- By Douglas Fraser
- Business and economics editor, Scotland
Image source, Getty Images
- Apart from his party’s financial crisis, the new first minister wants to reset relations with groups that are increasingly disconnected from St Andrew’s House.
- His first major policy and program speech for the government contained some significant changes in his approach to business and economics.
- He wants to use the tax system to redistribute not only income but wealth, but recognizes that he also needs a larger tax base to meet his “welfare” ambitions.
Humza Yousaf wants to get on the front foot. His party’s dire straits, as the focus of a police investigation, didn’t help. Nor is there much negativity that he needs to address.
But by passionately talking about a new relationship with councils, and measures to ease housing difficulties in rural and island communities, he must hope to get at least a hearing from the chambers. which is more critical.
His big statement of intent to Holyrood is the most important for its attempt to reset the Scottish government’s relationship with business.
That will not go well under Nicola Sturgeon. It was under his leadership that the party initiated the law for a method of returning the deposit of bottles, and followed a hard line of public health procedure to close the advertising of alcohol.
The problems go beyond that. Business lobbies feel they are at the end of the queue outside the First Minister’s door, as his attention is focused on public services and inequality. He will be closely involved in the portfolio of his health secretary, but will leave the economy to others.
Reverse vending machines for the deposit return scheme have been trialled across Scotland.
Humza Yousaf and his leadership rivals heard about that during their campaign. This week is his chance to shut down the clamor for a reset, by offering just that.
On certain policies that caused the most difficulty, he offered many concessions.
The bottle deposit scheme has been postponed for eight months, with a chance to address business concerns about its practical implications and costs (although the costs have already fallen on companies that won’t see a stream of income until next March).
The proposed ban on alcohol advertising, which grew out of public health concerns about Scotland’s relationship with booze, looks set to be fully booted.
‘With a purpose’
There are many more. The cry for a review of business rates has been answered, at least to open discussions on how to change them.
And there is a pledge not to do to workers in the oil and gas sector what Margaret Thatcher’s policies did to heavy industry in the 1980s. That recognizes a view that the transition from oil and gas to renewable energy – which puts a high barrier in the way of new hydrocarbon development – has taken a careless approach to the effects to many who work in it, especially in the North East economy.
The Scottish government does not control licenses for such development. But watch to see if the rhetoric around the oil and gas sector is changing, and how Scottish Green MSPs square that.
Former finance secretary Kate Forbes is Mr Yousaf’s leadership rival in the SNP
Humza Yousaf recognizes the need for economic development if she wants a tax base from which she can get the funds to deliver on her ambitions for public service and tackling inequalities.
That goes to the economic position taken by his leadership rival, Kate Forbes. The new First Minister spoke of the need for balance there, to grow ‘with a purpose’.
That balance has a determination to make the tax system more progressive than the rest of the UK – a target which, according to the rhetoric of the Scottish government, has already been achieved.
Spread the wealth
The new prime minister clearly sees more room for the use of the distribution tax from the high and from the rich. He told the Scottish Trades Union Congress on Monday that he was “interested” in the report published last year, and wanted to act on the issues it raised.
The STUC report proposed lowering the threshold for higher rate tax from £43,663 to £40,000, and putting the higher rate introduced this month, which is 42 pence in the pound, down to 43 pence.
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The Scottish government has promised a fairer transition for workers in the oil and gas sector
The STUC report continued, with reference to a wealth tax, which requires those above a given threshold to earn money for a 1% levy every year. Under the devolved powers, that cannot be done. So the proxy for wealth, at the moment, has to be property, using council tax and business rates.
The start of that is being done with consultations that could lead to a doubling of council tax on second homes, more tax on empty homes and at least one question mark on the exemption from business rates for most holidays. let’s
‘New Deal’
Reading more into the published program for the government, a ‘rural delivery plan’ is one of the priorities for Deputy First Minister Shona Robison.
He is also in charge of a ten-year program for all public bodies to change to “achieve effective and human-centered, financially sustainable public services”.
It is not new, but the emphasis is interesting – to make the finances increase in the longer run, and to use tight resources in a more targeted way.
Could that be a change in the way the SNP in government seeks to provide services for free to all, including those who can afford to pay for them?
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The community of Tiree is one that opposes Highly Protected Marine Areas in its waters
The policy change set by Neil Gray, cabinet secretary for ‘welfare economy, fair work and energy’, starts from the continuation of the National Strategy for Economic Change, published by Kate Forbes when he was in the cabinet.
That comes with “a sharp focus on the policies and actions that have the greatest potential to grow and transform Scotland’s economy, broadening the tax base to fund excellent public services and improve lives of the people”.
Neil Gray continued: “We will transform the delivery of business support, business, and innovation”. Nicola Sturgeon’s team said something similar when she became First Minister and it didn’t go down well.
And the new cabinet secretary said: “This requires a new approach to the Government’s relationship with business. At the request of the First Minister, I will engage with business leaders to develop and agree on a ‘Bag -ong Deal’ with the private sector, for how we can work with business to provide a growing economy that increases well-being”.
So if this administration can get out from under the rubble of the current crisis, let’s see how the ‘new deal’ develops.