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A MESSAGE FROM THE FIRST MINISTER
Welcome to the National Conversation - a unique opportunity for you to consider and debate the most important issues affecting the future of Scotland
Gaelic language version
Over the last ten years the Scottish Parliament has shown how Scotland can successfully govern itself by providing distinctive, innovative solutions to issues that matter to Scotland.
I am proud to serve as Scotland's First Minister, and proud of what we have achieved in that time. I believe that by abolishing tuition fees, providing care for older people, freezing the Council Tax, cutting business rates, delivering record numbers of police officers and addressing health and education, the Scottish Parliament and Government have made a real difference to the lives of the people of Scotland.
But devolution is a process not an event and the time is now right to review and further strengthen the responsibilities of the Scottish Parliament.
The current economic crisis has clearly demonstrated manyweaknesses in the existing constitutional settlement. Scotland has very limited scope to lower tax rates to provide a fiscal stimulus. We cannot borrow money to fund public works, or make changes to benefits, pensions or tax credits to meet Scottish needs. Instead, Scotland is dependent on decisions made by the UK Government at Westminster.
Our choices are also limited on issues such as climate change, alcohol misuse and investment in renewable energy.
We believe that Scotland should be like any other independent European country, working in partnership with our neighbours and with our own voice and the full ability to meet the needs of the people of our nation. This is why we plan to hold a referendum at the end of 2010, so you can decide.
But what does an independent Scotland mean to you?
The National Conversation is about giving you the facts, hearing your views and providing opportunities to debate some very serious issues about the future of Scotland. We believe that, only then, can you make informed choices when the referendum comes.
This leaflet is part of that ongoing process of keeping you informed about the opportunities and impact of an independent Scotland.
I look forward to debating these issues with you.
Rt Hon Alex Salmond MSP
Sustainable Economic Growth
The overriding purpose of this Government is to increase sustainable economic growth. Our policies and spending plans are all aligned to this purpose.
The current financial framework for the Scottish Parliament is, however, largely a legacy of the constitutional settlement prior to devolution. The constraints it imposes on Scotland's ability to take measures to stabilise its economy have been brought into sharp focus by the current recession. Scotland's long-term GDP growth has underperformed relative to comparable European countries in recent decades (see Figure 1).
Figure 1 Long-term GDP Growth Performance 1977-2007
Under the current framework we are prevented from setting the vast majority of taxes, welfare benefits and other reserved expenditures to meet the preferences of the Scottish people and respond to the challenges we face.
We are unable to borrow prudently, and have therefore only limited scope to inject a significant fiscal stimulus during downturns. Devolution also limits our ability to boost Scotland's long-term competitiveness through, for example, lowering corporation tax, or establishing an Oil Fund for future generations, as in Norway (see Figure 2).
Figure 2 Value of Norwegian Oil Fund (at start of year) 2001-2015
There is growing consensus throughout Scotland on the need for reform. Five options are considered in our report Fiscal Autonomy in Scotland: The case for change and options for reform. These range from independence, to 'devolution max' of fiscal autonomy within the United Kingdom, to marginal reform of the current framework.
We believe independence is the only option which will enable Scotland to reach its full potential, giving us the same range of responsibilities as other successful countries in Europe and further afield.
Independence would allow the maximum degree of discretion and accountability over fiscal and economic policy. Incentives for efficient policy delivery would be maximised. Crucially, it would give Scotland the full range of economic levers it needs to deliver increased sustainable economic growth and the more successful country we all want to see.
Business and Enterprise
Monetary and taxation policies are important, but they are not the only way to support business.
Company formation, insolvency and regulation are currently reserved to the UK Government and affected by EU regulations.
Greater responsibility for these matters would allow Scottish priorities to be better addressed, for example, in terms of incentivising research and development, innovation and utilisation of intellectual property and international trade.
Regulation of the financial services sector is also reserved. To sustain this key sector in Scotland we require a financial services regulatory system tailored specifically to protect Scotland's interests.
Transport
"An independent Scottish Government could integrate transport policy fully into the national policy framework, which would give the potential for greater integration, efficiency and to have Scotland's voice heard abroad."The majority of transport functions are already devolved to the Scottish Parliament. The devolution of responsibility for the rail network has, for example, resulted in the ScotRail franchise improving service punctuality from 85.8% (2005) to 90.6% (2008).
Scotland has also benefited from the introduction of a fairer, restructured fares policy in contrast with the long-term plan of the Department for Transport which proposes to pass on the greater balance of costs to the fare payer.
However, many powers which would significantly improve the effectiveness of our transport system and the safety of our citizens are reserved to the UK Government. These include legislation on road traffic and vehicles, civil aviation and maritime policy, transport security and general civil emergency planning in the railway, aviation and maritime industries.
Independence would mean that Scotland had full fiscal autonomy and so taxes and duties could be tailored to meet Scottish needs. Examples of this include setting and levying fuel tax, vehicle excise duty and landing charges at Scotland's airports. An independent Scottish Government could set taxes and duties in a way which benefited the Scottish economy as a whole and could be tailored to meet specific local needs. In addition, having the full suite of borrowing powers for significant capital projects would help the provision of major transport infrastructure, which could include the replacement Forth crossing.
"In addition, having the full suite of borrowing powers for significant capital projects would help the provision of major transport infrastructure, which could include the replacement Forth crossing."Independence would provide many opportunities to deliver more effective and efficient transport services, as the Scottish Government would set aviation and maritime policies and negotiate with the EU on these. In addition, the Scottish Government could set the conditions for licensing public sector vehicles and help passengers by having a single body to deal with passenger complaints in Scotland.
On road safety, an independent Scottish Government could set drink drive limits, national speed limits and the content of driving tests in Scotland to better fit Scottish circumstances and help to reduce road accident casualties.
An independent Scottish Government could integrate transport policy fully into the national policy framework, which would give the potential for greater integration, efficiency and to have Scotland's voice heard abroad.
Post 2020 - North Sea Grid
Energy
Scotland is an energy-rich country with the resources, skills, technology and ambition to be a world leader in sustainable energy. We can also work to secure affordable energy supplies for consumers and industry.
Aspects of energy policy which are currently devolved include planning, promotion of renewable energy, energy efficiency and emergency planning. Scotland is leading the debate in Europe on the development of a North Sea Grid and is emerging as a key player in energy policy at UK and EU levels.
Most responsibility for energy policy, including energy market regulation and the exploitation of oil and gas, is formally reserved to the UK Government, leading to Scottish interests
being disadvantaged. For example, Scottish-based electricity generators pay a much higher transmission charge than those in the south of England. And the schemes run by energy suppliers to promote energy efficiency in Britain's homes are not designed for Scottish conditions, despite the fact that heating bills are much higher in Scotland. The North Sea Grid would encourage renewable generation and exports from Scotland, and also contribute to future energy security in Europe. An independent Scotland would ensure that Scottish Ministers were able to negotiate for the benefit of Scotland in the EU. Key issues for discussion include how Scottish responsibility for
energy market regulation can deliver better opportunities to Scottish business, and how reducing energy demand can deliver benefits to consumers and the Scottish economy.
Key Questions:
What additional powers would make the Scottish Government better placed to deal with the current economic crisis?
How could the tax and regulatory systems be used to increase Scotland's competitive advantage?
What is holding back Scottish business in terms of achieving GDP growth and other targets set out in the Economic Strategy?
How could we better address these constraints in an independent Scotland?
JOHN SWINNEY MSP
Cabinet Secretary for Finance and Sustainable Growth
The Scottish Government believes that the time is right to discuss options for reform and the benefits of fiscal autonomy for Scotland.
An important dimension of the National Conversation is to examine how an independent Scotland would boost the competitiveness, productivity and profitability of Scottish-based businesses. Enhancing delivery of the Scottish Government's Economic Strategy and promoting a supportive business environment are the key aims.
Regulation of the financial services sector - which remains crucial for Scotland - is also reserved. The origins of the banking crisis and global economic downturn demonstrate both the importance of strong, proportionate regulation and the shortcomings of recent years.
As we move forward, a distinctive Scottish system of financial services regulation - set in the context of EU and global regimes - would better protect Scottish interests and promote sustainable growth of this key sector.
Our recently published paper Fiscal Autonomy in Scotland considers the options for reform and reviews them against a number of key criteria and economic principles to establish how effective each option would be in enabling Scotland to realise its full potential.
Independence is the best way forward for Scotland and would provide the assured constitutional structure to deliver the Scottish Government's purpose of increasing sustainable economic growth.
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