Q&A: opposition parties set out their priorities for the Scottish economy

Written by Staff reporter on 16 January 2019 in Inside Politics

Opposition finance spokespeople explain to Holyrood how they would manage the purse strings differently from the SNP

Opposition spokespeople on finance and their alter egos - Image credit: Holyrood

What kind of economy does Scotland need to become the country you want to build?

Murdo Fraser, Conservative: Scotland’s economy simply is not strong enough, with us being in the middle of a decade of underperformance relative to the UK economy as a whole. The consequence of this is poorer average wages, lower household incomes and lower tax revenues than we might otherwise have. We need a more dynamic economy, one with higher levels of productivity and with better paid, more secure employment. Developing higher skills, increasing exports and expanding the knowledge economy can all contribute to a relentless focus on improving productivity.

James Kelly, Labour: Scotland needs an economy that stops the cuts, tackles the gap between rich and poor and promotes economic growth. Investment in public services is the key driver to achieving this. The current budget cuts of £319 million to councils does nothing to address the 3,000 fewer teachers in schools and the lack of investment in skills, which doesn’t produce enough engineering and IT graduates to drive the economy forward. What we need is a budget that promotes economic growth through investment in public services and gives everyone in Scotland a fair opportunity, and to do that, you need to bridge the gap between rich and poor.

Patrick Harvie, Green: Scotland’s economy remains profoundly unequal, as well as over-reliant on a fossil fuel industry which cannot last, and must be allowed to die. We’ve reached the point where most political parties use rhetoric like ‘low carbon economy’ to some extent, but most are unwilling to follow through on the logic and accept that you can’t have a low carbon economy and keep extracting every last drop of oil and gas at the same time. But the transition to a truly green economy must be a just transition – it must not repeat the injustices of previous eras, like the deindustrialisation of the 80s. We need investment in the new, sustainable industries of the future, but we also need a reorientation toward local and community ownership to ensure that a sustainable future economy is one which shares the wealth we all create more fairly.

Willie Rennie, Liberal Democrat: At heart, I want every individual to achieve their potential. To be a successful country, Scotland will need the skills, talents and creativity of everyone who lives here to participate in the economy and society, and to feel they belong. Diversity and education will be the twin engines that drive invention and creativity to enrich our country and provide a bright, liberal future. Business needs a Scotland where they can draw on the well-educated and trained talents of people from all backgrounds, with a government that supports education, innovation and science. They need a government which is competitive on business taxes, which will invest in the modern infrastructure needed in a 21st-century economy, and that will work to keep us in the EU.

Your spending priorities are different from the SNP’s. How would you fund the additional investment you have called for?

MF: The reality is that the additional Barnett consequentials from the UK Chancellor announced in the October budget mean that there is £950 million extra available to the Scottish Government to spend. There is no need for either tax increases, or cuts to vital local services, when the overall Scottish budget is increasing.

JK: Labour wants a budget that stops the cuts. We oppose the cuts to councils and want a budget that is a bulwark against Tory social security policies, so we want to see an end to the two child caps to universal credit and working tax credits. We also want a rise in child benefit to tackle child poverty, and we want relief for rail passengers who are suffering chaos in the rail system, which we would grant through a fares freeze. Derek Mackay should be more progressive with taxation. So if you’re currently a chief executive on £140,000, you are currently paying no additional tax in this budget. If you’re on a top salary, you should be making a fair tax contribution to stop the cuts to public services and help make Scotland a fairer place.

PH: Our ‘Jobs in Scotland’s New Economy’ report showed a range of positive ideas, some of which require powers which are currently reserved. The UK Government hands a subsidy of around a billion pounds a year to the fossil fuel industry, and the SNP not only supports this but calls for even more! As well as redirecting this resource, either the UK or an independent Scotland would have the power to invest by way of ‘green QE [quantitative easing]’ – instead of using the money supply to refinance the banks, using it to invest for the future of the real economy. We wouldn’t be the only country to do this, and the campaign for a ‘green new deal’ in the US is also building momentum.

Meanwhile, with the more limited powers of devolution, there are also steps that can be taken, especially at local level. A network of local energy companies, owned by local government either wholly or in partnership with communities, housing associations, social enterprises or existing energy companies, would be able to invest in renewables and in energy demand reduction, with the profits benefiting the public instead of only shareholders.

The Greens are also unafraid to debate the role of the tax system. Income tax, wealth taxes and replacing council tax and non-domestic rates can all generate revenue fairly, from those who can afford to pay. Using land value capture to recoup the uplift in land values which arise from public investment is another way of making that investment more affordable, and restoring councils’ power to acquire land at its existing use value would help too.

WR: We set out a fully costed programme to invest in people through education and mental health. We want to protect local council services from the devastation they face under current plans. The Scottish Government needs to focus on delivering in these areas, using all the resources it has available. And on important issues such as mental health, we have shown that addressing poor mental health will relieve the burden and costs that fall on other public services, such as the police and prison services. Tackling mental ill-health would also give a bonus to business who could benefit from the million days lost to it every year.

 

How would you attract more higher earners to Scotland?

MF: There is a growing body of anecdotal evidence that an increasing tax differential between Scotland and the rest of the United Kingdom is deterring higher earners from elsewhere in the UK moving to Scotland. A competitive tax regime is an essential element in making Scotland more attractive to higher earners, coupled with high-quality public services and good transport links to the rest of the UK and beyond.

JK: Producing an economy where there is a greater emphasis on skills will attract higher earners in Scotland. We are not doing as well at skills as we should be. For instance, the number of girls sitting computing exams at Higher has almost halved since 2012, therefore, we are not bringing enough skilled people through the education system into the workforce and there needs to be a greater emphasis on that. And I believe that would grow the skills base in the economy and improve the technology and engineering sectors and in turn, attract more higher earners.

PH: I want Scotland to be an attractive place for everyone, not just for high earners. Cutting taxes for the wealthy, if that’s the implication, would be absolutely the wrong way to go, as the consequence would be an ever more unequal society and underinvestment in the future. Scotland is, and can continue to be, an attractive place to live by ensuring that everyone can enjoy a good quality of life, a healthy environment, strong communities and a culture in which we respect and look after one another.

Clearly, the biggest threat to the attractiveness of Scotland for those who might come and live here from other countries is the threat to freedom of movement, and the UK’s hostile environment policy toward immigrants. Many people are already feeling unwelcome and unsafe here as a result of these factors, and whether we remain part of the UK or become independent in the future, we need to challenge the anti-immigrant sentiment which has been deliberately cultivated over many years, and which was made worse during the toxic Brexit campaign.

WR: By promoting innovation and having a government that champions science alongside our world-class universities will make Scotland an exciting place for people to establish high-skill and high-wage businesses.

 

Are there universal free entitlements (e.g. tuition fees, personal care, prescription charges) you think should be abolished?

MF: The Scottish Conservatives are committed to retaining free prescriptions and personal care for all. We will set out our views on other issues in our manifesto for the 2021 election, depending on the state of the public finances at that time.

JK: No.

PH: Universal provision is important as a signal of our equal status as citizens, but it can also be the most efficient way of meeting needs which are themselves universal, or where maximising uptake is a social good. Turning access to education or healthcare into market commodities would be a deeply regressive move, and would inevitably leave the most vulnerable behind. Indeed, the Greens would go further. Everyone has basic economic needs, and a universal basic income would be an equitable and efficient way of meeting them. People would be far less likely to slip through the net than under the current system of tax and benefits. Like any new policy, it could be implemented well or badly, but we are convinced that if it’s done right, it can be both economically redistributive and personally empowering, opening up people’s freedom to make choices on their own terms about work, study, family commitments, volunteering and leisure.

WR: No. The universal entitlements brought in by all of the governments since 1999 have proved their worth in removing the stress and worry about paying for important services.

 

Liz Truss criticised the fact that those earning £50,000 a year in Scotland would pay £1,500 more than in the rest of the UK at a time of cuts to welfare for the poorest across the UK. Was she right?

MF: Yes, as there is evidence that the growing tax differential between Scotland and the rest of the UK will deter the very wealth creators we need in Scotland from moving here, and in addition, make it increasingly challenging to attract talented people to work at higher levels in the public sector. The knock-on effect of this is a poorer performing economy, and a lower tax take overall.

JK: I totally disagree with Liz Truss. This is about the sort of society you want and what you see from the Tories is a heartless society where they are prepared to stop benefits for families that have more than two children. We are heading back to the archaic days of Keith Joseph.

The Tories’ attitude is that they want to put people down, they don’t care if they suffer. I think we need a more compassionate approach. In Scotland, the government has the powers to put an end to many of these Tory policies and Labour will continue to press the SNP to use these powers to make a real difference to those most affected.

PH: Of course not! Liz Truss is part of a government which has handed huge tax breaks to those in least need, while destroying the lives of many of society’s most vulnerable people. But as someone with links to the hard-right Cato Institute, her political priorities are clear for all to see – the idea that Scotland or the UK should echo the sociopathic policies of the American right can, must and will be successfully resisted.

WR: People find it hard to stomach that the Conservatives have made their priority to cut taxes for the highest earners when businesses can’t get the skilled staff they need and young people have to wait more than a year for mental health treatment.

 

Derek Mackay compared himself to Doctor Who when delivering the budget. Who would you compare yourself to?

MF: Spiderman – because with great power comes great responsibility. And those in charge of the nation’s finances need to act responsibly to ensure that their tax and spending decisions enhance economic productivity and our public services and do not damage them.

JK: Henrik Larsson punching holes in the SNP defence and seeking to score goals on behalf of local communities across Scotland, by supporting public services, bridging the gap between rich and poor and standing up for rail passengers!

PH: I’m a lifelong fan of the Doctor, and I have to say that comparison was about as convincing as the sets used to be in the good old days.

But if that’s the way he wants to play it, I wouldn’t mind being Romana (the Lalla Ward regeneration, of course) as she was often there to give the Doctor a dose of much needed common sense and sometimes, when necessary, to say no.

WR: Probably the whole cast of the Wizard of Oz at the end of the film. They have a heart and a brain.

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