SNP’s renews independence push as economic challenges rise to the fore

The party was comfortably re-elected to a fourth consecutive term in office at May’s Scottish Parliament elections and this summer, party members endorsed the terms of a cooperation agreement with the Scottish Green Party that has seen two Green MSPs – Patrick Harvie and Lorna Slater – join the Scottish Government as ministers.

A cautious approach to tax

The SNP’s winning election manifesto has promised Scottish taxpayers certainty and stability, with no major changes to the Scottish Parliament’s existing devolved tax powers.

The most significant of these are the decision to freeze rates of Scottish income tax rates and to limit any future threshold changes limited to inflation, while rates of the devolved version of Stamp Duty Land Tax – Land and Buildings Transaction Tax (LBTT) – will also be retained at their current levels, although the party has promised a review of the operation of the LBTT Additional Dwelling Supplement, or ADS.

However the party has left the door open to future reform of Council Tax, with the Green agreement promising to look at “a fairer, more inclusive and fiscally sustainable form of local taxation”.

The party is also expected to press for the further devolution of tax powers, with National Insurance and full VAT and income tax devolution all expected to form part of the Scottish Government’s approach to the upcoming fiscal framework review.

Independence maybe?

While support for separation from the UK has dipped in polls since the Scottish Parliament elections in May, the margins of error either way are razor thin and the outcome of any vote remains highly uncertain.

The First Minister, Nicola Sturgeon, has suggested that a second referendum could be held by the end of 2023, once the impact of the Coronavirus pandemic has receded. Party members backed a motion supporting a second vote “as soon as it is safe to hold a proper, detailed, serious national debate”. It has been reported that the motion also called for the date of the vote to be determined by “data-driven criteria” about when the public health crisis has ended.

Asked by the BBC whether he would support such a timetable, the economist and former MSP Andrew Wilson, who chaired the SNP’s Growth Commission designed to lay the economic groundwork for a second vote and is therefore seen as a significant and prominent voice in this debate, told BBC Scotland’s Sunday Politics show that a vote in the autumn of 2022 or in 2023 would be “ideal”, but that it would be “hard work, an effort, challenging, but ultimately worth it”.

But senior figures within the party have been keen to say that the party’s ultimate goal can only be achieved if they are able to reach out to undecided Scots voters who don’t’ see themselves entrenched on either side of the constitutional debate.

The party’s depute leader (and current Justice Secretary) Keith Brown made this point in his speech to the conference, telling delegates that it was the job of members “to convince those who do not yet support our cause” and to do so by “engaging in respectful, constructive discussions with those fellow Scots who remain open to persuasion”.

First Minister Nicola Sturgeon too called for “co-operation not confrontation”, and suggested that the Scottish and UK governments could reach agreement, “as we did in 2014” to allow for a second referendum, the case for which, she said, had been made “clear” by the outcome of May’s election.

However, the chances of an agreement similar to the one that heralded the 2014 vote are thin – if not non-existent – as a spokesperson for Prime Minister Boris Johnson ruled out the prospect “even before she had finished speaking”.

National Insurance and Universal Credit changes highlight differences

In their speeches to the conference, ministers and MPs jumped on topical tax matters such as last week’s National Insurance increase to make the case for a more progressive use of Scotland’s tax system.

The First Minister said that Boris Johnson’s decision to increase NI by 1.25 per cent from next April “fails the basic test of fairness”. She said that, in contrast, “with very limited tax powers at our disposal we (the SNP) introduced an income tax system with fairness at its heart”.

Ms Sturgeon also suggested that, “[b]y making us poorer”, the UK would “say we can’t afford to be independent”. These remarks drew scorn from the Scottish Conservatives who accused her of inventing a “wild conspiracy theory” that “only the most fanatical SNP supporters” would believe. They said in response that the Scottish Budget was now its “biggest ever”, adding that the strength of the UK has protected 1 million Scottish jobs through furlough and enabled the roll-out of the Coronavirus vaccine.

The SNP’s Westminster leader, Ian Blackford, described the NI increase as “a new Tory poll tax, that falls hardest on Scottish families, the young and the lowest paid”. He said that the move was “one more reason why our future must be independent, giving us the power to deliver progressive taxation – instead of being forced to pay the cost of regressive Tory tax hikes that always punish the poor”.

Finance Secretary Kate Forbes saw the changes announced last week as a threat to devolution, saying that the Conservatives “unlikely to ever secure power in Scotland though a democratic process, are now dismantling the devolution settlement”.

Ms Forbes called on the (now former) Chief Secretary to the Treasury, Steve Barclay, to align the Upper Earnings Limit for NI with the higher rate threshold for Scottish Income Tax.

In a letter published on the Scottish Government’s website, she wrote that the ‘longstanding’ anomaly that sees Scottish taxpayers will income between £43,662 and £50,270 charged a marginal tax rate of 53 per cent should be addressed by UK Ministers at “the next available legislative vehicle”.

The SNP conference took place shortly before the publication of two new research papers by the Institute for Government concluded that an independent Scotland would need to increase taxes or cut public spending in its early years, and that limited currency options could leave the country vulnerable to economic shocks.

The researchers said that these challenges were not insurmountable, but that they posed a risk to the ambitions held by many within the Scottish independence movement that an independent Scotland could grow its economy quickly and reduce the impact of higher interest rates.

SNP members also backed a conference resolution calling on the UK Government to make the £20 uplift to Universal Credit permanent. Led by the Glasgow MP, David Linden, the resolution welcomed the £20 increase introduced at the start of the pandemic, but noted that its removal would ‘inflict significant pain on some of the most vulnerable communities’.

Members also backed calls for reform of local government funding that, among other matters, would give councils greater leeway to introduce new sources of funding, and proposals for a four-day working week, for which the Scottish Government has already committed funding for pilot schemes.

Party members are due to gather for the second of their online autumn conferences between 26-29 November.

By Chris Young, CIOT External Relations.