Glenrothes by-election: Darling stresses UK role in weathering downturn

Published on Monday 27 October 2008 12:55

THE clout of the United Kingdom is crucial in overcoming the current economic crisis, Chancellor Alistair Darling said today.

Mr Darling was speaking during a visit to Fife ahead of next week's Glenrothes by-election.

The Westminster by-election follows the death of Labour MP John MacDougall, who had a majority of 10,664 in 2005.

However that is smaller than the 13,507 majority the SNP overturned to win the Glasgow East seat in the summer.

Mr Darling said: "It is important at this time that we remember the strength of the United Kingdom.

"It is only because of the strength of the United Kingdom we were able to put into place measures to increase the capital in the British banking system, including RBS and HBOS, both Edinburgh-based.

"And it is only the strength of the United Kingdom that gives us the clout in the rest of the world and the clout in the coming months to support our economy, which is absolutely essential."

With recession looming, Mr Darling said the situation was "probably the most profound shock to the world economy that we have seen in decades".

Mr Darling also said the SNP proposal to scrap the council tax in favour of a local income tax was a "ridiculous idea" and urged First Minister Alex Salmond to ditch it.

The Chancellor said: "The last thing Scotland or Fife needs is a local income tax."

Mr Darling stressed he remained confident the UK could come through these difficult times.

He said: "At this time when our economy, in common with every other economy in the world, is slowing down, I believe it is absolutely essential that we continue to do everything to help people.

"As the Prime Minister and I have been making clear, we will support the economy as it slows down because that's the right thing to do.

"We showed just a few weeks ago how we in this country, working with other countries around the world, could come together to deal with the severe banking crisis that confronted the whole world.

"We need to show that same determination, both here at home and working with other countries in the rest of the world, to ensure we get through what is probably the most profound shock to the world economy that we have seen in decades."

The Scottish Government and others have been lobbying to keep key banking jobs in Scotland in the wake of the proposed takeover of HBOS by Lloyds TSB.

But Mr Darling said: "If you want people to come here to work in the banking industry, if you want to encourage people to work here at the moment, to put up their income tax over and above that which everybody else is paying in the United Kingdom, I believe would be extremely damaging.

"If you are trying to attract people to come and settle in Scotland, or to stay in Scotland, telling them income tax will be more here than it is in the rest of the country would be extremely damaging.

"I believe it would be a profound mistake if the SNP insist on that."

The Scottish Government confirmed at the weekend they were considering changing their local income tax proposal to include income from shares, and to give local councils power to reduce the rate below 3p.

But Mr Darling said the idea of having 32 different rates made "a bad idea even worse".

He also argued that some retired people relied on a "modest" income from shares and would lose out if dividend income was included.

Mr Darling said: "At this time, when we need to be doing everything we possibly can to not only retain jobs but build new jobs into the Scottish economy, it would be the wrong thing to do.

"The SNP need to remember they need to play their part.

"All of us need to be working together at this time. The Government, Scottish Government, and councils should all be working to do everything we can to help people through undoubtedly a very difficult time."

He urged Scottish ministers to ditch the local income tax plan and said: "Alex Salmond has got to realise this lies within his own power to scrap this ridiculous idea.

"It would be extremely damaging for Fife, extremely damaging for Scotland, extremely damaging for jobs and it should be rejected."