SNP plans mean ‘more austerity than under the Tories’, says IFS

Implementing the SNP’s general election manifesto in an independent Scotland would lead to deeper austerity than under Conservative plans for UK spending, a leading economic think tank has said.

By The Newsroom Wednesday, 4th December 2019, 6:58 am

The first analysis by the independent Institute for Fiscal Studies (IFS) found that without new taxes to balance the SNP’s proposed giveaways, taxes would have to rise or further cuts would be needed elsewhere.

And the respected think tank, which last week warned that both Tory and Labour spending plans are “not credible”, concluded that the SNP’s effort was focused on independence rather than tackling the “problematic” question of setting out a costed plan for government.

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IFS associate director David Phillips said that unlike its previous general election manifestos, and those produced by other main parties this year, the SNP has not provided detailed costings or tax plans.

Scotland's First Minister Nicola Sturgeon at the SNP election manifesto launch. Picture: John Devlin / JPIMEDIA

Writing exclusively in The Scotsman, Mr Phillips said the manifesto “isn’t really about a plan of action for five years of governing the UK” but was instead “about starting the process of leaving the UK in the next year”.

SNP manifesto

The SNP manifesto calls for NHS spending across the UK to close the gap with Scotland – a rise of £136 per head, or £4bn more per year by 2023/24 than Labour’s plans.

The nationalists are also demanding an end to the two-child cap on tax credits, the scrapping of the bedroom tax, increases to Universal Credit payments, and a higher National Living Wage.

“In contrast to not only Labour, but also the Liberal Democrats, and the Conservatives, the manifesto omits putting a cost to these measures. Nor does it set out plans for overall tax, spending and borrowing, which the other parties do and the SNP’s own manifestos did in 2015 and 2017,” Mr Phillips writes.

“It may reflect the fact that such a package of spending increases and tax cuts would mean the UK government having to borrow to cover day-to-day spending – something the other main parties have claimed they would not do.”

He continues: “It may also reflect the fact that the SNP’s manifesto isn’t really about a plan of action for five years of governing the UK. Rather it is about starting the process of leaving the UK in the next year. It’s about contrasting a near-decade of austerity and years of divisive debate over Brexit in the UK, with a positive-sounding vision of independence.”

‘Rather less progressive’

The IFS describes other SNP commitments on free TV licences for the over-75s, compensation for women born in the 1950s left out of pocket by the increasing state pension age, and no further increases in the state pension age as “costly” and “rather less progressive”, because pensioners are now “less likely to be in poverty than the rest of the population”.

And the think tank warns that the SNP’s call to link National Insurance, which is reserved, to devolved rates of income tax would be “reducing revenues by billions of pounds across the UK as a whole”.

With the SNP expected to support Jeremy Corbyn’s entry into Number 10 in the event of a hung parliament, Mr Phillips says the manifesto “looks rather a lot like many of Labour’s plans – which is probably more than just a coincidence”.

Last year’s report from the SNP’s Sustainable Growth Commission stated that Scotland’s deficit – £12.7bn in 2018/19 when oil revenues are excluded, or 7 per cent of GDP – would need to come down over the first decade of independence.

The IFS says the SNP should be “commended” for accepting the need to shrink the deficit, but Mr Phillips adds: “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.”

Public spending will need to grow by less than the rate of economic growth to balance the books, at a time when an ageing population is increasing demands on services, the IFS says.

‘Independent Scotland would have to count its pennies’

“Even the Conservative’s modest proposals for the coming parliament would see spending grow by around 1.8 per cent a year, slightly ahead of forecast economic growth,” Mr Phillips writes. “Therefore, in the short-term at least, independence would likely necessitate more not less austerity.”

He concludes: “An independent Scotland would have to count its pennies and pounds in at least its first decade of life. It might therefore be understandable that the SNP manifesto does not draw quite the same attention to the price tag of its proposals as Labour and the Liberal Democrats, in particular, do.”

Conservative shadow finance secretary Murdo Fraser said: “The IFS could not be more clear: independence means more not less austerity.

“It means more cuts to the NHS, more cuts to wages, and less money to pay for teaching staff, nurses and police. This is the reality of Nicola Sturgeon’s independence obsession. The Nationalists must now be honest – they would lead Scotland down the road to economic ruin, all for the price of a flag.”

Rhoda Grant, Labour’s finance spokesperson, said: “The lack of costings embodies how the SNP have fought this election. They have campaigned on another referendum rather than addressing the real life issues that face people in Scotland every day.

“They and this manifesto have abjectly failed to come up with serious and credible policies.”

Liberal Democrat leader Willie Rennie said: “The IFS is unconvinced by the SNP’s spending plans and so am I.

“Independence would not be positive for Scotland. It 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 to turn them around.

“We’ve got to learn the lessons of Brexit, not pile more chaos on top.”

Kirsty Blackman, the SNP’s deputy Westminster leader and economy spokesperson, defended the manifesto as “an ambitious and wide-ranging plan to end austerity, invest in our NHS and increase household incomes”.

She said: “In the next parliament we could potentially hold the balance of power. While we would never put the Tories into government, we have laid out clearly what our demands would be to any other party expecting our support. If