GORDON Brown’s Unionist think tank has called for the creation of a Scottish Treasury in a move which has been branded a “carrot” for voters.
A report by Our Scottish Future has outlined a number of recommendations for improving the country’s finances and warned the Scottish Government will need to choose between permanently higher taxes or budget cuts if it did not take action to grow the economy.
Scotland’s economy is forecast to grow more slowly than that of the UK over the next 50 years, according to the Scottish Fiscal Commission.
The report, written by Treasury and Scotland Office veteran John McLaren, also recommended that a Scottish Treasury should work closely with Westminster to boost growth.
He said its powers would include directing the spending priorities of the Government, introducing more growth incentives as well as overseeing taxpayers’ get “value for money” on public spending.
The latter recommendation is at odds with common criticisms of HM Treasury, which is often accused of being penny-pinching and being unable to balance that with its other mission of improving the economy.
Brownhog Day?
Ross Greer, the Scottish Greens’ representative on Holyrood’s finance committee, said: “This report is right to say that Scotland needs its own Treasury. The only way we will get that though is with independence, and the financial powers of a normal nation which come with it."
Alba have characterised the calls as a way of attempting to entice voters to vote for the Union at the next independence referendum.
Alba general secretary Chris McEleny said: “This Brownhog Day intervention is just the latest carrot at the end of the Unionist stick.”
The party is also at odds with the report’s warning against higher taxations, announcing on Wednesday its plans to make the case for increasing taxes on higher earners.
Alba will debate a motion put forward by the leadership at their party conference next month which would commit the party to advocating for a seven-band income tax system, compared to just five bands now. The top rate of income tax, for earners on more than £150,000 per year would rise to 50%.
McEleny added: “Instead of turning back to the failed economic policies of New Labour which have been carried on by the Tories, Scotland needs a radical shift to ensure that we have a progressive taxation system that rejects Westminster’s system of robbing from the poor to pay the rich.”
'Tied to the Tories'
Greer hit out at the report for talking up “the importance of productivity and growth” while Scotland remained “tied to a Tory government that has delivered a reckless Brexit and the highest inflation in the G7”.
He added: “Our Scottish Future may want ever-closer collaboration between the Scottish Government and Downing Street, but there is a reason why the people of Scotland have rejected the Tories time and again. They are the last people who should have power over our economy.
"The reality is that we simply cannot afford more years of Westminster-imposed cuts, austerity and economic mismanagement that we do not want and did not vote for.
"With independence we can take a different and better path and build the kind of positive and progressive future that Gordon Brown and his friends at Our Scottish Future claim to want."
McLaren highlighted recent findings by the Scottish Fiscal Commission, saying there could be a budget funding shortfall of £1 billion next year due to lower tax receipts.
Based on economic growth trends, this shortfall could exceed £2 billion at the start of the next decade, he said.
McLaren said: “The reality is likely to be that, instead of this shortfall feeding through as Budget cuts, the Scottish Government will keep on imposing higher taxes than are seen elsewhere in the UK.
“Instead of working with each other in a single market setting, the Scottish and UK Governments are often working in isolation and, at times, in an actively confrontational, rather than collaborative, manner.”
The report notes that economic development spending is higher in Scotland than the UK average, but says this is not translating into higher productivity or growth.
It recommends increasing the budget of the Scottish National Investment Bank and focusing its remit but said these measures were less important than committing to a “patient” plan to boost economic growth.
He said: “The most important recommendation is to have a consistent and long-term approach to economic growth policy, as few of the recommendations here will make a difference quickly.
“Rather, they have the capacity to make an impact over time, as has been experienced in other countries who have taken a patient approach.
“The alternative approach, chopping and changing over time and with funds dispersed widely and intermittently, will inevitably lead to familiar failure experienced in the past.”
