IoD hails cuts as a 'rare opportunity'

The business group argues that Scottish politicians have long shied away from making difficult but necessary decisions on cutting the bloated public sector, but there is now a "rare opportunity", led by necessity, to restructure the economy towards the private sector.

David Watt, head of the IoD in Scotland, acknowledged that swingeing cuts won't be "immediately publicly popular", but they will be vital if the next government wants to secure sustainable long-term growth.

"Obviously, health and education are important," Watt said, "but it's about hard choices and decisions to rebalance the economy. We believe that there is too much public sector focus as far as GDP is concerned - they (past governments] have spent too much money."

He said the Westminster government had taken a "brave" approach to public sector cuts and the Scottish Government needs to make some similarly courageous choices.

"We know rebalancing the economy can't be done tomorrow but over a period of five years," Watt said.

The IoD suggests that the next government could stimulate private sector growth by creating a low-tax economy. Although the Scottish Government would not be able to set its own corporation tax under the proposals in the Scotland Bill, Watt says ministers will have other tools at their disposal, such as business rates and council tax, to encourage more companies to set up and relocate to Scotland.

Scottish ministers also have the power to reduce the regulatory burden on firms, the institute suggests.

The manifesto similarly argues that reforms to the planning system need to go much further.

"The planning system is insufficiently flexible to promote economic growth," it reads.

"There is little evidence that the recent legislative changes to the planning system have improved matters enough."

Among the other proposals is a re-examination of Scotland's water industry, potentially privatising all, or part, of Scottish Water. The IoD says the continued use of public funds to support Scottish Water's investment activities is now "worthy of a challenge" given the constraints on public sector spending.

Growth in the private sector would also be helped by improved transport links, delivery of high-speed internet connectivity and greater support for key industries such as oil and gas, and renewables, the IoD states.

Chairman Raymond O'Hare, added: "The potential exists for Scotland to punch above its weight in economic terms but we need to get our priorities sorted now."

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