Left on the cutting room floor?

No one disputes that the root cause of austerity comes from the British government. The Tory austerity programme means that by 2020 public service spending in Scotland will have been cut by a massive 12.5% in real terms since 2010. These cuts are unnecessary and pursued as an ideological attack on public services.

In response, the Scottish Government has decided to slash council grant allocations to meet most of these cuts. Local authorities have been forced into a financial settlement, including the 9th successive year of the regressive council tax freeze. Any council that mitigated austerity locally by raising the Council Tax would lose not only the Council Tax freeze support but all the ring fenced grants. Local democracy is trampled into the dust.

This year’s budget is taking 5.2% or £500m in real terms (£350m in cash) out of local government. Unavoidable commitments, such as employer National Insurance contribution increases, could double these cuts. As well as direct reductions to services, this could mean another 15,000 job cuts for local councils. Of the 50,000 jobs that have already been lost in devolved public services, 40,000 have been in councils. Even Convention of Scottish Local Authorities (CoSLA) has described the financial settlement for local government as ‘undeliverable without an unacceptable level of cuts to services and staffing’.

The one positive element from the budget discussions is an allocation from the £250m identified for social care to pay the Scottish Living Wage to care workers. There still needs to be clarity over how this money is allocated, but this could make a significant contribution towards the staffing crisis in Scotland’s social care provision.

The problem with an austerity budget is that unless you expand the spending envelope, the debate simply deteriorates into robbing Peter to pay Paul as the First Minister has fairly pointed out. The departing CoSLA chief executive, Rory Mair, hit the nail on the head in his parting interview in the Sunday Herald, saying:

Scotland and local government have the power to raise more tax. So why are we keeping tax the same and making public service cuts? That’s the very definition of an austerity budget. If you self-deny the ability to raise more money and you decide that the way to deal with a downturn in resources is to cut, however you dress it up, that’s an austerity budget.

Under existing powers, Scotland has limited opportunities to grow the spending envelope as an alternative to austerity. That changes this year when the Scottish Parliament takes control over 10p of income tax, known as the Scottish Rate of Income Tax (SRIT).

UNISON has argued that the Calman powers are flawed because they don’t allow Parliament to vary the income tax bands or the rates within the bands. However, that doesn’t mean they are not progressive – as the IPPR, Resolution Foundation and other academics have confirmed. And these flaws will in any case be corrected next year under the new Scotland Bill.

In the context of a general political reluctance to test public opinion on tax increases, Scottish Labour’s proposed 1p increase in the SRIT is, if nothing else, bold. This would raise an additional £475m next year, rising to £520m in 2018-19. Scottish Labour is proposing a £100 rebate for taxpayers earning less than £20,000 which will reduce this revenue gain by £50m but ensures that the lowest paid pay nothing more – including the average council worker in Scotland. The Scottish Parliament Information Centre (SPICe) has confirmed that 64% of the increase would be paid for by the richest 20% of households.

Politically, this creates a challenge for the Scottish Government’s anti-austerity rhetoric and reminds us that deficits can be reduced through taxation, as well as by cuts. ‘Scandamerica’ has never been a credible concept for me however much we would like to believe it was possible. Increasing SRIT doesn’t mean an end to austerity in Scotland but it will raise enough revenue to save thousands of jobs and protect vital local services. It has also sparked a long overdue debate in Scotland about taxation and public services.

Dave Watson is the Head of Policy and Public Affairs at UNISON Scotland