This was to have been a historic budget — the first time a Scottish government had approached a financial settlement armed with the power to alter tax rates and significantly influence the balance of wealth across the country. For an SNP administration with a social democratic agenda, and the express aim of achieving greater equality, that was potentially an opportunity to make its radical intentions clear.
But this has never been a radical government. Caution has been its watchword, and taking a managerial approach to its finances has always been given precedence over strong political statements. John Swinney, the former finance secretary, had warned that raising tax levels for higher earners might well have the effect of alienating them. That is, those at the top end of the scale were also those who would find it easiest to relocate homes or offices, and that ultimately would have an adverse impact on the nation’s economy. That risk has been avoided.
There is one minor tax change. Mr Swinney’s successor, Derek Mackay, announced that he would not be replicating the UK Treasury’s tax cut for higher earners, which means that the 40 per cent rate will start at £43,430 in Scotland, compared with £45,000 elsewhere in the UK. It is a shift of emphasis rather than a serious fiscal change, but it will be seen as indicating the direction of travel for the government and it may well be the portent of more progressive tax changes.
More significant is the ending of the council tax freeze that has been imposed in Scotland for eight years, and is now to be lifted. From April local authorities will be able to raise council tax by up to 3 per cent and use the funds to improve services. At the same time the government is to inject additional funding into local government with the aim of closing the attainment gap between children from deprived and better-off areas.
Some may take a cynical interpretation from this. The councils that have had to accept the freeze over the years have tended to be controlled by independents or coalitions of opposition parties. The ones that will benefit will be largely SNP-dominated. That, however, is less important than the principle of greater autonomy.
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Giving back the councils’ right to make their own decisions on how to spend money raised locally is the right thing to do. Early indications had been that anything raised by council tax increases would go into a central pool, to be distributed by government edict — a very familiar example of centralised policymaking. That idea seems to have been dropped, meaning that councils now face tough decisions over whether to increase local taxes or cut services. At least, however, those decisions will be theirs, rather than imposed from above. Councils ought to know better than national government where the gaps in social care and education are and how best to bridge them.
They will also need to explore ways of introducing greater efficiency. There has been pressure on councils to find means of merging or sharing services. There has been too little progress with this but now that greater autonomy has been given, the time has come to explore ways to deliver this.
Announcing increased funding for education, to go directly to schools rather than through local authorities, is another sign of a government beginning to recognise that local decisions are usually better than centralised ones. If, at the same time, it is able to accept that this may mean decisions that diverge from its own strategy, then that should be seen less as a sign of weakening than a recognition of Scotland’s diversity.
No one is likely to look back on this budget as marking a historic watershed. But in it can be seen signals of a healthy change of direction from a government whose tendency has usually been to impose policy from the centre.