Scotland 'could be low-tax haven'

Published on 20/07/2005 02:17

GEORGE Osborne, the shadow chancellor, has thrown his weight behind radical proposals from senior Scottish Conservatives to lower income tax, should they ever win power.

Scotland could become a low-tax "magnet" within the UK, he said, pulling off the kind of economic recovery shown by Ireland over the last decade.

He has also made clear that the Tory party will not split into its component English and Scottish parts if David Cameron, his ally, wins the Conservative leadership contest in the autumn.

Speaking to The Scotsman ahead of his visit to business leaders in Edinburgh today, Mr Osborne said he expected to hear complaints about the tax burden - currently the highest in the UK as a result of business rates set by the Scottish Executive.

"The ability to reduce income tax by 3p in the pound is something I know the Scottish Conservatives are clearly looking at, to make Scotland a particularly attractive place for investment and for businesses to locate," he said.

"One of the advantages of devolution is that it gives Scotland an opportunity to make itself more competitive against England," he said.

Mr Osborne is the first Conservative to confirm in public the plans which David McLetchie, party leader, discussed at an MSPs' brainstorming session.

He will today meet Mr McLetchie at the inaugural meeting of the Scottish Tories' new "Shadow Cabinet" - a group which includes Mr McLetchie, Eleanor Laing, the shadow Scotland secretary in Westminster, and Peter Duncan, who lost his Galloway & Upper Nithsdale Westminster seat at the election.

Mr Osborne is effectively acting as Mr Cameron's campaign chief, and said both of them are keen to forge an alliance with "reforming" Labour MPs - and may well support Mr Blair over welfare reform.

He was keen to stress that Scotland will remain an integral part of the Conservatives should Mr Cameron win. David Davis, the favourite contender for leadership, has spoken in favour of ending Scotland's party ties with England.

Mr Osborne accepted there is support amongst his party to cut free from Scotland altogether - and revert to the pre-1965 situation where the Scottish Conservatives were a separate sister party to the English Conservatives.

"There is a big temptation for the Conservatives to become the English party south of the Border," he said. "I think flirting with English nationalism would be a profound mistake. The Conservative party is, at its heart, a unionist party. I'm determined the Conservative party remains committed to the union."