On the campaign trail 16 – The fiscal framework

Let’s be honest, despite it being cited as the area that can win or lose an election working out economics can be difficult and dry. Especially for someone like me who never was the best at numbers and maths.

All this fiscal framework business has been making my head spin. It’s all part of the new powers that are coming to Scotland but there has been, to put it mildly, disagreements between the Scottish Government’s John Swinny and Greg Hands, the chief secretary to the UK treasury.

It was agreed that neither Scotland nor the rest of the UK should not be any worse off because of the Smith agreement, it was also decided that Scotland should raise its own income tax. As it would be unfair for Scotland to still receive the full block grant it currently gets from Westminster as well as raising its own money the Barnett formula block grant given to Scotland will be reduced. So far so fair you might think.

Where the two camps disagree is on how the amount of income tax Scotland will raise can be predicted. Swinney wants a per capita indexed deduction which would help compensate for lower population growth in Scotland. The UK Government say this is unfair to taxpayers in the rest of the UK. It’s also difficult to predict how much Scotland will raise in tax in future years since Scotland’s tax policy could be different to that of the rest of the UK when Holyrood uses these new powers.

Nicola Sturgeon says the UK Government’s proposed method would leave Scotland £3 billion worse off over 10 years, meaning the ‘no determent’ part of the Smith agreement would not be adhered to.

We’re now in a situation where there’s very little time to go to get an agreement as the deadline is February 23. Hands claims failing to agree will ‘let down the people of Scotland’ while Swinny is adamant he will not agree to anything that may not be in Scotland’s best interests. Surely a wise decision, after all, the Scottish people is who he is there to serve and, if they feel he has done wrong so close to an election, it could be detrimental to the SNPs chances of growing its parliamentary majority further.

It would seem that both sides might have to give a little in the final discussions if they want to make this deadline which is place to make sure the Scottish Parliament can scrutinise it before it dissolves for the election on March 23.

This deadline may have been possible had Hands not decide this was the optimum time to take a holiday. Don’t get me wrong, he is entitled to holidays and a personal life but when a crisis pops up at work many people have to delay their holidays and when you have accepted a job like this sometimes it has to come first. The First Minister is said to be fuming and Hands says he is available on the phone and will return if Swinney is ready to make a significant move. It makes it look like Hands is not taking this seriously at all.

This seems like it’s the Scottish Government that have the most to lose if this drags on. The UK Government can sit on its hands and wait without any real difficulty. Having this hanging over the SNP when they’re campaigning could have a negative effect although at this point it is difficult to see anything preventing them from having a larger majority after the May election.

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