'New Powers Needed To Halt Decline'

Scotland could find itself locked into a self-perpetuating cycle of economic decline unless it gets more powers beyond those currently on the table from Westminster, economists have warned.

The powers recommended by the Smith Commission on devolution require Scotland to live within its means without adequate power to grow the economy, independent economists Jim and Margaret Cuthbert said.

In a paper for left-wing think-tank the Jimmy Reid Foundation, the economists say Scotland should gain control over more taxes, economic levers and the ability to exploit its own natural resources within a federal UK.

Summarising the paper, the Jimmy Reid Foundation said: They conclude that the income tax base is very different between Scotland and the rest of the UK."

This means income tax is an unsuitable choice as the primary vehicle for giving the Scottish parliament greater fiscal responsibility."

There is no adequate solution to what we have called the 'gearing problem', namely, the problem that arises when changes in rUK in a tax which is devolved to Scotland are allowed to impact on reserved services like defence, which are for the UK as a whole."

The Scottish Government is being given responsibility for living within its tax resources, without being given adequate powers to grow the economy, and hence its tax base.''

It added: A Scottish government operating under the proposed reforms will find itself severely constrained in its freedom of action, with the danger of Scotland finding itself locked into a self-perpetuating cycle of economic decline."

Scotland requires much greater powers if it is to have a chance of making a success of increased fiscal responsibility."

"These powers are required in three main areas of more taxation; more economic powers; and ability to exploit and benefit from its major natural resources.

Jim and Margaret Cuthbert said: The paper is of particular importance just now, when the new Conservative government is putting forward its proposals and timetable for implementing the Smith recommendations, and when the SNP will be seeking to use its increased muscle at Westminster to modify the proposals to give Scotland greater powers."

The debates about implementation and modification have to be informed by a proper understanding of the problems inherent in Smith, some of which are highly technical, but have profound consequences."

What our paper does is to provide a thorough analysis of the problems - as well as putting forward solutions.''