SNP budget protects the rich while continuing the austerity agenda

Socialist Party Scotland's response to the SNP's Scottish budget

As predicted, today’s draft budget from the SNP Scottish Government, if unchanged, will result in continued cuts to public services over the next year. Public sector wages which have fallen by 15% in real terms over the last decade will continue to lag behind rising inflation. Moreover, the opportunity to begin to reverse the chasm between the rich and working poor was refused by the pro-business SNP leadership. The paltry tax changes they did propose will do nothing to tackle the record levels of inequality in Scotland.

Council services

As in previous years the burden of austerity will be faced by local government workers and the users of essential council services. Here, a real terms cuts of £134 million in revenue funding for local authorities in 2018 was announced. And this despite the fact that in the run-up to the budget Scottish councils made clear they needed a £545 million increase just to stand still. The result will be savage cuts budgets in February and March across Scotland’s 32 councils if, as seems likely, SNP and Labour councillors vote to implement the cuts. 30,000 council jobs have already been axed since 2010. The continued onslaught, including on workers jobs and terms and conditions, must be met with a declaration of war by the trade unions as we go into the new year.

Public sector pay

Even the long overdue decision that the 1% public sector pay cap imposed by the Scottish Government for the past seven years was to end raises more questions than it answers. Derek Mackay, the Scottish finance secretary, announced a 3% pay rise for all public sector workers earning up to £30,000. And a 2% increase capped at £1,600 for those earning more than £30,000. But with inflation measured by CPI now at 3.1% and rising – 3.9% for the more realistic RPI rate – this will do nothing to reverse the years of pay austerity suffered by council workers, NHS staff and civil servants.

Moreover, it is clear that the 3% increase for 2018 will not be fully funded by the Scottish Government and will come out of existing budgets. This is unacceptable and can lead to, for example, a ratcheting up of attacks on workers terms and conditions alongside further cuts to services. Trade unions should reject the 3% figure and demand a fully funded pay rise that begins to reverse the decade long real terms pay cuts. Nor will the “increased” funding to the NHS in Scotland stop the ongoing crisis in GP provision and cuts to local health services either.

Tax

This budget, for the first time, gave the Scottish Government control over income tax and the setting of rates and bands. The opportunity to introduce progressive taxation by levying higher rates on the richest and raising significant amounts for public investment was in the hands of the SNP. In the end they capitulated to the demands of business and the need to be seen to protect the wealthy. A paltry 1 penny increase in tax for those on £150,000 or more will barely be noticed by the elite. Only £164 million will be raised over all through the proposed tax changes. But this also includes tax increases for workers earning over £33,000, which includes teachers, social workers, some NHS staff and others who have suffered years of pay cuts. The tax cuts from April 2018 for the lowest paid amount to a meagre £20 a year in the pockets of those earning less than £20,000

Derek Mackay claimed the “progressive” tax changes would “mitigate UK budget cuts, protect our NHS and public services, support our economy and tackle inequality in our society.” In truth, the budget does none of these and will only continue the austerity agenda in Scotland. Many workers and young people who have voted for the SNP will be disappointed in the SNP government protecting the top 1% while continuing with cuts and below inflation wage cuts on the working class majority. Socialists and trade unionists demanded real tax increases on the super-rich which would have raised hundreds of millions for public services. Threats by the rich to move to England or to avoid or evade tax, parroted by SNP leaders, can only be answered with socialist policies, including demands to nationalise the banks and big business and for capital controls.

Depression for years

Very significantly, the newly established Scottish Fiscal Commission (the equivalent of the UK Government’s Office of Budget Responsibility) outlined their economic growth projections for Scotland for the next few years. And they make shocking reading. Predicted GDP growth for 2017 is 0.7%, the same in 2008, 0.9% in 2019 and 0.6% in 2020. What these figures illustrate is that on the basis of a continuation of capitalism, – whether Scotland is independent or not – there is no way out of a spiral of permanent cuts and falling or stagnant incomes. Only a socialist Scotland based on democratic planning, public ownership and a massive programme of public investment in housing, education and public services can offer a way forward.

No cuts budgets 

A mass campaign involving the trade unions, communities is essential. A key first step in building that resistance is to demand that the Scottish Government and local councils set no-cuts budgets. For councils, for example, borrowing powers, reserves and capitalisation could be used to set a legal no-cuts budget. As of 31st March 2017, useable reserves in Scottish councils stood at £1.9 billion. No cuts budgets are the policy of unions like Unison, Unite and the GMB. 

Such a stand, alongside a programme of sustained and coordinated strike action by the trade unions on pay, workload and cuts, could force this weak Tory government to retreat. May’s government is hanging by a thread and mass action can win significant concessions and even ensure the removal of the government itself. 

The Liverpool socialist council in the 1980s was hugely influenced by the policies, tactics and strategy of Militant – the forerunner of the Socialist Party. That council refused to make Thatcher’s cuts, built a mass campaign alongside the working class of the city that included a city-wide general strike and mass demonstrations and won extra money to build thousands of council houses, nurseries, sports centres etc. In order to fight cuts effectively, it’s also necessary to stand against the economic system that is driving austerity and to fight for socialist change.

Political alternative

The SNP leaders have failed to fight Tory austerity, despite their rhetoric. While we welcome both Jeremy Corbyn’s and Richard Leonard’s victories over the Labour right wing, they need to use these steps forward to call on all Labour councillors to stop implementing Tory cuts as a step to building a real left and anti-austerity Labour Party. Socialist Party Scotland is part of the Trade Unionist and Socialist Coalition. We are prepared to stand against SNP and right wing Labour politicians on a no-cuts and socialist platform. A mass working class party to counter the cuts politicians is essential in Scotland.  

Trade union action needed

If SNP and Labour MSPs and councillors refuse to make a stand, the mass mobilisation of public sector workers and local communities can still have a huge impact. The 1% pay cap may be lifted but with inflation rising way beyond 3%, below inflation rises – pay cuts by another name – are set to continue. Ballots for strike action in local government, the NHS, the civil services as well as in the private sector should be organised to build a united front on pay and cuts. Decisive action by the organised working class would turn the tide against the austerity agenda. It could even force some councillors and MSPs into taking a real anti-austerity stand and refusing to make cuts. What is clear is that the mass mobilisation of the trade union movement will be crucial in the months ahead.