Public/private sectors in economy need to be rebalanced

Published on 15/03/2006 01:30

Should we be concerned that the public sector now accounts for more than half of the Scottish economy?

When the chairman of Scottish Enterprise, Sir John Ward, recently highlighted the alarming levels of public-sector dominance of local economies across Scotland, he was hounded by MSPs for having the temerity to bring the issue into the public domain.

And now we have a new report, prepared by the Scottish Executive's own researchers, which tells us the public sector has grown by 6 per cent in the last four years and now dominates the economy (your report, 13 March).

So what will MSPs do in response to official confirmation that Sir John was right? We have three suggestions:

1, reduce the size of the public sector, in real terms. This does not mean, leave the public sector alone and hope the private sector grows faster, as recent correspondence with the First Minister's office would appear to suggest;

2, reduce the burden of taxation and red tape on Scottish businesses; and

3, accelerate the equalisation of business rate poundage north and south of the Border, in full.

Unless there is universal acknowledgement that the burgeoning public sector is seriously inhibiting business growth, we will not create the smart, successful Scotland we all wish to see.

GRAHAM BIRSE

Deputy chief executive, Edinburgh Chamber of Commerce

Melville Street

Edinburgh

You report that the public sector is 51 per cent of the economy. But the measure of "the economy" which is used is gross domestic product - a measure which all sensible economists should recognise is past its sell-by date.

In GDP, we count as economically valuable all sorts of bad things like oil-spills and burglar-alarm sales, and ignore highly productive things like voluntary work. It simply does not accurately assess how well we are doing as a nation.

So the proportion of the economy taken up by the public sector is not the main issue. It is what we consider the economy to be in the first place.

GAVIN CORBETT

Briarbank Terrace

Edinburgh