SNP fiscal plans would have devastating consequences, says Ed Miliband

Nicola Sturgeon signing nomination form 2

Ed Miliband has said Scotland faces “devastating consequences” if Scottish spending had to be cut by £7.6bn in a year under Nicola Sturgeon’s plans for full fiscal independence.

Signalling a witch to far more aggressive attacks on SNP policy, the Labour leader challenged Scotland’s first minister to disclose which areas of spending she would cut and which taxes would rise to fill that “black hole”.

He said: “I will never sell Scotland short by signing up to the SNP’s plans and I will never sell Britain short by giving up on the pooling and sharing of resources.”

Miliband was joined in Edinburgh by Ed Balls, the shadow chancellor, as Labour launched a new campaign against the SNP after a new YouGov poll suggested Sturgeon’s party was pulling further ahead in Scotland, with a 25-point lead over Labour.

On Thursday, the Scottish transport minister, Derek Mackay, accepted a forecast by the independent Institute for Fiscal Studies that Scottish government income would be cut by £7.6bn this year if Scotland had full fiscal autonomy.

Balls said a funding gap of that size – 12% of total government spending in Scotland – would mean “full fiscal austerity”. It would require spending cuts far more severe than the Tories’ long-term plans, or hefty tax rises.

He said Sturgeon’s assertion that Scotland could grow its economy fast and far enough to plug the gap with increased tax receipts and productivity was fantasy. That would require an annual GDP growth rate of 5.3%, almost double that forecast for any of the advanced countries.

But challenged by the Guardian to set out what the implications of Labour’s UK-wide spending cuts would be for Scottish Treasury funding, Balls was unable to say. He confirmed that Labour was planning to cut non-protected departmental spending while securing funding for the largest spending areas such as health and education.

Balls said Labour’s tax proposals, including the mansions tax, bankers’ bonus levy and pension relief tax changes, would protect central government funding far more than the Tories’ plans.

Anticipating questions on the threat posed to Labour’s 40 Scottish seats by the SNP surge, the shadow chancellor challenged Sturgeon to support his party’s tax plans.

“You can’t trust the SNP to deliver social justice in the coming year,” he said. “I challenge the SNP to back Labour’s fair tax changes across the UK: the bankers levy, mansion tax, and changes to pension tax relief for high earners.”

Powered by article was written by Severin Carrell Scotland correspondent, for on Friday 10th April 2015 14.09 Europe/ © Guardian News and Media Limited 2010