Scotland has the potential to become one of the most successful economic nations in the world, a report by a new independent think tank claims today.
Reform Scotland says that with the right framework for growth in place – based on lower taxes, smaller government and more financial control – the country can become an international leader, providing Scots with greater prosperity and higher living standards.
However, reaching that goal will require an average growth rate of 3.5% over a period of 10 to 12 years, according to research carried out by Reform Scotland. Over the last 30 years, Scotland’s annual average growth rate was 1.8%.
In its report, ‘Powers for Growth’, the think tank makes four broad recommendations to improve Scotland’s economic performance:
- lower overall tax burden;
- more limited government;
- greater fiscal autonomy;
- better statistical information.
Reform Scotland is a new, independent, non-party think tank whose objective is to set out a better way to deliver increased economic prosperity and better public services based on the traditional Scottish principles of limited government, diversity and personal responsibility.
Its board members include prominent figures in the business and financial world.
Commenting on the first report, Ben Thomson, Chairman of Reform Scotland, said:
Our research examines why Scotland’s trend rate of growth lags behind other countries as well as other parts of the UK. It does this by highlighting differences between Scotland and other areas in relation to key economic indicators such as productivity as well as areas more directly within the control of government such as levels of taxation.\’
The report shows that lowering the overall tax burden and reducing the size of government has a positive impact on economic growth. We would therefore urge all political parties to adopt policies which would deliver these outcomes and bring benefits to the Scottish economy. However Reform Scotland’s research also recognises that the impact of such policies cannot be fully realised without greater financial powers for the Scottish Parliament.
If Scotland aspires to match the most successful economies, there are additional benefits to be gained from a tax system that is differentiated from the rest of the UK and provides Scotland with a real platform for higher economic growth. This would also mean that the higher revenues resulting from higher economic growth would stay in Scotland and not return to the Treasury.
At present public spending in Scotland is largely governed by a block grant from Westminster. Raising more revenue in Scotland would also provide an incentive for greater control of public spending.”
However, Reform Scotland believes that additional financial powers are valuable only if used to reduce the tax burden and control spending. If used to increase taxes, this would have a detrimental effect on economic growth in Scotland.”