Scottish Spending Review – much ado about nothing

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By Hazel Lewry

The budget is in, and the screaming has started.

We’ve seen a broadside from organisations as diverse as the retailer’s consortium, through COSLA to the STUC gripe about various aspects of the SG budget.  Although to be more accurate it was Labour representatives of COSLA who were complaining.

The biggest issues are wage freezes, pensions and alcohol / tobacco.  The £850 million business rate claims have now been disproven although nobody seems to have told Tom Gordon over at the Herald.

 

Before getting onto a couple of specifics, aiming criticism at Swinney is a bit like arguing with your sergeant in the trenches over why you’re going “over the top”. He’s in it too – just passing along the bad news.

The above organisations and entities should be arguing with the Tory/Lib-Dems in London, not Swinney in Edinburgh who’s trying to walk a high-wire when he’s had his pole taken away.

The first question is what taxation powers does Swinney actually have, that he can use to creatively generate revenues for everyone’s Christmas list? The short answer is basically none, though I had to smile at his creativity in getting a short form of minimum pricing through.

Critics of this budget should simply remember one thing. Swinney and Salmond have little to no control over the budget size. All they can do is accept the pocket money and then try their utmost to protect social Scotland. Looking it over I have to admit they didn’t do too badly.

The next thing critics of this budget would do well to remember is that these punitive measures are being dictated by Westminster to a nation that has every appearance of being in surplus and if independent shouldn’t be suffering like this at all.

Oddly I didn’t read or hear that in the mainstream press – maybe I just missed that bit?

Now we’ve got a budget that economics says will be good for employment, on the surface at least. Swinney’s front loading capital projects to keep the welfare lines low, the economy moving and the wheels of industry turning.

While we have to feel for those pushed into an extra wage freeze or real pay reduction by having take homes whittled away at the back door, none can argue that keeping people in work is a bad idea.

Ironically, who gets all those extra income taxes, that extra NI, that extra VAT and that revenue from energy tax? It isn’t going to be John Swinney, or Alex Salmond who’d both use it to throw more fuel into the engine of growth.

No – it goes to Westminster, to pay debt or wars, and perhaps, just perhaps some of what we send south might find its way back north again by way of Barnett.

Why then is Swinney choosing this path? I see it as a caring path and a sensible path, possibly the only path.

It’s a caring budget because while doing their utmost to protect social Scotland the SG also helps the SG, though to far lesser an extent than they will assist Westminster’s treasury. This budget is designed to keep money flowing in the Scots economy and therefore help everyone in it. The impact will be significant, from small shopkeepers to small furniture makers, garages to souvenirs shops, coffee shops to supermarkets. If the money’s flowing they’re not laying off.

All of the above takes us back to the Independence question again, doesn’t it? If we really want to remove our economic brakes and help our nation we need full control over all of our finances. If we had that and are seeing the cuts we do, perhaps Swinney and Salmond would be fair game. Without it the critics are just fair blethering.

This brings us back to the “Tesco Tax”, another area where there’s arguably “much ado about nothing”. The big supermarkets will now be hit if they sell both alcohol and tobacco.

Seems there’s a simple solution, stop selling one or the other.

The corner shops that can’t compete on buying power are not touched by this. Their prices should not change. The supermarkets who are being hit are, according to SG figures seeing about a 0.1% take from their revenues, which hasn’t been challenged as yet. I’ll therefore consider that a safe number.

The number again, 0.1% – less than 1/20th of the massive VAT increase just passed by Westminster, and there’s suggestions of food and basics going up in price.

Twaddle; just add it to the alcohol and tobacco sales. If one didn’t smoke or drink then they’d see no increase at all. If they didn’t shop at an “out of Towner” they’d see no increase at all. If they don’t change their habits and still buy booze and ‘baccy as before then for every £100 they spend they’ll pay an extra 10p. Compare that 10p to Osborne’s £2.50 and the rest, just this year.

As a fraction or percentage that’s pretty close to zero, or nothing, but there’s certainly a hubbub over it.

Now we have a levy on Alcohol and Tobacco and the councils get the money, not the supermarkets. I judge that as rather nicely done.

Odd how these folks quietly ate Osborne’s grab, but they and the media howl about Swinney’s.

Swinney himself couldn’t give councils more from pocket money, but remember that the proportion of the Scottish grant they do get has increased from that inherited by the SNP in 2007.

Commenting on the levy Scottish Retail Consortium director Ian Shearer claimed it was “a blatant fund-raising exercise which is illogical and discriminatory”.

He said: “Supermarket margins are already cut to the bone as stores compete to offer the best deals to cash-strapped consumers”.

“The UK already has some of the highest alcohol taxes in Europe. This tax would make it harder for food retailers to keep prices down for customers, and makes Scotland a less attractive place to do business, invest and create jobs.”

Mr Shearer, again, the tax doesn’t apply to food. If you only sell food, you’re exempt. Actually if you sell almost anything except alcohol and tobacco you’re exempt – the logic/scaremongering doesn’t work.

In fact Mr Shearer’s colleague Andrew Opie of the British Retail Consortium said it would be “almost impossible” for retailers to pass the levy onto customers in the form of food price rises.

In a comment that was representative of non-retail industry perspectives, Evelyn Gillan, chief executive of Alcohol Focus Scotland, said: “The big retailers make large sums of money from the sale of cheap alcohol so it’s a positive that some now goes back into the public purse.”

She was supported by those of the anti-tobacco lobby such as ASH Scotland, who’s Sheila Duffy, said: “It’s good to see the Scottish Government recognising and committing to the importance of preventative spending. Prevention is better than cure.”

Looking at the public sector pay freeze, I’d be less than happy, but as ministers and MSP’s are going to be subjected to it as well, I’d consider it acceptable.

Government employs over 30,000 public-sector staff and the Public and Commercial Services Union said its members would be “very angry that they are facing this double whammy from Westminster and Holyrood”. Their spokesperson Lynn Henderson adding “The extension of the pay freeze by our own Government and employer will provoke anger as never seen before.”

Lynn – if you can arrange either more pocket money or fiscal autonomy then there’s a strong case to gripe at Holyrood – otherwise your people need to be speaking to Cameron and Osborne.

Not a great budget, but then there wasn’t as much pocket money as the nation needed.

I’d still look for a formal re-do on the “Tesco Tax” as well.

This budget just reinforces it’s time and past time to simply “reap our own harvest and ring our own till”.