Sir Tom Hunter: Smart answer to scourge of poverty

Published on Saturday 6 February 2010 19:00

WITH a UK general election almost upon us, let's not forget that next year we in Scotland will elect a new Holyrood parliament.

As that moment looms we must ask, with apologies to JFK, what the government of our country can do for us when elected. The answer is a very focused approach to three key issues: economic growth, poverty alleviation and education.

But before tackling those issues we have to address two points. Firstly, we are over-governed and increasingly dependent on government; we need to cut out the red tape and the handouts. Government should deliver a framework in which individuals and business can thrive and those most vulnerable are cared for. Secondly, a question: in Singapore they pay top dollar for their PLC management team – their government – to secure the best talent; do we?

President Kennedy noted "conformity is the jailor of freedom and the enemy of growth". To that end I believe we need a fundamental shift in how we tackle growth, poverty and education. Simply doing what we have always done is not good enough for Scotland.

Horrendously, poverty is alive and well in Scotland; around 250,000 children live in poverty. Tragically, poverty begets poverty, just as education begets education. Education is the major element in the long-term eradication of poverty. It's the silver bullet – and it's the teacher who delivers that bullet.

Every shred of evidence available points to the positive impact of education in increasing a young person's life chances for success. Moreover, the impact of an exceptional teacher is beyond doubt, so let's invest more in our teaching profession and reward them appropriately. Forget about class sizes – it's the teacher, stupid. They are our number one chance of tackling the cycle of poverty.

Education policy cannot and should not be a partisan issue; educational policy should be delivered independent of politics. So the first act of the new Scottish Government should be – as Gordon Brown did with the MPC and interest rates – to hand educational policy to an independent body informed by evidence, unhindered by petty politics.

Nobel laureate James Heckman has proven the link between early intervention and the money that can be saved thereafter. We know that a long-term person Not in Education, Employment or Training (Neet) costs the taxpayer a staggering 100,000 each.

We solved universal care for the elderly, so why not universal care for the poor?

Our next government should deliver an independent educational policy unit bereft of politics. The single outcome agreement should have as its priority the eradication of child poverty. All local authorities are measured on Key Performance Indicators, and their number-one KPI should be Neet reduction. We also need to do more to target the poorest and hardest-to-get-to children – tragically, we know where they all live.

Lastly we need an integrated, measured approach from the Third Sector, social workers, education departments, health and police services, working in unison.

How do we fund this? One answer is prioritisation. The second comes from the banks. The British Banking Association estimates there are 15 billion of unclaimed assets in our banks and building societies. We should use this money, and Scotland's share would be more than 2bn.

For those doubting the power of education, the Minneapolis Federal Reserve recently concluded a study on the impact of early educational intervention versus economic development. Education won hands down, with every dollar invested yielding $8 of return.

If Scotland goes down the Calman route of more powers for Holyrood, we should use those extended powers to reduce personal tax, particularly for the poorest, so it becomes more attractive to work than survive on state benefits. The multiplier effect will be an explosive increase in employment, reducing dependency and yielding marked economic gains.

If we go down Alex Salmond's independence route, we should create our own version of Switzerland – a low-tax nation, a tax haven even. Make Scotland one of the most competitive nations in the world to invest in. Reduce corporation tax and decrease personal tax. The multiplier again delivers.

At the very least, in the short term we should use the tax-varying powers available to us to reduce the overall tax burden and increase our attractiveness as a nation to invest and live in.

Differentiating ourselves like this through viable fiscal policy will see a net inflow of jobs, businesses and economic prosperity, because we'll be doing the very thing that is attractive to business and people – paying less tax. By doing this our competitive position becomes formidable and our own growth prospects increase.

Let's also deliver a smaller tax take from small business – the lifeblood of this economy and the sector our growth will be driven from. And let's make it more attractive to build a business than a career of public service – our public sector is far too large and economically unsustainable. We need to instigate policies and practices that encourage an enterprising, entrepreneurial society.

Unemployment is cause and effect; a thriving economy delivers employment and crushes poverty. We have a proud history of innovation and enterprise but change is the law of life, so let's get ahead of the game, not lag behind it. As custodians of Scotland's future, we need to leave a legacy to be proud of for future generations to enjoy. As my friend, the economist Muhammad Yunus, says, we can create a world without poverty. How about we create it here in Scotland first?

• Sir Tom Hunter is a serial entrepreneur and philanthropist