Brown missed his chance to boost competitiveness

Spending was emphasised in the report, particularly capital spending on education, transport and investment in science and innovation.

Brown focused heavily on a long-term strategy for education and innovation. It is therefore disappointing that he did not use the Pre-Budget Report to demonstrate a medium to long-term direction for making the tax system for business more competitive.

The tax system is the UK's shop window for attracting inward investment and it is important for the government to recognise that, in today's global business environment, companies' profits are potentially very portable.

There has been growing concern among the business community that the UK's business taxation system has been losing its competitive edge of late. The UK headline corporation tax rate - once on the low side - it is now at best middle of the pack.

This is not just when comparing the UK with smaller countries such as Ireland and a number of the recent EU accession states. Major competitors such as Germany are also trimming their headline rates.

Issues such as relatively low rates of tax relief for corporate investment, the lack of overt tax advantages for UK holding companies, increasing challenges to domestic tax legislation through the European Court of Justice, and the level of stamp duty payable on company shares also continue to cause concern.

Brown made a commitment to invest at least 1 billion in science and innovation. Given Scotland's strong academic presence, particularly in life sciences, our educational establishments and research organisations should benefit directly.

However, there was no improvement on the existing tax relief available to businesses for investment in research and development, or to make the relief easier to access.

There was little focus on private business and enterprise. However, with the skills shortage that exists in Scotland, businesses will welcome the Chancellor's announcement of new programmes to encourage more training partnerships between government and industry.

The announcements on the environment were modest. Amendments to petroleum revenue tax exemptions should encourage further investment in the North Sea and the proposed increase in air passenger duty will be welcomed by environmentalists. But it will increase the cost of travel for an increasingly globalised Scottish business sector.

The continued exemption for such travel from airports in the Highlands and Islands may do a little to mitigate this rise - but this is a tax on air travel, not carbon emissions. The test of an effective environmental tax is that it changes behaviour, and it is questionable whether these announcements will achieve this end.

There was no commitment to reduce stamp duty land tax on property generally, with anti-avoidance legislation being introduced to target certain areas of stamp duty land tax planning.

The proposed planning gain supplement - which will tax the increase in value of property arising on planning consent being obtained - remains an issue for the construction industry, but the relaxation of restrictions on eligibility to qualify as a Real Estate Investment Trust will potentially be of benefit to Scottish construction companies.

For Scotland's life insurance industry, the Pre-Budget Report encompassed the first outcomes of six months of consultation. These include measures designed to simplify the taxation of insurance companies, but the inclusion of anti-avoidance measures means that tax will remain a complex and difficult area.

The lack of tax cuts or major changes to the tax system overall in last week's report was not surprising. While many of the measures announced are welcome, it is disappointing that there was little focus in the speech on business, and how the competitive position of the UK from a tax perspective can be improved.

• Rhona Irving is head of tax, PricewaterhouseCoopers LLP Scotland