WITH typical hard-hitting wisdom, Margaret Thatcher once said that “the problem with socialism is that you always end up running out of other people’s money.”
That is a perfect description of what has happened in Scotland and Wales, where the two devolved, left-wing governments have become bywords for chronic financial mismanagement and waste.
PASir Keir Starmer and his Shadow Chancellor Rachel Reeves claim to be champions of fiscal restraint[/caption]
The devolved, left-wing governments of Mark Drakeford and Humza Yousaf have become bywords for chronic financial mismanagement and waste
Red in both their political outlook and their addiction to whopping deficits, the Scottish Nationalist administration in Edinburgh and the Labour administration in Cardiff show no interest in reform of the public sector, nor any understanding of wealth creation.
Where they excel is in squandering money on sprawling bureaucracies, favoured causes and pet ideological projects, like gender self-identification in Scotland and a national speed limit of 20mph in Wales.
‘Malign, paralysing control’
But the price for all this posturing and profligacy is paid by local people and businesses, who see their taxes continually hiked.
It helps to explain why their economies are so stagnant.
The longer the Scottish and Welsh socialists exert their malign, paralysing control, the more their fiefdoms resemble East Germany before the Berlin Wall came down.
What makes this devolutionary catastrophe all the more disturbing is how it provides a stark warning of what could happen in Britain if — as seems likely — Labour win the next election.
At present, Sir Keir Starmer and his Shadow Chancellor Rachel Reeves claim to be champions of fiscal restraint, promising an iron discipline when it comes to public spending.
But it is a highly unconvincing pose, partly because of the huge expectations Labour have created with their endless moans about “Tory cuts” over the past 13 years and partly because every Labour government in history has ended up drowning in debt.
Whatever Starmer and Reeves now pretend, their instincts are much the same on the economic front as those of Humza Yousaf, the First Minister of Scotland, and Mark Drakeford, the First Minister of Wales, who recently announced his resignation from the post.
This week both devolved governments set out their budgets for next year and, in each case, there is going to be more financial pain and worse services.
In Edinburgh, the SNP Finance Secretary Shona Robison decided to raid upper income earners through the creation of a new 45 per cent tax band for those paid £75,000-£125,140.
According to the Chartered Institute of Taxation, 114,000 Scots will be in the new bracket, forking out £1,871 more in income tax next year and over £5,231 more than someone on the same salary in England. In addition, they also pushed up the top rate of tax by 1p to 48p.
The impact of these changes can be brutal. Thanks to the way the personal tax allowance is withdrawn, those in the new 45 per cent band will have a 67.5 per cent effective marginal tax rate.
But most of the nation in work there is being punished by the SNP’s approach, because anyone on more than £28,000 a year will pay more.
This zeal for confiscation has made the income tax system absurdly complex, with no fewer than six bands, compared to just three in England.
The Scottish Government says these steps are needed to fill a black hole left by London’s under-funding.
But that is a hollow argument. Not only does Whitehall provide a decent annual settlement, but also, absurdly, these new tax rates will not raise much money.
In fact they amount to little more than a form of gesture politics.
In any case, Scotland’s problems are of their own government’s making.
The SNP have proved to be hopeless stewards of the economy and public finances. They refuse to live within their means and instead have allowed a £19billion gap to grow between revenue and expenditure.
Colossal sums have been wasted on failed projects such as the £360million construction of two new ferries that may never sail and the long delayed National Care Service.
More money has been frittered away on political self-indulgent initiatives like opening nine overseas offices and the provision of mobile phones to prisoners.
‘Bill could be crippling’
Meanwhile, standards of education have plummeted in comparison to England, and the NHS there is mired in crisis.
It is the same sorry story in Wales, where poor decision-making has meant that its £21billion budget embraces cuts in services as well as hefty increases in business taxes.
Finance Secretary Rebecca Evans tried to blame austerity, but it is the Labour government that is responsible.
Their running of the Welsh NHS has been dismal and cash has been thrown away on vanity projects. But they are happy to squeeze businesses to pay for their recklessness, with the rate relief on pubs, shops and restaurants slashed from 75 per cent to 40 per cent.
That could be an indication of things to come under Labour, whose flagship policies for the whole UK include a plan to spend £28billion a year on a vast green agenda that will incorporate lavish subsidies for green job creation schemes and investment in new technologies.
But the bill for this eco extravagance could be crippling.
One study by the Treasury shows that the borrowing for Labour’s blinkered green vision could raise interest rates by 1.25 per cent and add £2,000 on to the average mortgage.
Given what has occurred in Wales and Scotland, that is all too believable. We have been warned.
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