It’s a common misconception that the Scottish Parliament ‘lacks the tools to improve the Scottish economy’.
Nothing could be further from the truth. In fact I’d estimate that 85% of what governments can do to improve economic performance is already within Holyrood’s remit. A further 10% is held by supranational bodies like the EU and the WTO over which Scotland would lose influence on independence.
The SNP say they’d cut corporation tax on independence. Since they advocate a higher tax and debt approach to the economy this would obviously entail much higher taxes elsewhere, negating any benefit from a cut in CT. Besides, they haven’t touched the considerable tax powers they already have, so it’s a bit of a dubious claim in the first place.
Anyhow, here’s my five point plan for economic revival in Scotland, as set out for Think Scotland:
- Holyrood controls 30% of output in the form of the grossly inefficient public sector. Reforming that would do more to improve the economy than any tax changes.
- The Scottish planning system is still geared to English problems of population density that we don’t have. As a result land is too expensive, there isn’t enough development and the development we do undertake is ugly. Reforming planning on German lines would reduce costs massively while rebalancing the economy away from mortgages and houses to saving and investment.
- Further, higher and skills education are an under-funded mess ill-aligned with the needs of the economy. We should break down the barriers between them by offering everybody a learning credit they can use anywhere, plus allowing universities and colleges to raise funds based on students’ future income.
- Effective transport infrastructure is central to economic performance. But Scotland’s transport system is characterised by unionised monopolies forever going on strike and pork-barrel white elephants such as the Edinburgh Tram and the Borders Railway. Investment should be demand-led rather than voter-led.
- Scotland’s oil money, received via the Barnet Formula, is squandered on an inflated public sector. Instead we should cut taxes, starting with business rates and moving on to income tax (both already devolved). Public sector productivity improvements will allow major reductions, and in the mean time we could chop business rates by 50% if we scrapped Scottish Enterprise and took the water and ferry companies off the government’s books.