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Under SNP or Labour alike, the workers will be clobbered


Nicola Sturgeon has been running Scotland for just over three years, though already it feels very much longer. It was in November 2014, having valiantly fought off the challenge from, er, no one, that Sturgeon was anointed SNP leader and assumed the position of First Minister. The national rejoicing culminated with 12,000 worshippers, all convinced that the 10-point defeat in the earlier independence referendum had in fact been a moral victory, filling Glasgow’s Hydro Arena to acclaim the blessed Nicola.

Performing at the same venue in February 2018 was renowned miserabilist Steven Patrick Morrissey. Though the man who fronted The Smiths in the mid-eighties is still revered by fans, it is Morrissey’s idiosyncratic and often splenetic outbursts which now tend to attract more attention than his musical output. Despite having previously spoken in favour of Scottish independence – ‘I love the Scottish spirit and they do not need Westminster in the least’ – on this occasion there was less reverence towards the First Minister than had been heard three years earlier at the Hydro, with Morrissey asking his audience, ‘Do any of you actually like Nicola Sturgeon?’

Assuming that a cross-section of Scottish public opinion was in attendance, some will continue to answer in the affirmative, though critics of Nicola Sturgeon are now much more conspicuous than before. Nevertheless, the SNP government still attracts sufficient fervour for some of the crowd to take umbrage and reportedly leave when Morrissey followed with, ‘Those hands will be in anybody’s pockets.’

One assumes Mozzer was talking figuratively rather than making a #MeToo allegation; whatever else the criticisms of Nicola Sturgeon, no one has yet accused her of becoming handsy after too much Irn-Bru. Being a keen observer of Scottish domestic politics, Morrissey was no doubt casting his jaundiced eye over an impending vote at Holyrood: on February 20, MSPs approved the restructuring of Scotland’s income tax system set out in last December’s budget statement, for the first time landing Scotland with tax rates different from the rest of the UK.

From its inception, the Scottish Parliament had the power to vary the rate of income tax set at Westminster by up to 3p, but declined to use it. However, the mere fact of the SNP holding the independence referendum, regardless that it was lost, somehow gave us the Scotland Act 2016 which ratcheted further powers to Holyrood, including much greater control and flexibility over tax thresholds and rates. And the outcome of the 2016 election being a minority SNP government made it certain that, to pass a budget, the Nationalists would have to exercise these new tax-raising powers just to buy the support of six eco-loons known as the Scottish Green Party (which campaigns for a top rate of 60p).

A year ago this unholy alliance froze the upper limit for basic rate tax, the result being that higher-rate earners in Scotland began paying more tax than in the rest of the UK. From April 2018, although there is the introduction of a 19p ‘starter rate’ for the first £2,000 of taxable income, the basic rate of 20p now extends only to earnings of £24,000, after which a new ‘intermediate rate’ of 21p is paid, thereby increasing the marginal rate paid by many on relatively modest wages. And with a penny added to both the higher and additional rates, and the threshold for higher-rate tax also falling further behind the rest of the UK, middle Scotland will, predictably, bear the brunt.

Mind you, the clobbering of aspirant workers could have been worse, and in future might well be, should Scottish Labour stage a comeback as it now attempts to outflank the SNP from the Left. Labour’s criticism is that the new tax rises are insufficient and ‘fail to make radical use of the powers available’. Recently installed with the backing of the Campaign for Socialism – basically Momentum with a Scottish accent – leader Richard Leonard brandished his credentials with an alternative budget that would bleed a group he described as the ‘wealthiest few’, but in fact would severely punish anyone earning over £60,000. Coming from Corbyn and McDonnell’s man in Scotland, it is a portentous warning for the rest of the UK.

At this point the SNP government is being less punitive but crucially, it has now established the precedent for increasing tax in Scotland, thereby setting the future trajectory. Holyrood is, and will almost certainly remain, a Left-dominated assembly, in which the visionless Conservatives – still anxious to distance themselves from Thatcherism – are mere padding, and where such as the Greens are able to wield power without responsibility. In such an environment, now that the McGenie is out of the bottle, a future of competitive tax-raising is all too plausible.

In the meantime, it remains to be seen whether these new tax hikes will increase revenue at all. And even if tax receipts do rise, there is little in the SNP’s record to suggest the extra will be beneficially spent. A small but typical example of politically-correct largesse came on the recent centenary of the suffrage act when, to celebrate the anniversary, Nicola Sturgeon merrily announced the flushing away of £500,000 to ‘encourage more women to become involved in politics’. A greater representation of women is of course essential for ensuring that in future there is continued vital spending on, um, encouraging women into politics.

It is this sort of frippery that should grate with workers in Scotland earning over £33,000 and who will now pay more tax than before, and which should infuriate all those on over £26,000 who will continue to take home less than their counterparts in the rest of the UK. Except, that is, those working in Scotland’s public sector, the vast majority of whom are to receive a 3 per cent pay increase from which to fund their tax liability.

By contrast, for much of Scotland’s private sector there will have been no similar wage rise. Instead, many on stagnant pay and who, under the government’s auto-enrolment scheme, had already faced a tripling of their minimum pension contribution, now also have the burden of additional income tax. For such people, the April 2018 payslip will make grim reading and, as the noted political commentator Morrissey might put it, heaven knows they’re miserable now.

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Gary Oliver
Gary Oliver
Gary Oliver is an accountant who lives in East Lothian.

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