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Viewpoint / Editorial: Tax reforms welcome amid Tory austerity – but SNP must act on ferries pledge

LAST week’s draft budget from Scotland’s finance secretary Derek Mackay was more notable locally for what it did not contain – fair ferry funding – than what it did. More on the infamous ferries pledge later. But what are the implications of the things it did contain?

Fair ferry funding absent from draft budget

Few would quibble with commitments on affordable housing and £600 million towards the ambitious aim of providing superfast broadband access to 100 per cent of homes by 2021.

There was gnashing and wailing from predictable sources about changes to the income tax system. Much national coverage homed in on the fact that one million people earning in excess of £33,000 a year (comfortably above the national median income) will pay a little more tax.

Incidentally, considerably less coverage was devoted to the fact that around 1.5 million low and middle-earners will receive a small tax cut. But the entire narrative fostered by the right-wing press over the past 30 years fails to recognise that paying a sensible level of tax is a social good in any civilised society.

True, any kind of tax rise might seem harsh on hardworking public servants who have endured years of frozen pay. But unions have welcomed the draft budget’s commitment to give nurses and teachers pay settlements at least in line with inflation in 2018/19.

In addition – and this isn’t about fuelling a grudge among those who want to break up the UK – the SNP is grappling with year after year of declining revenue funding from Tory ideologues whose ultimate goal is to massively shrink the state.

Extra capital funding from Westminster is hugely welcome, but it is for spending on infrastructure rather than services. The Fraser of Allander Institute says the block grant will be worth half a billion less in real terms by 2019/20 compared to today. It is further estimated that the grant will be worth £2.6 billion less than it was when the Tories took power in 2010.

Austerity has caused untold damage to public services north and south of the border – the public’s logical desire to protect NHS funding above all else has come at a cost to local government, with Shetland Islands Council again voicing understandable disappointment at its settlement last week (a 2.6 per cent real terms cut year-on-year, the third highest among Scotland’s 32 local authorities).

The news for NHS Shetland was marginally better than expected – but with rising demand and healthcare inflation it still faces serious difficulties in the years ahead.

Targeting working people’s income is maybe not the ideal way to bolster funding for public services, but in the absence of a fuller suite of tax powers – which the Smith Commission failed to deliver following the 2014 independence referendum – the SNP’s room for manoeuvre remains limited.

There is a strong argument that by only increasing the upper rate of tax by a penny, Mackay was being too timid. The estimated £165 million in extra revenue generated by the tax changes is welcome, but much more will be required in future years – and, in the absence of sanity breaking out at Westminster, those with the broadest shoulders ought to bear the burden.

So it must be hoped that the creation of new income tax bands heralds the beginning of an era of more progressive taxation in Scotland.

What is particularly frustrating, at a time when we ought to be having a grown-up debate about how to properly fund services, is listening to the rambling incoherence of Scottish Conservative politicians like Murdo Fraser. His party may be the official opposition, yet they are also a political outlier in a parliament of broadly social democratic parties.

Let’s be clear: the Tories have decimated state spending UK-wide for over seven years, and now oppose tax rises while simultaneously calling for greater expenditure. Despite being his party’s finance spokesman, basic arithmetic is evidently not one of Fraser’s strengths.

So, while Highlands and Islands list MSP Jamie Halcro Johnston’s support for greater ferry funding is welcome, his party’s nakedly ideological decision to take a wrecking ball to public services must never be forgotten.

Under the circumstances, on the whole last week’s pragmatic – if imperfect – budget was not the wall-to-wall bad news it might have been.

That, nevertheless, does not get the SNP off the hook for one explicit pledge they have yet to honour. SIC officials this autumn constructed a lengthy timeline of the number of times the government has spelled out its commitment to fair ferry funding.

Shetland’s oil fund was created to help the community deal with the upheaval caused by the North Sea industry. It is not there to offer governments – at Holyrood or Westminster – an excuse to welch on services it is duty-bound to fund.

In the context of a £31.5 billion overall budget, the £10 million or so required for the Northern Isles is not a huge sum. There is cross-party consensus in favour of fair funding, and the ferries shortfall simply must be bridged.

If the government ignores the will of parliament in its finalised budget, transport minister Humza Yousaf should be compelled to travel to the communities of Bressay, Fair Isle, Fetlar, Foula, Papa Stour, Unst, Whalsay and Yell to explain which sailings he thinks should be cut from the timetable.

This website has previously argued that MSP Tavish Scott could at times be more constructive in his dealings with the nationalists in a hung parliament that presents opportunities to achieve things for Shetland.

We continue to hold that view. But by calling for Scott to bring ferry funding to the budget negotiating table, SNP ministers are laying a very transparent trap that the Liberal Democrat was correct not to walk into.

SNP supporters may argue that such brinksmanship is in the nature of minority government. But it is pretty cheap politics to use a commitment contained in the governing party’s own manifesto as a carrot to garner support from other parties.

Local councillors have vowed to use the next few weeks to press home the unanswerable case for fair ferry funding. If they want to demonstrate that they truly are a party that governs for all of Scotland, SNP ministers must honour their pledge to islanders.