CBI calls for budget to invest in infrastructure and freeze taxes

In its submission ahead of next month’s Scottish budget, the business lobbying group is demanding that Swinney adopts a “bolder approach” to slashing the cost of government by capping the public sector wage bill, outsourcing more services to the private sector and spinning off Scottish Water.

The CBI also wants to see graduates contributing to the cost of their university education, adding more money to the devolved administration’s £35 billion budget.

The organisation is challenging Swinney not to increase taxes for businesses during the current three-year spending review, following on from the £95 million tax on large retailers in last year’s budget and the £36m levy on empty premises.

McMillan said: “The Scottish Government should put economic growth at the very centre of its upcoming spending plans.

“A bolder approach to making savings and promoting competition is needed in order to keep business taxes down and protect important GDP- enhancing investments in infrastructure, skills development, and export support.

“Despite the fiscal stringency that will be required from the public purse over the next few years, there remains a pressing need for the devolved government to sustain investment in and support for the economy.”

The CBI renewed its calls for Scottish Water to be spun off into an arms-length public-interest company and for the reintroduction of an air route development fund to encourage airlines to bring more flights to Scotland.

The Scottish Government is currently calling on the Treasury to pump a further £5bn in capital projects so that Holyrood can receive extra cash through the Barnett formula.

But the CBI warned that ministers north of the Border should be preparing their own plans for extra infrastructure spending in case the coalition government at Westminster does not push the button on further projects.

Money freed up from savings in other parts of the Scottish budget could be used to fund construction and maintenance projects, which in turn would stimulate the economy, the CBI said.

The organisation commended the Scottish Government’s “positive announcements” for upgrading of roads including the A9, A96 and M8 and the CBI called on local councils and other public bodies to look at work they could do to bring forward improvements, maintenance or repairs on other parts of the roads network. A spokesman for the Scottish Government  said: “We welcome CBI Scotland’s  engagement and its support for our continuing measures to invest in the economy.

“The Scottish Government and our agencies are doing all we can within our current powers to strengthen the economy, to create and bring jobs to Scotland, to stimulate growth, and to sustain the most-supportive environment for business in the UK.

“In preparing the draft budget to be published in September, we will take full account of the latest economic position and look forward to debating our spending plans over the autumn.”