The SNP is learning there’s no such thing as a free lunch

During his time as Scotland’s First Minister, Alex Salmond was accused by the Scottish Labour leader Johann Lamont of fostering a ‘something for nothing’ culture with vote-grabbing policies like free university tuition, free prescriptions and a council tax freeze – expensive gimmicks that took cash away from where it was needed most. Lamont’s analysis was sound and reflected the consensus among Scottish economists but she was pilloried for her speech and her leadership never really recovered.

Vindication twelve years after the fact might be cold comfort for Lamont but the SNP government has seemingly come around to her way of thinking. A week ago, it scrapped the devolved version of the winter fuel payment, following in the footsteps of Chancellor Rachel Reeves. Social security minister Shirley-Anne Somerville blamed Westminster cuts but adopted the Chancellor’s policy of limiting payments to those on pension credit and other means-tested benefits. On Tuesday, SNP ministers cancelled a £40 million pilot scheme that charged all journeys on Scotland’s nationalised rail service at ‘off peak’ fare rates. Announcing the end of the 12-month ScotRail trial, transport minister Fiona Hyslop sounded a Lamontian note: ‘The pilot primarily benefitted existing train passengers and those with medium to higher incomes.’ 

Pleading penury and pointing the finger at the Treasury has been the SNP’s strategy since it came to power in 2007, but after 17 years the ‘Please Sir, a big Chancellor of the Exchequer did it and ran away’ excuse is wearing thin. In 2022/23, Scotland overtook Northern Ireland to become the UK nation with the highest level of public spending per capita. The average expenditure north of the border was £14,456 per head, compared to £12,227 in England. In addition to the Treasury block grant, the Scottish government has received increased autonomy to raise its own revenue through taxation, which it has done by nudging up income tax for middle and higher earners. But in financially straitened times, it finds itself no longer able to afford the policies which helped it secure a near two-decade run of election victories. 

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What lurked behind many of those policies, however, was a ruthless rationing that diverted resources away from those most in need to those whose votes were needed most. One of the SNP’s flagship policies has been freezing council tax, with the levy frozen or rises capped at three per cent for the past 17 years. Former first minister Humza Yousaf announced a surprise continuation of this approach last October without detailing how it would be funded. 

It was funded the way every freeze since 2007 has been funded: by cutting further and deeper into local government budgets. In the last decade, the Scottish government’s annual budget has increased in real terms from £42 billion to £58 billion but the share allocated to local government has fallen from 30 to 23 per cent. Scotland’s councils are collectively £585 million in deficit this year, a figure forecast to hit £780 million by 2026/27. One in four local authorities is at risk of being unable to balance the books, a statutory requirement in Scotland. Needless to say, cuts to council services have fallen hardest on the poorest and most vulnerable. 

An even more brutal example of rationing provision to fund a ‘free’ entitlement is the policy of no university tuition fees for Scottish students. It’s very popular with the Scottish middle classes who, unlike their English counterparts, don’t have to dig into their pockets to put Fraser and Freya through four years at a Russell Group university. But it comes at a cost. There are annual caps in funded places – i.e. limits on the number of Scottish students who can be accepted by Scottish universities – and institutions are financially penalised for exceeding the cap. 

This is in part a function of Scottish universities’ reliance on overseas students, who are charged market rate to make up for the costs of the no-fees policy. For this academic year, the number of funded places for Scottish students has been cut by 1,289. Over the past decade, Scottish government funding for these places has fallen 19 per cent in real terms while financial support for those on the lowest incomes has gone down 16 per cent. University education is free in Scotland, but only as free as SNP ministers decide. 

This is a story of SNP economic populism and fiscal mismanagement but it is also the story of a broader malaise affecting not only Scotland but the entire UK, a collective code of silence around our national finances, our expectations from government and the disjuncture between the two. If we were having this discussion 25 years ago, this would be the point at which I nodded sagely and said something like, ‘You can’t have Scandinavian spending on American tax rates’. Those were the days.

Today we couldn’t have Scandinavian spending on Scandinavian tax rates because Britain is a much poorer country than it was at the turn of the century. Britain is not the sixth-largest economy in the world, London and the south east are. Britain is a largely deprived country with a capital city that remains something of a wealth generator. We are Mississippi with Wall Street bolted on. 

In Scotland, as in the rest of the UK, we continue to talk in micro terms about this benefit being cut or this tax raised when our economic dysfunction is macro. Neither Britain nor any constituent nation of it can afford the luxuries of prosperity unless and until we are a prosperous country again.