Kate Forbes calls for £80bn spending package from Westminster
VAT cuts to help the country's beleaguered tourism industry are called for in a Scottish Government report entitled COVID-19: UK Fiscal Path – A New Approach, as well as a reduction in employers' National Insurance to boost recruitment.
More financial powers for the Scottish Parliament are also set out.
It has been published as Prime Minister Boris Johnson prepares to unveil a major multi-billion pound capital spending plan to help drive recovery over the next decade, with a £1 billion school-building plan in England set out today.
Ms Forbes said the UK-wide package is needed as Westminster still controls much of the economic levers for Scotland.
“We are emerging from the biggest economic shock of our lifetimes. It has hit the most vulnerable in our society disproportionately and presents challenges that the Scottish Government does not currently have the powers to meet,” Ms Forbes said.
“The UK Government’s fiscal policies are still key in determining our budget, so today we set out the principles we believe it should follow to ensure we emerge with a fairer, greener economy that values wellbeing alongside growth.
“This report recommends bold, practical steps which would provide an immediate boost to our economy, protect existing jobs and deliver new ones. It tackles public debt, employment and proposes measures to further support business. Crucially, it avoids any return to austerity. Economic stimulus must be prioritised over deficit reduction until the recovery has fully taken hold."
Estimates suggests the economy has shrunk by about 20% across the UK as a result of Covid lockdown, while unemployment has also soared.
The £80 billion package would allow the tourism and hospitality industries to move onto a reduced VAT rate of five per cent, today’s report states.
It also suggests a two pence cut in employers’ National Insurance Contributions to reduce the cost of hiring staff.
A new National Debt Plan is also called for to help business and household budgets recover from the effects of the pandemic.
The report also calls for a jobs guarantee scheme for young people and extend sector-specific employment and business support schemes
The Scottish Government’s financial powers should also be extended, the report adds, with Ms Forbes demanding increased borrowing powers to allow Scottish ministers to boost the stimulus available north of the border.
Ms Forbes added: “Germany has already adopted a similar-size stimulus package, representing four per cent of GDP, and the UK Government needs to be similarly positive, proactive and ambitious.
“Action is needed now. If the UK Government is not prepared to respond then Scotland must have the additional financial powers required to secure a sustainable economic recovery.
“Without those powers we will be at a severe disadvantage to other nations. It would be like trying to chart our way to recovery with one hand tied behind our back.”
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