Council of Economic Advisers
FM: Experts provide advice to inform devolution proposals.
First Minister Alex Salmond met with the Council of Economic Advisers today in Edinburgh.
During the Council’s sixth meeting, members discussed how to maximise the economic impact of new powers for Scotland and how they could be best used to promote competitiveness and tackle inequalities.
The devolution paper discussed today will be shared with the Smith Commission for their information.
The Council agreed that in order for such a process to be meaningful and purposeful, any new framework needs to promote efficient policy decision making and ensure that, once established, the economic and financial costs and benefits of using these new powers are captured in Scotland.
In particular, any process of no-detriment on fiscal matters must simply capture the first-round effects of transferring a particular power, with the economic and financial consequences of policy choices that then follow allowed to take their full course. Boosting economic incentives for Scotland, whether that be through taking advantage of Scotland’s distinct strengths or offsetting an economic disadvantage in the UK, should not be overly interpreted as being subject to no-detriment. The clear objective of granting greater powers must be to deliver meaningful discretion and accountability which can only be achieved by granting genuine autonomy for both the policy choices themselves and their outcomes.
The paper considered by the Council today argues that:
- Devolution of a suite of taxes would best fit with a clear economic strategy rather than a small basket of taxes;
- A diverse tax base has the advantage of reducing risk from changes to particular individual revenues and provides greater scope to grow the economy and create a fairer society. It also offers more scope to take advantage of synergies with existing devolved responsibilities;
- Full authority to vary the rates and bands of any devolved taxes is much preferable to tax assignment which whilst creating the impression of autonomy, would ultimately do little to change the powers of the Scottish Parliament but would increase the risks to the Scottish Budget; and,
- Responsibility for the welfare budget would provide a powerful tool to support jobs and to tackle inequalities.
At today’s meeting, the Council also considered other work including opportunities to maximise the contribution of women in the economy.
The First Minister paid tribute to the successes of the group since its creation in 2007 and to the Council of Economic Advisers Chair, Crawford Beveridge CBE. The Council of Economic Advisers meet bi-annually to cover a varied programme that has included:
- Economic recovery and jobs
- Education and skills
Chair of the Council of Economic Advisers Crawford Beveridge said:
“Devolving a range of taxes to Scotland will benefit both Scotland and the UK.
“For Scotland, taking ownership and accepting accountability for a much greater proportion of its own finances provides an important opportunity to grow a stronger economy and create a fairer society. In our meeting today, we discussed the principles which could underpin an overarching economic and fiscal framework and which, if followed, would provide a workable model for both Scotland and the UK.
First Minister Alex Salmond said:
“I believe that the Scottish Parliament should be responsible for the full range of taxes levied in Scotland. This way we can continue to drive forward prosperity and fairness in Scotland for everyone in this country.
“We know that the taxes and revenues raised per head in Scotland are higher than the UK as a whole – it’s about time that we had the powers to use it to benefit everyone in Scotland.
“The latest Labour Market stats published today shows Scotland outperforming the UK on employment, unemployment and inactivity rates, which demonstrates the commitment of the Scottish Government in supporting our economy.
“I am particularly pleased to see the progress we are making on narrowing the gender gap in employment. The figures show that despite the global recession the Scottish economy continues to strengthen with overall employment now 43,000 higher than the 3-month period April-June 2007, with female employment 66,000 higher over the same period.
“With discussion on further powers for the Scottish Parliament now taking place it is essential that we have the full tools we need to support employment opportunities for everyone in Scotland.”
As Chair of the Fiscal Commission, Lady Susan Rice participated in the discussion on the devolution proposals in an observer capacity only. Both Lady Rice and Professor Andrew Hughes Hallet did not participate in the discussion on the potential role an independent Fiscal Commission may have under further powers.
For membership of the Council of Economic Advisers, please visit http://www.scotland.gov.uk/Topics/Economy/Council-Economic-Advisers
For the latest report from the Chair, Crawford Beveridge, please visit: http://www.scotland.gov.uk/Topics/Economy/Council-Economic-Advisers/Reports