What Scottish Government must do to tackle its £5 billion black hole – and avoid a £50 billion one

The First Minister should immediately pull together a business council to advise government on economic growth with actionable outcomes. The business talent and willingness are there; is the government like-minded? When you are looking at a £5 billion economic black hole, you’d think that would be welcome… economic growth is the only way out of that hole, along with driving efficiencies.

Currently half of the government’s day-to-day spending goes on a public sector that, over the past five years, has grown by 11 per cent to a total of £27bn, with the health and social care budget adding a further £22bn … the results you will be at a loss to explain: a decrease in productivity.

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A tax on growth

There are solutions, some immediate, others medium-term:

First, immediately reverse the non-domestic rates increases until a new system is delivered. This is a tax on growth, delivering job losses and economic hardship.

Second, open up licenses in the North Sea now – we have an oil and gas deficit until 2050 that the North Sea could largely plug with six billion more barrels of oil and gas. Stop, I hear the environmentalists say. Do they understand the negative impact of importing instead of domestic production: jobs, tax revenues and opportunities versus being a slave to imports?

Third, immediately address the housing crisis with a fast-track planning system for applications over 100 homes. Change the apprenticeship scheme to allow businesses to access the talent they need – put the apprenticeship levy in the hands of business.

Fourth, review our tax system, which currently sees a teacher earning £50K here receiving £1,500 less that their English counterparts… And if you want a real drain on productivity – people are now turning down overtime because it would put them in the ‘broad shoulders’ category of high earners: complete madness.

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The cost of independence

Then we have over 100 publicly funded entities supposedly supporting business alongside three major economic development agencies – consolidate, drive efficiencies and focus on delivering Scotland’s scaling companies. If we delivered 50 per cent more scale-ups in five years, Scotland could add £18bn to the Scottish economy and 100,000-plus jobs – now that’s how to fill a £5bn black hole and I think it’s achievable.

But there’s a bigger hole to fill if we move towards independence. This is not only a distraction, it is a £50bn black hole with the loss of the Barnett formula funding; has anyone explained how that would be replaced?

The way to independence is competent government and proving to the electorate they can govern Scotland for the better. Frankly, the last 19 years does not look like competent government.

It is time for the country, its politicians, its businesses and its citizens to herald in a new vision for Scotland where opportunity for all flourishes, businesses succeed and the health and education of our nation improves markedly. You can only do that through economic growth to pay for what Scotland needs so let’s face up to that fact and get on with it.

Sir Tom Hunter is a philanthropist and serial entrepreneur