What does Scotland do about THE MESS?

Now to begin with I have to define. As I write there are several messes, not least Ukraine, for which I have no solution. It is simply beyond my capacity. So to be specific this Mess is economic and refers to the plight of us all in the face of costs that are already rising and seem set to rise further on several, indeed too may, fronts.

Then by "us" I mean me and my fellow Scots and as such I have to declare that I am a member of the SNP and as such it is axiomatic I believe in independence for Scotland, to which I add the corollary of "within the EU", although in this precise context that is probably irrelevant. Thirdly, I have to express frustration and that it is with the political establishment in Scotland, from which I do not, I repeat, do not exclude the Scottish National Party. Specifically I am frustrated by the lack of policy from all the parties. And finally I have to define "policy". In my terms it is two-pronged. The first is a defined set of principles that are advocated, which have by definition to be different per party but in all cases extend beyond independence or unionism. The second are not just the measures already taken in devolved areas but also proposed measures considered at the time to be in reserved areas, with the disagreement, perhaps conflict, the constitutional stoochies that would inevitably result, seen not as a problem to be avoided but as a vital political vehicle on the road to independence.

So where do we start. As I begin to write it is the day before the Westminster government's Spring Statement. I shall finish writing on the day itself, from when the real question in my view is not where money might be spent but how the bulk of the population will find the money to pay the bills. The draws on income are rising and fast, whilst incomes themselves are not. There is a looming gap, whether it be manifested in price rises in food and fuel or the costs, just past, present and future of running an adequate health service. And here I am going to get one thing off my chest immediately. I do not believe that the National Health Service in the forms, in which it functions north and south of the border, and they are different, can continue. The reasons are two-fold. The first is too may people seem reluctant to pay more for it, even though its costs, both now and with the proposed National Insurance increase, lie comfortably within the band of 12%-15% of GDP that it and other comparable systems have shown is required. And the second is that the myth of the insurance element of NI has been thoroughly exposed. In the same way as I have never understood why feminism  has not kicked back about the absorption into general support of the Child Benefit and the then subsequent decimation of its value, when it was created as a payment targeted specifically at women I do not get NI has been allowed to be another tax paid into the general pot. Just as Child Benefit is hypothecated for women so NI should have been for us all.     

However, that is a battle, perhaps two that seem lost, albeit that the first is recoverable and the second is probably best replaced and a new start made. Moreover, there is in the latter a model to be followed, a good one at that, seen as many as the best there is and all the better for it having been created by a Scot. You won't know his name. But you will probably know his grandson's. But before the reveal first a little story. Several years ago a poll was held to establish who the citizens of the country considered to have been the greatest amongst them and the result was surprise to almost everyone. No war-hero or politician, scientist or entertainer was chosen. The man who was had been was the introducer of national health service with a small "n". He was the grandfather of the actor, Kiefer Sutherland, from which you might correctly deduce the country is Canada. His name was Tommy Douglas. He was born in Glasgow and would emigrate across the Atlantic, not once but twice, taking what he saw in terms of working-class health both in his old and new homelands and doing something about it. You might read, research his story and think on.

But back to the matter in hand just now; monetary matters and advocation. The term "levelling-up" is much used and is by certain parties quite probably being completely abused. But it matters. There has seemed to me since time immemorial no substantial argument beyond hubris for a differentiation between the level, at which National Insurance begins to be charged and that for Income Tax. And that argument has distilled into two areas. Firstly let us drop the pretence that both are not taxes and secondly recognise that the Income Tax tax-free allowance, currently £12,580, or a tad under £242 per week, is de facto seen as a minimum income to feed, cloth, house etc, whether it is in reality sufficient or not. It is therefore incongruous that a figure, currently £184 per week on PAYE and £6515 per year for the self-employed, is used used as a minimum for health. Are health and welfare incompatible? 

And there appears to be a further incompatibility. That those earning over £967 per week or just over £50,000 per year seem not to get as sick as the lower paid which might well be true, but is hardly egalitarian and is in complete contrast to other taxes, and have their contributions trimmed. Moreover, it is not by one or two percent, a tenth or a fifth but by fully five-sixths, meaning that the marginal, real tax rate paid on income of approximately just under £50,000 is a third greater than that of just over that figure. Crazy!.

And finally there is tax on tax. National Insurance is paid on gross income and so is income tax. Above £12,580 there is double taxation, just like VAT on Fuel Duty but far more pernicious. It means that on the twelve thousand, five hundred and eighty first pound the tax rate in England is presently 34% not 32%, soon to be not 33.25% but actually almost 36%, with the equivalent Scottish rates, 33% and just under 35%.     

So there are the problems but what are the solutions, specifically the declared Scottish solutions. I suggest two approaches, indeed three distinctively Scotland-specific policies. The first is the permanent equalisation of tax-fee allowances. And miracle of miracles that is actually almost what has happened in Westminster today, the NI tax-free rate allowance being raised to that of income tax. At a stroke the system is literally clearer both in terms of application and previous obfuscation, albeit with the caveat that there is no stated guarantee of the immutability that Scotland would distinctively sign up to. The second is either that double taxation is removed by NI becoming tax deductible or that it is retained but all NI is from this day onward is treated as its name implies, as an insurance premium for health, now including Social Care, etc. and is fully hypothecated in a separate fund that government by law can top up as required but cannot raid. 

And the third is the acceptance and movement immediately of and to the figure that results, of course, be adjusted notably without failure by at the minimum inflation, as the minimum standard for the State Pension and the same acceptance and movement as rapidly as possible but nevertheless in the short term of and to it also being the standard for a Universal Income to be paid to all with a National Insurance number, although not necessarily in work, so pensioners, non-professional carers, non-working mothers, the unemployed and the disabled included and thus replacing the current and benefits systems plus.

However, it has to be recognised, as the Westminster government did today but seemed to offer no specific solution, that equalisation of "tax" allowances at the lowest levels is not without cost. To a degree the raising of the NI rates might seem to close the resultant deficit but the truth is that that money is already spent, and several times over.  There has to be another source and that can take only one form. If NI is now fully recognised as a tax then it has to be made non-regressive at the very least and better still progressive. And each can only be done in one way, the total removal and replacement of the 2% NI rate. In the case of non-regression that would entail the charging of the same NI rate, be it 12%, 13.25% or more, on all taxable income, be it that of the new pauper or the billionaire. And in the case of progression it would mean the charging of a standard rate to £50,000 or similar and standard rate plus a supplement of 2% above that ad infinitum. As proof it would mean just now that an earner on an average income would pay a real contribution of about 7% of income, a higher earner on twice the average 11.5% and one on ten times the average, 12.5%.

And if the above, essentially a reset, can be carried out for Scots in the case of health and social care there are other areas where the same principle could be applied.