'Devolution has not aided Scots growth'

ALEX Salmond's call for new economic powers has been questioned by a leading Scottish think-tank after a study raised doubts over whether devolved government policy in Scotland had had an impact on growth.

The doubts raised by Glasgow University's Centre for Public Policy for the Regions (CPPR) come as the First Minister makes a third trip to London to discuss economic powers since the Holyrood election last month.

Mr Salmond is due to meet UK, Irish and other devolved administration government ministers at the British-Irish Council, but has made it clear that he intends to raise demands for control of the Crown Estate and corporation tax again.

However, in its study, published today, the CPPR noted that growth in Scotland since devolution has largely matched that of the UK.

Scotland lagged behind from 1998 to 2003, out-performed the UK generally from 2003 to 2007, but has struggled at around the same level since then.

John McLaren of the CPPR said that he was surprised how little research had been carried out by the Scottish Government into why the performance of the Scottish economy had varied over time. He also noted that it was hard to see if devolution had made any noticeable impact.

But he added that the figures also showed Scotland is "not a basket case which lags behind the rest of the UK".

He said: "This suggests that you don't need sweeping powers such as slashing corporation tax to improve growth in Scotland.

"As the Scottish Government has done so little to work out whether why different changes have happened, it is also hard for it to claim that its actions have had an impact.

"If the rationale behind having powers over corporation tax is because the Scottish economy is lagging behind, then it is a poor rationale. In fact, Scotland has done well compared to other European countries.

"It suggests that the rationale is more simply about just wanting those powers than what can be achieved by them."

Mr McLaren also noted that the figures suggested there was more of an imbalance in the Scottish economy than the UK with a heavy reliance on construction and financial services.

While at their height - between 1998 and 2003 - financial services rocketed by 63 per cent compared to the UK's 34 per cent, the banking crisis has had a worse impact with a decline of 17 per cent in Scotland compared to the UK's 4 per cent.

Construction growth in Scotland ran at 16 per cent between 1998 and 2007, more than double the UK average, but now has also gone into decline, shrinking 6 per cent since 2007.

Since being re-elected with a majority in Holyrood the SNP has made three key economic demands for improvements to the Scotland Bill - which comes before the Commons again tomorrow - to help Scottish ministers boost the economy.Holyrood is set to get increased borrowing powers, but demands for control of corporation tax and the Crown Estate have been rejected in the short term, although they may be considered later.

A spokesman for Mr Salmond rejected Mr McLaren's arguments, saying: "Clearly if the Scottish Government has control over more economic levers it can tailor the Scottish economy better to help growth."

The spokesman added that the Scottish Government will also be publishing a paper this week showing how devolution of the Crown Estate will help local communities in Scotland, as well as promoting growth.

A spokesman for Finance Secretary John Swinney said: "This report underlines the importance of sectors like construction to Scotland's overall economic performance, and reinforces the case for strong capital investment in order to protect and create jobs.

"The report also shows that the SNP Government has ensured Scotland's economy has stood up well to the huge pressures we have faced in recent times. However, Scotland needs more financial responsibility in order to make the most of our potential."