Jim McColl on the Scotland Bill: This is an opportunity we can't afford to waste

Published on Friday 10 December 2010 19:04

The Scotland Bill recently published by the UK government is a huge opportunity to make a real difference for the better for Scotland's economy.

But that will only happen if the final product is far more ambitious than what is on offer in the current proposals.

The proposals do not go nearly far enough - and the income tax element of the plans has a built-in deflationary bias which risks leaving Scotland worse off, not better.

The way the plans are currently drafted, it means that if the Scottish economy's performance improves, the resulting benefits will flow to London, rather than remaining here. That cannot be right.

And, just as there needs to be an incentive for Scotland as a whole to grow its economy, we need to be able to offer specific tax incentives for business thinking of locating here.

There is no such incentive built into the current proposals, despite the fact they are so badly needed.

People need a reason to bring their businesses to Scotland, and full financial responsibility with control over major fiscal levers, such as corporation tax, would provide the chance to create such incentives.

Critics of financial responsibility for Scotland claim it would mean there was no level playing field within the UK. This ignores that there is no level playing field at the moment for Scotland, which does not have the fiscal levers other countries take for granted.

All of the politicians scrutinising the Scotland Bill have an obligation to act on what is in the best long-term interests of Scotland, not what is in the best interests of them or their parties. Otherwise, we are going to be talking about exactly the same issues five years from now.

The Scotland Bill is an opportunity that this country cannot afford to waste, and the chance of gaining real financial responsibility should be grasped enthusiastically.

lJim McColl is a member of the Council of Economic Advisers.