Equality put at the heart of Scotland's new economic strategy

Launching Scotland’s new economic strategy, the First Minister said reducing inequality will help build a more prosperous nation and close the gap with “the best in Europe”.

The blueprint also showed that Sturgeon has stamped her authority on the party, setting out plans to change corporation tax so the focus is on “targeted changes in tax allowance” rather than a “blanket approach”.

The strategy is a striking change in policy from her predecessor Alex Salmond, who had controversially planned to reduce corporation tax by three points if Scotland became independent.

Sturgeon said the new approach of promoting equality and competiveness as “two sides of the same coin” is in tune with international consensus, adding productivity was key to any real improvement in living standards.

Speaking at the Calnex Solutions headquarters in Linlithgow, the First Minister said: “Scotland’s economic recovery is now well established: our economy has grown continuously for two years, GDP is above pre-recession levels and the economic outlook is the strongest it has been for many years.

“The Scottish Government wants to create a stable and balanced economy that is outward-looking, confident, innovative, based on the core strengths of our people and supported by investment.”

The document, titled Scotland’s Economic Strategy, outlines the Government’s plans to increase productivity to allow Scotland to compete with leading European nations.

“When we published the first Scottish Government economic strategy back in 2007, Scotland’s productivity then was six per cent below that of the rest of the UK,” Sturgeon said.

“The gap with the rest of the UK has reduced significantly since then, but we are still some 13 per cent below Sweden and 20 per cent below Germany. So we need to do much more.

“That is why we want to focus on closing the gap with the very best in Europe and that really matters,” she added.

The document emphasises commitment to developing a new economic framework which builds upon a rise in living standards and an increase in competitiveness, saying the two elements are “mutually supportive”. The blueprint also sets out the Government’s four priorities for sustainable growth: investment, inclusive growth, innovation; and internationalisation.

Deputy First Minister John Swinney, who also spoke at the launch, said: “In each of the key areas of innovation, investment, inclusive growth and internationalisation there are powers and responsibilities that remain at Westminster which could help us to achieve more and better jobs.”

“Our ambition is for the Scottish Parliament to have the full powers of any normal nation. However, our particular focus in the coming years will be on achieving those powers that help us to deliver on our economic ambitions – to boost competitiveness and to tackle inequality,” he added.

The report also set out plans for the development of a Scottish Business Development Bank to support small and medium-sized businesses with a “strong growth potential”.

Scottish Trade Union Congress general secretary Graeme Smith said he “enthusiastically welcomes the strong commitment to tackling inequality” evident in the new strategy and praised the plans to reform the approach to Corporation Tax.

“The GES (Government Economic Strategy) is improved and strengthened by the introduction of fair work as a key priority,” Smith said. “It is also heartening to observe the Scottish Government quietly dropping its longstanding commitment to deep, blanket corporation tax cuts in favour of a much more nuanced approach.

“Other positive aspects include the new approach to measuring outcomes and the desperately needed Business Development Bank,” he said.

Andy Willox, Scotland policy convener for the Federation of Small Businesses, praised aspects of the Government’s plans but said a lot of “detailed, practical work” would need to take place.

“Despite a string of economic regeneration strategies over recent decades, too many of our communities have been left behind,” Willox said. “The Scottish Government’s publication sets out bold aspirations to address this, but it will require a lot of detailed, practical work to turn these admirable intentions into real improvements on the ground.”

Willox also said he supported the focus on digital infrastructure but “cautioned against” the plans for more foreign investment and criticised the idea of the Business Development Bank, which he described as “extra state support for a small selection of hand-picked firms”.

Dan Macdonald, founder of independent business organisation N-56, said the plans were “morally sensible”, quoting IMF findings that correlate lower inequality with faster, more durable growth.

He said: “We are delighted to see this new economic strategy not only serve to boost economic growth but also serve to tackle inequality. Inequality has a negative impact on long-term economic growth and prosperity.

“It is useful to do more than look just to the UK but to look to others who are doing better economically and socially, such as Singapore, Switzerland and the Nordic countries.”

Scottish Green Party MSP Alison Johnstone supported the position Nicola Sturgeon has taken on corporation tax but said the Government must clamp down on tax-dodging corporations and focus more on local economies.

She said: “A resilient Scottish economy should be based on Scottish businesses and small enterprises, not multi-national companies which jump ship for a new tax break. Companies such as Amazon have benefited from millions of pounds in grants from the taxpayer. This sort of corporate welfare must stop.”