CATASTROPHIC: Tax justice or austerity-induced declines in life expectancy?
Tax Justice Scotland is seeking to promote a better conversation on tax policy. As such, the views expressed in this blog are those of the author and do not necessarily reflect the views of Tax Justice Scotland and its diverse supporters.
UK-wide austerity has caused average life expectancy to stagnate since 2012, and to decrease in the most disadvantaged areas (write GERRY McCARTNEY and DAVID WALSH) . With more UK-wide public spending cuts looming, the Scottish Government should use fairer taxation to combat the impacts of austerity – and avoid additional cuts.
Austerity Kills
Since 2010, a range of austerity measures have been implemented across the UK. Although most areas of public spending have suffered to some degree, the largest cuts have been directed at social security and local government, with brief interruptions in this broad approach only seen during the pandemic.
Our analyses show that the effects of austerity policies have been catastrophic.
Life expectancy, which had on average increased uninterrupted across the UK since 1945 suddenly stopped improving after 2012. Even worse, for people living in the 20-30% most disadvantaged areas, life expectancy started to decline.
Let that sink in: despite medical advances, people in our least well-off households have seen their lives get shorter.
‘Healthy life expectancy’ is also in decline, meaning that people are living for a shorter time in good health. The evidence that these dreadful health and life expectancy trends are due to austerity is now overwhelming, as summarised in our book Social Murder: austerity and life expectancy in the UK.
Austerity continuing under Keir Starmer’s Labour
Make no mistake: austerity is not going away.
The UK Labour Government’s self-imposed ‘fiscal rules’, which limit public spending, are triggering a new round of spending reviews across departments, with cuts again on the cards. Ahead of the Chancellor’s Spring Statement on 26 March, we’re now seeing reports of looming cuts to social security, with those on benefits further stigmatised.
Elsewhere, local government spending has been squeezed in real-terms per person by 18% in England (2010 to 2023/24), and 7% in Scotland (2009/10 to 2022/23). We have also just seen the international aid budget slashed to fund defence spending.
These cuts are a choice: after all, there is no shortage of fair tax options to raise more resources at UK level. Tax Justice UK and the Patriotic Millionaires suggest over £60 billion more could be raised per year through tax reforms and the closure of tax loopholes.
What can be done in Scotland?
In the absence of tax justice at UK level, the Scottish Government isn’t powerless.
It’s true that the devolution settlement dictates that it has to run a balanced budget, with the bulk of its revenues coming from the block grant, and a smaller proportion from devolved taxes.
This has meant that as budgets were squeezed in real-terms between 2010 and 2019 the Scottish Government has either had to pass on those cuts to Scottish public services, or raise taxes to protect budgets. Subsequent increases to deal with the pandemic have been eroded away .
Positively, the Scottish Government has chosen to raise some additional tax revenues; for example, the relatively small, but progressive adjustments in the Income Tax bands and rates. However, the scale of these changes has been wholly insufficient to compensate for the cuts in the block grant up to 2020.
Implementing a more comprehensive tax justice programme in Scotland is therefore the obvious option to protect the health of the Scottish population from further austerity.
Many tax options are available
Generating more revenue from Income Tax by increasing taxes for people on higher incomes would be a fair first step, particularly given that it is likely that most Scottish high earners work in the public sector and therefore cannot move that income elsewhere (the postholder could leave, but the job – and the tax paid on the income from it – would remain in Scotland).
But taxing earned income from employment isn’t the only way to raise more revenues to combat austerity; we must find ways to better tax wealth too.
Changes to how property wealth is taxed are long-overdue. Right now, the Council Tax is patently unfair because it taxes poorer households more than richer households as a percentage of their income and property value.
The Scottish Government has powers to make it fairer, or to replace it entirely, something that has been (unimplemented) SNP policy for many years. While the Cabinet Secretary for Finance says she’s “seeking a consensus on a local taxation system that is fairer, financially sustainable and fits a modern Scotland”, we’ve heard similar promises too many times to count.
Wealth takes many forms – including ownership of land, shares and savings, as well as pensions, and other assets. Devolved powers to better tax all of these forms of wealth are limited, but options like a land tax, perhaps administered locally, could be considered. Doing so would not only raise more revenues to fund services but also combat the damaging impact of wealth inequality on the economy.
Wealth inequality fuels other inequalities, like those related to gender and ethnicity. But most importantly, a growing wealth gap between those who have wealth and those who don’t – locks some of us into a life of precarity and poverty, and others into one of privilege and opportunity.
This not only concentrates advantage, opportunity and power in fewer hands, but also limits social mobility for the majority, undermines the social contract, and can ultimately threaten social cohesion and democratic politics.
With a recent report for the STUC indicating that a combination of tax justice reforms in Scotland could raise an additional £3.7bn per year, we must see faster progress.
Reject austerity and deliver tax justice
So, in the absence of action at UK level, if the Scottish Government really wants to protect the health of the Scottish population, fighting back against austerity will be necessary. The only real option in the current context is to increase taxes in a fair way so that the rich pay more.
Tax justice for Scotland, and the rest of the UK, really is a matter of life and death.
This blog was written by Gerry McCartney, Professor of Wellbeing Economy, University of Glasgow and David Walsh, Senior Lecturer in Health Inequalities, University of Glasgow.
David and Gerry’s book, Social Murder: austerity and life expectancy in the UK, is available now from https://policy.bristoluniversitypress.co.uk/social-murder