AS I SEE IT: Kate Forbes’ pledges on building an entrepreneurial culture look a little hollow after her latest spending commitments, writes TERRY MURDEN
There have been many pledges by Scottish Government ministers to put the economy at the forefront of policy, not least from Finance Secretary Kate Forbes who, only a few weeks ago, said there was a need to “ruthlessly and relentlessly” build an entrepreneurial culture to deliver more economic prosperity over the next decade.
The page on that commitment appears to have been turned rather quickly as Ms Forbes delivered her review of government spending over the next four years and announced a 16% cut in the budget for enterprise, tourism and trade promotion.
That’s twice the size of the cut in budgets for local government, the police, justice, universities and rural affairs.
The Institute for Fiscal Studies offered some sympathy for Ms Forbes, saying that underlying these difficult decisions are UK government funding plans that, because of soaring inflation, look less generous than when they were set last autumn.
But blaming Scotland’s ills on the UK government – as Ms Forbes likes to do – would be a cheap way out. As the IFS points out, a significant contributor to the budget cuts is a big increase in social security spending, together with a relatively poor income tax performance based on overly optimistic forecasts of revenue.
Spending on Scottish social security benefits is forecast to increase from £3.9 billion this year to a whopping £6.4bn in 2026-27 – an increase of 48% in real terms. Holyrood has also introduced a range of additional benefits such as the Scottish Child Payment, amounting to a further £600 million.
It means that the Scottish Government is forecast to be spending £1.3bn more on social security benefits than the funding it receives from the UK government following social security devolution.
Other large real-terms increases in funding include active and low carbon travel (up 47%), and concessionary fares and bus services (up 24%).
While there is a concession to investment in the economy through a 67% uplift in funding for employability and training services this is a relatively small demand on the government’s overall budget.
In addition to the cuts, the Finance Secretary is also making provisions to increase the cost of doing business. Her statement contained a hint that business rates may be raised and other taxes imposed.
She states that “for the next [rates] revaluation to be revenue-neutral in 2023-24, based on current expectations about the tax base, an increase in the poundage would be required.”
Another section refers to the need to “explore greater scope for discretionary revenue-raising, such as the Visitor Levy (tourist tax) and the newly created Workplace Parking Levy.”
Ruthlessly and relentlessly building an entrepreneurial culture? There is little evidence of it in this statement..
tmurden@dailybusinessgroup.co.uk
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
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