“And even though, with Scotland as an independent country, your policy options would be much greater, you have to be constantly aware of the trade-offs involved and the limitations on your power to influence the choices made by workers and by companies. You can at least take comfort from the fact that less prosperous nations with less well-developed institutions than Scotland manage these issues without the roof falling in.”
The author, fiscal expert at FAI, examines the tax changes designed to achieve greater fairness made in the fifth Scottish Parliament – and the scope for reform and greater powers in the next.
Since its inception, the Scottish Parliament has not been renowned for its reforming zeal. But the pandemic has thrown up a range of challenges that must be addressed if a ‘working’ system is to re-emerge in hospitals, schools and the courts. It is surely right then that the electorate has some idea of the competing views of each of the political parties as to how they intend to respond to the pandemic’s effects.
“..further Covid-related allocations are designed to support the economy during ongoing restrictions – and these provide the Scottish Government with further resources during 2021/22. In years beyond that, this was a budget that aims to rebuild the economy by leveraging investment, whilst raising more from tax and tightening the screw on public services spending. But there is no role in the future economic vision for welfare policy or public services spending.”
‘The scheme will apparently operate ‘UK wide, using the new financial assistance powers in the UK Internal Market Bill’. Whilst the fine details are awaited, the lack of explicit reference to the devolved governments will antagonise intergovernmental relations in area where tensions are already running high.’
“But GERS does provide an accurate picture of where Scotland is in 2020. So, in doing so, today’s numbers set the starting point for a discussion about the choices and challenges that need to be addressed by those advocating independence or new fiscal arrangements.”
After questioning economic orthodoxy in his two previous articles, the author asks whether Scotland can deal with the ‘new normal’ and asks commentators/analysts to join nin the discussion.
‘If QE was a policy response to the idea that banks were too big to fail, the MMT response is based on the idea that an entire country cannot be left to fail. The question is: what happens if MMT doesn’t work to save a country in a crisis?’
‘Overall, a combination of : the pandemic lockdown; the existing post financial crisis slowdown, in both absolute and relative (to the UK) terms; and another looming North Sea slowdown, means that Scotland’s economic prospects are far from bright.’
‘Once the public health crisis of COVID-19 is over, it might yet expose the flaws in this capital-led economy just as it has exposed the inadequacies of our public health systems that has suffered from under-investment over a decade of austerity.’