How budget agreement is in interest of enemies

Each year the party argues that the SNP's spending plans are so fundamentally flawed, its priorities so badly skewed, that the whole budget should be ripped up and started again. Each year this bold attempt to seize the moral high ground flops. The SNP simply hold up a popular budget policy and condemn Labour for voting against it. Ominously, as Labour do not need reminding, Mr Swinney's latest budget includes a plan to give free school meals to all pupils in the first three years of primary school.

In fairness, Labour's discomfort reflects a general truth about Holyrood budgets: the main opposition party is always on a hiding to nothing. Between 1999 and 2007, Labour-LibDem administrations went out of their way to avoid making concessions to the SNP, while before the election of a majority Nationalist government in 2011, Mr Swinney invariably preferred to deal with the Conservatives rather than give Labour anything to celebrate.

This year things are looking different, however. Mr Swinney's seventh budget seems likely to be his first to win support from Labour when it goes before MSPs for final approval on Wednesday afternoon. Hell really has frozen over but, even so, isn't this something of a surprise given the long history of budget fall-outs?

The issue that has brought the SNP and Labour to the brink of a deal is the so-called bedroom tax. The two parties are vehemently opposed to cuts to housing benefits which are costing some 82,000 Scots households an average of £50 per month and leaving many, who cannot find a suitable smaller property to move to, struggling to pay their rent.

In a report by Holyrood's welfare reform committee yesterday SNP and Labour MSPs concluded the bedroom tax was "iniquitous and inhumane" and urged the UK Government either to scrap it or give Holyrood the power to ditch it in Scotland. Failing that, both parties have promised to scrap the bedroom tax: the SNP if they win independence and Labour if they win the 2015 Westminster election.

They agree on much but for the past year the two sides have clashed repeatedly over what the Scottish Government's immediate response should be. Labour have called on ministers to mitigate fully the impact of the bedroom tax, arguing that it is precisely the kind of Westminster-defying policy the Scottish Parliament was created for. The Scottish Government is moving in that direction, albeit after a reluctant start.

Initially, ministers appeared to baulk at the £50 million cost. Then they claimed Holyrood was powerless to act. But in September, as pressure grew, Mr Swinney agreed to top-up the cash available to compensate tenants' directly by £20m, the maximum allowed under Department for Work and Pensions rules. He also warned he would not be "letting the Westminster Government off the hook," suggesting that was that.

The threat lasted a month, until Nicola Sturgeon told the SNP conference a further £20m would be available next year. Ministers continued to insist that any additional help for tenants would be illegal. But this month they agreed to examine ways to get round the DWP rules. With Audit Scotland now backing local schemes to write off tenants' debts in Renfrewshire and East Lothian, the SNP's position that nothing can be done looks increasingly hard to maintain.

So a budget deal is on the cards. If Mr Swinney does announce extra help for tenants early next week it will be quite a U-turn. However, he will surely calculate there is more praise than criticism to be had in effectively abolishing the bedroom tax. The move would also counter the nagging accusation that the SNP have been putting their independence campaign before helping people in the here and now. As for Labour, Johann Lamont will want to avoid the political pain of voting against budget goodies like free school meals. Damage limitation, then, means an agreement on Wednesday suits both sides.