How SNP mismanagement of the economy has cost Scotland £624 million
If Scotland had simply kept pace with the low-growth, low-productivity economy presided over by Boris Johnson and Rishi Sunak, there would be no black hole in the Scottish Government’s budget
Just last week the Scottish Finance Secretary, Shona Robison, was forced to come to parliament to announce more than half a billion pounds of cuts to her budget mid-way through the financial year. This is not the result of the Westminster bogeyman but, as outlined by the Fraser of Allander Institute and other experts, as a direct result of her own government’s bad decisions and poor planning around pay.
In addition to cuts, £460 million of revenue from ScotWind projects will be used to backfill her own incompetence. This money is a one-off and was levied on firms in exchange for seabed leases to construct the next generation of offshore wind projects.
The total £760m ScotWind pot was supposed to be reinvested in the renewable energy sector. Now, just two years later – and following a £200m raid last year – that money has almost disappeared. Remember the cries of “treachery” when Margaret Thatcher used the proceeds of North Sea oil and gas for day-to-day spending instead of “investing for the long term”?
To make matters worse, because the government is using one-off funding to cover annually recurring spending, there is every chance we’ll all be back here in a year’s time with the same problem.
Damning indictment
But it didn’t have to be like this. Since the devolution of income tax to the Scottish Parliament in 2016, the government has had a strong incentive to develop Scotland’s economy. If the Scottish Government delivers a stronger economic performance and higher average wages relative to the rest of the UK, we get more revenue for vital public services.
However, the Scottish Fiscal Commission, the official, independent fiscal forecaster, estimates that Scotland’s relative underperformance on wages has cost the public purse £624m in 2022-23 alone. If we had simply kept pace with the low-growth, low-productivity economy presided over by Boris Johnson and Rishi Sunak, we would be able to plug the SNPs competence black hole with millions to spare.
This is a damning indictment of the Scottish Government’s record on the economy. Since the inception of the parliament, successive governments have focused on social policy to the detriment of economic policy and, for too long, the current government’s approach to the economy has been to use income tax rises as a substitute for economic growth. But they have run out of road.
Lurching from crisis to crisis
We need a new culture of partnership between government and business. One where government sets shared strategic goals, like on net zero or the technology revolution, and business is supported and emboldened to innovate and grow to meet those challenges.
Instead of lurching from crisis to crisis, the government's actions should be clear and predictable to allow businesses the certainty to invest. We need to fix our broken planning system, re-align our skills system and de-clutter our enterprise agencies to unleash the potential of Scottish business.
This is not just good for business, it would close that £624m performance gap in the Scottish Government’s budget.
Daniel Johnson is the Scottish Labour MSP for Edinburgh Southern
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