John Swinney refuses to rule out tax rises

John Swinney has refused to rule out tax rises next year after being pressed on the issue at First Minister’s Questions.

Scottish Conservatives leader Russell Findlay highlighted reports that UK Chancellor Rachel Reeves is preparing to announce a manifesto-busting increase to income tax later this month in the Budget.

Accusing Labour of “breaking promise after promise”, he urged the first minister not to also increase taxes in the Scottish budget.

But Swinney refused to make any such commitment, instead saying his government would set out its tax and spend plans in the new year after the UK Government had done so.

Reeves will deliver the Budget on Wednesday 26 November. It is widely expected to contain tax rises, despite a manifesto commitment last year that her party would not increase taxes on “working people” – including income tax, VAT and National Insurance.

Income tax is devolved in Scotland and so any move to increase it at Westminster would not directly hit Scottish taxpayers. However, it would have implications for the Scottish budget.

The Fraser of Allander Institute recently said an extra two pence on the UK basic rate would cost the Scottish Government £1bn due to its impact on the block grant adjustment mechanism.

In a blog post, the think tank said: “This would be a pretty significant cut to funding, and it would then be for the Scottish Government to determine how to react to this. It could decide to adjust spending plans, or to raise taxes to return revenues to where it expected to be.”

The current Scottish rate of income tax sees those earning up to £15,397 pay a little less than counterparts in England and Wales, while those earning over £27,492 pay more.

In the chamber, Findlay said the higher rate of income tax in Scotland had already “driven away” workers and “held back” the economy.

He asked: “Will John Swinney give a cast-iron guarantee of no further tax rises – income, business and property – in the Scottish budget?”

Swinney defended the higher rate of tax on higher earners in Scotland, saying it enabled more investment in public services. He also argued the “majority” of people in Scotland paid less in tax than those in England.

On the upcoming budget, he said: “Decisions have to be taken very carefully on tax issues. The chancellor will be accountable for the decisions that she makes, and the Scottish Government will take our decisions accordingly when we respond.”

Just last week, Swinney told an IPPR Scotland event that his government was “not going to make any more changes during this parliamentary term”.

Despite the refusal to rule out changes today, his spokesperson denied it was a change in position because the government had not yet set out its tax plans.

Later in FMQs, Scottish Greens co-leader Ross Greer called on Swinney to oppose the development of the Rosebank oil field off the coast of Shetland.

Last month, Norwegian energy company Equinor resubmitted its application for a licence for the field. A previously-approved licence had been ruled unlawful because the company had not included emissions from the burning of fossil fuels extracted from the site in its environmental impact assessment.

A new assessment found Rosebank would result in 250 million tonnes of CO2 equivalent over its lifetime.

Greer said: “That is clearly incompatible with any chance of meeting our climate ambitions. However the first minister spins it, approving Rosebank would be a disaster for people and planet… Will he oppose the Rosebank oilfield?” 

Swinney refused to say whether he personally backed or opposed Rosebank, instead arguing any developments must meet a climate compatibility test.

He said: “There will a need for the utilisation of some oil and gas resources for the foreseeable future. That has to be undertaken in a way that’s compatible with our journey to net zero, and that is the approach the Scottish Government will take.”