Mackay dodges defeat on draft Budget

26 Jan 17

The presiding officer’s casting vote has enabled finance secretary Derek Mackay to escape a symbolic Holyrood defeat on the eve of publishing his Budget Bill.

Votes were tied 63-63 on a Labour motion, rejecting Mackay’s draft budget “in its current form.”  Though the debate was largely about positioning, allowing Labour to accuse the Scottish National Party of colluding with the Tories at Westminster in what one MSP called “austerity on steroids”, it did vividly demonstrate the pressure on Mackay in a tough round of Budget negotiations.

Labour’s Alex Rowley opened by demanding a 1p increase in income tax, and condemning what he claimed were cuts of £327m in local authority grant support. He also criticised the government for failing to replace the council tax, as recommended last year by an independent commission.

Mackay insisted that the council cuts were offset by £120m paid direct to head teachers to close the school attainment gap, and by money pumped into the merged health and social work partnerships. He said Labour’s income tax hike would bear hardest on lower-income tax payers.

But the Conservatives’ Murdo Fraser said Mackay’s proposals left Scotland the highest-taxed part of the UK and could impede economic growth by chasing businesses away.

His stance was in turn derided by the Greens’ Patrick Harvie, who said there was a clear need for more radical income tax changes.

The Liberal Democrats’ Willie Rennie said he too was ready to countenance a 1p income tax rise.

With no working majority, the Scottish Government must strike a deal with another party to get its Budget through the Parliament. Neither the Tories nor Labour are interested, with the former condemning Mackay for making use of Holyrood’s new tax powers by failing to replicate a UK cut income tax for top earners, while Labour condemn him for not using them more extensively.

Talks with the smaller parties are proving slow. The LibDems are demanding an additional £400m of spending, notably on education, mental health and infrastructure. The Greens want Mackay to make much more ambitious use of the tax powers to safeguard local services.

Negotiation will continue over the next few weeks, as the Bill moves towards separate votes on the tax-raising and public spending elements within it, and the signs are that the talks will go to the wire. 

  • Keith Aitken
    Keith Aitken

    covers Scottish affairs for Public Finance from Edinburgh. He was formerly economics editor and chief leader writer on The Scotsman and now has a busy freelance career as a writer, broadcaster and event chair.

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