Chamber
Plenary, 11 Jun 2008
11 Jun 2008 · S3 · Plenary
Item of business
Small Business Bonus Scheme
That is why we want to give those businesses more investment and ensure that the public infrastructure is there to support their businesses, rather than just give tax cuts to businesses that do not need them. There are businesses that need tax cuts, but equally there are businesses that do not. That is why a universal cut will not work.
I would like a serious year-on-year analysis of how the savings are invested back into businesses—Liam McArthur spoke eloquently about that. We must have evidence to ensure that the policy brings the most effective use of our resources. That is why I was pleased to see that the amendment in Liam McArthur's name calls on the Scottish Government to commission an independent assessment of the impact and effectiveness of the scheme and previous business rate reduction measures
We face a challenging global situation, but that means that there is even more reason to target Government investment rather than provide strings-free universal tax cuts. Despite not knowing the impact that the cuts will have, the Scottish National Party has told us how well it is administering the scheme. We must target support where it is needed most.
Would it not make more sense to provide greater proactive support to start-ups or companies investing in areas in which there are major economic challenges in energy efficiency and skills, for example? In terms of taxation, the UK ranks sixth out of 178 countries on the World Bank's ease of doing business index—we need to spike the myth that high taxation is rendering Scottish businesses uncompetitive. I am sure that no one in the chamber, no matter their political objectives, would want to see Scotland or any other part of the UK slip into recession to make a political point.
The scheme is not about economic growth; it is a question of ideology and wider support for supply side economics in the Government's leadership. Frankly, that is a more worrying trait. The First Minister asserted in the Wall Street Journal last year that he has been a long-term advocate of supply side economics. In simple terms, supply side economics involves believing that tax cuts pay for themselves and more. The First Minister is proud of his American-modelled council of economic advisers, but even the chair of George W Bush's similar advisory group, Edward Lazear, states:
"I certainly would not claim that tax cuts pay for themselves."
I hope that some of the SNP back benchers will stand up to the right-wing economic proposals that are being peddled within their party. I assure SNP members that no social democratic Government in the world right now believes that cutting tax is the key to economic performance.
Labour members know that taxation has little to do with the economic and social success of the so-called arc of prosperity countries. The availability of skills, the quality of the workplace environment, public services, infrastructure, security and stability are the key factors. Just this morning, I met people from a small business—Gibson Training and Care in Leven, Fife. Although it will save about £2,000 in rates, it is faced with a £100,000 cut in funding for the provision of adult apprenticeships. There is not much relief for that company or for the three staff that it has had to lay off because of the SNP Government's spending priorities. That has happened because the SNP has prioritised tax cutting ahead of workforce development. We need honesty in the debate. If the Government is cutting business taxes, it must be clear that, invariably, that means less money for public projects and that the private and other sectors that gain from such projects will have a smaller pool from which to pull money.
I will quote Stephen Boyd of the Scottish Trades Union Congress, who is a former colleague of mine. He will probably hate me for this, but he is far more qualified than I am to talk about such matters. In a recent STUC report called "Supply-Side Scotland?—Taxation, Fairness and the Scottish Economy", he said:
"Tax cuts, business or personal, will eventually have to be paid for by spending cuts. Politicians owe it to the Scottish people to be clear on this point."
That is where the SNP Government falls down, because spending cuts are the consequence of tax cuts. That flip-side of the equation appears, conveniently, to have slipped the SNP's mind.
I would like a serious year-on-year analysis of how the savings are invested back into businesses—Liam McArthur spoke eloquently about that. We must have evidence to ensure that the policy brings the most effective use of our resources. That is why I was pleased to see that the amendment in Liam McArthur's name calls on the Scottish Government to commission an independent assessment of the impact and effectiveness of the scheme and previous business rate reduction measures
We face a challenging global situation, but that means that there is even more reason to target Government investment rather than provide strings-free universal tax cuts. Despite not knowing the impact that the cuts will have, the Scottish National Party has told us how well it is administering the scheme. We must target support where it is needed most.
Would it not make more sense to provide greater proactive support to start-ups or companies investing in areas in which there are major economic challenges in energy efficiency and skills, for example? In terms of taxation, the UK ranks sixth out of 178 countries on the World Bank's ease of doing business index—we need to spike the myth that high taxation is rendering Scottish businesses uncompetitive. I am sure that no one in the chamber, no matter their political objectives, would want to see Scotland or any other part of the UK slip into recession to make a political point.
The scheme is not about economic growth; it is a question of ideology and wider support for supply side economics in the Government's leadership. Frankly, that is a more worrying trait. The First Minister asserted in the Wall Street Journal last year that he has been a long-term advocate of supply side economics. In simple terms, supply side economics involves believing that tax cuts pay for themselves and more. The First Minister is proud of his American-modelled council of economic advisers, but even the chair of George W Bush's similar advisory group, Edward Lazear, states:
"I certainly would not claim that tax cuts pay for themselves."
I hope that some of the SNP back benchers will stand up to the right-wing economic proposals that are being peddled within their party. I assure SNP members that no social democratic Government in the world right now believes that cutting tax is the key to economic performance.
Labour members know that taxation has little to do with the economic and social success of the so-called arc of prosperity countries. The availability of skills, the quality of the workplace environment, public services, infrastructure, security and stability are the key factors. Just this morning, I met people from a small business—Gibson Training and Care in Leven, Fife. Although it will save about £2,000 in rates, it is faced with a £100,000 cut in funding for the provision of adult apprenticeships. There is not much relief for that company or for the three staff that it has had to lay off because of the SNP Government's spending priorities. That has happened because the SNP has prioritised tax cutting ahead of workforce development. We need honesty in the debate. If the Government is cutting business taxes, it must be clear that, invariably, that means less money for public projects and that the private and other sectors that gain from such projects will have a smaller pool from which to pull money.
I will quote Stephen Boyd of the Scottish Trades Union Congress, who is a former colleague of mine. He will probably hate me for this, but he is far more qualified than I am to talk about such matters. In a recent STUC report called "Supply-Side Scotland?—Taxation, Fairness and the Scottish Economy", he said:
"Tax cuts, business or personal, will eventually have to be paid for by spending cuts. Politicians owe it to the Scottish people to be clear on this point."
That is where the SNP Government falls down, because spending cuts are the consequence of tax cuts. That flip-side of the equation appears, conveniently, to have slipped the SNP's mind.
In the same item of business
The Presiding Officer (Alex Fergusson):
NPA
The next item of business is a debate on motion S3M-2102, in the name of Jim Mather, on the small business bonus scheme.
The Minister for Enterprise, Energy and Tourism (Jim Mather):
SNP
I am delighted to open this debate on the impact of the small business bonus scheme. The introduction of the new scheme on 1 April marked an important stage ...
Johann Lamont (Glasgow Pollok) (Lab):
Lab
The minister said that, as a listening Government, it received the message from the business community that what was happening was a disincentive. Is he awar...
Jim Mather:
SNP
I have not heard that message directly from the housing associations. We deal with them in my constituency as a key sector in the economy. I look forward to ...
John Park (Mid Scotland and Fife) (Lab):
Lab
Will the minister explain how he can guarantee that there will be increased investment from smaller companies that will lead to more jobs and greater economi...
Jim Mather:
SNP
I regret that John Park has a zero-sum game mentality. The Government is putting business in the driving seat, and business has a sense of obligation. Let us...
Tavish Scott (Shetland) (LD):
LD
On the minister's point about his discussions with business, is his position on regulation still that it should be one in and one out?
Jim Mather:
SNP
We have a mature approach with the regulatory reform group. Better regulation is the objective and the process, and it has to be the focus. I can assure Tavi...
John Park:
Lab
Would it be appropriate for you to make available the names of the companies that you are talking about today? It would be useful for us in the wider debate.
Jim Mather:
SNP
There are plenty examples from around the country. I advise John Park to do what I did the other day, which was to walk around Oban and Rothesay and talk to ...
The Presiding Officer:
NPA
Before I call Elaine Murray, I remind all members that contributions should always be made through the chair, which means referring to members by their chose...
Elaine Murray (Dumfries) (Lab):
Lab
I ought to start by declaring an interest as one of the people who has received a small business bonus. That is probably true of many members who run offices...
Gavin Brown (Lothians) (Con):
Con
In 2000, Jack McConnell ended the uniform business rate that applied to both Scotland and England. Was that a good result for businesses in Scotland?
Elaine Murray:
Lab
As I was just about to explain–and as has been long rehearsed over the years—business rates comprise two factors: poundage, which at that point increased in ...
Derek Brownlee (South of Scotland) (Con):
Con
The minister is often attacked—not without cause—for bewildering people with management gobbledegook, but today I will forgive him his mention of Deming beca...
Elaine Murray:
Lab
I offer a brief correction. I said:"Tax cuts are always popular with the beneficiaries."
Derek Brownlee:
Con
I stand corrected. On the subject of correction, the establishment of a town centre regeneration fund was a policy in the Conservative manifesto, as Elaine M...
Liam McArthur (Orkney) (LD):
LD
Small businesses are the lifeblood of our economy. The contribution that they make to the diversity, competitiveness and resilience of our economy is immense...
Derek Brownlee:
Con
I accept the logic behind Mr McArthur's argument. Do the Liberal Democrats think that that logic should also apply to other Government interventions to assis...
Liam McArthur:
LD
I would not disagree with that point, but it does not seem to reinforce the point that Derek Brownlee has just made in his speech. Good governance and sound ...
Gavin Brown:
Con
Will the member give way?
Liam McArthur:
LD
I am sorry, but I must make progress.I am astonished that, amid their self-congratulation, Mr Brownlee and his colleagues cannot bring themselves to support ...
Gavin Brown:
Con
Will the member give way?
Liam McArthur:
LD
No.Our amendment also provides the basis on which to address the concerns that underlie the Labour amendment. Skills, energy efficiency and, of course, physi...
Roseanna Cunningham (Perth) (SNP):
SNP
I have looked forward to the debate for some time, and not just because I, too, can declare as an interest the fact that my constituency office is saving mon...
John Park (Mid Scotland and Fife) (Lab):
Lab
I have been consistent on this issue since entering Parliament last year and I made my views known in one of my first speeches. Reductions in business rates ...
Roseanna Cunningham:
SNP
Just exactly what size of business does the member think that he is talking about when he talks about fleets of cars? Most of the businesses benefiting from ...
John Park:
Lab
That is why we want to give those businesses more investment and ensure that the public infrastructure is there to support their businesses, rather than just...
Alasdair Allan (Western Isles) (SNP):
SNP
As other members have done, I declare an interest in as much as my office pays rates.Whatever our arguments today, there can, I hope, be no disagreement abou...
David Whitton (Strathkelvin and Bearsden) (Lab):
Lab
Just as the sun shines, I stand up. Does Mr Allan think that it is an economic benefit to the Western Isles that the minister turned down the Lewis wind farm...