Election 2024: What calculations will Scotland’s politicians be making?

Money makes an election whirl round.

Yes, there’s party fund-raising for the leaflets, battle buses and billboards, but more significant are the big questions of how we make more money in this country, how we tax it, and how that revenue is then distributed.

And over the next five weeks, I’ll be watching issues with pound signs attached.

A reminder of the background

There has been a prolonged period of real earnings struggling to return to their 2007 peak. Part of that has been due to price inflation over the past two years, and the cost of living going up.

Taxes as a share of the economy are higher than they have been for seven decades. Spending is under severe pressure, as the cost of servicing debt rises and the health service devours a fast-rising share of what is available.

Is Scotland different to the rest of the UK?

Holyrood has gone further on raising income tax from higher earners. The SNP administration is more constrained by the promises it has made on free provision of, for instance, university tuition, and use of its welfare powers.

These will be up for debate at the Holyrood election scheduled for 2026. The choices this summer will shape the amount of money available to MSPs before and after that vote.

Promises on devolved areas, such as health, education, police or prisons, should feed through, proportionately, to the block grant which Holyrood distributes.

Some spending promises may have no direct impact on Holyrood’s budgets, such as measures to reduce immigration or increased defence spending.

Also, some non-financial measures – restricting visas for foreign students, changing workers’ rights, oil and gas drilling licences – could affect the Scottish economy while having little or no role for Holyrood.

What do businesses in Scotland want?

Scotland’s business sector is diverse. But it tends to want capital projects that help get goods to and from market, a good system for training recruits, it would prefer workers to be healthy and not on waiting lists, and either lower taxes, reform of taxes or both, starting with business rates.

You could say that doesn’t matter: businesses don’t vote. But business figures can have an influence. So Labour has 120 signatories to a letter backing it as the credible challenger to the Tories.

Signatories are mostly from a narrow range of sectors; technology, creatives, boutique finance and entrepreneurs. Few now represent big business, which has good reason to keep clear of party endorsements.

Among the few notable Scots on the list are Iain Anderson, founder of public affairs consultancy Cicero. He has been a Conservative supporter for 40 years.

Benny Higgins was boss of Tesco Bank, and has become a serial appointee of the SNP government, setting up its investment bank and chairing its national art galleries. Both men now back Labour.

This letter is to challenge perceptions of Labour, demonstrating it has changed since the last election in 2019, when Jeremy Corbyn was leader.

Some trade union leaders are unimpressed by the lean towards business, and a dilution of plans to strengthen worker rights.

But unhappy union leaders could be just what Labour wants swing voters to hear.

Tories don’t have to work so hard to show business supports the party, as its campaign contributions demonstrate, though recent years have seen business and party fall out over Brexit and the consequences of it.

But this is only week one. There will be more letters. In past elections, such endorsements have worked well for both the Tories and the SNP.

Why appeal to pensioners?

Older people are more likely to vote, and more likely to vote Conservative.

Rishi Sunak’s “bold plan” includes a promise not to tax the state pension.

Was there a threat to do so? Yes, there was.

It’s risen because it has matched price and wage inflation (whichever is higher, as part of the so-called “Triple Lock” to ensure the state pension keeps up).

The “new” state pension, for younger pensioners, is a pay-out of £11,502 this year. If it were to rise by another £1,070, income would become taxable. For those receiving a work-related pension, it already is.

The Conservative leader says he will add to the Triple Lock promise, by raising the personal allowance from £12,570 to ensure it is no lower than the annual pension pay-out. Independent analysts say it was already an expensive pledge to retain.

Labour says the tax promise is another “gimmick”, and points to inflation as the reason this has become an issue.

But the pledge puts Labour under pressure to match it, as it said this weekend it would not raise income tax or National Insurance.

That starting threshold is the one part of income tax which Holyrood does not control. SNP ministers do not have to say if they would match it or not.

How will promises be paid for?

Labour is making much of plans to increase tax on less popular groups that currently have tax advantages: private schools, non-doms (rich resident foreigners) and oil producers.

Those are far from what’s needed to meet its aspirations, but it may be enough to get through the election.

The major parties vying for at least a share of power are under pressure at all elections to say how promises will be funded.

This requires a lot of effort, and is of dubious value, except to indicate some commitment to fiscal prudence.

Beware when any party balancing bills by promising to improve tax collection. They all do.

And when you hear a policy will cost, for instance, £2.5bn – the estimated cost of compulsory national service – consider that would be 0.02% of this year’s government spending.

The point here is that election campaigns spend a lot of time on issues of marginal spending significance, and areas of disagreement which can be relatively small.

Offshore oil and gas and the UK election

Under Boris Johnson, Tories were turning against continued drilling for oil and gas. Under Rishi Sunak, they’re enthusiastic backers of more drilling licences.

Labour has taken a firm and uncompromising line that it will accept licences granted up until the election, but won’t allow further ones.

Having the election earlier than expected this year may have curtailed the number of licences issued, and a more rapid run-down of its investment and production.

In addition, Labour wants to increase the windfall tax revenue from the sector.

The industry, in a fierce lobbying offensive, is using the election as an opportunity to put pressure on Labour to soften its opposition to drilling.

If it did so, it would help Scottish leader Anas Sarwar sound more alert to the concerns of the offshore workforce and Scotland’s north-east.

The role of the SNP is worth watching. It is straddling support for offshore oil and gas workers while wanting to be in the vanguard of climate change action.

The compromise is what they call a “just transition” – taking care to bring oil and gas workers with them.

Westminster leader Stephen Flynn, fighting to retain an Aberdeen seat, has left little doubt that he is pushing within the party to change the Scottish government’s draft energy strategy, to move away from “a presumption” against new drilling licences.

There’s no word when that document will be published.