Minority governments must quickly learn the value of co-operation
The minority SNP Scottish Government faced a real crisis getting its budget through the first legislative hurdle
Derek Mackay - Picture credit: PA
Minority governments have to learn quickly the value of co-operation. For the SNP, it’s been many years since it has had to make concessions in the Holyrood chamber to pass legislation,
However, with the very serious threat of another election being called if the recent budget failed to pass, ministers had to get up to speed quickly.
The last minority government was created in May 2007, the SNP had won a historic victory but with the narrowest of margins – 47 seats to Labour’s 46. This left then leader Alex Salmond with a dilemma: to secure a coalition with both the Lib Dems and the Greens to reach 65 or go it alone as a minority. The Lib Dems, with 16 MSPs and then untouched by the Conservative Westminster coalition which led to the party’s decimation across the country, appeared jaded by having been in coalition for the previous eight years and with the Greens seemingly prevaricating over a formal coalition, the SNP decided to go it alone.
Fast forward to 2011 and the SNP won an unprecedented 69 seats, generally thought to be due to its record in government over the past four years, and the fact it no longer had to worry about appeasing its political rivals. A jubilant Salmond said the win was “a victory for a society and a nation” and pledged to hold an independence referendum before the end of the parliamentary term.
And while 2014 saw Scotland voting emphatically no to independence, in the weeks and months following the poll, SNP membership mushroomed and in 2015 the party returned 56 of Scotland’s 59 Westminster seats.
Last year Scotland was back at the polls for the Holyrood elections and all eyes were once again on whether the SNP would return another majority. As the results were announced on 6 May, the SNP ultimately gained 63 seats and formed yet another minority government.
First Minister Nicola Sturgeon hailed this as another historic victory but a couple of weeks ago, we saw how precarious this situation can be.
Finance Minister Derek Mackay’s draft budget was released in December and all opposition parties refused to back it without concessions.
“He’s going to have to do a lot more listening,” said Scottish Green co-convener Patrick Harvie at the time, claiming Mackay was not being progressive enough on income tax.
Liberal Democrat leader Willie Rennie said Mackay had “miles to travel” to convince the Liberal Democrats to back the budget, pointing out cuts for Highland and Island Enterprise and funding for universities.
Initially the Scottish Government planned to raid local government budgets to give directly to schools to tackle attainment, but Mackay said the fund would be provided centrally via a new ‘pupil equity scheme’, allowing local authorities to keep additional funds raised by a council-tax rise.
“[This] budget delivers a strong settlement for local government,” he said. “The measures I have announced mean that the total support from the Scottish Government and through local taxation provides an increase in spending power on local government services, not of £59.6 million, but of £240.6 million or 2.3 per cent.”
But Scottish Labour leader, Kezia Dugdale, said the Finance Secretary had cut council budgets by £327m “in the small print”.
“However the Finance Secretary tries to spin it, today’s budget means a real-terms cut of £327 million from the SNP Government to local services,” she said.
Murdo Fraser, Scottish Conservatives’ finance spokesman, said the SNP tax plans made Scotland “the most expensive part of the UK to work and live in” and his party could not support the budget.
“The Finance Secretary received an extra £140 million from the Treasury compared to the current year, plus an extra £800m for capital spending,” he said.
“He also has huge new powers over tax to deliver real growth in Scotland. However, Mr Mackay has chosen to hike taxes on families and businesses, risking a choking of economic recovery.
“That will only deprive Scottish public services of vital tax revenue.”
Suddenly it was glaringly obvious the budget was in serious trouble and it looked likely the SNP would need backing from either the Liberal Democrats or the Greens to pass it. If the government failed to get the numbers it needed to get through the first stage vote, an election would be called.
Cue a few weeks of frantic debate and damning headlines. However, much as it might have spiced up the lives of political commentators, an election was never likely to become a reality and on the morning of 2 February, the Greens announced the news the SNP were looking for – a confirmation that they had reached a deal.
And later that day, thanks to their extra six votes, the budget passed the Stage 1 debate.
The deal made will see the threshold for the higher rate of tax frozen at £43,000 rather than rising to £43,430, as had been proposed in the draft budget. This will mean income tax in Scotland diverges from the rest of the UK in income-tax rates for the first time, using new powers gained under the Scotland Act, as the UK Government is to raise the threshold to £45,000 in the rest of the UK. As part of the agreement, £160m of additional funding is to go to local government in the un-ringfenced core grant. There will also be £25m more for police reform and £35m for Scottish Enterprise.
Finance Secretary Derek Mackay said: “I have been listening very carefully to the other parties in this parliament across the political spectrum on both tax and spend and I have entered into negotiations in good faith in order to build the consensus that this country needs.
“I particularly welcome the constructive approach that has been taken by the Green Party. It has asked me to consider changes to our income-tax proposals and to provide additional funding for local government.”
Speaking to Holyrood after the debate, Patrick Harvie said that in a minority government, it is the responsibility of all parties to exercise influence for the good and to make a meaningful difference.
“That is a healthy kind of parliament,” he added.
“I even think that it is good for ministers to know that the votes are not in the bag when they turn up to work. They need to work for those votes and convince people by compromising.
“Government needs to compromise, and today the Greens have achieved the biggest budget compromise in the history of devolution in Scotland.”
He added: “The government had become used to having a majority in the last session and that’s not the case anymore. Also, Derek Mackay wasn’t in the previous minority government so it was new to him too. The discussions were always friendly and business-like but there has to be willingness in future years, and from all sides, including the government, to make progress sooner. Leaving things to last minute haggling is not really safe, it includes a political risk and isn’t likely to lead to the best outcome in terms of public policy.
“When the draft budget was published, it was clear that local government was in for the brunt of the cuts and in particular there was a feeling that the government was trying to include various other forms of local spending which were not giving flexibility to councils to make their own decisions.
“We ended up fairly quickly focusing on the local government settlement. The position we reached is not perfect, I won’t be calling it perfect in the Stage 3 debate either but it’s good enough, looking at the additional £160 million plus the ability for them to make their own local choices on council-tax rates.
“The three per cent cap is still unreasonable, this should be a purely local decision but they have the ability to generate some more revenue from council tax. I think we’ve got a longer-term debate to have about tax, about income tax, a replacement for council tax, about how we scrutinise tax policies which are coming from the Scottish Government and how we move from constantly comparing every rate, band and threshold with England to instead constructing a regime of taxation which is right for Scotland.”
During the chamber debate, Murdo Fraser, bizarrely referring to Harvie’s party as “lentil-munching, sandal-wearing watermelons”, said: “We know that it is not the Greens who are the patsies in the chamber but the entire SNP front bench, for they have swallowed hook, line and sinker, the Green Party’s hard-left, high-tax agenda.
“They have let Patrick Harvie pull all the strings, and it will be hard-working Scottish families that suffer as a consequence.”
However, Willie Rennie intervened to comment: “May I put into context what Murdo Fraser is talking about?
“As a result of the decision today, a person who earns £100,000 will pay £86 more than they would have paid under the SNP manifesto, but they will pay £2,080 less than they would have paid under the Green manifesto.
“I do not think that the government has given way a hell of a lot.”
Rennie said the Lib Dems had put forward “a costed and reasonable compromise package”, but the Scottish Government had not accepted it.
Scottish Labour leader Kezia Dugdale took issue with a claim made by the First Minister that Labour had been playing playground politics with the budget, noting that she had had “cordial and constructive” conversations with Derek Mackay.
But Labour had been looking for more taxation to fund further public spending and Dugdale commented: “With the concession that he has given the Green Party to move away from his manifesto commitment on the top rate of income tax, the cabinet secretary has abandoned the principle of sticking to his manifesto, and it leaves him open to accusations about why he did not use the 50p top rate of tax.
“If he has moved away from his manifesto once, he can do it again in the name of protecting vital public services.”
A Labour amendment to the budget failed, while the budget motion itself was passed by 67 votes for to 57 against.
Scotland’s councils had mixed reactions.
COSLA, which represents 28 councils, welcomed the news but warned that the outlook is still bleak for local authorities. President David O’Neill said he was pleased that after months of lobbying, the Scottish Government had revised the budget.
He added: “What we have clearly seen is that some MSPs in the parliament both recognise and indeed value the vital public services that councils provide to communities and this has resulted in the government’s concession today. We have worked closely with parliamentarians and will continue to do so as the budget makes its way through parliament.
“Whilst I absolutely welcome the reduction in the cut, the simple truth is that there remains nearly £200 million of a cut to local public services and this is still not a good result, better but not good. That said, what I can promise is, as always, my colleagues in local government and I will do our very best to mitigate the impact of these cuts on communities.”
Meanwhile, the Scottish Local Government Partnership (SLGP), which comprises Aberdeen, Glasgow, Renfrewshire and South Lanarkshire councils, said Mackay “crumbled” in the face of mounting pressure over council funding and accused him of attempting to “bamboozle” voters using “sleight of hand”.
SLGP finance spokesman, Willie Young, said: “Mr Mackay says he has ‘listened and acted’ – which really means he is patting himself on the back for caving into the huge pressure we put on him when we said we would not accept the ferocious cuts which threatened services the poorest in our society depend on.
“It’s actually breathtaking to watch the Finance Secretary pull tens of millions of pounds out of his back pocket, like a rabbit from a top hat, while local authorities up and down the land struggle to keep the whole show on the road.”
The budget will now be scrutinised by Scottish parliamentary committees before the Stage 3 vote in the chamber at the end of February.
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