AS I SEE IT: TERRY MURDEN says the First Minister enjoys a freedom from global scrutiny not afforded to Westminster
Nicola Sturgeon has enjoyed taunting the new Tory leadership in Westminster over its spectacular tax u-turn, or act of “ineptitude”, and has managed to share a rare consensus with Conservative backbenchers and even a few disgruntled Cabinet members.
However, the First Minister should exercise her own care and attention before delivering what has become an instinctive knee-jerk opposition to anything the Westminster government says or does. As she addresses her party conference this weekend she does so with a litany of failures by her own administration, from over-budget ferries and rising crime statistics, to a health record that is in intensive care.
Add to that the legislation rushed through parliament to freeze rents for tenants. While Ms Sturgeon attacks Liz Truss and Kwasi Kwarteng for springing a heap of unfunded tax cuts on the markets, the First Minister chose to announce the rent freeze without any consultation with the sector. Just as the markets let the Prime Minister and Chancellor know what they thought of the mini-budget, so an alliance of landlords and property investors in Scotland gave the Holyrood government a sharp tongue-lashing.
In each instance it was a case of putting political expediency before commercial good sense. The Prime Minister and Chancellor thought they were on a vote-winner with the axing of the national insurance and corporation tax increases, the repeal of the hated IR35 off-payroll reforms and, most of all, the decision to bring forward the cut in the basic rate of income tax. Aside from the failure to produce a plan on how it would be paid for, it was the scrapping of the top rate of income tax as well as the cap on bankers bonuses that looked reckless, unfair and caused all the fury.
At Holyrood, the rent freeze was also presented as a “good thing” in so far as no one wants to see tenants unable to pay their rent, or thrown out of their homes. How it was announced was another matter, as well as what was also unfair about the bill. No consultation, no warning. And only a last minute insertion of a landlord’s ability to apply for a 3% rise in rents saved it from being an unbridled attack on those who provide a home for more than a third of the population.
The Scottish government wants to be seen as caring, quite rightly. But there is plenty of evidence to suggest that the effect of this bill will be to squeeze the sector, forcing some landlords out of the market, thereby reducing supply and eventually forcing up rents.
And why single out tenants? If the point of this policy is to protect people on low incomes, why not support those, including first time buyers, who are facing a sharp increase in their mortgage payments?
No wonder private landlords feel they are being singled out.
As letting agent Riccardo Giovanacci writes elsewhere in Daily Business Magazine, this looks conspicuously like another case of Holyrood trying to out-do Westminster and appear more in touch with the public.
Ms Sturgeon will certainly play the ‘good cop, bad cop’ card during the SNP’s annual gathering, once again suggesting that Westminster has a monopoly on bad decisions and that only independence can save Scotland from the wreckage.
One big difference between the two is that Westminster is always under the watchful gaze of the international markets. One slip and the punishment, as we have just seen, can be brutal. Ms Sturgeon’s government does not have to face the glare of global investors and the money markets. Its actions may be subject to the criticism of opposition politicians, lobby groups and regulatory bodies. But its performance does not attract the same degree of international attention.
This gives the Scottish Government a margin of error not afforded to Westminster. It is something Ms Sturgeon may contemplate as she prepares to publish her paper on how the economy will operate under independence. It will include proposals for a central bank, eventually having control over monetary policy, including interest rates, and a Scottish currency.
That’s when Scottish politics will really come under the watchful eye of the global markets. If decisions like freezing rents and throwing money at the government’s various pet projects affects Scotland’s public finances the response will be more punishing than a stern slap on the wrist by the auditor-general. Welcome to the world of big finance.
tmurden@dailybusinessgroup.co.uk
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
No, she may not be judged by the markets, but the scrutiny of the media is relentless. Over budget ferries – true but the money is being spent in Scotland and on the ferries. She can’t get away with overspending and even £100 million is forensically scrutinised. Down in Westminster £37 billion is spent on aTest and Trace system that did not work. No scrutiny. £65 billion spent in one day by the Bank of England. Forgotten about.
The Scottish government had to bail out the yard that made the mess, so how can you blame someone else for another’s mess?