The new First Minister, Humza Yousaf, takes the reins at an incredibly difficult time for the economy, coinciding with the current financial problems inside the Scottish National Party. Many column inches have been devoted to the analysis of both these circumstances but, for most voters, they want to see governments working together to focus on the real priorities for the people of Scotland. For the majority of voters these priorities include tackling the cost of living, improving public services and reducing the tax burden.
In each case, difficult but necessary, choices need to be made. Firstly, inflation is public enemy No1 when it comes to the cost of living - current food and energy prices being the worst examples. There are several reasons why inflation is high, including those which have global origins, but it is essential that it is brought under control because, if not, things will only get worse. For example, one of the tough choices for governments has been to recognise that public sector pay agreements need to be realistic.
Secondly, when the Scottish Fiscal Commission - in its 50 year projection for the Scottish economy - makes clear that there is unlikely to be any chance of substantial public spending savings within health, social security and social care because of demographic changes, governments need to think carefully about how they will deliver public services in future. We cannot continue with the profligacy of public money that has been wasted on failed Scottish Government projects whether that is Bifab, Prestwick Airport, malicious prosecutions or the ongoing ferry fiasco which has been such an appalling drain on taxpayers’ money. Nor can we afford the inefficient delivery of public services, the bureaucracy for which has become so overblown.
But the third issue relates to the future of taxation. The Scottish Fiscal Commission asks us to consider whether we have the right taxes (those which most effectively reflect Scotland’s demographics) and which taxes can bring in the greatest revenue streams. Any economist will tell you that you cannot continue imposing higher and higher taxes without causing a deeply damaging effect on the economy. Last month, I tweeted an image of what economists call the Laffer Curve. It reached around 60,000 Twitter users and demonstrated the relationship between tax rates and tax revenue. It tells us that tax rates can only increase so far, before the amount of money collected by government for spending on public services actually decreases, because higher rates act as a disincentive for investors. The very last thing that Scotland needs right now is any disincentive to invest or to stimulate economic growth. Scotland is already the highest taxed part of the United Kingdom with 1.4 million Scots paying higher rates of tax than our neighbouring home nations. That is setting alarm bells ringing amongst both the public and the business community. And just look at Norway - a Nordic-model country we so often hear the SNP saying they want us to emulate - where higher earners are deserting the country and taking their assets with them because of the punitive tax regime.
The announcement that more tax rises are on the way has, predictably, spooked businesses, industries and the professions. To encourage investment, Scotland must be an attractive place to invest and it should be very obvious that making yourself less desirable than your closest neighbour will only drive away opportunities. Likewise, on business rates, small businesses in England and Wales receive a 75% discount but the SNP has decided not to match despite Barnett Consequentials being available to do so.
The Scottish Conservatives are unashamedly a party that believes in economic growth. We want to break down tax barriers for businesses and the red tape which stifles enterprise and innovation. We want tax rates to be competitive, an investment structure that delivers for all and does not neglect Scotland’s rural communities. We want to address Scotland’s worker shortage by creating jobs and incentivising people to stay within the work force. And we are unashamedly a party that wants to maximise support for our local communities which is why l strongly support the Levelling Up money that is coming from the UK Government.
In the SNP leadership election, Kate Forbes said that current SNP economic policies “simply won’t cut it”. She’s absolutely correct.
