No-one is innocent in the cuts blame game

Robin McAlpine

Keir Starmer says all his failures to come are the fault of the Tories. The SNP says all their failures to come are the fault of Starmer. Sarwar says the size of the Scottish Government's budget has nothing to do with the decisions made in Westminster. And my son says he did tidy up his bedroom and that someone else must have sneaked in and messed it up again.

But I have questions. I have questions for them all. I've asked my son the ones I've allocated for him (like 'who?' and 'why?'). I'd like to ask Keir Starmer what is it the Tories got wrong since, fundamentally, Starmer is wedded to exactly the same economic and fiscal strategy give or take some window dressing.

I'd like to ask Sarwar if he still believes in the Easter Bunny and whether it would upset him too much if I explained that it isn't a magical rabbit leaving all that chocolate, its a person making decisions and they've got a name and can be called by it.

My question for the SNP is more subtle; why does everything always catch you by surprise, like you never know it's coming? I ask this to lead the SNP towards the conclusion I think it should reach – it really didn't have grown-up multiyear budget planning and it really didn't take a grown-up long-term approach to public finances. Let me explain.

To do this I want to take only three examples of the problem. Right now the Scottish Government can't meet bills and keep public services going but claims that it can't raise enough tax income to do anything about it, but also that it people can't afford the Council Tax so it needs frozen.

Example number one is that Council Tax. Everyone-but-everyone knew there was going to be a horrible budget squeeze this year (it's been coming for a while and will continue for a while) but the Scottish Government decided to spend coming on for £200 million to freeze Council Tax. That was irresponsible, especially since the vast majority of the benefit went to the wealthiest households.

The bigger issue is that this is a 20-year problem now. The Council Tax needed reformed in the early 2000s and the SNP came to power promising to replace it with a local income tax. So it froze the Council Tax by funding the local authorities accordingly if they'd do just that. There was a lot of money about back then.

Except they frankly bottled it and reformed nothing, and then did it again in 2016 when they again held a review which again concluded it should be reformed. Because it is a woefully unjust tax it is particularly difficult to raise income from because the poor pay five times as much proportionately than the rich. So its a bad tax at raising income.

The failure to understand this as something other than a short-term popularity contest in which the SNP avoided offending anyone by doing nothing means at a later date you are reliant on a tax which doesn't work but is still so unfair you say you need to protect people from it - expensively. That is the impact of short termism.

The second example is pay deals. A couple of years ago the Scottish Government was basically stonewalling on negotiations with trade unions over public sector pay with inflation rampant. Then the binmen went on strike during the Edinburgh Festival, the city looked apocalyptic during its major international showcase, the then-First Minister was embarrassed by it so she rushed out a generous pay deal.

Except that created a baseline which inevitably worked its way through the other negotiations and left the Scottish Government with a total bill it was simply not prepared for. That leads us (in part) to where we are now and the constant search for cuts.

My point is that if you make policy as a linear sequence of efforts to be popular, you'll eventually find the road blocked. Running a country is not about seeking maximum popularity in each decision, it's about making decisions in a planned and coordinated way. I'm most certainly not saying the Scottish Government shouldn't have made generous pay deals, I'm saying it should not have stonewalled early on and engaged seriously in a government-wide pay strategy it was capable of managing.

Here is a third example; multiyear budgeting. The old Labour Scottish Executive used to produce spending reviews which covered three years of spending. This gave spending departments and the activities they funded predictability and the ability to plan. It really was very valuable.

I can't remember who stopped doing this first, the Scottish Government or the Westminster Government, but they both stopped it. This was a mistake. Government is not something you do for one year and then for another year and then for another. Government is something that is recurring and ongoing and should be planned as such.

I have some sympathy with the Scottish Government on this – it can't create three-year budgets on its own if it isn't given three year budgets. But it could go through the processes and create indicative budgets. The Spending Review process was a good one, where spending departments asked all their delivery arms and partners to come up with bids for what they needed and the whole lot was put together and assessed strategically.

What I'm trying to get across here is that the fixed-budget reality for Scotland risks turning the parliament into a 'pocket money parliament' which gets cash to spend and just divvying up that spending becomes the real purpose of government. That is anti-strategic. The problem is that it is the Scottish Government has leant into this vision.

In fact it is worse, the Scottish Government took the pocket money conception even further and saw the Scottish budget as a 'slush fund' with which to buy popularity. The many, many hundreds of millions of pounds spent by the Scottish Government on an endless stream of small bid-in grant funds really only served to give the impression of government action. Likewise all the endless, expensive working groups, consultations and reviews that led to nothing.

Very few of these things delivered anything more than an initial headline. They came, they went, they left little behind and they absorbed resource which should have been used strategically for transforming the fundamentals underlying government performance.

On the whole Scottish Labour was content to take the 'pocket money' approach, having always conceived of the Scottish Parliament as something more like a regional authority which also passed laws. The SNP administration early on made noises about changing this approach and did take some strides in that direction, but was probably derailed by the financial crisis and then distracted by the referendum.

But the post-referendum administration really embraced pocket-money-politics and used it to build high short-term popularity. Sadly it didn't change the structural realities in Scotland so when the money ran out, the popularity ran out with it.

All of the above is to try to explain the comments from the Scottish Fiscal Commission, the Fraser of Allander Institute and others on the failure of the Scottish Government to take long-term approaches. The Scottish Government in recent years was highly, highly short term in its behaviours and that is catching up with them now. It is a real problem for Scotland. We don't change our reality, we just spend money to sustain it.

The whole 'whose fault is the cuts' spat is going to turn into an ugly no-score draw in which groups of unpopular politicians throw mud at each other and an awful lot of it sticks basically everywhere. It is obscuring a more important reality.

Centrist politics in Britain have hit their end point and unless a miracle comes along, Starmer isn't going to get the kind of economic miracle he needs to actually fund good public services from GDP rises alone. This might actually be the end of the line for that blatant fiction, and the terrain between now and the end of that line is really bleak. He will pay for this, and blaming the Tories is already reaching an end point.

Scottish Labour trying to sustain the idea that the exact same excuses its UK leadership is using don't apply in Scotland is not a long-term approach either. It won't be able to sustain this silliness because it is so overwhelmingly, patently silly. He really ought to stop that now while he still has no credibility left...

But the Scottish Government has nowhere to hide because, whatever resources it has had, it has used them badly because it wouldn't take a far-sighted or strategic approach. We are still rattling on with basically the same Scotland we inherited in 1999, little changed, little reformed.

Politics is famously a short term affair which suffers from its short time horizon. Thus it is, thus it ever will be. But when those time horizons shrink from five years to one year, sometimes not even that, things get worse and worse. Sure, the financial crisis and the pandemic were massive shocks to the system, but that ought to make longer-term planning more important, not less.

It is therefore very hard not to feel that it is us the public who will pay for all of this in higher taxes and lower quality public services and infrastructure. We had nothing else to vote for. The only political administration in the last two decades which did not accept the idea that the only problem with the economy is its size was Corbyn's. None of the rest even begin to accept that the problem isn't the volume of wealth but its distribution.

So all we have left is people telling us that they are stuck with no option but to manage decline. And it's all because of the other guy...