The SNP’s bone-headed leadership contenders have no idea how to fix Scotland’s broken economy

The race to replace Nicola Sturgeon risks condemning the country to relative decline for another generation

Source - Daily Telegraph - 20/02/23

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The contest for the leadership of the Scottish National Party (SNP), and in turn to become First Minister of the second largest nation within the UK, has already become drably predictable.

The proposals put forward are unfortunately all too familiar: Put up taxes. Spend more money. Bash the English. Put up taxes again. Spend even more money. Bash the English a bit more, and blame everything on Mrs Thatcher, whilst pointing out that she was English. Repeat as necessary.

Even the supposedly “moderate”, fresh-faced Kate Forbes pushed up taxes as finance minister while running up a budget deficit so huge even the Greeks in their heyday would have been embarrassed by it.

In truth, the SNP’s tax and spend policies are turning into a disaster for Scotland’s economy. With Westminster pushing taxes up to eye-watering levels, there is a huge opening for the administration north of the border to cut taxes, a move that would turbo-charge growth and, paradoxically, hugely strengthen the case for independence.

Fortunately for the Union, none of the political pygmies vying to replace Nicola Sturgeon can see this. Instead they will persist with a set of failed policies that will condemn the country to relative decline for another generation at least.

The leadership race is not exactly shaping up as an inspiring battle of ideas. So far, the health secretary Humza Yousaf and the former minister Ash Regan have thrown their hat into the ring, with the finance minister Kate Forbes joining them on Monday. One or two more may follow by the end of the week, with a new leader expected to be announced by the end of March.

What have we been offered by the leadership hopefuls so far? New policies? A change of direction? Reforms to improve Scotland’s health service, its schools, or most of all its economy? None of the candidates seem to think any of this is even worth discussing.

Instead, the main issues being chewed over are whether to press on with Sturgeon’s deranged gender recognition bill and how quickly to push for a second independence referendum.

The youthful Forbes presents herself as the change candidate but she is anything but. As finance minister, she presided over rises in the top rate of tax to take it significantly above the English rate for the first time and oversaw a budget deficit that at its pandemic peak reached an eye-watering 22pc of GDP, which is only sustainable because of subsidies from the rest of the UK. If that is “change” it is hard to know what continuity might look like.

Yes, her devout Christianity may well make her controversial to the SNP’s woke membership, but she is hardly radical. 

Whoever wins the current contest must change course on the economy or risk dooming Scotland to obscurity. There is mounting evidence that the anti-business policies of the SNP, aided by their Green allies, are crushing an economy that should be one of the most prosperous in the UK, and indeed in the whole of Europe.

Under Sturgeon’s dismal rule, the SNP used its tax powers to impose significantly higher rates on Scotland than the rest of the UK, partly by increasing the top rate (now 47pc compared with 45pc in England), but also by freezing thresholds so that higher taxes kick in at much lower levels.

There are already suggestions, not surprisingly, that we will see an exodus of high earners crossing the border as a result, with only public officials on six-figure salaries left to pay the higher rates.

Meanwhile, investment in North Sea oil and gas, once Scotland’s biggest industry, has been harassed out of existence. Six months of rent controls have created a crisis in the property market. Productivity north of the border has declined, compared to the rest of the UK, and so have real wages.

The Sturgeon-led statelet has only been kept afloat on a sea of spending. The pandemic might have been an exception, but since 2015 the Scottish budget deficit has averaged 9.3pc of GDP, compared with 3.1pc for the UK as whole. It is only sustainable because the catastrophic state of Scottish finances are disguised within the numbers for the UK as a whole. Left to itself, the bond markets would sink the country in the blink of an eye.

None of the SNP candidates seem to think there is anything wrong with this. In many ways, the front-runner Forbes is the worst of them. As finance minister in the Sturgeon administration since 2020, she had presided over punishing tax rises, as well as the chaotic mismanagement of the budget. She was ultimately in charge of fiscal policy, and can hardly evade responsibility.

Just like all the other candidates for First Minister, she is committed to the SNP model of out-competing even the government in Westminster by creating a bigger state and imposing ever higher taxes to pay for it.

The irony is that, now more than ever, there is a clear opportunity for Scotland to do something different. With taxes rising so steeply in England, it would be very easy for Scotland to carve out a space for itself as the pro-business, pro-wealth creation alternative.

Just imagine the impact if Edinburgh had decided not to match Jeremy Hunt’s reduction in the threshold for the top-rate of tax, while using its powers to charge high-earners just 43pc of their income. Plenty of people in the City would start wondering if the Edinburgh and Glasgow offices were good for more than just back office work.

Even more dramatically, Holyrood could lobby for powers over corporation tax. Scotland would not have to go full-Ireland (although it is obviously the model it should emulate), but preserving the 19pc rate would tempt a lot of British companies to shift work and profits to their Scottish units.

A “just-very-slightly-more pro-business Scotland” would easily outperform the rest of the country. And, of course, that would hugely strengthen the case for independence. Breaking away from an increasingly over-taxed, zero-growth England would be a far more attractive option: richer regions find it easier to divorce themselves from poorer ones than the other way around.

Fortunately for the preservation of the Union, all the candidates for First Minister are far too bone-headed to see that. Instead, they will stick doggedly to Sturgeon’s failed formula – and complacently oversee the decline of the once prosperous Scottish economy.