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General election 2019: SNP pledges ‘could mean more austerity’ – IFS

BayRadio | December 5, 2019

Introducing the SNP’s general election pledges in an independent Scotland could lead to more austerity, according to an economic research group.

The Institute for Fiscal Studies (IFS) said the SNP’s manifesto set out plans to increase spending while also setting out a list of tax-cutting measures.

It said the SNP had not costed these pledges, unlike the other main parties.

But it said spending cuts would have to be made elsewhere, or other taxes would have to rise to pay for them.

The IFS has previously said that the spending pledges of both the Conservatives and Labour ahead of the election were “not credible”, and accused both parties of not being honest with voters.

It said the Liberal Democrats’ manifesto would involve lower levels of borrowing than under Labour or the Conservatives, but would still be seen as “radical” in “most periods”.

The SNP manifesto was unveiled last month by leader Nicola Sturgeon, who said her party was offering Scottish voters a chance to “escape Brexit and put Scotland’s future in Scotland’s hands”.

What does the IFS says about the SNP manifesto?

In his analysis of the SNP’s manifesto, IFS associate director David Phillips said it differed from those of the other three major parties because it was not “a plan of action for five years of governing the UK”.

Writing in the Scotsman newspaper, Mr Phillips argued that the document was instead about “starting the process of leaving the UK in the next year”.

He highlighted the party’s call for the UK government to dramatically increase spending on the NHS in England, which would add hundreds of millions of pounds to the Scottish government budget through the Barnett Formula.

He said spending proposals such as the abolition of the so-called “bedroom tax”, ending the two-child cap on means-tested benefits and other increases to Universal Credit would benefit low-income, working age families.

But he said other proposals aimed at pensioners, such as keeping universal free TV licences for the over-75s and offering “compensation” for the so-called Waspi women, could actually increase inequality.

This is because pensioners are already “less likely to be in poverty than the rest of the population”, he said.

The SNP has also set out a list of tax-cutting measures – including reducing VAT on e-books, bikes, solar panels and energy efficiency measures and calling for National Insurance thresholds to “fit devolved income tax rates” – which Mr Phillips said could mean changes that reduce revenues by billions of pounds across the UK as a whole.

He argued that it could therefore have been “problematic” for the party to have set out the cost of the measures it was proposing.

Mr Phillips said this was because the SNP’s own Growth Commission, which examined the finances of an independent Scotland, had already recognised that the country would “start life with a significant budget deficit”.

He said the SNP should be “commended” for setting out a plan through the Growth Commission to reduce the budget deficit significantly over the course of a decade.

But he said it was “inconsistent” to claim that the Growth Commission’s plans would not be austerity but at the same time argue that the UK government had been pursuing austerity in recent years.

He added: “Pursuing the types of policies suggested in the SNP manifesto in an independent Scotland would mean either those cuts would have to be even bigger, or other taxes would have to be increased to pay for the proposed net giveaways.

“Therefore, in the short-term at least, independence would likely necessitate more, not less, austerity.

“Of course, that does not mean Scotland could not afford to be independent, or even that in the longer term better governance and better policymaking as an independent country could mean a stronger economy and more to spend on public services. That is possible – although far from guaranteed.

“It just means that an independent Scotland would have to count its pennies and pounds in at least its first decade of life.”

How has the SNP responded?

Kirsty Blackman, the SNP’s deputy Westminster leader and economy spokeswoman, insisted that investment in public services would increase “year in year out” after independence, which she said was in “stark contrast to the brutal austerity that is the hallmark of successive UK governments.”

She added: “The Growth Commission explicitly rejected austerity and instead proposed that Scotland’s inherited deficit be reduced by growing the economy, not cutting spending.

“The latest Gers figures proves that this is possible. It shows that Scotland’s notional deficit fell by 1.1% at the same time as spending increased by 2.5%. This was achieved because growing the economy increases tax receipts.

“Brexit is the biggest threat to Scotland’s economy and will have a deep and lasting impact on our public services.”

But Scottish Conservative finance spokesman Murdo Fraser said it was clear that “independence means more not less austerity”, and that the SNP was looking to “lead Scotland down the road to economic ruin, all for the price of a flag”.

Scottish Labour finance spokeswoman Rhoda Grant claimed that the SNP had “abjectly failed to come up with serious and credible policies”.

And Scottish Liberal Democrat leader Willie Rennie said independence would mean “at least a decade of new deep cuts at a time when we need to invest in education and boost mental health services”.

What did the IFS say about the other party manifestos?

In analysis published last week, the IFS said it was “highly likely” the Tories would end up spending more than their manifesto pledges, while Labour would be unable to deliver its promised spending increases.

Neither party was therefore being “honest” with voters, IFS director Paul Johnson said.

The Liberal Democrats’ manifesto, he said, would involve lower levels of borrowing than under Labour or the Conservatives, but would still be seen as “radical” in “most periods”.

However, he added that, given the uncertainty around Brexit, it was difficult to determine what the exact effects of the three parties’ offers would be.

Written by BayRadio

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