SNP and Plaid Cymru miss the point

This BBC write up of the joint SNP-PC press conference (held, ironically, in London) mentions what appeared to be the main thrust of the full coverage which I saw on the BBC Parliament channel*:

Mr Wyn Jones said... "We promise a strong block of Plaid and SNP MPs to fight for fair funding for Wales and Scotland, to protect local services and the most vulnerable in society, protecting them from the cuts agenda of the three main London parties, push the green agenda and push for business growth."

He and Alex Salmond kept referring to 'the London parties' and funding from 'Westminster'. Sure, this type of pork barrel pleading is what you'd expect - they want to get as much money from 'London' as they can, and I am sure that they will, but there is an upper limit to how much they can get (and it might well be less than what they get now). They also paid lip service to the idea that they want to get the private sector in their own countries going again, fair enough.

But they ignored or overlooked a third flow of money over which they have a lot of control, namely the flows which are a result of the restrictive planning system. Home-Owner-Ism is just as rife in those countries as it is in England, which forces Welsh and Scottish people to take out much larger mortgages than they really need to, and most of the interest that they pay goes 'to London'.

If I were in charge in Wales or Scotland (but not allowed to change the tax system to more locally collected property taxes and less nationally collected income taxes**) the next best thing I could do would be to liberalise planning laws. That would make it cheaper to rent or buy business premises; and it would make it cheaper to rent or buy houses. Because people spend the bulk of their money locally, all the rent that is longer being sucked out of the productive economy, and all the interest that is not being syphoned off 'to London' would slosh round the Welsh or Scottish economies instead.

What can possibly go wrong?

* The physical contrast between Wyn Jones and Salmond is quite comical, Wyn Jones is a small, thin, pale grey man, and Salmond appears to be about two foot taller, two foot wider and slightly larger than life. This is not so obvious from the picture accompanying the article.

** Both SNP and Plaid Cymru, like the Lib Dems, have the insane idea of replacing Council Tax with Local Income Tax - brilliant politics but terrible economics.

As I have said before, the problem with Council Tax is not that it is a property tax, the problem is that it is a Poll Tax. At the very least, we could increase the number of bands. If we had from Band A all the way to Band Z with a 20% gap between each band (as at present), then Council Tax on a Band A property would be £50 or £100 a year or something and for one in Band Z it would be £5,000 or £10,000.