Kezia Dugdale spoke in Edinburgh this morning setting out a bold new policy to use the powers we have to stop the cuts to children’s education and essential public services.


Thank you for joining me this morning for a moment that I hope will change the nature of the debate in Scottish politics, not just ahead of the election in May, but for the years ahead as our Parliament accepts more financial responsibility and devolution comes of age.

The bad news is that this is a speech about tax…

The good news, though, is that I will speak in simple terms, because I stand here to tell a simple truth: if we really want a different society and if we really want a different economy, we have to pay for it.

In Scotland we have had an easy political consensus in recent years.

A consensus which only the Tories and Lib Dems have stood outside. It says that we should break from George Osborne’s austerity, that we should choose to invest in our future, that we should take different decisions.

Well now we can.

Since becoming leader I have spoken again and again about how, so far, this consensus has come without a cost. I’ve bemoaned how cheap and easy it is to pose as a socialist while avoiding the big questions about how we will pay for change.

That came to an end with the setting of the new Scottish Rate of Income Tax. For the first time, new financial powers could not lie unused on the shelf.

The Scottish Government was forced to make one of three choices:

  • To continue the financial choices made by the UK Chancellor of the Exchequer by maintaining the status quo – a choice to copy austerity;
  • Or to cut the rate below that set at the UK level and so cut more harshly than George Osborne – a choice to deepen austerity;
  • Or to increase the rate to enable different choices to be made from the Tories – a choice to break from austerity.

So, you would think that would have been an easy choice for the SNP.

They have dominated Scottish politics using a simple argument: that more powers mean fewer cuts.

That if we made decisions in Scotland we would choose to break from Tory austerity; that our political values were different.

Hundreds of thousands of Scots, wanting to protect the public services we love, have rallied to that cause. To the promise of an alternative to austerity.

Yet when the moment came, when the powers were put into the hands of the nationalist government, when they could have seized the opportunity for change…

…they didn’t choose to be different from the Tories, they chose the same financial choices as George Osborne.

They could have decided to be different, instead they disappointed.

They chose to accept austerity, not end it. They chose cuts over investment.

Whether John Swinney’s decision comes from a lack of conviction or a lack of courage I won’t speculate on today.

The cuts the SNP have chosen to inflict will be felt in every community in Scotland. The hundreds of millions of pounds taken from local services are cuts to things that we all rely on.

These are cuts to the public services we all want to be there when we need them. And these are cuts to our economy. Analysis by the GMB trade union has already identified more than eight thousand job losses.

If you are in any doubt as to the scale of these cuts, here are words of SNP Councillor Sandy Howat, the Deputy Leader of the council in this city. He says:

“A cut of this scale would be very damaging for jobs and services within Scottish local government generally…the harsh reality is that this will translate to real job cuts that hit real families, in real communities…

Everyone will be hurt by this.”

What is true in this city is true across Scotland.

Over in Glasgow, a city crying out for investment, they are being forced to make the biggest cuts. In SNP controlled Dundee, 6,000 council employees have received letters asking if they would take voluntary redundancy.

Across the country we can see the shape of the cuts to come.

But the worst thing about the SNP’s choice is that they will make cuts to education.

On top of the £130 million of cuts announced to the Scottish Government’s centrally managed education budget, the hundreds of millions of pounds of cuts to local government will mean a new round of cuts to our children’s nurseries, primary schools, and secondary schools.

Cuts to those who protect vulnerable children and young people.

Cuts to the life of communities where our children grow up.

In the past, as local government has been cut again and again, we have been promised that education is protected.

But the official figures show that isn’t true.

The Scottish Government’s auditors report that councils in Scotland have already cut education in real terms.

They found that almost all councils have now cut education and that those savings had been made by reducing teacher numbers to a 10 year low.

The price of those cuts is that achievement is falling, the chances our children get are being limited, their horizons are being narrowed.

  • Guarantees of childcare aren’t worth the paper they are written on, with an average of 11 children waiting for a free place at every nursery school.
  • Children leaving primary school unable to read properly.
  • Your ability to get to university determined by the bank balance of your parents rather than your talent.

Education is already falling behind. Further cuts to schools will only make it harder to catch up.

Disadvantaging children, holding back business, harming our economy and our future prosperity.

So I say today: Labour cannot support an SNP budget which asks our children and young people to bear the brunt of the cuts.

Education is everything.

Our nurseries, schools, colleges and universities are the stairway out of disadvantage.

They are the map that shows us where to locate our potential, the place where we can grow into the person we feel we should be.

Ask any of the big thinkers on the left. Joe Stiglitz tells us that if we don’t invest in education “we are transmitting advantages and disadvantages across generations.”

Piketty tells us “the best way to increase wages and reduce wage inequalities in the long run is to invest in education and skill.”

Because education isn’t only our most important social policy.

It is our most important economic policy. As an example, analysis shows that if, instead of cutting hundreds of millions, we instead invested half a billion more in education, it would create 14,000 jobs now and add more than half a billion to the economy.

As I said a month ago, when I launched our policy to help double the mortgage deposits of first time buyers, you cannot claim to be for aspiration if you are also for austerity.

You cannot offer people opportunities, the chance to grow, to secure a more prosperous future for themselves and their families, if you are cutting education.

That doesn’t help people get on in life and fulfil their ambitions. It leaves them behind.

For all these reasons, the SNP should have put schools first when making their budget, instead they will be amongst the hardest hit.

Today’s announcement shows that we, like parents all over Scotland, share the ambitions and aspirations they have for their children. Nothing is too good for them.

Nicola Sturgeon says she wants children in Scotland to have a world class education. Great. But people aren’t stupid. They understand you can’t get anything world class on the cheap.

If the SNP want to argue that we cannot afford to spend more on education, let them say that. I say we simply can’t afford not to.

And if education is a priority, First Minister, then don’t just deliver another speech promising you really mean it, deliver a budget that proves you really mean it.

I understand why some councils are talking about defying the council tax freeze.

There is no doubt that the SNP’s decisions have harmed local services already, but there is no prospect of reversing these cuts using the council tax which now makes up such a small proportion of local revenue. Council tax now accounts for just £2 billion of the combined budgets of over £16 billion for Scottish councils.

To reverse the provisional cuts announced by the SNP to Dundee’s budget, for example, would take a council tax increase of 35%, to fill the gap in Glasgow it would have to be 36%, North Lanarkshire 33%.

We’ve got to fix local government finance, we’ve got to remove the historic millstone of debt from around the necks of local authorities…

…but we need to find a way to stop these cuts now.

The SNP were elected nearly a decade ago with a manifesto promise to sort this out. We can’t just keep kicking this down the road.

John Swinney has put the people running our public services, those looking after our elderly, protecting the vulnerable, those running our children’s nurseries and schools in an impossible position.

  • The SNP are cutting their budgets by hundreds of millions of pounds.
  • They have said they’ll increase those cuts if local authorities try to use Council Tax to make up the gap.
  • And they even now threaten them with the removal of funding for teachers and social care if they don’t accept the SNP’s cuts.

So what are they supposed to do?

We can’t just borrow, but nor can we afford to cut education.

People will realise that if we are going to avoid these cuts, the money has to come from somewhere.

When the scale of these cuts became clear, I knew what it would mean for our schools and our public services, I knew that the only alternative was the one I will announce today.

So, I asked Nicola Sturgeon at First Minister’s Questions about her about cuts to education.

I think it is worth quoting her reply at length:

“We are in a budget process right now, so if Labour wants local government to get more money in next year’s budget…it has to set out where that money will come from.”

She continued:

“If [Kezia Dugdale] does not do that, she does not deserve to be taken seriously by anybody.”

I couldn’t agree more.

Last week she waved her Budget in the air and challenged me again.

Well today it is my turn to challenge the First Minister. It’s time for her to get serious.

Because if you take the logic of the SNP’s argument to its conclusion it means this:

If they are presented with a way to avoid these cuts, as I will now do, and they then decide not to take that choice, then the responsibility for making the cuts is theirs.

These will become cuts the SNP have made a deliberate choice to pursue.

If they reject the only credible alternative to austerity there can be no credible claim that the SNP is an anti-cuts party.

No more angry press releases, no more hand-wringing rhetoric at rallies.

Just the naked truth of their choices in government, there for all to see.

So here it is. The alternative.

Given the choice between using our powers, or making cuts to our children’s future, our nation’s future, we choose to use our powers.

When the SNP return to the Scottish Parliament with their budget tomorrow we will put forward an amendment that they should accept. If they do not it will define the Scottish election campaign.

We will tear up this SNP budget that simply manages the Tory cuts, and instead use the power we have to set the Scottish Rate of Income Tax one pence higher than the rate set by George Osborne. This will provide an extra half a billion pounds a year to invest in our future.

Lower paid workers won’t lose a penny because we will take this opportunity to give something back through a new payment. One in four workers will pay no more, and one in five taxpayers will end up better off financially as a result of the rebate.

Some of us will pay a little more, the wealthiest will pay the most, but we will all gain from protecting our children’s schools, the public services we love.

We don’t do it because we want to use the powers for their own sake. We do it because there is no other alternative to cutting our nation’s economic future.

This is fair.

Under this plan over the course of a year a worker on the Minimum wage would be £81 better off. I would pay an additional £481. The First Minister would pay an extra £1,447.

Even before our rebate, this is a progressive policy. But our rebate will put beyond any credible doubt that, far from being the losers from this policy, low paid workers are the biggest winners.

We would establish, with local authorities, a £100 annual rebate for low income taxpayers. This workers rebate will account for just £50million of the £500million this change will raise but will mean that we can boost the incomes of low paid workers.

Lower paid works won’t lose a penny because we will take this opportunity to give something back through the new £50 million workers rebate we have announced.

One in four workers will pay no more, and one in five taxpayers will end up better off financially as a result of the rebate.

And today I can also reassure low income pensioners who pay tax that they will also be protected by a £25 million rebate, another measure to make sure that this policy is fair in how it asks people in society to contribute toward the costs of change.

Local authorities already make direct payments to people, either through the council tax system or in direct payments, for example the fund that ensures that tenants do not lose out from the bedroom tax.

This isn’t beyond our wits to make it work.

Despite what the SNP have claimed, if the will is there we can use the tax system in a fair way and avoid making cuts to local schools and local communities – and we help out low income workers.

Using our powers to avoid cuts is a progressive choice.

Even without the new rebate we propose, the wealthiest will pay far more than the poor. In fact previously it has been estimated that the top half of earners will provide more than 84p in every pound of additional money raised from such a change.

Presenting his budget cuts, John Swinney told the Scottish Parliament that he could not make a different choice from George Osborne as it meant the poorest would be hardest hit.

That simply is not true – and he knows it.

Analysis we publish today shows that not only is the SNP’s claim false, but that, even before taking into account our rebate, the better off will pay more, in cash terms and percentage terms.

John Swinney himself let slip that inconvenient truth telling the finance committee that this was a “progressive power.”

It may be an inconvenient truth for the SNP, but it is a truth. And one that forces them to make their own decision.

So rather than making excuses as to why we can’t stop the cuts, he should look at the possibilities for change.

We have a once in a generation chance to create a fairer and more prosperous Scotland – if only we have the courage to accept the opportunity that comes from these powers. Starting with the new powers we have now, starting today.

And, when the Fiscal Framework negotiations are concluded, however long that takes the two governments, and the next wave of tax powers are transferred to our parliament, we would ensure that the burden of paying for change is shared fairly, with those most able to afford it paying the most.

We need powers, and the possibilities that brings, not posturing. Of course, don’t accept a bad deal, work hard for a better deal, but it is your job to get a deal. The two governments should stay at the table for as long as it takes.

An SNP government that has been so reluctant to use the powers it has must not walk away from the opportunity for further change.

The tax system has gradually become less and less fair over the course of my lifetime.

When I was born the top fifth paid 38% of their incomes in tax while the bottom fifth paid 31%.

Over the course of my life that has been turned on its head so that, by the time I was elected, those at the bottom paid 37% and those at the top 35.5%.

Today’s announcement is just one element of Labour’s tax plan that will begin to shift the balance of taxation from the least able to the most able to afford it.

We have led the debate on using our new tax powers:

  • Setting out a different approach on Air Passenger Duty from the SNP, instead using the money to help young people aspire to own their own home;
  • A plan to bring back the 50p top rate to ensure that every child gets a world class education, making the most of their ambitions, regardless of the income of their parents;
  • And our proposal to maintain the higher rate threshold at its current level, rather than implementing George Osborne’s planned tax cut.

We will set out the full detail of our tax plans, and how they will rebalance the burden of tax away from the poorest and towards wealthier earners, ahead of the election.

But already we have provided more detail, more vision and more honesty about how we will fund change than any of the other parties.

Our plans are also fundamentally fairer.

The SNP have only set out two tax choices for the future, both of which would make things less fair:

  • First the decision not to use the Scottish Rate of Income Tax to make different choices from the Tories, and instead to make hundreds of millions of pounds of cuts to communities, hitting the poorest hardest.
  • Second the decision to cut Air Passenger Duty, a tax change that ONS statistics suggest would be worth £4.50 a year for the bottom 20% but £73 a year for the top 20% of earners.

The Tories, meanwhile, would increase cuts by hundreds of millions of pounds with unfunded tax cuts.

It says everything about the attitude of the Tories that they didn’t even pretend that they had costed their tax plans. They will make cuts at any price. That should bury forever the idea that Ruth Davidson leads a different kind of Tory party.

We’ve had decades of ‘trickle down’ economics. The reality is that wealth has flowed in the other direction.

So, we now offer a radical alternative to the others.

We reject the economic worldview of the SNP and the Tories: that cutting investment is inevitable, that the only strategy for growth is to cut taxes lower than our neighbours, that competition means a race to the bottom.

There is no future in cutting back on education, no future competing on low skills, no future in a low wage economy.

I choose to invest in education because we can’t afford not to.

The SNP and the Tories have not yet adapted to the new age of financial responsibility that comes to Scotland along with our new powers. We cannot simply borrow. We’ve got to pay for the public services we value – or lose them. We’ve got to start being honest with voters that change comes at a price.

This choice we make today on the Scottish rate of income tax would provide half a billion pounds more to invest in our children’s future. It enables us to stop cuts to schools and to guarantee that spending on education will be protected in real terms across the next Parliament.

This is a commitment conspicuously absent from the SNP platform. Look at what they have promised…and what they haven’t:

  • They have promised to protect spending on the NHS in real terms over the next 5 years.
  • They have promised to protect spending on police in real terms over the next 5 years.
  • They have promised to protect the small business bonus over the next 5 years.

So they have no problem making long term spending promises.

Their reluctance to make the same promise for education suggests that the policies of the last few years, which have seen spending on schools cut, will continue if they are re-elected.

Our choice will ensure that education budgets, college and universities, teacher numbers and the opportunities open to our children are protected.

Ours isn’t an easy choice, yet we can’t go on in Scotland with a government that pretends to stand on the left but when it comes to the crunch, stands for nothing. We cannot give up on the future.

I’m sick and tired of an SNP government that tells us over and over again what it can’t do, a government which squanders the possibilities that come from the huge powers it holds.

Make no mistake, the SNP’s eagerness to tell you all of the good news but none of the bad news is because they are hiding the scale of the cuts to come.

If, after today, the SNP reject the only alternative to austerity it will transform the choice at the election: vote Labour to break from Tory cuts, vote SNP to pass those cuts onto our children.

It’s their choice.

We stand today as a Labour party that will go into the election against austerity, a Labour party that is offering a positive alternative, a Labour Party that supports ambition and aspiration.

The SNP will now go on the attack. I know that.

But the question they cannot avoid is this:

When they have built their political success on the argument that more powers means fewer cuts…

When they have the power…

When they have a majority in parliament…

And, when they now have the support of the opposition to take the action needed to break from austerity and protect our children…

…Why won’t they make a different choice?

…Why are they making cuts they don’t need to make?

And what will they now choose?

Will they accept the alternative we have set out?

Or will they admit that they have chosen, not been powerless to avoid, but they have chosen to make these cuts?

If they choose cuts, if they disappoint, then we will pursue them in every corner of Scotland, for every cut, every worker sacked, every vulnerable young person who suffers, every service lost, because of the decision they have taken to cut.

But you know, I’d much rather make positive change than make political capital.

Many won’t like hearing the hard truth I have set out…

…but I have to say it because it is best for the future of Scotland, because we can’t go on like this, talking Left and then acting Right.

Pretending we can have Scandinavian levels of public services while only ever cutting taxes.

And when people reflect on it, when they realise the scale of the cuts coming to their communities, they will know that the truth cannot be avoided: there is a choice between some of us paying a little more and all of us getting a lot less.

That to protect our nation’s future, we need to use the new powers that our nation has now.

But I genuinely hope it won’t be an election issue because I want the SNP Government to accept our amendment to the budget and to make the choice to avoid these cuts, this week, today, now.

So let me finish today by speaking directly to the First Minister:

I have listened to you for twenty years tell Scotland that more powers means fewer cuts. We have the power in Scotland now, so let’s work together to avoid these cuts.

I have listened to you since you became First Minister say that education is your priority. It’s mine too. So let’s use the power you have to avoid cuts to education.

You know, First Minister, if we do not make this change, it is our children, our young people, and the most vulnerable in society who will pay the price. We will all be poorer.

So please… let’s put aside party politics, let’s come together and do the right thing for Scotland’s future.

In the choice between using our powers and cutting Scotland’s future, we choose to use our powers.

What will you choose?

Labour has made our choice this morning. We are proud of it. Let’s win the argument for change.

Thank you.