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Sunday, November 21, 2004

ENTERPRISE MOTION

Creating a favourable environment for business & recapturing Scotland's spirit of enterprise & innovation were central aims in the Party's 2003 Election Manifesto.

Conference notes:

1 the importance of creating an environment favourable to business in Scotland.

2 the key long term role that sustainable economic growth must play in ending poverty.

Conference therefore calls on the Scottish Executive to

(i) set up a Parliamentary Committee charged with actively reducing the burden of legislation on business, particularly small businesses

(ii) provide special assistance to individuals & small businesses seeking to register international patents & copyright

(iii) ease building & zoning regulations outside conservation areas

(iv) make a substantial reduction to corporation tax in Scotland

(v) target skills training on areas of high unemployment

(vi) benchmarking growth in Scotland against growth in the UK as a whole & in other OECD countries

(vii) undertaking not to increase the real tax take on business by more than 1% per annum until growth has exceeded the average of the UK & OECD


Scotland's economy is in serious trouble. We are consistently growing at at least 1% less than the UK as a whole. Currently we are marginally poorer than Spain which makes us the 2nd poorest western European country after Portugal & if either we discount the receipts & multiplier effect from the Barnet formula or wait a few years we will be the poorest. On the other hand Ireland which was in a not much better position in 1989 is now per capita the world's 4th wealthiest sizeable country.

What happened is that in 1989 they started liberalizing the economy - reducing business tax substantially & cutting regulation. This has received an undeservedly slight amount of coverage in our media & is often claimed to be put down to Ireland's independence (1921) or joining the EEC (1974) or having citizens abroad sending back money (19th Century). Since their spectacular growth of up to 9% per annum was first measured in 1991 I think the cause is fairly obvious. Note that this achievement has not been made by 5 year plans or starving the peasantry to buy machine tools or building nuclear power stations or any major sacrifice (although the politically correct brigade are now sacrificing their pubs).

This motion was designed to gently start things here going in the same direction.

(i) is designed to put cutting red tape on every MSP's agenda. I am not one of those who believe MSPs are lazy or in it for themselves - it might be better if they were not so hard working. Those who enter Holyrood want to achieve things & the traditional way of doing so is to pass a law or regulation. Unfortunately all such have side effects & when taken together can produce an impenetrable hedge of regulation. Setting up a commission to cut regulation is handing the MSPs pruning shears & giving them a job to do.

(ii) Small companies are far more innovative than large ones - this has been proven time & again. On the other hand they don't have as large legal depts. By taking on the legal burden of securing patents worldwide we could encourage innovative small businesses here & in the long term it would be repaid manyfold.

(iii) See the building motion for arguments.

(iv) Corporation tax is actually a reserved matter but I have no doubt that if we went to Westminster & offered to pay Scotland's share of this out of our current grant (& the Treasury experts were to assure Gordon Brown that this would have a net positive effect on our & therefore 8% of the UK economy) he would accept. Assuming that our corporation tax is, like our income tax, 7% of the UK's a 50% cut would cost a bit over 1 billion. This would cause some pain but without it the programme is just waffle. This is the only part that costs serious money, cutting regulations actually saves it.

(v) Obvious

(vi) Basically Jim would have to stand up in Parliament & accept plaudits or brickbats on how we are matching our targets. Concentrates the mind wonderfully.

(vii) This is a self denying ordinance not to kill the goose after it starts laying. Currently an undertaking not to increase industry taxes by more than 1% costs us nothing. With the economy growing at roughly that rate, we can't anyway. While such a party promise cannot be legally enforced parties do not like to be seen to openly lying. This would help to create an air of business confidence in our long term future & a justified confidence if it was kept.






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