At-a-glance: Scottish government's post independence economy paper
The Scottish government's paper on how the economy could work in an independent Scotland has been published.
Titled Building Security and Creating Opportunity: Economic Policy Choices in an Independent Scotland, it contains an introduction by Finance Secretary John Swinney and is broken up into 10 chapters.
The first chapters deal with Scotland's current economic position within the UK, while the latter lay out the SNP's vision of how this could change if the Scotland's voters say "Yes" in next September's independence referendum.
The document does not say exactly what economic policies a future SNP government of an independent Scotland would adopt, but instead gives examples of the type of policies and economic levers that would be available, and why they would benefit Scotland.
Here is an at-a-glance guide to the document.
The Scottish economy's strengths, challenges and opportunities
This section provides a general overview of Scotland's economy, highlighting its strong performance in sectors such as food and drink, energy, the creative industries, financial services and tourism, and the international investment it has attracted.
But it also lays out some of the challenges facing the Scottish economy in the years to come - regardless of constitutional change - such as changes in population, the balancing of public finances, tackling inequalities and creating greater economic resilience.
It then argues that only independence will give Scotland's economy the opportunity to reach its full potential.
The current framework and independence
This chapter summarises Scotland's current economic position under devolution, and contrasts it with how things could change with independence.
It lays out the policy areas and economic levers that would come under Scotland's control, such as monetary policy (including currency arrangements), fiscal policy and financial regulation, the financial institutions that would exist and other "macroeconomic" arrangements such as taxation and public spending.
It then argues that these policy areas and levers would give Scotland greater control over its economy, and a competitive advantage over others.
Assessing the options
In this section, the paper looks at the two options available to voters in Scotland - staying within the UK or becoming an independent country - and lays out the SNP's case for why it believes the latter is better in terms of the economy.
This part of the paper concentrates on "why Scotland would be better off outside the UK" and argues that both long-term competitiveness and short-term responsiveness could be improved under independence.
It makes the point that Scotland has improved its economic performance under devolution, but argues that the country has been put at a significant disadvantage due to UK fiscal policies, and uses the experiences of other parts of the UK and other countries to compare and contrast Scotland's position.
Boosting competitiveness and reindustrialising Scotland
This part of the paper sets out in detail four priorities for an independent Scotland's economy: diversifying the business base, rebalancing the economy, boosting entrepreneurship and using Scotland's economic strengths to their full potential.
It then highlights a number of strategies and policies that could be employed to support them, including:
- Establishing a new tax regime
- Bringing in new tax measures such as a reduction in corporation tax, "to counterbalance the pull of London and the South East"
- Using employer taxes such as National Insurance to encourage companies to employ more staff
- Establishing a new industrial strategy which promotes manufacturing
- Improving infrastructure such as postal services, transport, digital technology and energy
- And integrating business strategy with foreign policy and international engagement to promote trade and investment
The SNP believes that increasing Scotland's productivity performance by 1% has the potential to boost employment by about 21,000 over the long-term, and argues the initiative to cut corporation tax could create approximately 27,000 jobs.
This section focuses on improving productivity in the economy and using innovation to secure sustainable growth, with innovation in research and development and business investment being "central to this", according to the paper.
Under independence, argues the Scottish government, Scotland would have more opportunity to focus on innovation within the economy, and could introduce the following measures to encourage it:
- More support for university research
- Tax credits, tax allowances or payroll tax incentives to attract more skilled workers in research roles, specifically targeted at small and medium-sized enterprises (SMEs)
- Improving intellectual property arrangements
- Encouraging innovation partnerships with public sector organisations such as the NHS
- Attracting more skilled workers from outside the UK
- And establishing an new national innovation agency
The Scottish government says this would build on the current projections of 9% growth over the 25 year period of 2012 to 2037
Making the labour market more resilient, adaptable and inclusive
This part of the paper looks at the Scottish labour market and the challenges it faces. The Scottish government argues that an independent Scotland could choose to support the labour market by using policies and economic levers that are not available under devolution.
Suggestions made in the report include:
- Using the tax and National Insurance system to encourage firms to invest in training and take on certain types of workers, such as the disabled
- A single, streamlined agency to look after skills, training and employability
- A more integrated approach to welfare, health, housing and social care
- A new Employment Rights Authority bringing employment-related matters under one body
- And tying the minimum wage more closely to the circumstances of the economy and business success
The SNP says an increase in Scotland's economic activity rate of one percentage point would be equivalent to an extra 30,000 plus people in the labour market.
Ensuring growth is shared and sustainable
In this part of the report, the Scottish government sets out how it would seek to make Scotland a "fairer" country that shares its wealth more equally.
Priorities for achieving this could include:
- Funding to knock-down barriers to employment, such as childcare
- A new tax and welfare system
- An integrated transport system and better digital connection across the whole country
- And getting a better picture of remaining oil reserves and exploiting the low-carbon sector
Scotland's position in the global economy
Scotland has the potential to significantly boost international exports and strengthen trade relationships with other countries around the world, according to the report.
This part of the paper makes clear that the Scottish government believes Scotland should and could become an independent member of the European Union.
In the long-term, it says, an independent Scotland would increase its output and tax receipts, and create new jobs, through attracting more international trade and investment and better "brand recognition" on the world stage.
Measures such as changing air passenger duty, developing more overseas trade markets and taking a more integrated approach to attracting trade and investment and getting a better deal for Scottish interests in the EU would all benefit Scotland, according to the paper.
The Scottish government says a 50% increase in the value of Scottish exports - which it hopes to achieve by 2017 - could boost output by about £5bn and create more than 100,000 jobs in the long-term.