The alliance with the Greens is hurting the nationalist cause – and making Scotland poorer
Source - Daily Telegraph 18/08/23
How to mitigate good news? It’s not a question most of us have to ask ourselves, but these days it’s a common one for the SNP. Having made so many contradictory pledges over the past few years, good news is not always something the Party can celebrate.
And this week was no exception. The publication of the Government Expenditure and Revenue Scotland (Gers) report revealed that Scotland has finally seen some progress in reducing its spiralling deficit.
The country’s gap between what it collects and what it spends came in at £19.1bn last year, down from the £23.7bn gap in 2021. Its deficit is still higher than pre-pandemic levels, but this £4.6bn drop is significant, not least for a country with such a loose grip on its public finances.
Scotland’s deficit still amounts to 9pc of the country’s GDP, compared to just over 5pc for the UK as a whole. The international comparisons are no less unfavourable. Compared to the UK’s neighbours – including France, the Netherlands, Belgium and Sweden – Scotland has consistently been an ugly outlier.
One of the hardest questions for the ruling party to answer as it continues to push for independence has been: is the country ready to make a go of it alone, when its finances are in such dire state?
From the perspective of what the SNP claims to care about above all else – securing and winning a second referendum for an independent Scotland – the figures from this week’s Gers report should have been shouted from the rooftops. Instead, the response was reserved.
The SNP’s Wellbeing Economy Secretary Neil Gray gave an understated nod to Scotland’s “vibrant energy sector” which made this progress possible – perhaps the least controversial way of saying out loud what the SNP are loath to admit right now, that the drop in the deficit is largely thanks to measurably higher revenue collected from North Sea oil and gas production.
During the first referendum in 2014, this was exactly this kind of revenue that SNP leaders declared the country could count on to keep an independent Scotland afloat. But having entered a pact with the Scottish Greens to retain a grasp on power, the SNP now finds itself in a bind: in order to have any chance in an IndyRef2, the party has to play down the wealth that can come from country’s natural reserves – reserves it relies on to make the fiscal case for leaving the United Kingdom.
The Gers report is very clear in its findings from the past year: it is thanks to revenue from North Sea reserves that “revenue per person” was higher in Scotland than it was across the UK.
Tax revenue was £15,967 per person in Scotland, almost £700 more than the average in the UK; but without the extra revenue from the windfall tax, the weight of contribution shifts, estimated to have been £859 higher across the UK compared to Scotland.
This flip is an important part of the narrative for the SNP, not least because government spending on residents in Scotland remains significantly higher per person, at £19,459 a year (more than £2,200 the average spend across the UK).
In a country where university tuition fees remain free (i.e. taxpayer funded) for Scots, and where junior doctors have just been given an above-inflation pay raise of 12.4pc, it is helpful to be able to say that your heavy-spending tendencies are backed up by increasing revenue.
As it happens, this influx in revenue is likely to be temporary, as the gains from the windfall tax will wane as prices return to pre-pandemic levels.
Moreover, the tax itself is likely to have a diminishing impact on Scotland’s future revenue from its energy sectors, as some of the major oil and gas companies have already suggested they will review future investment strategies due to the UK’s increasingly volatile tax regime.
The SNP’s alliance with the Greens has no doubt put pressure on successive first ministers to lambast the oil and gas sector, despite the country’s reliance on these resources.
This week the Tories rightly noted the oddness of Humza Yousaf condemning Rishi Sunak’s plan to extend 100 new licences in the North Sea (the Scottish Greens labelled the move “the way to climate breakdown”) despite Scotland’s finances being so heavily bolstered by the sector.
Perhaps North Sea oil revenues would be less important overall were there a wider growth agenda shared by the two parties. But the Scottish Greens would rather use their political clout to push for new taxes and heavy-handed bans.
Their commitment to the degrowth agenda runs so deep that they managed to get the SNP to sign up to some “rent controls” in Scotland – the bread-and-butter policy for inflicting economic damage on any city where it is tried. Already we’re seeing the negative consequences: rents have seen their steepest rise in the last year in over a decade in Scotland, as the controls on some properties have led to a surge in cost for other properties on the market.
There is now acknowledgement within the SNP that the current agreement with the Greens is making the fight for independence look increasingly unserious.
Some of its more senior figures are even calling for a new vote on the alliance, as it becomes clear that the agendas do not line up. After all, one of the most fundamental pillars of an independent nation are its finances: its ability to afford what it chooses to spend. The SNP has always been weak in this area. But now any discussion about Scotland’s future prosperity is being sacrificed to the degrowth ambitions.
What does the Scottish government have to show for it? So far, the Scottish Greens have failed to illustrate how their policies would sustain the transfer to net-zero.
They have, however, shown how they’d make the country poorer. It’s a destructive agenda that is currently being enabled by an increasingly red-faced SNP.
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