Scotland's Economy Westminster Mismanagement

Business for Scotland response to George Osborne’s Autumn Statement

Written by David Bell

Response to Chancellor George Osborne’s Autumn Statement from BfS director Ian McDougall

George Osborne

George Osborne

Ian McDougall is a partner in McDougall Johnstone and a director of Business for Scotland. He said:

“We welcome the business friendly actions announced today, such as the abolition of National Insurance contributions for apprentices aged under-25, making it cheaper for small businesses and other employers to take them on, and the additional £500m of bank lending plus £400m for government-backed venture capital funds which invest in SMEs.

“But we feel there are certain things, like the increase in R&D tax reliefs from 225% to 230%, that just don’t go far enough, and that’s not devolved so we can’t improve this in Scotland. And the extension to the Funding for Lending scheme, although welcome, simply does not deal with the lending crisis for small business, where the banks in 2014 expect to reduce borrowing to the SME sector by an eye watering £2bn. Without investment in jobs and businesses the economy will continue to stagnate.

“We believe today’s Autumn Statement is evidence that Westminster’s austerity programme has failed.

“If you look at the downgrading of growth projections, even from the numbers presented in the budget in March 2014, they show that the UK is set to continue to under-perform in comparison to its peers, and put further pressure on tax receipts for the rest of this decade.

“Osborne promised to reduce the current account deficit to £20bn in 2015/ 2016 and wipe it out by 2016/2017; we now know the deficit will be £75bn in 2015/2016 and will not turn in to a surplus until 2020 at the earliest. In reality, this will be 2022/2023 and then the debt has to be repaid. This failed policy means anyone born into austerity will still be living in it as they enter the workplace – almost a generation of failed economic policy driven by incompetence in Westminster.

“In addition to failing to manage the UK debt, Osborne has delivered another £3bn cut in tax credits. The average employee is already worse off by £1500 since 2010 and this is a further reduction to the pound in their pocket. This continued strangulation of wage levels is yet another blow to Scottish SMEs as our customers simply have less money to spend.

“Ballooning national debt, reduced growth, stagnating wages levels and ripping the pounds from the pockets of the poor, together with the confirmation that the powers that Scotland needs to deliver economic growth and create prosperity have been denied to Scotland and given to others, make this a pretty black day for Scottish business.”

Today’s Autumn Statement was used to announce that Northern Ireland should have control over revenue-raiser Corporation tax and the setting of business rates would be devolved to Wales. Yet Scotland still lacks the financial levers necessary to grow the economy, create jobs and deliver real social justice. You can listen to Gordon MacIntyre-Kemp of BfS on Scotland Tonight responding to Lord Smith’s suggestion that Scotland should “stop coveting corporation tax”.

Join us now.

 

About the author

David Bell

4 Comments

  • Excellent summary.
    I saw the Scotland Tonight interview. GMK was cool and eminently rational. Peter Hughes flapped about vainly, becoming more and more determined to stuff the NO vote down GMK’s throat. It became his only argument…desperate stuff.
    Only a matter of time, I think.

  • BfS doing an excellent job analysing the Autumn Statement from a Scottish perspective. If we’d been independent we’d have easily coped with the slight fall in Brent Crude prices. Scotland has higher per capita GDP so can deal with a tiny amount of oil volatility better than rUK, and oil volatility is not that a problem anyway. And OK a black hole in iScotland public finances would have hurt but HeyHo! Stop complaining!

      • There are several factors to take into account in predicting world oil prices:
        The USA now produces 12 Mbpd, similar to Saudi. The increase has been due to fracking which becomes uneconomical at around 70usd per barrel. Saudi oil costs less than 2usd per barrel to extract. Although it will impact on Saudi inward investment, they can afford to maintain production levels and sit back and watch the fracking phenomenon implode due to environmental problems and production costs.
        IS in Iraq and the iranian intransigence over nuclear power remove oil supply from the market which suits the Saudis and which makes the oil price artificially high.
        Slower growth in china reduces world demand.
        But only an eejit would bet his house on what price oil will be trading at in ten years time. Economics is not a predictive science but is a statistical analysis of history. Well, in fact, it is not a science at all unless market manipulation is taken into account! LIBOR for anyone who doubts.
        Anyway. I have not seen any sensible reacation to lower oil prices in terms of the benefits to economies. Reduced transport costs? Less fuel hardship for low income families? Increased industrial output due to lower energy costs?

Leave a Comment