Another no-punches-pulled guest post today, this time from Neil Findlay MSP, who was elected to represent the Lothians for Labour in May. This piece first appeared on The Citizen, the current issue of which is worth it for the cover image alone.
It is clear from the post-election analysis that Labour lost across all social classes, regions, genders and minority groups and religions. In short, we were “gubbedâ€. On policy and presentation we were simply out-thought and out-manoeuvred. Put another way, Labour was “out Laboured†on policy and “out New Laboured†on campaigning. The SNP, on the other hand, constructed a narrative as the protectors of Scotland from the Tory Westminster government, all the while presenting itself as all things to all people and the party of “Scottish Social Democracy†(how does this square with the demand for corporation tax cuts?).
But, the election result brought to a head questions of policy, message, ethos and strategy which had been in need of asking for some time. Considering these questions is fundamental to rebuilding the Labour Party. How we do this is vital. Fads and nicknames should be binned and basic tenets of Labour must be brought back: no more ‘New, Old or Blue Labour’, the ‘Real’ Labour Party must be re-discovered, renewed and revived.
The party has to stop abandoning our traditional supporters in pursuit of the so-called “aspirational middle ground”. We could begin by apologising to both our loyal voters and those who deserted us for getting it so badly wrong. I was always taught that when you do wrong you should own up to your errors, be humble and seek forgiveness before rebuilding your friendship, which will in the end become stronger and more long lasting – we should follow this lesson.
Yet, only 15-16 years ago things were so different. Then Labour appealed to a very broad section of society. In the mid to late 90’s people believed Labour offered a credible alternative to the tired and nasty Tory Party. So how did we go from having broad and cross-society appeal to our current position? The legacy of Iraq and Afghanistan (and other foreign adventures), benefit cuts, the 10p tax fiasco, tuition fees, subservience to the markets and the courting of the super-rich (yes including Murdoch), light touch regulation of the banks and the subsequent banking crisis and the expenses scandals all contributed to the electorate falling out with Labour in the UK. In Scotland, this was compounded by bland, uninspiring and sometimes just silly policies and the perceived control of Scottish Labour by London.
Currently, our public services are under all-out ideological attack from the Tories at Westminster. Labour has to be at the forefront, leading a campaign for an alternative and positive agenda – we have to be seen as the defender of public services; the defender of a decent and civilised society and we need to say what we would do differently. We can do this with our partners in civic society, yes with the third sector who are feeling the brunt of the cuts but most importantly with the Trade Union movement – the greatest ally our party has. In carrying forth this vigorous defence of our public services the party can begin its renewal and the revival of ‘Real Labour’.
As can some solid ideas and principles from the Peoples Charter and Better Way Campaign which will undoubtedly resonate with a Scottish electorate who are currently feeling marginalised, under threat and unjustly treated. These could include:
- Supporting economic stimulus to attack unemployment – the UK party’s position of “our cuts would be less harsh than the Tories cuts†is not good enough.
- Investment in the economy to create jobs and stimulate growth can and does work – look at history and we can see how investment not cuts rebuilt the economy, created the NHS and the welfare state after 1945.
- Oppose privatisation, like the SNP/Lib Dems are proposing in Edinburgh, and say how we would run local government better.
- Develop – genuinely – co-operative models of public service delivery.
- Create publicly run renewable energy projects. Rather than cede control to big business (as the SNP is currently doing) we should facilitate community schemes where there is a direct financial benefit distributed to local people.
- If the council tax is to be frozen, let’s have a freeze for those in the smallest, lowest priced properties but create a new charging structure to increase payments for those at the top of the income scale. Or whisper it – we could look at a (genuine) local income tax based on the principle of progressive taxation – ability to pay – I have never understood why it is good nationally but not locally?
Labour should have no fear of promoting fair progressive taxation and a national clampdown on tax evasion – a Scottish, UK and global scandal. If the SNP want new powers for the Parliament then maybe they would have more credibility if they were banging the door of Downing Street asking for powers to deal with tax evasion.
We should oppose the SNP demands for powers over corporation tax – there is no evidence cutting corporation tax would create growth – Germany has 33% corporation tax, Greece has 20% and Ireland 10%. Question: do we want to be like Germany or Ireland? Answers on the back of a postcard to Mr J Swinney.
Labour has to champion and be prepared to implement major reforms of financial institutions including a Robin Hood tax on speculative transactions. This is morally and financially the right thing to do.
Labour has to promote positive polices like the living wage across the public sector and ensure that contractors are included and we should be evangelical about getting the private sector sign up too.
Labour must reform employment legislation to strengthen workers’ rights and remove fear from employees. And we need to rebuild our relationship with our greatest allies in the Trade Unions, making real efforts to re-engage Trade Unionists in our movement and getting the RMT, the FBU and others back into the party (and Ed, let’s stop listening to the metropolitan spinners and show some maturity and get yourself along to events like the fantastic Durham Miners gala day; you did more harm not turning up than you ever will by being there).
And Labour should have an investigation into high wages in the public and private sectors including the bonus culture of the city – it is our lack of challenge on issues like this this that tarnished our reputation as the party of fairness.
And we should support workers who are resisting redundancies, pension cuts and privatisation as we know it is our people (or our former supporters) who will suffer most.
Considering and then introducing these types of policies would demonstrate the substance, resolve and principles of a newly renewed Labour Party. As would our determination to fight the downgrading and downsizing of our public services, and opposition to the private vultures who see our public services as ripe for harvest. We could show imagination and vision by making the case for new models of public ownership, for the public and by the public, which create conduits of public and community participation and involvement and which sees our people and communities benefit directly. It is these types of ideas and this type of vision which will help the people of Scotland re-connect again with the Labour Party.
#1 by Barbarian on September 14, 2011 - 3:01 pm
A suggestion would be to stop appearing to fight the SNP at every turn and actually work with them.
A good opposition is one that works with the government, but also fights them over poor policies.
For example, if the Scottish Government wants centralise the Police, and Labour seem to be in favour. But if the SNP wanted to introduce ID cards, for example, that is where I would expect the opposition to fight.
I am no SNP cybernat. I criticise them so much I get accused of being a Labourite/Tory/Unionist, although no one has stooped as far to accuse me of being a Lib Dem.
What Labour needs to do as well is get rid of people such as Milliband. The man is a product of the political sausage machine and has never held a proper job in his life. I don’t expect a John Prescott Mark 2, but for heavens sake get some people in who have real talent, rather than the ability to suck up to the right people in power. The Tories are as a guilty as are other parties to a certain extent.
I voted SNP last election and at the general election. Prior to that I voted Labour, and when I lived in England I voted Conservative (blame Kinnock!).
I know Labour voters who changed to the SNP – not because of independence but because they could see a party that was working for the voters, rather than the banks.
PFI also needs to be dropped. How on earth can you justify a contract where a photocopier costs £30 grand a year? PFI is an absolute nonsense that has tied up the NHS is England with crippling debts for years.
The bottom line is that the Labour Party has turned towrds the Tories in order to win power in England.
You do not win by reacting to your opponents, you have to be proactive.
Scotland needs a strong opposition. It makes the government work harder and it ultimately benefits the whole country, whether or not independence happens.
Full marks for writing this article, and the same to Better Nation for publishing it.
#2 by Colin on September 14, 2011 - 3:49 pm
A generally fair piece. But this bit:
We should oppose the SNP demands for powers over corporation tax – there is no evidence cutting corporation tax would create growth – Germany has 33% corporation tax, Greece has 20% and Ireland 10%. Question: do we want to be like Germany or Ireland? Answers on the back of a postcard to Mr J Swinney.
Why does that mean we should oppose Holyrood having the power to vary corporation tax, though? Leaving George Osborne in control of the rate won’t make us like Germany either.
#3 by James on September 14, 2011 - 4:33 pm
Good point – I agree.
#4 by Aidan on September 14, 2011 - 4:41 pm
The general trend is for governments to have less power over corporation tax – I think we should be working with the EU to limit countries ability to vary corporation tax outside a band in order to prevent a race to the bottom. So I think there’s probably a good case for opposing it on those grounds.
I think there’s a lot more merit in allowing it to vary the capital allowances, rather than the rate itself.
#5 by DougtheDug on September 14, 2011 - 5:01 pm
The general trend is for governments to have less power over corporation tax
Where are you getting this information from Aidan. I know the European Commission is trying to control corporation tax across the EU but as far as I know all governments of the world still control their own corporation tax rates.
#6 by Dubbieside on September 14, 2011 - 6:14 pm
Doug
There is one government that does not control its own corporation tax.
Labour in Scotland would support the right of the tory government in Westminster to do that for us.
#7 by Aidan on September 14, 2011 - 8:33 pm
They have nominal discretion over it, however it’s all gotten a bit prisoners dilemma and with countries like Ireland around there’s strong downward pressure on rates, see http://ec.europa.eu/economy_finance/publications/publication530_en.pdf for more.
By committing all members of the EU to a corporation tax band system that trend will be halted or reversed (depending on the banding agreed) and countries will actually have *more* discretion over corporation tax. A difference of a few percent between broadly similar countries is outweighed from an investment perspective by things like infrastructure, education etc. which is what we want to competing on, not beggar-thy-neighbour tax rate brinkmanship.
#8 by Steve on September 14, 2011 - 4:11 pm
A good piece. Realistically though, the Labour party at UK level isn’t going to adopt this agenda any time soon. Ed Miliband continues to focus on the “squeezed middle†whoever they are, and only this week he had a go at the unions – he wouldn’t even support the them in their attempts to defend a pension deal that was struck with a Labour Government. Bizarre. So my question for Labour people in Scotland is, to what extent are you prepared to separate in policy terms from the UK party position?
The choice for the left in the labour party is compromise on this agenda in order to maintain cohesion as a UK party, or pursue this distinct agenda in Scotland, loosening the ties with the UK party.
My preference is that you pursue this agenda wholeheartedly in Scotland, and hope that the rest of your party follows.
#9 by Craig Kelly on September 14, 2011 - 5:25 pm
I couldn’t agree more with the above comment and with many of the suggestions in the article. As the above comment identifies, Scottish Labour have suffered, in some ways, because of English Labour’s desire to fight the Tories on their own turf. Perhaps Labour’s own version of Murdo Fraser’s Tory-divide may reap benefits. Or perhaps it would merely be the logical step towards your party participating appropriately in devolution.
There are many areas where a traditionally progressive party like Labour could and should be supporting the current administration. Opposition for opposition sake has severely harmed Labour. The people of Scotland want a positive vision, not sneering from the sidelines.
Like the above poster, I am not an SNP hack, but I do have to take issue with the point on corporation tax. In no way is Scotland like Germany, nor could we ever aspire to be, so the point is disingenuous. Furthermore, before the global economic collapse Ireland’s tax rate did reap them significant benefits, and it was not their level of corporation tax that saw them disproportionately affected by the economic disaster.
We probably agree that Scotland’s biggest problem is a lack of jobs. I’m writing this from Sweden where I’m studying a masters. It happens that I want to become an academic, but if I did currently want to enter the job market, Scotland would offer small pickings. I don’t know one person who graduated with me who is in graduate-level employment in Scotland. Cutting corporation tax would encourage companies to settle in Scotland, in turn creating jobs. We cannot continue the tradition of swelling our public sector as a method of lowering unemployment.
Essentially though, despite my objections, I’m delighted to see the Labour Party involved in critical self reflection. All political parties are guilty of avoiding this form of inner dialogue, so credit to you.
#10 by Craig Gallagher on September 14, 2011 - 6:22 pm
I am inclined to agree, as with tha majority of comments about this article, that it is a fair piece that demonstrates a healthy recognition of the need for Labour to look inside themselves for the answers they need.
I shall add to those comments that it is heartening to see a Labour politician calling for the party to out-Labour the SNP, given that four years of attacking them on their right flank have quite simply failed. The Scottish National Party are quite socially democratic but economically conservative, and although I don’t buy into the whole “voodoo economics” argument that these two are incompatible, it nonetheless leaves them open to attack and pre-emption from others on the left who might want to pursue a more socialist economic policy.
Ironically, it seems to me that if the Liberal Democrats weren’t one of the principle enemies of Scotland in this drama they would have been well-placed in May to attempt to out-left the SNP, perhaps even drawing some support from disenfranchised Labourites.
#11 by Dubbieside on September 14, 2011 - 6:34 pm
Could someone explain to me why Scotland should ask for powers to deal with tax evasion when they have no control over the tax that is being evaded.
“Perceived control of Scottish Labour by London” that will be the party that has to ask London Labour permission to make changes.
This is nothing more than a wish list,
“Supporting economic stimulus to attack unemployment” How? Supporting Full Fiscal Autonomy might be the place to start but London Labour would never allow the Scottish branch to do that.
“Investment in the economy to create jobs and stimulate growth” How? More PFI or FFA?
“Create publicly run renewable energy projects” How? Which current projects would you stop to fund this, given that London Labour support Scotland continuing to receive their pocket money from Westminster.
As for the rest of the wish list, these are things that a Westminster government with thirteen years in office could and should have introduced. Why did Labour not introduce these things when in office?
#12 by DougtheDug on September 14, 2011 - 6:36 pm
…and the perceived control of Scottish Labour by London
I’m not sure how control is only perceived and not real. The Labour party is unitary and Scotland comes under the control of the leader Ed Milliband and the NEC just like the rest. Even now the proposed “leader” will not be anything more than a regional manager and it’s not clear at all from the information released by the the review panel if he or she will have any authority over the MP’s and MEP’s in Scotland.
Currently, our public services are under all-out ideological attack from the Tories at Westminster.
But the Labour philosophy is that it is better to live under Conservative rule from London than have a left-wing independent Scotland and that’s the platform it fought on in 2011. I can’t square that with the desire for more worker rights, no cuts to public services and co-operatives.
Fads and nicknames should be binned…
I agree, and the nickname, “Scottish Labour Party”, should be binned straight away.
#13 by James on September 14, 2011 - 6:47 pm
Some days I wake up and try to pretend to myself that the SNP are left-wing. Also, the situation you describe has been the case, but will it continue to be so?
#14 by Allan on September 14, 2011 - 7:48 pm
Centre left at best, but mostly the best interpritation of New Labour that Scottish Labour never managed…
#15 by Dubbieside on September 14, 2011 - 8:40 pm
“But mostly the best interpretation of New Labour” some of the things that the SNP will never copy from New Labour,
Prescription charges, increased every year under Labour.
PFI/PPP, our grandchildren will still be paying for Labours folly.
Double the starting rate of tax.
Tuition fees.
Where are the socialist policies in the above. No difference from torys.
#16 by Craig Gallagher on September 15, 2011 - 12:15 am
Is centre-left not left wing? As I suggested before, on social policy there is no denying they fit the model of a modern social democratic party. They favour collective healthcare and education – as in, they would rather we pay for these things through high taxes than direct fees – and are ardent advocates of expanding and improving our renewable energy capacity.
Where they are open to criticism from the left is that they are economically right-of-centre, preferring small businesses to generate jobs and private investment to spur research and development.
#17 by Aidan on September 14, 2011 - 8:39 pm
Well, no, the Labour philosophy is not that it’s better to live under Conservative rule from London than have a left-wing independent Scotland.
That’s why we proposed, fought for, won and implemented devolution.
Devolution can go further – it’s a process remember, not an event, I forget who said that – and Labour worked for and got more powers for the Parliament in the last session (and yes, the Scotland Bill as it stands is imperfect and needs improvement).
There’s a general consensus in Labour that full independence isn’t the best route for Scotland but that’s not because we cleave to “London rule”, it’s mostly because we think there are better, less disruptive mechanisms for gaining more autonomy.
#18 by Dubbieside on September 14, 2011 - 8:51 pm
Glaciers have moved quicker than Labours devolution process. Devolution can go further, but not under Labour. 1999 was a long time ago, and nothing would have changed but for 2007 and 2011 when the game changed for ever.
Labour had a window dressing operation called the Scotland bill that does nothing for the financial position in Scotland.
“And yes, the Scotland Bill as it stands is imperfect and needs improvement” If that is the case why was it not improved before it was submitted to Westminster? Probable because London said so far and no further.
“There’s a general consensus in Labour that full independence isn’t the best route for Scotland” Yes Labour would rather a tory Westminster rules Scotland than Scots running their own affairs.
All the name changes etc will not disguise the fact that for Labour London rules.
#19 by Don McC on September 15, 2011 - 7:27 am
Didn’t the Grayman concede that it was exactly at least his philosophy, stating he would rather live in a Thatcherite UK than an independent Scotland under Brown? (although he may actually have a point there!)
I wonder if a straw poll was done, how many Scottish Labour MPs would answer similarly. 75%? 90%? It would, undoubtedly, by a majority. Of course, if the comparison was between a Thatcherite UK and an independent Scotland under Salmond, you could guarantee a unaminous vote in facour of Thatcher.
Conceeding that the Scotland Bill is imprefect and needs improving is one thing. Doing something about it is an entirey different matter. Scottish Labour ensured that improvement won’t happen anytime soon. Their antics during the bill’s reading and debate illustrated exactly how much contempt they have for their own constituents, preferring to attack the SNP rather than ensure the bill’s flaws were debated and amended.
Your assertion that Scottish Labour oppose independence because they’ve actually thought about it is laughable. Their opposition is dogma, pure and simple, and it IS all about sticking to “London Rule” with the troughing gateway that facilitates. If it was otherwise, someone, somewhere, anybody even, would have come up with an indisputable positive argument for the Union. As it is, the old “Scotland’s too poor, too wee, too stupid” stand by is trotted out every few weeks. Now that the Lib Dums have adopted the same argument, expect it to be repeated ad nauseum for the next few years.
Remember that it wasn’t Donald Dewar who coined the phrase “Devolution was a process”. He heard it elsewhere and used it to make it sound as if Labour was still engaged with consitutional change for Scotland. This, though, was merely another vain attempt to cut off the SNP (what significant changes did Dewar, or his successors, implement?). Yes, Labour delivered Devolution but that’s ancient history now. What have they done lately to help Scotland gain more autonomy?
The Scotland Bill is such a mess because it’s yet another attempt to see off the SNP while conceding as little real powers as possible. Of course, the bill also contains some substantial power grabs back to Westminster, justified by the “too wee, too poor, too stupid” line yet again. “Charity regulation? Nah, better with the guiding hand of the UK for that.”
#20 by DougtheDug on September 15, 2011 - 9:56 am
Well, no, the Labour philosophy is not that it’s better to live under Conservative rule from London than have a left-wing independent Scotland. That’s why we proposed, fought for, won and implemented devolution.
You do understand how devolution works Aidan? The money Scotland gets to spend on public services is directly linked to public money available in England.
If a Westminster government slashes and burns public finances in England then that will have a direct consequence in Scotland as Scotland’s share is directly proportional to the spend in England. The only reason Scotland is partly insulated is that the SNP government has been very efficient at utilising the shrinking amount given in the block grant.
There is no additional cash in the much vaunted Scotland Bill as the sum of the tax component + top up grant is always the amount calculated by the Barnett formula which is the amount we get now which is directly linked to the English spend.
The amount of public money Scotland gets is always determined by the Government in Westminster.
#21 by James on September 15, 2011 - 10:21 am
The amount of public money Scotland gets is always determined by the Government in Westminster.
This is simply untrue. The Block Grant is set by Westminster, but that’s not the same thing as the Scottish Government’s potential revenue. SNP Ministers rejected various progressive ways to use exising tax powers to raise more money. And then they went further with a CT freeze which disproportionately benefits the better off and squeezes the services disproportionately relied upon by the worse off.
#22 by DougtheDug on September 15, 2011 - 10:41 am
The current 3p in the pound variable tax rate is regressive as it only applies to the basic rate of tax. The higher bands do not change if the 3p in the pound rate is used to up the basic rate. The tax is regressive in that the burden is disproportionately shouldered by the lower rate taxpayers.
The council tax freeze is voluntary. The councils have the power over council tax and they thought that top up funds from central government as compensation were better than cranking up their council tax. In any case council tax doesn’t go to central government it stays with the councils.
I’ll rewrite it for you.
The amount of public money the Scottish Government gets is always determined by the Government in Westminster unless it hits the poor with more income tax.
#23 by James on September 15, 2011 - 11:25 am
So many factual inaccuracies and so much spin for one comment.
1. Increasing the basic rate is semi-progressive, and only stops being so on incomes that attract the top rate. It’s not ideal but it’s certainly not “hitting the poor”, especially those who pay no income tax but rely on squeezed services.
2. The council tax freeze is effectively compulsory, because councils are told either to freeze or to have their grant slashed. I was told by one councillor that to raise a penny more for local budgets given that additional penalty they’d have had to raise CT by 19%.
3. There are several other ways to raise revenue even if you don’t like Council Tax, Local Income Tax or the Scottish Variable Rate – any other structure of local finance could be devised (as you know we proposed LVT), and the UBR is also devolved.
#24 by DougtheDug on September 15, 2011 - 12:04 pm
So many factual inaccuracies and so much spin for one comment..because councils are told either to freeze or to have their grant slashed.
Nope. There was and is a standard methodology for allocating funds to Local Councils. Over and above that there was a total of £70 Million compensation for councils who agreed to freeze their council tax. Councils who didn’t freeze their council tax didn’t get the compensation. A simple concept. There was no “slashing” of the funding reached through the standard methodology of allocating funds.
#25 by James on September 15, 2011 - 12:26 pm
Utterly untrue.
#26 by DougtheDug on September 15, 2011 - 12:36 pm
Utterly True
Annex D, page 9, where the £70 Million is allocated based on each local authority’s share of the 2010-11 budgeted council tax income as returned on the POSE 2010 forms to compensate them for lost revenue.
#27 by James on September 15, 2011 - 12:49 pm
I recommend not embarrassing yourself further. Yes, there’s £70m given, but the overall funding was cut by almost £654m per year across all local authorities. Table 14.02 here.
Say it’s inevitable, say you don’t want to look at alternatives, say there are no alternatives, pretend it’s all the Tories’ fault, whatever, but that’s the reality of the local government settlement.
#28 by DougtheDug on September 15, 2011 - 1:09 pm
Now James, your changing the argument.
Your premise was that the councils were forced into accepting the council tax freeze because their budgets were to be cut unless they did so. I’ve proved you wrong.
The fact that the budgets were cut across the board for all councils whether or not the councils agreed to the council tax freeze is something else entirely.
#29 by James on September 15, 2011 - 1:56 pm
I’m glad you’ve accepted the argument (which so many Nats deny) that John chose to cut local authority budgets.
But the other point is simply wrong.
“Giving details of the 2011/12 local government finance settlement yesterday, he said average cash cuts would be 2.6% for councils that adopt measures agreed between the Scottish Government and local government leaders. Councils that do not adopt them will face cuts averaging 6.4%.”
It wasn’t “fully funded”. It was an ultimatum – cut and freeze or cut further. Totally anti-democratic, and actually worsening the settlement offered by Tory Ministers.
#30 by DougtheDug on September 15, 2011 - 4:53 pm
There’s lies, damn lies and statistics James.
The Government was willing to fund the councils in order to maintain a council tax freeze, guarantee Government commitments on education and free personal care for elderly people and to maintain police numbers. These were all central government promises not council promises and all these services are under the control of local government not central government. Even with that the councils had to suffer an average of a 2.6% cut.
If the councils didn’t want to maintain the council tax freeze or to keep free personal care or to maintain the police numbers which were central government commitments not council ones they didn’t get the extra funding from the government to pay for them. Quite logical and above board.
Once you take the compensation for the CT freeze, free personal care and police out of the council revenue funding it ends up as what appears to be a 6.4% average cut but the article you quote misses out the important bit.
If the councils didn’t take the cash to maintain these central government commitments then they could save money by cutting police numbers and personal care and raise more revenue by upping the Council Tax, options which were not open to those who promised to maintain these services.
It was a simple bargain. Either to take the compensation to maintain the higher commitments promised by the Scottish Government or to set their own levels of service and taxation with no compensation.
#31 by Doug Daniel on September 15, 2011 - 1:13 pm
I don’t know if I’ll ever get your stance on the Council Tax freeze, James. It’s a regressive tax, so surely anything that stops the poor having to pay more is a good thing? You always go on about how it benefits the rich more than the poor, but this ignores the fact that its very existence penalises the poor more than the rich.
As for LIT etc, well, the SNP wanted to proceed with that last time, but were blocked by the Tories (who implemented Council Tax in the first place), Labour (who loved increasing it) and the Lib Dems (who are in favour of LIT, but only if they propose it). Besides, isn’t one of the main stumbling blocks of any new tax that the HMRC would need to agree to collect it – something which is about as likely as the Lib Dems sticking to their principles? I always like the discussion of alternative taxes, but I’ve never been entirely sure to what extent the Scottish Government can impose them.
#32 by James on September 15, 2011 - 1:59 pm
Council Tax isn’t a fair tax primarily because it’s not based on land value and the top end of it stops at very low values, given the lack of revaluation. It’s not progressive enough. Freezing it aggravates the inequality because it primarily benefits the better off. Forcing a freeze to it (the ultimatum given) then harms the public services those on lower incomes rely upon. It would be hard to devise any approach to local government finance more regressive than a frozen Council Tax.
And now the SNP have a free hand to deliver any local taxation they require.. and are sticking with a tax you don’t like. It’s their stance you should surely be wondering about, given they’re the government.
#33 by Steve on September 15, 2011 - 2:10 pm
I recommend looking at the table on page 11 of the following report. http://www.management.stir.ac.uk/research/economics/?a=27925
It shows that the freeze benefits the poorest 10% of the population the least, and that the bottom 20% of the population in income terms do worse than nearly everyone else, although to be fair the top 10% don’t do all that well either relatively speaking..
I think this analysis is a bit flawed, but in the absence of an official Scottish Government analysis of the freeze by income decile (which could probably be obtained as an answer to a PQ hint hint James) it’s the best evidence I’ve seen on the impact of the freeze.
Of course that’s just the impact of the freeze, the freeze leaves intact a regressive council tax system which sees the rich paying relatively less than those on middle and lower incomes.
#34 by Steve on September 15, 2011 - 2:14 pm
The SG could do whatever it likes with local taxation, but since the SNP have never even tried, it’s a bit rich to say the reason they’ve failed so far is HMRC or anyone else.
#35 by Doug Daniel on September 15, 2011 - 2:33 pm
Well, that’s why I’m asking “isn’t it true…?” rather than saying “it is a fact…”, as I’m not entirely sure. Certainly it was the case that when he was SoS, Des Browne stated that any attempt to abolish council tax would see the £400million from council tax benefits taken away from Scotland, and I was under the impression that another stumbling block was that people said HMRC wouldn’t implement LIT – of course, that could be just as rubbish as those who say the EU will block the SG from implementing minimum alcohol prices.
What is true is that the SNP couldn’t get a majority in favour of LIT last term, so the “anyone else” bit is in fact accurate, at least in terms of the previous term.
#36 by Indy on September 15, 2011 - 8:22 pm
That is absolute nonsense. Councils who freeze the council tax are compensated for that by the Scottish Government. If a council decided not to freeze the council tax they would not be given the compensation for that. And why should they?
The level of grant to each local authority however is determined according to a formula which is agreed with COSLA.
#37 by Steve on September 16, 2011 - 7:57 am
It’s true that councils who froze their council tax are compensated for that. But it is also completely true that all that compensation achieved was a smaller cut to their budgets than otherwise would have happened.
From James’ point of view the deal was we’ll cut your budget, and if you don’t freeze your council tax we’ll cut it more, blackmail.
From your point of view, the councils got a great big budget cut, but were then compensated for freezing their council tax, resulting in a net budget reduction, but a smaller one.
If I give you £5 and take away £20, it really doesn’t matter which of those transactions happens first, you’re still £15 down.
And while it may be true that the way the money is allocated between councils is by way of an agreed formula, I don’t think it’s fair to say that councils willingly agreed to have their budgets cut, they had no choice in the matter.
#38 by DougtheDug on September 16, 2011 - 8:17 am
Steve:
…the councils got a great big budget cut, but were then compensated for freezing their council tax, resulting in a net budget reduction, but a smaller one.
No. The councils budgets got cut by around an average of 2.6%. If they wished to incur extra staff costs by maintaining police numbers to the central government target, to incur health costs by providing personal care at the fees set by central government and to keep the council tax at a level set by central government they were compensated for these extra staffing and health costs and the reduction in revenue from the council tax.
If they didn’t want to incur these costs and to increase their income from council tax they were free to set their own levels of staffing, health care costs and council tax. What they couldn’t do was do this and still get compensated by central government for following the central government targets.
To compare the previous funding of a council which had signed up in 2010-2011 to the government package of revenue grant + compensation with a council which didn’t sign up to the associated costs of the package in 2011-2012 and only got a straight revenue grant is fantasy economics.
#39 by Allan on September 14, 2011 - 7:59 pm
It’s a good post, and identifies many of the problems that “Scottish” Labour have. The problem is that a lot of those issues were New Labour party policy. The privatisation of local public services was, I think, something Tony Blair was going to float when he made his speech to the TUC on 11 September 2001. It was certainly a key plank of the Labour manefesto for that years General Election, while some bloke called Purcell was rather keen to follow that route here. While Milliband the younger is not the first person to identify middle class voters (that are considerably better off than the average Scottish worker) as key people to taylor policy towards.
The real problem is that the people at the top of the party, Blair, Brown, Mandleson, were quite happy to alienate many core supporters so long as they had the “swing” voters onside. “Scottish” Labour were always going to be in trouble when the people read the small print and found policies similar to the ones that Thatch was proposing 10 years earlier.
#40 by Steve on September 14, 2011 - 10:40 pm
I’d just like to say how much I am looking forward to Neil introducing a bill to the Scottish Parliament to scrap the council tax and introduce a local income tax. Come on Neil, bring it on!
I’ve been unable to persuade James to get the greens to introduce a bill to scrap the council tax, so over to you Neil!
What would all those SNP MSPs who favour a local income tax do then, vote it down?
#41 by Barbarian on September 15, 2011 - 12:29 am
I don’t trust ANYTHING that has the words “local” and “tax” in the same sentence.
Why not a flat rate tax across Scotland, with the revenue divided up based on population in each area? Collected centrally as well.
Perhaps too simple a solution, but the Armed Forces used this when Council Tax replaced the Poll Tax.
Why should I pay more for using the same services simply because I earn £2000 a year more than my neighbour?
#42 by Aidan on September 15, 2011 - 11:25 am
You mean reintroducing the poll tax?
#43 by BM on September 15, 2011 - 1:35 pm
Because you’re a compassionate human being who learnt about sharing in nursery school?
#44 by James on September 15, 2011 - 1:59 pm
*like*
#45 by Doug Daniel on September 14, 2011 - 11:18 pm
“We should oppose the SNP demands for powers over corporation tax – there is no evidence cutting corporation tax would create growth – Germany has 33% corporation tax, Greece has 20% and Ireland 10%. Question: do we want to be like Germany or Ireland? Answers on the back of a postcard to Mr J Swinney.”
Oh dear, where do I start? Well, first of all, your numbers are off – Greece’s CT may be reducing to 20% this year, but it was 25% last year, which is comparable to UK CT. Germany’s CT is a complicated beast, comprised of federal CT, local CT and the solidarity tax, although it can indeed reach 33% in some places. Ireland’s CT is 12.5%, which means you’re underestimating it by a fifth. If you can’t get the numbers right, why should we believe you have the analysis right?
So it proves. Your extremely simpistic premise is “low corporation tax bad, high corporation tax good”. However, you torpedo your argument straight away by pointing out that Greece – which is in the biggest mess in Europe – has a much higher CT rate than Ireland! If low CT was the reason behind failing economies, then why isn’t Ireland the country that is looking likely to bring down the Eurozone?
Let’s throw a few more countries into the mix, shall we? Spain and Italy – two more countries that are on very shaky ground – have similar CT rates to Germany. What about the Netherlands and Switzerland, who have similar levels to Greece – when was the last time you heard either of these countries being mentioned in the news in regards to catastrophic economic failure? Montenegro – on a mere 9% – should, under your “analysis”, be in absolute economic meltdown. But they’re not.
This is just simplistic rubbish. Countries set a corporation tax level that suits their situation. You cannot draw a direct correlation between a country’s corporation tax rate and their economic performance. Who do we want to be more like? Well, it’d be great to be like Germany, but the fact is, we’re nothing like them – we’re not sitting in the centre of Europe for a start.
What an utterly ridiculous point. Incidentally, when was the last time the UK had corporation tax over 30%?
#46 by Steve on September 15, 2011 - 12:06 am
Doug, if as you say you can’t draw a direct correlation between a country’s corporation tax rate and their economic performance, doesn’t that kill the argument that Scotland should reduce their rate? I still think Scotland should get control over it so that if they take action that does grow the economy and so boosts the corporation tax yield the Scottish budget should benefit from that. But there doesn’t seem to be a sound argument for substantially lowering the rate in Scotland.
#47 by Craig Gallagher on September 15, 2011 - 12:21 am
No, it doesn’t kill the argument, because a direct correlation wasn’t the argument in the first place. The SNP don’t want corporation tax devolved so as to improve their economic performance by that magic flick of a switch, they want it so that they can respond more flexibly and in a manner seperate to that of the UK as a whole when they need to attract new job-creating industries.
It’s about control and management of the economy, not improvement (although that is the overall argument underpinning control and management, of course)
#48 by Doug Daniel on September 15, 2011 - 9:03 am
Well no, because obviously it has some role to play, I’m just saying it’s not as simple as “country X has a lower corporation tax rate than country Y, therefore country Y will be in a worse economic state than country X”.
Neil has cunningly cherry-picked Germany, Greece and Ireland as examples to try and prove his theory that lower corporation tax has an inherent, blanket negative effect on a country’s economic performance, regardless of other factors like natural resources and national work ethic. The truth is, you could just as easily choose Italy (31.4% when combining IRAP and IRES), Russia (20%) and Montenegro (9%) to suggest that it is somewhat more complicated.
The fact is, anyone who bases their opposition to tax varying powers on the basis that the economic powerhouse of Europe (Germany) has a higher rate than the economic numpties of Europe (Greece) is talking out of an orifice which is not located on their head. If Neil is so keen for Scotland to join Germany in the 30%+ bracket of corporation tax – apparently the key to economic prosperity, which is why Italy and Spain are two of the strongest economies in Europe (oh, wait a second…) – then he’d be better off campaigning FOR corporation tax to be devolved and then lobbying the Scottish Government to INCREASE it. By this time, perhaps Labour will have convinced the Scottish electorate to give them another chance, and then they can increase it to the 30%+ level they had it at between 1997 and 2010 (oh, wait a minute…)
He’s certainly not going to see 30% corporation tax in the UK with the Tories in control!
#49 by Doug Daniel on September 15, 2011 - 9:13 am
Also, if there’s one thing we could learn from the corporation tax rates of other countries, it’s that you don’t need it to be set at a blanket national rate. Many countries have a national element and a more local element. This is probably more important in larger countries like Germany and Italy rather than small countries like Scotland, but it’s something the UK should be doing, which would allow Scotland, Wales and the North of England to use corporation tax as a way of attracting investment away from the South East. Which, err, is exactly what the SNP is proposing…
#50 by Barbarian on September 15, 2011 - 2:03 pm
Type your comment here
Nope. The Armed Forces system only had one household member paying. My wife (who wasn’t in the Forces) did not pay. Married couples who were both serving also only had one person paying.
You have one person per household paying, but everyone pays the same rate. If you own multiple properties then you pay the same per property.
Tax really needs to be simplified. And most certainly tax avoidance schemes need to be hammered. Who cares if Simon Cowell has to spend most of the time out of the country?
#51 by Dubbieside on September 15, 2011 - 2:20 pm
After canvassing in May there are three things about the council tax freeze from conversations on the doorsteps.
There was an almost universal welcome from the people who mattered i.e. the voters, that at last a government was trying to keep household bills down. The universal welcome came no matter from a council estate or a private one.
No one cared whether it was regressive or not, only that their bills would not be going up.
Labours late conversion to supporting the freeze was seen as opportunistic at best, and did them no favours.
#52 by Steve on September 15, 2011 - 2:29 pm
That might have something to do with the fact that the message simply did not get out about the level of cuts that would be required to sustain the freeze.
Take a look at this, published on 11 May. 11th May! AFTER the election.
http://news.scotsman.com/holyroodelections/3bn-the-true-cost-of.6766153.jp
This fact simply got no coverage during the campaign, partly because all the big parties were in a favour of a freeze.
#53 by Dubbieside on September 15, 2011 - 3:40 pm
Rather than yet another anti SNP article in the Scotsman maybe the last part of the article is worth repeating
“A spokesman for finance secretary John Swinney said: “The SNP published a fully costed manifesto, taking into account all of the issues identified in this paper, which identifies a surplus of over £1bn by the end of this spending period – after new expenditure commitments are taken into account.
“The reality is that the annual cost of the council tax freeze builds up to £560m at the end of this parliament, or less than 2 per cent of the Scottish Government budget.”
Now lets see who would I trust on the figures, the person who has balanced the books successfully over the last four years or The Scotsman.
It will still play a big part in the May council elections, and continue to be popular with voters, nine years freeze against an increase of 60% over the eight years of Lab/Lib government.
#54 by Steve on September 16, 2011 - 8:08 am
The article may be in the Scotsman, but the data comes from a SPICE official report for the Scottish Parliament, are you saying that an official briefing for the Parliament is wrong?
Also, please take a look at my blog http://taxingscotland.wordpress.com/2011/04/19/council-tax-freeze-is-it-worth-it/ where on the 19th April I showed that the total cost of a 9 year freeze is £3.15 billion, and that about 500 million of this is money lost to Scotland.
It’s just a matter of fact that the cumulative cost of a nine year freeze is over £3 billion.
The £560 million figure is true, that’s the cost of year 8 of the freeze, and that is the last full year of the freeze before the next Scottish Parliament election.
So now do the maths, year 1 costs 70m, year 2 costs 140m, year 3 costs 210m, year 4 costs 280m, year 5 costs 350m, year 6 costs 420m, year 7 costs 490m, year 8 costs 560m and year 9 costs 630m.
Add all of those costs up and you get the total cost of £3 billion.
Just because something is reported in the Scotsman doesn’t automatically mean it’s a lie!
#55 by Doug Daniel on September 16, 2011 - 9:19 am
Not trying to dispute the figures here, but why does it cost an extra £70m every year? Is that merely inflation? I don’t quite see how we know in advance that the councils are going to need exactly that extra £70m every year on top of the £70m from each previous year, especially with the pay freezes going on in the public sector at the same time. But then I hate economics.
Just imagine how big council tax bills would be just now, and at the end of year 9, without the freeze. No wonder it’s a vote winner.
#56 by Steve on September 16, 2011 - 9:43 am
The 70m is based on the extra income councils would have got if they had put CT up by 3%.
So for example, in year 1 instead of putting up a £1000 bill to £1030 the Scottish Government gives the council the £30 not to put it up.
But for year 2, if the council had put the bill up to £1030 in year one, and then again by 3% in year 2 the original £1000 bill would now be £1060.90, so the SG has to give the council £60.90 to keep the bill frozen.
And so on, like compound interest.
Without the freeze, over 9 years bills would have gone up by 30% by these calculations, so yes, I can see why it’s a vote winner too, even if it is expensive.
#57 by Doug Daniel on September 16, 2011 - 10:59 am
But my problem with this is, what is the justification in the first place for raising the bill by 3% each year? This is why I, for one, hated council tax anyway – it seemed like councils just kept putting it up every year for the sake of it, with no real justification and certainly with no improvements in services. With the pay freezes in place, I don’t entirely understand why they would have been putting it up by 3% every year anyway.
#58 by Steve on September 16, 2011 - 12:38 pm
Inflation. Presumably in normal times, a rise in line with inflation would only allow councils to maintain existing levels of services, not improve them, as their costs, fuel, wages etc. would be going up.
#59 by Steve on September 15, 2011 - 2:44 pm
To be fair, you are right, about CT benefit and about the Lib Dems and others not supporting the SNP.
But now CTB is getting devolved in 2013, so that’s no longer a barrier.
The HMRC thing was always a red herring, especially when you consider that they’ll be delivering a scottish rate that affects basic and higher rates of income tax under the Scotland Bill provisions.
And the SNP have a majority now, but unfortunately no mandate for a LIT since it wasn’t in their manifesto.
So, as I’ve suggested before, I think the Parliament should legislate now to allow whoever wins the next election to scrap the council tax, and introduce either a land value tax, or a local income tax or a bit of both.
If we legislate now but don’t implement any changes then no-one has to go back on manifesto promises. But having the legislation in place allows whoever wins in 2016 to get on and make the system better.
#60 by Doug Daniel on September 15, 2011 - 3:52 pm
I suppose therein lies the SNP’s Get Out Of Jail Free card – it’s difficult to make changes to the tax system when we still don’t know for sure what will and won’t be devolved, what we can and can’t play with etc. Hence their whole argument about delaying the referendum until they’ve had a chance to get some teeth into the Scotland Bill. Is it sensible to implement some sort of new tax which could be out of date almost as soon as it’s implemented, because of other legislation that is already in the pipeline? It’s that old argument about whether it is worth the effort in getting the SVR up and running just for the sake of a couple of years.
I think I like your idea about getting legislation for scrapping council tax sorted now, though.
#61 by Erchie on September 15, 2011 - 5:48 pm
Type your comment here
That’s what we in the trade call untrue, even a fib
The SNP desired to bring in Loal Income Tax. Usual suspects, Inc LibDems who shared the policy, voted against it
#62 by The Burd on September 15, 2011 - 6:35 pm
And then ditched the policy in this election. So not entirely untrue… in fact largely correct.
#63 by Erchie on September 16, 2011 - 7:45 am
Nope
Steve said they ever even tried. This is patently false
Why did they drop it this time around?
Dunno. Maybe they thought it couldn’t work. Maybe the screw ups by HMRC persuaded them that they couldn’t get that in lifetime of the Parliament
Certainly the SNP did not expect to get a majority, it might be, given the polls, they were less than sanguine about even being the largest party, and they isn’t put it in for that reason.
Not being a member of the Party, I have no idea
But to say the didn’t try, still untrue
#64 by Steve on September 17, 2011 - 7:42 pm
I think it’s really important not to lie, so I’d like to say hands up to that Erchie, the SNP did make some effort, they campaigned on it and when they won in 2007 they ran a consultation on their proposals.
I have no idea why John Swinney dropped it all of a sudden, some say the figures were looking too bad, some day he couldn’t get a deal done with the Lib Dems. My personal feeling is that this came just after the budget where the SNP and the Greens fell out, and they were always going to need the Greens to abstain at the very least, and that became less likely once it became clear that the two parties couldn’t do business together.
So like you say they did try, although how hard they tried I’ll never know because I wasn’t there.
It’s a shame they dropped it for the 2011 election though, and that does show a lack of commitment to progressive taxation which is extremely disappointing, not least because had it been a manifesto commitment they’d be in a position to deliver it now.
#65 by Observer on September 15, 2011 - 9:36 pm
I thought that the SNP withdrew the LIT proposals because they realised that it wouldn’t bring in enough revenue in a recession.
That is obviously the flaw in putting too many eggs in the one basket. Yields from income tax vary according to the strength of the economy.
This is a good article, I could pick holes in various aspects of it, but he is going in the right direction.
#66 by Observer on September 15, 2011 - 11:06 pm
For goodness sake John Swinney has no power to choose how much money is allocated to the Scottish block grant as you well know. Along with the rest of the Cabinet he makes decisions on how to allocate the budget. If we look at the two big areas of government spending local authority funding has been cut by around 3 per cent, while spending on the NHS has been protected as far as it can be. Most people agreed with that decision.
If you are seriously arguing that the council tax could have been used as a means to raise sufficient revenue to compensate for cut that has been applied to the Scottish budget of over a billion pounds perhaps you would like to tell us how big an increase in council tax would be required for that? Because it would be a lot more than an increase of 19 per cent!
Perhaps when you reflect on why the Greens did not do very well at the last election and the SNP did do well it might be worth considering that a basic understanding of, and connection with, the way that ordinary people live has something to do with it. Anybody who thinks that ordinary, average families could afford a big hike in taxation at this time is simply living in cloud cuckoo land.
Type your comment here
#67 by Steve on September 16, 2011 - 1:04 pm
The Greens LVT would have raised an extra Billion, and the SSP’s Local Income Tax would have raised an extra £1.5 billion.
Both of these proposals would by and large have cut tax bills for the poorest, and raised them for those that could afford them.
Not only would this have given some protection against the cuts, but putting money in the pockets of low earners might have helped stimulate demand driven economic growth, something the SNP claim to care about.
Whilst the SNP may be playing a blinder politically, and good luck to them, they have turned away from using the powers they do have to mitigate the cuts and to make taxation fairer. To blame Westminster is a total cop out when you consider the powers over local taxation that we do have but don’t use.
#68 by Indy on September 17, 2011 - 8:31 am
Would the LVT really have raised a billion pounds in the lifetime of this parliament?
Because in the report that Andy Wightman wrote for the Scottish Greens on the practical implementation of LVT he suggested that the completion of the programme of Land Registration (necessary to develop a Scottish Land Use Database) be accelerated to 2015.
By the time that the Green manifesto was written however it was being proposed that this process could all be completed by 2012.
Call me a cynic but …..
#69 by Steve on September 17, 2011 - 7:45 pm
How hard would it have been to conduct a valuation exercise? I suspect with enough will (and money) the process could be delivered in a pretty quick time period.
#70 by Indy on September 18, 2011 - 10:31 am
I don’t know how hard it would be – I merely note that the expert commissioned by the Green Party suggested that an accelerated process could be completed by 2015. Whereas the manifesto said that it could be done by next year.
We have to ask ourselves how much work went in to scoping out whether that process could, in fact, have been completed in one year or whether that claim was made simply because it was expedient.
#71 by Gaz on September 16, 2011 - 7:33 pm
Pretty much the same stuff he has been spouting since being elected to West Lothian Council a few years back. So the lack of detail on the how is telling.
Still no answers other than to hammer business (at the expense of thousands of jobs in the areas he is meant to be representing).
Some of his aspirations are sound enough. Public ownership of renewables would be great. If only we had the ability invest taxes from oil in forward looking projects like that.
Sadly for Neil he would prefer Scotland suffers Tory governments it didn’t elect rather than allow the people of Scotland the powers it needs to fulfil his ambitions.
And for what? To protect the UK’s ‘place’ in the world and the jobs of countless MPs and Peers who used to espouse the same ambitions he does until they got on the Westminster gravy train.
#72 by Scottish republic on September 16, 2011 - 10:41 pm
“””””””””What should Labour do?””””””””””
Among the many popular suggestions that spring to mind, there is one that is fit for decent parlance: fulfil your pledge ‘to abolish failed Scottish Labour’.
That’s an idea most of the electorate could get on board with.
Frankly, Labour is so self-serving and off to the right-wing that nobody cares what you do.