Engagements

– in the Scottish Parliament on 30th May 2013.

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Photo of Johann Lamont Johann Lamont Labour

1. To ask the First Minister what engagements he has planned for the rest of the day. (S4F-01418)

Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

Engagements to take forward the Government’s programme for Scotland.

Photo of Johann Lamont Johann Lamont Labour

Does the First Minister think that George Osborne has cut corporation tax enough or is he urging the Chancellor of the Exchequer to go further?

Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

George Osborne is, of course, following the footsteps of Gordon Brown, who as chancellor cut corporation tax.

The Scottish Government has modelled the results of a corporation tax rate in Scotland 3 percentage points below that prevailing in the United Kingdom. The results of that show an additional 27,000 jobs over the medium term and an increase in Scottish gross domestic product of more than 1 per cent.

When it controls corporation tax, this Government’s policy should be to set a competitive rate and then collect the corporation tax. The policy of successive UK Governments is to set the corporation tax rate and then not collect it, which seems a strange thing to do.

Photo of Johann Lamont Johann Lamont Labour

That answer sounded like one of Mike Russell’s bus trips from Campbeltown.

Gordon Brown indeed said that he would cut corporation tax when it could be shown that we could afford it. The difference is that Alex Salmond says that, if we were independent now, he would cut corporation tax 3 percentage points more than George Osborne whether it makes sense or not.

However much George Osborne cuts taxes for his mates in banking, Alex Salmond would cut them further. However deep Osborne could be seen to be in the pockets of corporate greed, Alex Salmond would be that bit deeper. He says to Google, Amazon, Starbucks and anyone who wants to evade tax that they should come to Scotland because there will be less tax to evade.

If Alex Salmond would set corporation tax 3 percentage points lower than whatever rate George Osborne set, does it not follow that he would have to cut schools and hospitals deeper than George Osborne, too?

Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

I will introduce a number of corrections for Johann Lamont.

Gordon Brown did not say that he would cut corporation tax; he cut it and then boasted about doing it, saying that it was one of the great achievements of his term as Chancellor of the Exchequer. I mention that merely because it does not put Johann Lamont in a strong position to complain about the policy of cutting corporation tax when Gordon Brown did that in office as Chancellor of the Exchequer.

Johann Lamont should have referred to my first answer. I thought that an argument whereby we would have a 3 percentage point differential in the rate of corporation tax between Scotland and the rest of the UK would be a good one for Scotland because we have analysed it and the analysis said that it would create 27,000 jobs and an increase in GDP of more than 1 per cent over the medium term.

I also said that it seemed to me that the task is to set a competitive rate of corporation tax and then collect it. I know that this will come as a surprise to Johann Lamont, but the non-collection of corporation tax across a range of companies did not start under George Osborne as chancellor; it started when the Labour Party was in government. Our policy of setting a competitive rate of corporation tax and then collecting it is substantially superior to the Labour-Tory policy of setting a rate of corporation tax and then forgetting to collect it from key companies.

Photo of Johann Lamont Johann Lamont Labour

I think that we have come to a pretty pass when the First Minister imagines that he is in a strong position on the issue, given that response to the question that I asked him.

If the First Minister is in a strong position, perhaps we should ask who agrees with his corporation tax policy. We know that he agrees with it and we assume, by their silence, that his back benchers also agree with it. [Interruption.] Yes—the only place where there never appears to be any debate is on the Scottish National Party back benches.

However, we know that neither Scottish business nor the unions support the First Minister’s position. The Confederation of British Industry Scotland, the Scottish Trades Union Congress and the nation’s accountants—the Institute of Chartered Accountants of Scotland—do not support it. This week, we found out that the Scottish Council for Development and Industry does not support it. Not even the chair of the yes campaign supports it.

Members will be glad to know that the First Minister does have one supporter—his tax exile Jim McColl. Does the First Minister agree with his one supporter, Jim McColl, that in an independent Scotland capital gains tax should be abolished?

Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

I correct Johann Lamont on the SCDI report. I refer her to page 22, which points out that a low rate of corporation tax could have

“a positive effect in attracting further investment to Scotland.”

If it had a positive effect in attracting investment to Scotland and if, as the Scottish Government’s analysis suggests, it would create 27,000 jobs in Scotland and would over the medium term increase Scotland’s GDP, I presume that the Labour Party would not oppose it. The Labour Party would not seriously oppose creating 27,000 extra jobs in Scotland or increasing Scotland’s GDP. [Interruption.]

Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

If, as the modelling shows, it is correct that those things will happen, that is a substantially good policy, especially since the Labour Chancellor of the Exchequer implemented a cut in corporation tax when he was in office.

As for the attack on Scotland’s leading job creator—Jim McColl—if the Labour Party and the no campaign are reduced to attacking serious figures in Scottish job creation and entrepreneurship, that shows exactly why 500 businesses have signed up to the yes business campaign over the past two weeks.

Photo of Johann Lamont Johann Lamont Labour

The most important word there was probably “if”.

The First Minister calls to his defence his own figures, which some of us might think do not really stand up to scrutiny. The fact of the matter is that the SCDI said:

“There is no great desire to participate in a race to the lowest tax environment”.

We know that the First Minister thinks of himself as a talented economist; not only that, he likes quoting real economists, too. How many times has he told the chamber about his adviser, Joseph Stiglitz, and all the Nobel prizes that he has won? What does Joseph Stiglitz say about the policy? Just a month ago, he said:

“Some of you have been told that lowering tax rates on corporations will lead to more investment. The fact is that’s not true. It is just a gift to the corporations increasing inequality in our society.”

I agree with the Nobel prize-winning Joseph Stiglitz and the businesses, the unions and the professionals, who all say that the First Minister is wrong. Will the First Minister tell us who is right?

Members: Gordon Brown!

I cannot believe that SNP back benchers are calling in aid Gordon Brown, when I am telling the First Minister that his own economic adviser said that the policy was wrong. [Interruption.]

The Deputy Presiding Officer:

Order. Can we have a bit of calm, please?

Photo of Johann Lamont Johann Lamont Labour

Will the First Minister tell us who is right? Is it the First Minister, the ex-Royal Bank of Scotland economist and renowned adviser—nay, pen friend—to Fred Goodwin, or is it his Nobel laureate economic adviser, Professor Joseph Stiglitz, who says that he is wrong?

Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

Johann Lamont cannot really divorce herself from Gordon Brown, because he is now the leader of the Labour no campaign, which is of course separate from the Tory-Labour no campaign led by Alistair Darling.

Joseph Stiglitz is indeed his name. He is a Nobel laureate. He is on the Council of Economic Advisers. He has pointed out that the vast disparity in income levels in the United Kingdom under the Labour Party is not an efficient way to run an economy. He is part of the fiscal commission, which recommended the post-independence sterling area. I am delighted that Johann Lamont is now going to accept the wisdom of Joseph Stiglitz and the other Nobel laureates on the commission.

The important thing about the policy is to set a competitive rate of corporation tax to benefit the Scottish economy, and then to collect it. That is a substantially better position than the position under the Labour Party—and now under George Osborne—where corporation tax is not collected. Having a competitive rate for a tax that is collected is somewhat better than having a rate of tax that is not collected.

If Gordon Brown implemented that policy, I do not think that Johann Lamont can divorce herself from it. It is good for the Scottish economy, and it is going to generate jobs and investment in Scotland, as is contained in the SCDI report. If we have based our policies on what is best for jobs, investment, growth and the Scottish people, that is why this Government is in office and why Johann Lamont’s party is over on the Opposition benches.