SNP budget: Principle, positioning and party politics

First Minister Nicola Sturgeon and Finance Secretary Derek Mackay arrive to delivering his draft Budget at the Scottish Parliament. Photo: PA

Now the dust has settled a little on yesterday's groundbreaking Scottish budget, it's worth taking a look at the bigger picture which has emerged.

For the SNP this budget was all about principle, political positioning, and party politics - though their critics would put those 'p' words in a different order.

The principle was to make Scotland's tax system more progressive, that is with the better off paying more and the less well off paying less.

The political positioning was two-fold. The SNP under Nicola Sturgeon is now in the middle ground of the tax debate in Scotland.

That is between the calls for much higher taxes from Labour under its new Left-wing leader Richard Leonard and the Tories under ruth Davidson saying taxes should not rise at all.

The second part of that positioning is that the plans unveiled by finance secretary Derek Mackay yesterday allow the SNP to claim Scotland is the lowest taxed part of the United Kingdom.

Nationalist MSPs absolutely loved that as they do anything that - in their view - allows them to claim progressive political superiority over the Tory minority government in Westminster.

And this leads on to the party politics of the budget. The Tories had been warning for months, years even, that Scotland would be damaged if it became 'the highest taxed part of the UK'.

Credit: PA

The SNP is delighted, indeed overjoyed, that it has blunted this Conservative claim which was potentially very damaging for the Nationalists' long-term electoral fortunes.

Now the Tories, naturally, dispute interpretation of what happened yesterday and will continue to say that Scotland is the highest taxed part of the UK.

They will say that because Mr Mackay will raise some £160 million more in tax next year than this year then, in their view, Scotland is more highly taxed than England, Wales and Northern Ireland.

Now clever politicians, and we have some very clever politicians in Scotland, can make the facts of the budget fit what they call their 'narrative'.

And it is clear from much of the coverage today of the budget that there are many ways in which the tax plans can be interpreted.

However, as things stand the SNP can claim that a majority of Scottish taxpayers will pay less than their counterparts in the rest of the UK, thought it is only 'marginal' - in other words a tiny amount of some £20.

That, as the very least, blunts the Tory attack on the SNP though we can be sure that this will not stop the Conservatives under their leader Ruth Davidson continuing to use tax as an issue.

They think it still plays for them.

Finance Secretary Derek Mackay delivering his draft Budget for 2018-19 at the Scottish Parliament in Edinburgh. Credit: PA

Expect the Tories to focus on the 30% (more some say) of people who will have to pay more taxes in Scotland and to try to suggest to the rest of the population that it's only a matter of time before the SNP will come back for more from their pay packets (cheques? direct bank payment?) in the future.

It has been the conventional wisdom in modern politics for decades that income tax is such a visible tax to voters (unlike say National Insurance, which is effectively a tax) that it cannot not be touched.

Although the SNP plans do not squeeze the rich until the pips squeak (someone on £40,000 a year will be £140 worse off than their equivalent in the UK, someone on £50,000 will be £655 down etc) they are still a risk in the context of that conventional wisdom.

If the Tories can convince not just those higher earners that they have been hard done by at the hands of the 'Nat tax' as their finance spokesperson Murdo Fraser called it, then they could reap long-term political advantage.

Finance Secretary Derek Mackay delivering his draft Budget for 2018-19 at the Scottish Parliament in Edinburgh. Credit: PA

On the other hand it there is no apparent adverse reaction to the plans, the SNP will be able to claim Scots really are more left-of-centre, more social democratic, than people south of the Border. This might tempt them to go further in the future but Ms Sturgeon and her deputy First Minister John Swinney may talk the radical talk but they are also inherently cautious and canny politicians.

They may well conclude that despite the hopes of their more radical backbenchers it will be thus far and no further on income tax rises.

That, then, is the politics of the budget but there's an argument that in focusing on this (as I just have) two more significant issues have been under-played.

First, was it worth the significant changes in the tax system to raise just £160 million - a very small sum compared to the overall Scottish budget of some £27 billion?

Second, and even more importantly, on the same day as the budget the new Scottish Fiscal Commission published its forecasts for the economy north of the Border.

They predicted that growth would be below 1% every year for the next five years, well below that forecast by the Office of Budget Responsibility for the whole of the UK.

Although the Fiscal Commission still predicts revues from Scottish taxes will grow, despite its anaemic growth forecasts, the lack of economic expansion should be a major concern to all politicians.

Credit: PA

At the very least slow growth over the next five years, if the the forecasts are correct, will cast doubt over whether there is a strong tax base from which to raise revenue in the future.

If you want to get a flavour of the budget debate yesterday, and watch by interview with Mr Mackay you can see the latest edition of Representing Border here:

And for those who want some in-depth, serious, objective analysis of the budget I can highly recommend the Fraser of Allander Institute blogs which you can find here: