FMQs Review: The effects of ending Barnett

Full fiscal autonomy and the Barnett Formula dominated today’s FMQs. Kezia Dugdale MSP led with the fact that if Scotland had full fiscal autonomy, as desired by the current Scottish Government, then this would lead to the scrapping of the Barnett Formula. This in turn, according to the Scottish Government’s own Government Expenditure and Revenue Scotland (GERS) figures published yesterday, would lead to a loss of around £4 billion of funding. That is funding, according to Dugdale, which could not then be used to fund the NHS and other vital public services.

Dugdale then went on to claim that the FM wanted to take Scotland towards “austerity-max”- a situation where, with the end to the Barnett Formula, would led to a 5% reduction in GDP and around 138,000 Scottish job losses. The message from Scottish Labour was twofold and clear. Firstly, that Scotland benefits from being part of the Union and moving towards full fiscal autonomy would lead to massive tax rises and/or spending cuts beyond the level already being imposed by the UK Government. Secondly, only a vote for Labour in May can protect Scotland from the Conservatives – a message taken straight from the party’s conference floor last weekend.

In response, the FM repeatedly dodged Dugdale’s questions. Instead of answering Dugdale’s questions on the economic and fiscal effects of losing Barnett, the FM chose to accuse Scottish Labour of “talking down Scotland”, allying themselves once again with the Tories, and repeatedly claiming that only the SNP could protect Scotland from further austerity post-May.

Picking up on this last point, Ruth Davidson MSP asked the FM when, under the Scottish Government’s proposals outlined in a recent speech by the FM to borrow an additional £180 billion, would the UK deficit be eliminated. Having received a generic answer from the FM about the SNP having a “different approach” to eliminating the UK’s deficit, Davidson then moved onto asking what effect full fiscal autonomy would have on Scotland. Davidson quoted yesterday’s Institute for Fiscal Studies (IFS) reaction to the GERS figures, which according to her reading would lead to a 15p increase to income tax and massive cuts/tax hikes.

Unsurprisingly, Sturgeon was not impressed with Davidson’s reading of the figures. She too quoted from the IFS and highlighted the fact that their maths was predicated on Scotland gaining full fiscal autonomy by 2015/16 – which starts in just two weeks’ time. Given Scotland isn’t going to get full fiscal autonomy by then, she reiterated her belief that Scotland needs to take more control of its own fiscal and economic leavers to deliver real and lasting change to Scotland.

 

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