Letters / ‘No’ will cost isles £7.5m
One of the arguments against independence is uncertainty. But, there is a local threat to services in Shetland from austerity certainty in a UK future.
Shetland will be affected by the 2016 plans for the UK government to increase tax income by increasing revenue from National Insurance.
There will be increases both to the taxpayer and employer contributions. Shetland Island Council were unable to supply the cost of these changes in response to a Freedom of Information request in March, however, James Gray (1) recently advised that these changes to national insurance will cost the council £2 million per year.
At the end of April, Shetland Health Board identified these costs as half a million in their board paper financial plan. Effectively, that amounts to a £2.5million cut in essential council or health board services or services that cannot be developed in the future to meet Shetland unique needs.
Based upon SIC and Shetland Health Board staff figures, local staff of these two local bodies will see their collective national insurance contributions increase by £1 million. That is a further £1 million that will be lost to the local economy, to the detriment of Shetland businesses.
That takes the total outflow of tax from Shetland to over £3.5million. That is the certainty of what is coming with the UK.
Meanwhile, a Sheffield Hallam University Report (2) on the impact of welfare reform in Scotland will remove £1,600 million per year from recipients in Scotland. The report from the Holyrood Welfare Reform Committee records the impact on Shetland as £4 million.
Between National Insurance changes and welfare reform that is a £7.5 million cost to the local Shetland economy by being ‘better together’.
The outcome of the 2015 general election in the UK does not matter. Regardless of the colour or combination of colours of the next Westminster government, they all agree with a further £25 billion of austerity measures (3) being implemented, this will be a combination of further cuts to welfare, reduction in essential public services with increases in general taxation also on the horizon.
Whoever forms the next UK government will continue the distraction of focusing public attention on headline income tax rates and allowances whilst subtle changes made elsewhere will be taken off you to raise income in other ways.
Back handed tax increases are applied to avoid increasing income tax without thinking through the negative impact on everyone. The point is to distract people into believing that they live in a low tax economy just because direct income tax is low. OECD figures show otherwise.
Tory and Labour governments have applied tax increases which have had undesirable effects. Energy bills had VAT applied which has led to increasing numbers in fuel poverty, a major issue here in Shetland. Meanwhile, Gordon Brown’s changes to pension funds stopping them recovering tax on dividends has led to pension funds deficits and the closure of the majority of company pension schemes.
Brian Nugent
YES Shetland
1. comments in Shetland Times 30 May (front page article).
2. http://www.scottish.parliament.uk/S4_Welfare_Reform_Committee/Reports/wrR-14-05w.pdf, page 48 and elsewhere
3. http://www.bbc.co.uk/news/uk-politics-25617844
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