No imminent return to Cabinet for Kate Forbes as speculation dismissed

The likely ditching of “progressive” tax hikes - as first revealed by Brian Taylor in Saturday’s The Herald - comes as the SNP seeks to “recalibrate” following the party’s drubbing at the Rutherglen and Hamilton West by-election.

READ MORE: Brian Taylor: SNP may freeze income tax rises

Further reports on Sunday said the First Minister’s senior colleagues and aides were said to be giving serious consideration to rowing back on the plans championed by Mr Yousaf throughout the SNP leadership campaign.

Ms Forbes, who was narrowly defeated by Mr Yousaf in the SNP contest, has argued against further tax hikes. In a interview earlier this year the First Minister pointed to her stance as a possible barrier to her return to Cabinet in a finance role.

In the Holyrood Sources Special podcast on August 17, the First Minister said Ms Forbes was not in his Cabinet, specifically as Deputy First Minister and finance secretary, because: "There were some differences around progressive taxation, for example..."

But he added: "I would never close the door to Kate being back in government if she wanted to come back in."

READ MORE: SNP split over council tax freeze as ex-health secretary hits out

The reports over the weekend on the prospect of income tax rises being dropped led one of the hosts of the podcast Calum Macdonald to ask this morning: "Could this open the door even further to Kate Forbes rejoining government?"

Shona Robison is the deputy first minister and finance secretary so if Ms Forbes were to return to her former role in government the move would require a reshuffle. Such a possibility was quickly dismissed.

A senior SNP insider told The Herald: "There are no plans for a reshuffle."

Mr Yousaf's announcement of the council tax freeze - which he made in his address last Tuesday to the SNP conference - was applauded by delegates in Aberdeen but left council leaders stunned.

The freeze had two elements - abandoning a plan to restructure the tax to raise bills for Band E to H houses by 7.5 to 22.5% from April and paying councils not to raise the levy as part of their annual budget setting process in the spring.

The restructuring was due to raise around £175m and the annual rise around £100m.  Ministers have said they will compensate councils for the latter element, but that is now subject to negotiations.

The freeze and the possible decision not to hike income tax are all part of the party's plan to shift away from policies that could hit the pockets of the middle class.

Asked about the prospect of income tax rises in December’s budget, one senior party figure told the Sunday Times: “It’s not going to happen.”

A senior SNP source said: “If we can get to a position where we are not raising income tax then everyone would welcome that. I think that would be everyone’s aspiration.”

SNP and Green ministers have already introduced five different income tax bands and individuals earning about £28,000 pay more tax in Scotland than they would in England or Wales.

Shortly after becoming First Minister Mr Yousaf told the Scottish Trades Union Congress annual conference in Dundee that he planned to “go even further” with “progressive taxation”.

He said he was “very interested” in creating a new income tax band of 44% for people earning between £75,000 and £125,140.

The fall-out from Rutherglen, which Labour won with a remarkable 20-point swing, led to an SNP crisis meeting at Bute House, Mr Yousaf’s official residence.

In attendance were Stephen Flynn, the SNP Westminster leader who has been pushing for the change in strategy; John Swinney, the former deputy first minister; Bruce Crawford, a key figure in holding the 2007 minority government together; and Stewart Hosie, the former deputy leader, as well as cabinet members and advisers who are particularly close to Mr Yousaf.

According to one attendee, the agenda posed the questions: “Where are we, where do we want to get to and how do we get there?”

Writing in a column in The National on the subject of climate targets Ms Forbes said income tax increase would damage growth and shrink the number of taxpayers at a time when the country’s finances are in difficulty.

She wrote on August 2: “There are some who think that raising taxes exponentially or complicating the system further will somehow get us out of the hole of difficult public finances. Nothing could be further from the truth, as proven by history and most expert analyses.

“I don’t advocate unfairly low rates of taxation either. We have a moral duty to support progressive forms of taxation, whereby the rich pay more and the poorer pay less.

“But I do know that raising taxes exponentially high stymies economic growth, shrinks the number of taxpayers and altogether results in less public finance. It’s short-termist when we need long-term vision.

She said the alternative is to go for growth and work with the private sector: “By maximising the opportunities for our economy to grow and prosper, we will see more private funding invested and more public funding available to meet our net zero targets.

“This is the time for Scotland to truly become the net zero capital of the world, led by Aberdeen and the North East, which has all the talent, infrastructure and expertise required.

“It is not the time to hit our industries with higher burdens, or to shut down new economic opportunities, or to jeopardise business growth by legislating for ever-increasing bureaucracy and complexity. That will only undermine our efforts.”

It is understood that no decisions have been taken on the Scottish budget yet which will be published on December 19.

The Scottish Budget date has been set to provide sufficient time to analyse the UK Government’s Autumn Statement on November 22 and consider the implications for Scotland’s finances.