New Scots love higher taxes...

The SNP government has spun a HMRC report on Scotland's higher rates of tax to argue they attract rUK incomers but we need many more migrants from everywhere

Any port in a storm and boy does the Scottish National Party need a safe harbour. As its grip on power at Holyrood loosens, its leaderless leadership is putting it about that higher taxes are no barrier to inward migration from the rest of the UK (rUK). Indeed, they can be construed as an attractive part of Scotland’s offer….

The spin, both from First Minister Humza Yousaf and his deputy Shona Robison, is based on two (not one as they suggest) new HMRC reports on ‘labour market participation and intra-UK migration of taxpayers’.

Robison, also finance secretary, has said: “The latest figures show that across all tax bands and almost all age ranges in 2021-22, more taxpayers chose Scotland as their home than left – offering yet more proof that Scotland is an attractive place for people to live and work, while our progressive approach to income tax asks those who earn more to contribute some more.

“We know people base the decision on where to live on a range of factors, and by coming to Scotland they have access to a range of services and benefits not available elsewhere in the UK, including free tuition and prescriptions….” In other words, a ‘progressive’ fiscal system attracts more migrant taxpayers.

A wee snag: HMRC doesn’t say that. It does say that post-2017 - the first year of some devolved controls over taxation - net migration here increased by around 8000 after being flat between 2011 and 2017 (the first seven years of majority SNP government as it happens). In those years it fluctuated between -1500 to +1500. Oh, and post-2019, after nine years of deficit, ‘net income movement’ rose to a surplus of ca. £200m.

We dinnae ken

The HMRC researchers go out of their way to stress the imponderables, bearing in mind the large increases in net migration to Scotland (and Wales) in the pandemic years 2020-2022: “…there has been no negative trend in net migration to Scotland in the years following the introduction of the 5 band Scottish Income Tax system in 2018 to 2019.”

But: “from this analysis alone we cannot draw definitive conclusions about whether migration trends were affected by tax because we do not know the counterfactual – so, we do not know what the level of migration would have been in a theoretical scenario where Income Tax had not been devolved, or where the 5-band system had not been introduced. There may have been factors that increased migration to Scotland unrelated to tax. HMRC have conducted further work to isolate and understand any behavioural effects from this policy change.”

No definitive conclusions, then. There is maybe one: “We find no evidence of a change in labour market participation following the Scottish Income Tax changes.” Even that comes with caveats. And, while a few hundred higher earners may have migrated south in the period under discussion, no discernible numbers of low earners settled over the border because of the progressive fiscal regime.

The analysts conclude: “there are also other wider economic factors and simultaneous policies that could have impacted labour market participation and cross-border migration decisions during the time period studied.”

So, Yousaf and Robison are (yet again) building castles out of thin air.

The castle on the hill

What truly matters is attracting enough migrants to offset Scotland’s declining working age population - a policy truism accepted by all of our mainstream political parties. Early Census figures suggest this working age population has declined by 1.1% or 37,000 while it has held up in rUK. Overall, between the 2011 and 2022 Censuses, population growth in Scotland was 2.7% compared with 6.3% in England and Wales.

We know that, without net migration, the Scottish population would have declined over the period - by 49,800. Surveys also underline that - progressive fiscal regime or not - Scotland fails to attract enough migrants to boost productivity growth. It’s not as if the country and its people are unwelcoming: au contraire. These surveys (such as by Saskia Smellie and Christina Boswell of Edinburgh University or by Migration Policy Scotland) show positive attitudes among Scots towards immigration: they want more migrants, not fewer.

Once more, the real issue is delivery using the Scottish Government’s existing powers (“significant autonomy” over, say, education and housing). Prof Rebecca Kay, who chairs its population and migration expert advisory group, has written: “Policies that support Scotland’s smaller but growing migrant populations to flourish would play a significant role in persuading a greater proportion of those either already in the UK as well as those considering a move for work or study to view Scotland as an attractive option.”

That should be a priority for the (likely) new First Minister and their government/Scottish Parliament. Misleading statistical spin just masks the absence of effective implementation of policies that make Scotland a better place to live for all, no matter where they come from.