IThere are multiple sources giving a similar answer before and since:

‘According to OBR figures, of the >£2 trillion owed, £371 billion (or around a quarter) is owed to the Bank of England (BoE). This is about the same as the national deficit. The Official Monetary and Financial Institutions Forum describes the situation as the BoE “nearly financ[ing] the deficit.” In addition, £172 billion is owed to the UK’s state bank, National Savings and Investment. So, we owe around one-third the debt to ourselves. Much of the remaining two-thirds of the national debt is held by private gilt buyers.’)