David Watt: Wealth creation is the only way to drive Scotland forward

Scotland will see a Holyrood election in May of 2016 and no doubt there will be a budget revision, so perhaps the impact of reduced public funds may come out then.

David Watt, executive director of IoD Scotland

There can be little surprise at John Swinney’s budget and I suppose with that election looming it was not realistic to expect anything else. However, there is a disappointing absence of any real change of direction – no significant spending on the economy and no real innovation or focus on wealth creation.

There was a pledge not to follow the austerity of George Osborne and a commitment to continue all our “free” benefits universally and to alleviate any impact of reforms like the bedroom tax, and a focus of spending announcements towards the lower end of the income scale.

The investment in education and health was again as expected and necessary but crucial is the commitment to reform and efficiency in health provision – “just as important if not more important” said Swinney; and the movement of some social care money to the local authorities out of health must be a welcome step. The freeze in council tax, while unsustainable, is probably a welcome measure for householders.

Resisting the temptation to raise income tax is especially welcome, but is perhaps something we should worry about in six months’ time.

The rise in business rates is not at all welcome and it is justification for keeping the small business bonus scheme. The promised review of these rates is very pleasing and something the IoD, with others, has been calling for over some time, but this added burden on business is particularly unwelcome and badly timed given the drive to living wages.

Given the overall increase in money available from Westminster is £400 million, and this doesn’t meet all the new expenditure, our call for less government and real cuts in departmental spending will probably feed through but it is being hidden given election pressures.

Yes, spending on affordable housing and infrastructure does help fuel and service the economy, but if Scotland is to grow a sustainable economy, we must move towards wealth creation footing – and our Parliament must play its full part in this.

• David Watt is executive director of the Institute of Directors Scotland