Salmond takes gamble on 'middle Scotland'

Local income tax would hit hardest the very voters who elected the First Minister last year, writes Hamish Macdonell

FIRST there was "Mondeo Man", the epitome of middle-class middle England, courted by New Labour as Tony Blair chased victory in 1997. Then there was "Dunfermline Man", the middle-class Scot from commuter-belt Fife targeted by Gordon Brown in his 2001 Budget. For the past ten years the middle-class voter, particularly the "swingers" – those willing to change their political allegiance – have been at the centre of every serious party-political voter strategy.

The SNP's approach has been no different. The Nationalists spent a decade making themselves appear moderate, credible and electable, winning over business leaders and the public alike.

Alex Salmond, the First Minister, knows he would not have won last year's elections without the backing of "middle Scotland", those voters in solid, white-collar jobs who were prepared to ditch Labour and give him a chance. So what is he doing by introducing a local income tax that would hit the very strata of society which gave him his chance for power in the first place?

Mr Salmond has insisted many times that his local income tax plans would mean that 80 per cent of Scots would be either better off or no worse off than they are under the council tax.

The Scottish Government has also claimed that only households with earnings of more than £70,000 a year would be worse off. If that was the case then "middle Scotland" would remain very firmly on his side. But independent research suggests that the picture is much more complicated than that.

The accountancy firm PricewaterhouseCoopers (PWC) tried to put together a detailed picture of winners and losers under the local income tax plans. It broke down the wage levels by individual council tax bands and found that a single person in an average Band D home earning more than £35,000 would have to pay more under local income tax, and that those in more expensive Band G homes would pay more if they earned above £53,000.

PWC also worked out that couples in Band D homes would start to pay more once their combined income hit £49,000, while couples in the more expensive Band G homes would pay more if their combined income totalled £75,000 or more.

What this means is that many single people earning £35,000 or more and many couples earning £50,000 together will be worse off under the local income tax than they are under the council tax.

This is "middle Scotland" territory, these people are "Dunfermline man" and "Mondeo man" – the very people who helped put Mr Salmond into Bute House last year.

A rough calculation suggests that while firefighters, nurses and teachers would be better off under the local income tax if they were the sole earners in their households, they would be worse off if they were part of a dual-income family.

They would then join the ranks of doctors, lawyers, IT workers and many self- employed specialist tradespeople, all of whom would be worse off under the local income tax scheme.

Mr Salmond's first two big political initiatives were designed to win over "middle Scotland" – a freeze in the council tax and big cuts in business rates. Both of these were effectively tax cuts.

Indeed, John Curtice, Professor of Politics at Strathclyde University, described the SNP Scottish Government yesterday as "the biggest tax-cutting government we have seen since the Tories". According to Prof Curtice, the local income tax is also actually a tax cut as the Scottish Government was investing £281 million in subsidising the new tax, money which was not available at the moment to subsidise the council tax.

But he argued that Mr Salmond could ride through any opposition from middle-income earners to his new tax because he still enjoyed the general trust and confidence of the Scottish people, and that was the most important thing.

"'Middle England' was used as the justification by those in the New Labour operation to take the Labour Party to the right on various issues," Prof Curtice said.

"Whatever benefit that brought to the Labour Party at the time, 'middle England' has proved incapable of saving it from the huge hole it is now in. So ideological balance of this sort is fine, but a reputation for competence is worth a lot more."

Prof Curtice added that although Mr Salmond's local income tax plans might hit some middle-earners, the First Minister was gambling on the massive unpopularity of the council tax – which is ranked only alongside inheritance tax as the UK's least liked taxes – to give his plans the support they need.

James Mitchell, Professor of Politics at Strathclyde University, said "middle Scotland" did exist and was increasingly influential. It was aspirational, dynamic, politically active and the SNP had to listen to it, he said. "They have good houses and they want bigger houses," he said.

With Scotland changing over the past 50 years from a largely industrial, working-class economy to an educated, service-driven economy, so this section of the population has become bigger, more influential and more important in political terms.

As Prof Mitchell pointed out, these people vote in large numbers and often decide elections. They also use local services such as schools and hospitals and spend money in their local economies. And while many of those in this "middle Scotland" bracket may earn less than the thresholds to make them worse off under the local income tax, they want to earn more and believe that they will do in time.

Prof Mitchell said it was easy to forget that the Nationalists actually believed in local income tax as a point of principle,

but he said most people in "middle Scotland" did not like the council tax and that was why, in the opinion polls at least, they backed plans to scrap it and replace it with something else.

"You have to remember that this is a policy which is against something deeply unpopular, the council tax, not really in favour of something else," he said.

Prof Mitchell said he did not believe that the local income tax would ever get through the Scottish Parliament because there simply was not a majority for it.

And he added: "Its a win-win situation for the SNP. If they don't get this through – and I just don't see how they can – they will be remembered for what they tried to do: getting rid of something unpopular. If they do get it through, they will have got rid of the council tax."

What is clear is that Scotland does appear deeply divided over the local income tax with so-called civic Scotland – business leaders, unions, councils and other professional bodies – opposing the plans bitterly and a large proportion of the population in favour of them. Or rather, they are in favour of abolishing the council tax. What Mr Salmond is gambling on is that this hatred of the council tax will carry through to support for a local income tax.

Labour and the Conservatives believe that, once all those doctors, vets, teachers and bank workers who make up "middle Scotland" find less money in their pay packets, they will turn against the new tax and against the Scottish Government. At the very least, it promises to be a fascinating battle.

By-election hope for the numbers to favour SNP

"I MAY be missing something here," said Professor James Mitchell of Strathclyde University, "but I just don't see how they are going to get this through the parliament."

Prof Mitchell had looked closely at the positions of all the parties in the Scottish Parliament and concluded that Alex Salmond stands little chance of getting the local income tax on to the statute books.

At first glance, the parliamentary arithmetic appears to back this up but, as with everything in a minority parliament, the reality is a little more complicated than that.

The Scottish Nationalists have 47 MSPs. Presuming ministers can do a deal with the Liberal Democrats and bring their 16 MSPs on board, this gives the Scottish Government 63 votes, two short of the majority needed to carry the policy.

This is where the Greens come in. So far at least, the Greens have stayed firm to their policy of a land value tax. They want a property-based tax and, as long as they stick to that principle, they will not be brought over to the government side.

There have been some suggestions at Holyrood that the Greens might be bought off with changes to the Climate Change Bill but ministers would have to make significant changes to their environmental plans to get the Greens to take such a big step.

There appears to be only one possible way out for the Scottish Government. At some time in the next six to eight months, a by-election is expected in the Labour-held seat of Motherwell and Wishaw when Jack McConnell takes up his post as the next High Commissioner for Malawi.

If the SNP was to win that by-election, it would give the Nationalists 48 seats to Labour's 45 – a crucial three-vote gap which would give the pro-local income tax side 64 votes and their opponents 64 votes.

At this stage, the position of independent MSP Margo MacDonald would be absolutely crucial. She has shown no sign of wanting to back Mr Salmond on these tax plans, but she is also a good negotiator and could probably raise substantial sums for policies of her own in Edinburgh, if she was willing to do a deal.

Mr Salmond has a tough job getting this policy through and, as with most important decisions in a minority parliament, it will come down to backroom deals between parties.