The latest Scottish Budget was yet another attempt at micro managing public spending expectations.

This is the fourth year in a row when the curtain has been lifted only enough to show a single year of future budget plans, rather than to reveal a clear sense of direction.

The inappropriateness of such a strategy was highlighted by the new Scottish Fiscal Commissions forecasts of on-going relatively low growth of the economy. If this is the ‘new normal’, then how does the Scottish Government intend to respond?

Its first reaction was to raise taxes, not just for high earners but well into what had been the Basic rate band. But this just solves the problem for one year, what will happen next year or the year after that?

It seems likely that the Scottish Government will gauge public reaction to these tax change before deciding what to do next. Given the further belt tightening coming down the line courtesy of the UK Government, this will mean either choosing more tax hikes or a return to an acceptance that tax and spending are out of kilter and it is the latter that will have to adjust to fit. The former approach would again need to involve many taxpayers, not just a few at the top of the range, and so result in another step forward in how devolution is changing Scotland.

However, the current short-termism is hampering the ability of the electorate to make its preferences known. There are a number of areas where freer and clearer thinking would improve matters.

First, where possible, outline tax and spending plans for at least three years ahead. These need not be sacrosanct, indeed they are highly likely to change as time moves on, but they give a clear direction of travel and allow for planning in accordance with the priorities that are laid out.

Second, restore a greater measure of local democracy to budget decisions, rather than centrally imposing a consistently falling budget. This involves leaving it up to councils to decide on how to allocate their block funding as well as on setting council tax, business rates and any new taxes they wish to create.

Third, steer away from mimicking UK Government decisions on how money is spent in England. Scottish conditions should determine Scottish policies.

Fourth, open up discussion on some more radical ideas. For example, the introduction of a Scotch whisky tax, in an industry largely overseas owned and probably making supra normal profits, or the shortening of university courses from four to three years, while still retaining a no tuition fees policy.

Throwing off such self imposed budgetary shackles might not result in the Scottish Government getting all the money it wants but it would allow it to be more dynamic in reacting to the testing funding situation that it is likely to continue to face for some years to come.

John McLaren

Scottish Trends website