Labour’s foresight

George Kerevan’s attacks on Labour’s devolution proposals (Perspective, 19 March) contain several factual errors and spurious assumptions.

Firstly, the income tax decisions reflect the convincing advice Labour received from a range of tax experts on the additional costs that devolving full income tax would have on business costs and tax collection.

Labour made it clear it would make no proposals that would harm the Scottish public – as increased costs of pensions would, for instance – and moved to a model which would increase both political choice and fiscal accountability.

Sign up to our Opinion newsletter

Sign up to our Opinion newsletter

Secondly, his criticism of the lack of business taxes to allow cuts to corporation tax to drive growth is ideological.

The Scottish Government’s own modelling of the effect of a 3 per cent cut in corporation tax showed the impact would be trivial – a 1.4 per cent increase in economic growth after 20 years.

Given the margin of error in economic modelling, this provides no sound evidence-base for fiscal policy.

Thirdly, changing the tax structure of devolution does not “guarantee alterations to the Barnett Formula”.

The SNP has been claiming that this would cut Scotland’s budget for years but Scotland is still receiving 13 per cent more per head than the UK average.

Moreover, the Welsh report on Needs Assessment was submitted to the Treasury four years ago and no action taken.

Fourthly, his comment on public sector job losses in Scotland as a sign of failure of sharing resources ignores the impact of his own party’s unfunded council tax freeze causing 40,000 job losses in local government.

The SNP claims to be protecting public services but has failed to use the current tax powers to do so.

Fifthly, the notion that there would be a social-democratic majority in an independent Scotland to safeguard the welfare state ignores the SNP’s regressive tax and spend policy since 2007, through the council tax freeze, increased spending on universal services which benefited the better off but did nothing for low income households, and the termination of a billion pounds of anti-poverty programmes.

Finally, his advocacy of full fiscal autonomy within the Union is nonsense.

It is incompatible with the principles of the Union, and would leave Scotland with a major fiscal deficit. Labour rejected it early on in its deliberations for these reasons.

(Prof) Arthur Midwinter

Academic adviser to Labour Devolution Commission

Raleigh Court