David Watt: What does the Scotland Bill offer businesses

Published on Sunday 5 December 2010 21:48

Now that we have the proposals on devolved powers laid out in the Scotland Bill, I suspect business people will be wondering about the impact.

The fact that politicians in Holyrood can vary tax by 10 per cent is somewhat worrying if it were to rise; however, this power could also be theoretically welcome if it were to go down. In addition, the potential for businesses – especially smaller ones – to have increased costs and associated inconvenience is also concerning.

There's also doubt about whether increased tax powers will in any case actually improve the devolution settlement, especially given any Scottish Government's reluctance (to date) to use such powers. In effect, it may well prove largely academic.

The irony of this increased "power" is that it is still significantly affected by MPs' decisions in London. One good move, however, is the granting of borrowing powers suggested in the bill. This is largely welcome given that this power is used for capital projects and not as a back- door way to fund overspent revenue budgets by Scottish politicians, many of whom seem to ignore the need for cuts and blame other people that they are now a reality.

The decision not to devolve other aspects such as stamp duty and landfill tax seems a missed opportunity as these are localised taxes, and as most politicians seem to believe in localisation, it's not a logical move to keep items like this UK-wide. It would also have been interesting to see whether the Scottish Government would have passed the income from these taxes on to local authorities. If it truly believes in localisation, it surely would have allowed such income to drive local economic activity.

This leads on to the biggest issue: what will the bill do to increase economic activity and prosperity? Nothing jumps out, apart from the potential of the borrowing powers. That is perhaps the business community's biggest concern over politicians and their deliberations generally – what are they actually doing to encourage sustainable wealth creation?

• David Watt is the executive director of the Institute of Directors in Scotland.