davidgowDavid Gow responds to Jim Murphy’s announcement of his support for devolved income tax and an increase in the top rate in Scotland.

 

Jim Murphy says he – and Labour – now supports giving the Scottish Parliament full powers over income tax ahead of the Smith Commission proposals later this week. He has specifically proposed reinstating the 50p tax rate for those earning over £150K a year – around 16,000 in Scotland – and suggests this would net £250m.

The former secretary of state for Scotland said at the Mitchell Library, Glasgow: “It is as important a change for the Scottish Labour Party as the rewriting of Clause Four was for the UK Labour Party. We will not only meet our promise on more powers for Scotland, we will exceed it. It is a clear signal to Scotland that we have changed, that we get it, that we will stand up for Scotland.”

Quite a volte-face indeed, not least on his own previous stance!

Jim Murphy says he hasn’t consulted Ed Miliband or Ed Balls about his plan, including the 50p rate. His rivals for the Scottish leadership, Sarah Boyack and Neil Findlay, haven’t been consulted either and are far from happy with it. Alistair Darling, ex-chancellor and Better Together chairman, savaged the concept in his FT comment piece on Monday. Gordon Brown opposes it ferociously.

If this proposal is as important as the re-writing of Clause 4 in 1995 then surely it requires just as much discussion and, more to the point, endorsement by the party membership in a host of fora. Tony Blair, it may be recalled, slipped revision of Clause 4 into his 1994 conference speech at the last minute. But there then followed at least six months of debate before it was approved by 467 of 470 CLPs – after ballots of individual members – and by some unions. It was then finally endorsed by conference itself.

Tony Blair was at least leader when he made the very radical proposal; Jim Murphy isn’t yet, and may not be as the election process is still in full swing.

It may well be that he’s right to say in a clear sideswipe at the SNP and Nicola Sturgeon: “This will result in there being no hiding place for those who want to talk about radical politics but then fail to deliver them.” Or he may well be endangering the very union that 55% of Scots voters reaffirmed on September 18. Or something in between.

But he doesn’t speak for me or thousands of other party members because he hasn’t asked us for our views and we have had no time to discuss, let alone formulate, them. The timetable for the Smith Commission was always ludicrously tight whatever the now sacred Vow said, but this pre-emption of its findings in an effort to scuttle the Nats is far too previous.

At the very least we need to debate the serious caveats raised by Alistair Darling and Gordon Brown regarding the weakening of the ties, as the ex-chancellor put it, that “bind all member nations of the UK” and the erosion of “the solidarity at the heart of it”. That cannot be left to an old-style cabal at the top of the party.

What are the benefits – and disadvantages – of enabling Holyrood to set the income tax bands and collect the revenues they bring? What happens to the tax yield in any downturn? What’s the impact on the Barnett formula? Should, indeed, the latter be scrapped? Where should the Scottish government direct its (increased) spending? Do we opt to be a Scandi-style high tax, high spend economy?

As Peter McGregor of Strathclyde Uni points out, a 3p rise in income tax would yield around an extra £1bn – which could be used to finance capital investment or increase the social wage and boost GDP by 2.8%. Or it could be used unwisely.

Either way, we need a coherent, prolonged discussion – a sustained SWOT analysis – of the proposal and its impact upon Scotland and the UK, rather than a rush to judgement.