Hervey Gibson: ‘Wee pretendy parlyment’ no more but devil is in detail

I love it when government – Westminster or Holyrood – promises more investment in broadband. With a little more bandwidth, then not only will I be able to watch Channel 4’s sleazy Seattle version of The Killing as well as BBC4’s stylish Copenhagen replay, but my business also might be able to get its toe in the digital economy.

And as a budget junkie, I might be able to hear all of John Swinney’s brave attempt to fend off Osbornomics, and what sounded (in 15 second snatches) like an impressive impromptu response by Labour spokesman Richard Baker. So I hope that my business and yours will reap the benefits of the £62 million communications investment promised in the Scottish Government’s budget and its digital future document.

From what I could tell via the appalling BT landlines that link Holywood (Dumfriesshire) to www.holyrood.tv, yesterday’s budget debate showed that we have left far behind the idea of a “wee pretendy parlyment”. There seemed to be sensible and witty speeches from all corners. It’s just too bad, from a budget point of view, that so far (and even with the Scotland Bill as the coalition is pushing it), the Scottish people only have wee pretendy tax powers to raise revenue.

The headlines from a Chancellor’s Budget are always about 2p on this tax, 4p off that, whereas the cabinet secretary for finance had, from what I could hear, only one significant revenue proposal: higher business rates for sin. Business rates are to go up for large alcohol and tobacco retailers.

We don’t know what “large” means. Will this be just a “Tesco tax” or will it help to get booze out of the corner shop? I wonder if it will work on fags too? But it’s fairly clear the government’s motivation is not the money, but the better behaviour and healthy habits that might be induced –what it called “preventative spending”.

So much more significantly on the business premises side, Swinney will reform empty property relief from April 2013 and introduce incentives to bring vacant premises back into use. While Osborne’s policies are busy bringing down the shutters on retailing, Swinney’s aim is to reduce the prevalence of empty shops in town centres and support urban regeneration. On the business rates front he will also create four enterprise areas (note: not “zones”), where presumably there will also be some rate concessions.

Enterprise zones in England are supposed to be part-financed by TIF, tax increment financing. I am troubled that Swinney declared he will use “TIF”. This means government will borrow money on the basis that its policies will be successful. Under this fashionable idea, which has all the Treasury bling that public-private finance once had, the business growth induced by government investment will put the tax base up. Eventually this is supposed to enable the government to repay.

Town centres have suffered a triple whammy. The Westminster government has been killing consumer confidence, local councils courting out-of-town retailing even in non-growth areas, while the internet has been providing alternative buying conduits. I believe a hardnosed commercial assessment, as long as it was not carried out by property agents with a vested interest, would show that in the current state of incomes Scotland has about 30 per cent overcapacity in its core town shops. It will need a lot of courage to prune that down in the autumn of the UK economy, although if the pruning can be done, then there is a fair chance the remaining branches of the commerce tree will flourish as a result. The other impressive debating emphasis was that at several points in several speeches there was a holistic approach to household incomes and the social wage. It sounds as if the proposed strategic priority of solidarity has struck some chords. But we must wait for the unions to comment on how fair and effective the Scottish measures on public sector pay will be. I hope they will have the decency to compare them with what is being meted out in England.

The only real way to weigh up a budget proposal is not in the rhetoric of the chamber, or in the specifics that catch one’s attention as they fly past. It is in reading between the lines of the spreadsheets that the economists and accountants have tucked away in the supporting documentation. I am sure we will be doing that over the next few weeks.

• Hervey Gibson is chairman of Cogent Strategies International and former head of economics at Scottish Enterprise