Yesterday’s complete policy reversal by the
Chancellor over furlough is good news – up to a point. It takes us back to
where we were in March with a scheme which is merely inadequate, short term and
poorly thought-through when they could have used the last seven months to refine
and improve it. The way it was done looks to have been driven more by panic than revealing
any indication of planning of forethought. And despite all of Johnson’s bluster
about the SNP not being willing to take yes for an answer, it still doesn’t
give a clear or categoric answer to the question that they’ve been asking,
which was whether furlough will be available in Scotland (and the same question
applies to Wales) if Scotland’s decisions differ from those taken in England
after the end of the English lockdown rather than used as a means of ensuring
conformity.
During his speech yesterday, the
Chancellor told
the SNP that the Scottish parliament has the power to raise taxes, and that if
it considers these measures important it could raise funds for them. I’m sure
that it was intended as a put-down, but it inadvertently underlined the key
difference between devolution and independence. The only way that a devolved
Scottish Parliament, acting under Westminster-imposed rules which limit its borrowing
capacity and mandate a balanced budget, is by first increasing taxes to raise
the necessary revenue. A state with monetary sovereignty, like the UK, can spend
the money without having to raise it first, exactly as Sunak is doing. He is
explicitly not raising taxes to pay for his program, and nor does he need to.
And for all his talk of fiscal responsibility and the need to ‘repay’ the money
in the future, he knows both that he won’t be doing so any time soon, and that
neither does he need to, because the government has ‘borrowed’ the money from
itself by increasing the total supply of money. When he talks about ‘repaying’
the money, he simply means reducing the overall supply of money in the economy.
That’s a policy choice, not an economic necessity, and means either tax
increases or more austerity, neither of which make any economic sense for the
foreseeable future.
They claim that the UK Government is being
in some way ‘generous’ to Scotland and Wales by ‘giving’ us extra money (a
point dealt with in more detail by Peter Daniels on Nation.Cymru today),
but they are tightly controlling the purse-strings more with a view to keeping
us in our place than allowing us to make any decisions of our own. Money
raised, borrowed, or simply magicked into existence by a few keystrokes doesn’t
belong to England, or to London, or to the government – it belongs to all of us.
Their pretence that it’s theirs merely underlines the nature of the
relationship in their eyes – master and supplicant. The good news, if there is
any, is that they don’t even understand that treating Wales and Scotland as
supplicants will be counter-productive for them in the long term.
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1 comment:
There is another issue with Westminster borrowing from the Bank of England, ie itself, in that the BoE still charges interest on the amount borrowed. Westminster then subtracts Scotland, Wales and NI's portion of this interest from the block grant before the grant is forwarded to the devolved nations. So in essence Westminster borrows from itself and charges the devolved nations interest on the borrowing and the interest is paid back to itself.
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