A Budget for a Fairer Scotland?

Published: 10 October 2014

Professor Kirstein Rummery discusses the opportunity provided to Scotland when on the 9th Oct the Finance Cabinet Secretary John Swinney delivered the 2015-16 budget to the Scottish Parliament. For the first time since 1707, Scotland had the opportunity to start raising its own taxes.  A chance for the Secretary to start flexing his muscles and demonstrate would Scotland could do to achieve its goal of a fairer, more prosperous society ahead of the Smith Commission’s recommendations for further devolved powers.

So, what did he chose to do? Commentators called it a ‘lurch to the left’, a tax on the aspirational, and a move towards progressive redistribution... My analysis of it is that it was a careful positioning of the SNP to demonstrate, particularly to middle class and older voters, that Scotland’s economy and fiscal policies were safe in their hands. This was a budget that had far more to do with politics than finances.

A budget for prosperity

The focus here was on job creation, particularly for young people, and improving skills and training. Some policies – such as the (re)introduction of the Education Maintenance Allowance will have demonstrable benefits for poorer students, removing some of the financial barriers to their participation in post-16 education and training. But there was little mention of what *kind* of jobs would be created, and whether they would match the skills and aspirations of young people – for example to work in the creative industries, to reform care work and to capitalise on the growth in demand for information technology skills. Further investment in Modern Apprenticeships is to be welcomed, but research shows that these at present contribute to occupational segregation and thus undermine efforts to address the gender pay gap (MacKay et al Jobs for the Boys and the Girls: Promoting a Smart Successful Scotland Three Years On Scottish Affairs, 66, 2009).

A £280m expansion in investment in childcare is planned, and this does demonstrate a commitment to fairness and equality, as access to high quality affordable childcare shows demonstrable benefits in reducing educational attainment inequalities, addressing child poverty, removing the barriers for low income parents (particularly lone parents, who are overwhelmingly women) to work, invests in workforce skills and shows a clear benefit to local economies. However, some of this provision will be targetted rather than universal, and it will not fully address the significant gaps in childcare provision in Scotland.

A budget for equality

Focusing on reducing the costs for first time buyers was presented as redistributive policy, but in reality this will not raise any additional revenue, and was criticised as being a missed opportunity to invest more significant sums in social housing and address poverty. However it does appeal to middle class voters, and older voters who have had to subsidise their children’s first steps onto the housing ladder.

Investing in mitigating the effects of welfare reform – e.g. through council tax freezes will be counterbalanced by a policy on public sector reform that is about investing in the NHS and protecting public sector pay. This, and an enduring commitment to free higher education, are policies that *look* like they would encourage equality, but are in fact regressive. Investment in the NHS does not in itself deliver improvements in health outcomes or address health inequalities: it does, however, provide new hospitals, health centres, health care personnel and protects their pay.  None of which have any demonstrable effect on the health of the population, but are very popular with the middle classes and older people, who are the biggest users of the NHS budget. However, the NHS is a black hole in fiscal terms – it will use up whatever money is thrown at it and it still won’t meet demand. In order to actually improve health outcomes and address health inequalities, research indicates it would be more effective to invest in:

  • Anti poverty programmes
  • Mental health support – one of the biggest reasons for underproduction in the economy is the lack of effective services and support for sufferers of depression, anxiety and severe mental illness
  • Addressing unemployment, particularly amongst younger people
  • Improving access to and the quality of work
  • Improving housing
  • Addressing addiction, particularly drug and alcohol dependency
  • Supporting carers more effectively
  • Investing in prevention rather than acute services

The latter is the only one where there is some indication of investment – the £100m promised for health and social care integration and other preventative measures was underplayed in the Budget announcement, as was the creation of a Scottish Independent Living Fund, extension of Self Directed Support and Personal Independence Plans. However, it is these measures – designed to put control over resources in the hands of the people using and needing them rather than in the hands of local authorities and welfare professionals – that are likely to lead to both better outcomes AND more efficient and effective use of limited health and social care resources.

It is a similar story with free higher education: presented as a way of improving social mobility and life chances, in fact it benefits the middle classes disproportionately, and educational and income inequalities are greater at the end of higher education than at school leaving age. If the Scottish Government was serious about addressing inequalities in education, skills and income, it would a) ban private education and b) invest in FURTHER education, which is far more effective at providing young people with the skills and training needed for employment, AND is more effective at addressing educational attainment inequalities linked to class and income than higher education.

But, needless to say, this would be a radical redistributive policy too far: it would seriously alienate both the middle classes AND the political elite (including the politicians and civil servants who make and implement policy) as well as the professional public sector. And academics.

A budget for politics, not fairness

What does this tell us about the present Scottish Parliament, and how it is positioning itself for further devolution?

  • It clearly wants to present itself as a prudent, cautious, financially responsible government that can be trusted with further powers to tax, spend, and redesign welfare;
  • It does not want to alienate key stakeholders such as public sector workers and unions, professionals and older people;
  • It is shying away from radical changes in spending and taxation – such as a Citizen’s Basic Income – which would be universal and redistributive – in favour of tinkering at the edges of the established tax and welfare structures.

This is not really a budget for equality and fairness: it is a budget to appease the middle classes, risk averse and older people.

Coincidentally, those groups who overwhelmingly voted No in the referendum on independence.

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