ANNOUNCING that the UK Government’s cut to the Winter Fuel Payment would be replicated in Scotland, top SNP figures including Deputy First Minister Kate Forbes said the party had been left with “no choice”.
Finance Secretary Shona Robison deployed similar rhetoric as she outlined some £500 million in cuts last week, painting a picture of a devolved government doing “everything we can” amid an “extension of the folly of austerity” at Westminster.
But campaigners, trade unionists, and opposition politicians in the Yes camp have argued that governments always have different options in front of them, it is only about which they choose to take.
The Sunday National spoke to a range of voices to hear what different choices the SNP could have made – or could still yet make – to have avoided some of the swingeing cuts facing the country.
Council and land tax reform
EVEN before first taking power at Holyrood in 2007, the SNP were pledging Council Tax reform. The party’s 2021 manifesto also said the party was “committed to reforming the Council Tax to make it fairer”.
As it stands, Council Tax is levied depending on what house values would have been on April 1, 1991 – a system which has drawn criticism.
The think tank Common Weal has suggested bringing in a replacement tax which would see people pay 0.63% of the current value of their home – updated regularly, or at every change of ownership.
A report from the Common Weal head of policy Craig Dalzell, published in April this year, said the 0.63% rate would have been “‘revenue neutral’ compared to council tax in 2019 – and would attract up to £650m extra in 2023 given house price rises in the intervening time”.
A staggered percentage system could make this proposed system more progressive.
Further, Dalzell’s 2024 report argued that by taxing land in the same way as housing – modelled on a system like Australia’s where tax is levied on land values with exemptions for things such as primary dwellings and farmland – some £450m could be raised annually.
Giving local authorities the freedom to set their own bands for the land tax would also allow for things such as a surcharge for foreign owners, which Australia also uses.
Dalzell told the Sunday National: “During her fiscal statement, Finance Secretary Shona Robison claimed that Scotland had no choice but to pass on even more austerity and that the Scottish Government had no tools to do otherwise. This is simply untrue.
“The Scottish Parliament has almost unlimited power to create new taxes so long as they are locally controlled and the revenues support local revenue. We suggest that Common Weal's property tax – which would replace Council Tax and start taxing land in Scotland – would have eliminated the need for the cuts we face today and would have empowered local councils to invest in their communities and local services.
“SNP members voted overwhelmingly for such taxes twice at last week's conference so there really is no excuse to do anything other than bringing forward a tax reform bill at the earliest opportunity.”
Property tax reform
WHILE a new Council Tax system may be a large job, there are smaller changes which could raise millions and could have already been put in place.
In November 2023, the Scottish Trades Union Congress (STUC) published research from Howard Reed, the founder of Landman Economics, into “the options for increasing taxes in Scotland to fund investment in public services”.
In his report, Reed outlined changes to the tax system that could only be implemented in the long run – and others that “could be introduced as early as April 2024”. Among these short-term options were some changes to how property is taxed.
Reed argued:
- Changes to Scotland’s Land and Buildings Transaction Tax (LBTT) – such as a two-percentage-point increase in the 10% rate for properties between £325,000 and £750,000, or creating new bands for non-residential sales above £250,000 – could raise £240m every year.
- A two-point increase in the Additional Dwelling Supplement (ADS) rate – which is currently charged at 6% on second or third buy-to-let homes – could raise £56m per year.
- The devolved Scottish Landfill Tax could raise extra funding. Reed proposed a 30% increase, which he estimated would raise £30m a year on top of the roughly £100m the tax currently brings in.
STUC general secretary Roz Foyer told the Sunday National: “The Scottish Government have made a rod for their backs through their inaction. Unquestionably, 14 years of Tory austerity have suffocated Scotland, but we are not without powers and the Scottish Government still refuses to use them fully.”
She went on: “Politically, we know tax rises aren’t easy and we know this is hard work for government. But cutting public services is even worse. The choice in front of them is simple - do what must be done in the here and now, using the full powers of the parliament, or inflict Scotland with managed decline for the next 18 months before the Scottish Parliament election.
“If we are to stick true to the values of our social contract – that in Scotland we will build a state that provides for those in need – then the Scottish Government must seriously get a grip and offer more than their gloomy, tepid programme for government that encourages a free-market race to the bottom.”
The Small Business Bonus Scheme
IN 2022, the Fraser of Allander Institute published a Scottish Government-commissioned report into its Small Business Bonus Scheme (SBBS), which offers tax breaks to businesses if the rateable value of the premises out of which they operate falls below a certain threshold.
In their report, Fraser of Allander experts said it had cost the public purse £279m in 2020 – but found “no empirical evidence that identifies the SBBS as supporting enhanced business outcomes”.
Further, the institute concluded that “rateable value is a poor measure by which to classify businesses as ‘small’ and therefore in need of support”, noting: “Our evaluation has found that businesses with large turnovers but operating from low rateable value properties are eligible for SBBS relief.”
For the Greens, the SBBS is a key area where the Scottish Government could find money instead of resorting to such huge cuts. The STUC Landman Economics report, citing figures from 2023, said that scrapping it entirely would free up some £280m annually.
"Despite its name, the Small Business Bonus Scheme hands major tax breaks to big corporations who simply do not need it,” MSP Ross Greer said.
“It's frankly astonishing that a quarter of a billion pounds is thrown away every year on a scheme which the Scottish Government's own review could find no evidence of economic benefit.
"When we were in government, the Scottish Greens began the work of scaling back this huge waste of money and on reforms like excluding shooting estates. The SNP have clearly chosen to abandon that work and protect super-wealthy landowners whilst making budget cuts elsewhere.”
He added: “Westminster is ultimately responsible for this funding crisis, but the SNP have choices and they are currently making all of the wrong ones.”
Foyer also suggested looking into SBBS reform, telling the Sunday National: “This is revenue that, should [the Scottish Government] have acted, could have been in the public coffers here and now. There would have been little need for the scarring cuts handed down by the Finance Secretary this week.”
ScotWind
IN 2022, an auction of Scottish seafloor sites for commercial-scale offshore wind projects led to 20 projects with option agreements and raised £755m for public spending. It was hailed as “transformational” by then-first minister Nicola Sturgeon.
However, critics said the auction had raised far less money than it could have, with former justice secretary-turned-Alba-MP Kenny MacAskill at the time saying the government was guilty of “selling the family silver cheap while Scots families face crippling energy bills”.
The auction, which was overseen by Crown Estate Scotland (CES), had set a cap on price at £100,000 per square kilometre (km2) – a ten-fold increase on the originally planned £10,000 cap. However, similar auctions south of the Border brought in a reported average of £361,000 per km2.
Finance Secretary Robison announced this week that £450m would be taken from the ScotWind pot to alleviate the scale of the cuts needed. With £350m already drawn down earlier this year, the pot is all but empty.
MacAskill, Alba’s depute leader, told the Sunday National: “We are an energy-rich country with people living in fuel poverty. Nothing highlights the urgent necessity for independence more than the absurdity of people across Scotland being unable to afford to heat their homes when we have vast oil and gas reserves and our renewables will generate five times more electricity than we need.
“This makes the cheap sell-off of ScotWind all the more depressing.
“Instead of the debate in Scotland being about where the axe should fall in cuts, we should be debating how to best invest this energy bounty in our public services and in creating a sovereign Scottish wealth fund for future generations to benefit from.”
CES has defended its decision however, suggesting that bids would have been lower value in Scottish waters as developments here are “likely to have higher construction and operation costs than the rest of the UK”.
“Challenging sea conditions, combined with higher grid costs and the use of floating structures, add to overall costs,” CES added.
Either way, the auction is finished – and soon the funds raised from it will be as well. With no ScotWind pot available to patch holes in the 2025-2026 Budget, the Scottish Government will need to look elsewhere – or anticipate even more swingeing cuts.
What is the Scottish Government saying?
The Sunday National put the above proposals to the Scottish Government.
In response, a spokesperson for the SNP administration said: “Ministers have made clear, following the UK Chancellor's July statement, that the Scottish Government continues to face the most challenging financial situation since devolution.
"This requires tough choices to ensure available funding can be directed towards the priorities of eradicating child poverty, building prosperity, improving our public services and protecting the planet.
“It should be understood that pressures in-year can only be managed within the budget available under current constitutional arrangements.
“Details of the Scottish Government’s plans for 2025-26 will be outlined later this year as part of the Scottish Budget.”
