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Wednesday, January 04, 2017

Taxpayer Scotland

TaxpayerScotland has reorganised it operations

Our campaign against waste and unnecessary spending is now being handled by The Taxpayers' Alliance

For media response please contact
07933 827522

Our policy advocacy and commentary will shortly be
re-appearing under the auspices of a new institute;

The Centre for Democratic Prosperity


Saturday, December 24, 2016

Merry Christmas and a Happy New Year

 Merry Christmas
to all our supporters

The team at TaxpayerScotland
wish all Scottish taxpayers

peace and low taxes

in the coming year

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes,
and a tolerable administration of justice
. Adam Smith


Wednesday, December 21, 2016

Non-tax taxes

For taxpayers who take the time to read the Scottish Government’s proposals for a differentiated status in its relationship with the EU within the wider UK, there are some important insights in the worldview of the Scottish state and the great and good advisers on its Council on Europe.

It would be churlish to suggest that the paper is anything other than a genuine attempt to find a “soft Brexit” outcome from the upcoming negotiations post Article 50. It succumbs to some of the repetition and self-righteousness of the white paper on independence, but it moves the Scottish Government’s position away from outright hostility and outrage.

The problem for taxpayers is that it reveals precisely some of the reasons that those who favour Brexit want the EU out of their lives; as such its arguments are often counter to what was intended. These can be summarised as non-tax taxes; impositions on wealth creation, innovation and trade that hold ordinary people back from the prosperity they should obtain from their efforts.

Non-tariff barriers are explained; any business will tell you that trade with the EU is replete with these – indeed, the idea that there is a single market is laughable when you realise that in exporting to the entire EU any business will often have to fill in 27 separate applications to trade with each EU nation in order to obtain clearances within the so-called common customs union. Each of those forms will be different and the view of those signing off new trade will differ, dramatically, across the EU nations. Think single regulatory regime, not a free trade market that benefits taxpaying consumers.

Regulations are claimed to, sometimes, be valuable. Well, perhaps, but talk to an engineering business about CE marks, specific industry regulations, environmental and re-cycling documentation and you will get another story. It’s expensive, slow, and traders are often faced with arbitrary blockages while moving goods into the single regulatory regime within the EU that is anything but single.

Labour market regulations – written up in the paper as “workers’ rights” – are lauded as a genuine contribution to a civilised society. But speak to many workers about the working time directive and how their wages are held back by this, and any employer on how holiday pay and other overheads actually prevent them from hiring more people and other down-sides of promising civility without counting the cost; you will soon find that these non-tax tax burdens on doing trade actually hurt poorer workers a lot more than highly paid and protected big business workers. We must always remember that fully a half of all employment is created by SMEs – who comprise 99 percent of businesses in Scotland. Non-tax taxes on small concerns are hugely damaging.

Of course there are gains to EU membership, and it is a perfectly tenable position to be aspirational and believe in the “family of nations” of the EU as the paper repeatedly proselytises. This is a firm statist position to be expected from a centre-left government; although it contrasts sharply with the gut feelings of the cohort who voted to leave the EU in protest against state-centric elites. But for taxpayers the leaving of the EU and Brexit is also about the liberty to trade freely, to operate privately and trigger Adam Smith’s invisible hand that offers unintended social benefits from individual actions and so generates liberty and prosperity for all.

There are a lot of non-tax taxes incorporated into the centralising, collectivist Euro state. In that respect, we should all recognise the echoes in the EU paper of the political hue of the Scottish Government and its tendency to tax us all to support its own local aspirations. Taxpayers should ask themselves if the outcome of both identities is simply to reduce the present and future wealth of our nation.


Friday, December 16, 2016

Canny management, no sense of direction

I am sure most of us have seen how bees feed from the heather. They arc around in eager loops, sniffing curiously here and gathering nectar there. Derek Mackay's first attempt at a budget using our new tax powers yesterday brought this to mind.

He flitted from little titbits for small traders, to small giveaways for councils, back to business rate reliefs, on to education, a quick attack on the bedroom tax, a nod at growth, solemnity on support for those in need. This was finely tuned managerialism, focussed on the needs of politics, showing the present minority government as responsible in its handling of new powers.

It's not enough.

In our blog this week, we said that we hoped to see a sense of direction, an understanding of how the trend in policy needs to be made clearly in favour of an agenda that will allow Scotland to grow strongly, reduce its deficit dramatically and redraw the state's responsibilities. Instead we got busy-bee management with no visible sense of direction.

Of course we expected little more from a stoutly social democratic government, but the vacuum here was deep; this was a budget worthy of a county council not a national government. And state sponsored capitalism and corporatism still infest Scottish Government thinking.

That's a shame because we are left with another vacuum, any sense of logical principle.

So much of what Mr Mackay offered was in the guise of "I know this hurts but believe me it needs to be done". If you offer tax relief to small business this is an admission that your taxes are creating damage. If you offer big business a threshold increase on an arbitrary additional rates levy you are saying that you know you are destroying jobs and trade in that sector. If you avoid a 50 percent income tax on the grounds that it will not raise revenue, but deny a threshold increase on a 40 percent rate on the grounds that the revenue is needed for the vulnerable, you are offering a peculiar on/off logic about human behaviour. And all for a tiny static gain in revenue within the grand scheme of billions raised from income tax.

Scotland needs more. Our nation lacks confidence, somehow the politics of identity has put social support through socialist means above all else as the fuel for a better tomorrow. Catalysed by a huge lobby replete with vested interests who see access to public money as their reason for being, our political class are reduced to endless vote buying; yet the management of electoral success is a lousy way to run a country. It's even worse as a way to help those in need.

A peculiarity is that this approach is from a government who say they offer salvation for Scotland as an independent nation. Through that claim, they have raised expectations that they have a vision, a direction towards a vibrant, caring, society. Given the powers to move that way, it is sad to see the new levers they now have to do something purposeful, principled and truly progressive are being used in such a traditional haphazard manner, like hungry bees flitting around the taxpayer honey pot. Ultimately, management with no sense of direction gives the impression of bureaucratic self-indulgence; political choices by the electorate will migrate soon enough when outcomes are seen to be wanting.

We believe in fiscal self-determination for Scotland; we need it in the same way as the UK needed to depart from the EU; de-centralised power exercised in tune with the sense of place, culture and legal tradition held by those over whom that power is exercised is a vital bulwark for individual freedom. And it is that freedom alone, in economic matters particularly, that can guarantee a better future for Scotland. High taxes and more state spending certainly can't.


Thursday, December 15, 2016

Scotland’s future matters

So much has been telegraphed about today’s Scottish Government budget announcement that we should not expect surprises. The perception and expectation that the tax burden on Scots will rise is firmly embedded.

Trends matter and we have already seen reactions to these trends in the shortfall on domestic Land and Buildings Transactions Tax and the increasingly pained growls of the commercial property sector. The same has begun on income tax; it was revealed only yesterday that an accountancy firm has begun to talk about “tax equalisation packages” that offer salary supplements for those talented staff that they wish to retain.

We too warned in our submission to Holyrood’s finance committee on Scotland’s tax system that the idea that progressive tax rates can actually deliver fairness and equality is less than likely. Other dynamic effects will be far more powerful and be more likely to increase inequality and curtail growth.

These messages from the supply side matter. While analysis and commentary about today’s budget will follow the tired format of a circus of conjecture and Keynesian promises, the real world will continue to make its millions of decisions unknowable to politicians and generate the change that will smack them in the face with tomorrow’s unknowable events.

That lack of knowledge matters, precisely because trends do matter, and Mr Mackay’s powers do now have enough leverage to adjust trends. The principles he must follow are outlined in the blog piece below this one. For us at TaxpayerScotland they are our only source of future prosperity.

Sadly for all Scots, we fear the force of ideas and incentives in state-funded relationships that drive the Euro-centric centre-left controlling the levers of Scottish power make only one trend feasible in policy choice – more tax to fund more spending.

These are failed policy choices wherever they have been tried. In the EU especially, but also in the US where a trillion dollar deficit is on its way. Taxpayers have been duped over a long period that “government” can support their health, social and educational needs by spending other people’s money on other people. The crisis in the NHS, social care and educational attainment tells us that this is just plain wrong.

Scotland’s government is particularly unwilling to counter the spending tendency of the managerial state. Take a look at this 10 point plan from an alliance of spending interests in the social support industry. It’s not just the money that matters here, it is the embedded nature of mostly middle class professionals across a myriad of initiatives that most voters have never heard of that sticks in the craw. And the left wonder where populist politicians get their motivation for castigating the “political elite” and offering hope to “the little people” from? It’s in documents like this, stupid, demanding more and more centralised tax spending.

Those paying for these initiatives can clearly see they do not work. While those who manage them hold their meetings in spacious, warm, and expensively equipped offices (with high business rates), ordinary taxpayers can still see freezing down-and-outs begging on our streets, poor mums giving laldy to squalling infants in the pound shop, bored teenagers scrawling banter on town walls, and the elderly scunnered for a shilling for the meter in damp flats. These socialist initiatives have failed and they always will.

There are ten-point plans aplenty in the Scottish public sphere; it’s time to resist them, and then scrap them. The Scottish Government needs to show trust of the people to build a new Scotland based on their creativity and technical talent, and a small government.

What Mr Mackay needs to do to start today is look ahead – to offer a ten-year, minimum, vision of a trend to a lower spending, lower taxing state; that can quickly release the “animal spirits” of our wealth creators. Only that can solve the social support crisis we face today. Higher taxation will only make it worse; progressively.


Monday, December 12, 2016

Incentives matter in all tax policy

A tax policy proposal crossed our desks this week purportedly offering a way out of our nation’s large deficit. It’s in a presentation by Conveyancing Direct ; we rather hope few have been duped into the impression that it makes any practical sense or tackles the central issue that Scotland faces with its finances.

It promotes the age old chestnut of a Land Tax – an idea that has been around for centuries which lauds the notion that land offers both a very wide tax base and one which cannot be hidden from the taxman. This tax is offered as a way to “reverse the austerity agenda” and “a fair way to fund all public services”.

Pink elephants can look quite pretty; but this proposal contains a number of ugly and major flaws in that it ignores four fundamental principles about tax. This week, as Mr Mackay offers up his first budget for parliamentary scrutiny, it is worth us reiterating those.

The first is an economic principle; that tax rates matter. This Land Tax proposal appears to suggest that extracting an additional £10billion from land values, even while reducing taxes elsewhere, will have zero effect. This is an error, while land cannot be moved about, its value as revenue earning wealth can be adjusted. In that respect, any land tax has to follow the immutable tax rule that unless rates are kept extremely low, those owning land will adjust its uses - and not necessarily in the way the tax designers expect.

The second, and linked, principle is about behaviour. Adjustments by individuals will inevitably apply in different ways across the wide tax base and uses of land. Much of the wilderness lands of America, controlled by the Bureau of Land Management, are gradually deteriorating due to regulatory intrusions (implicit land taxes curtailing the use of land without property), the Bronx in New York City is famous for its almost total destruction in the 1970’s due to rent controls (implicit land taxes on the use of land with property on it), Southern English houses are now being built with bedrooms without room for cupboards and garages into which modern cars do not fit (implicit land taxes through planning induced space shortages).

Land and property taxes, indeed all wealth taxes are extremely powerful in their effects because they do not tax income we already have at the margin – they take the core individual wealth that makes us feel secure, and the wealth of suppliers who take risks because of that wealth. A serious distortion of domestic property markets across the UK is well underway with labour mobility declining rapidly and a new generation forced to rent from a stalling buy-to-rent sector – high property taxes have done that.

These dynamic effects multiply through the reactions of individual owners and, when summed, create a key, wider principle that the total tax burden on any economy matters. It’s not enough to claim that tax reductions elsewhere might bolster incentives in other ways; they will, but the overall distortive effects of additional burdens, especially in land and property wealth, will be detrimental to economic activity. Mr Mackay please note.

The higher our nation's total tax burden is, the slower change and growth take place. There is now a lot of academic work suggesting that any intrusion by the state above 25 percent reduces wealth accumulation at an accelerating pace. Scotland, with a state intrusion around 50 percent performs well below its potential. Adding to this will always make things worse. Mr MacKay, again, please note.

The fourth principle is one of political economy; that the distribution of tax impositions is driven not by logic, but by choices made through political motives. The Land Tax proposal offers a good insight into this process. Lauded as being a genuinely equitable tax, its authors have realised that it cannot be imposed at equal rates to everyone. Rates are therefore adjusted; with marginal land, woodland, arable land, town and urban land seeing progressively higher rates of burden. As such, it reduces itself to absurdity to become little more than an additional localised council tax or business rate based on property land value. Would such de-centralisation ever be acceptable to the central planners of Holyrood who are there precisely so that they control re-distributions of centrally collected tax revenue in support of their centrist plans? All tax revenues entice political action on rates to favour whomever politicians decide are worthy. Localised land tax controlled by a polity composed of local shopkeepers would, through time, no doubt push the burden to urban retail chains and country landowners, a polity composed of urbanites might choose the middle class homeowners and, again, the long-suffering (usually marginal) large land owners about whose lifestyles they know nothing except their own prejudices.

There is, as so often, deep within this proposal, the perception that the poor are poor because the rich are rich, and that the rich are happily ensconced in their castles supping port and counting their gold. The first idea is just plain wrong, the second ignores the huge overheads that stewards of land, flora, fauna, and historic buildings carry in a constant battle to keep cash flow positive. Today, these struggling estates are usually companies rather than families; taxing them merely taxes their workers and customers. That’s a great way to empty the countryside.

It is a stated aim of the Scottish Government to impose taxation equitably, but let’s hope that Mr Mackay is not duped into believing that claims for taxes that apply widely to all means that they will be applied equally to all through time. There are always winners and losers, and it is the politicians' job to make sure their voters are winners and other parties' voters are losers. Taxation is by definition a coercive act by the state for as long as we are free to own earth and earn our own income.

Which leads to the real rub in all this; the issue is not taxation – it’s spending. The proposal for a Land Tax (indeed all taxes) starts from the wrong place. Scotland’s deficit is not something that needs solving through a higher tax burden, it needs resolving through finding out how to spend less and then introduce a lower tax burden which will balance the books over the longer term.

Until the Scottish Government comes forward with a clear set of policy proposals to live within its means, and lays out a clear path into the future that identifies what Scots can expect in tax rates and the burden of distribution, our nation will struggle with lower growth rates, lower investment and a high rate of talent export.

In this environment, Scots will endlessly be treated to the unedifying spectacle of endless political wrangling over how to find more tax revenues and empty aspirations about where to spend them when the reality is that there is no more money that can be extracted from Scots taxpayers. That devalues our nation’s capability, literally and metaphorically.


Monday, December 05, 2016

Time to encourage the local

With all the fervour over Brexit, there is a peculiar vacuum in our national conversation about how Scotland is fairing in the face of low growth and a so-called “austerity” driven, purportedly, by massive “cuts” in public spending.

At TaxpayerScotland we have never bought the story of a public sector being hollowed out to its last bowl of gruel. Spending on annually managed expenditures is highly inflexible, and we are aware that other public sector overheads, particularly pensions and debt repayments, are gradually being dealt with - albeit from a very high starting level.

So, it is gratifying to have read Audit Scotland’s measured report on local government finance. We recommend it for all with a level head and scepticism about demands for more money by those who live off public spending.

A few highlights stand out:

  • Ten to fifteen percent of local council income goes on debt repayments. Past profligacy still costs today’s taxpayers a huge amount of our hard-earned cash
  • While debt levels vary, there is a general trend of very gradual reduction. But some councils are still deeply indebted.
  • Staff costs are being reduced, but again very slowly. And each staff layoff costs around £35,000 pounds of our money to achieve.
  • There is a wide range in performance between councils. The fact that taxpayers can compare this performance is one of the drivers of control and, we hope, change.
  • Council incomes are in fact going up, with both more money coming from central sources, and a large increase in fees from priced services. The pressures it seems are coming from the burden of social care and having to cater for a range of centrally imposed mandates.
  • Local Government finance is often thought to be turgid and boring, but the fact is that it is a lot more real than central government’s manipulation of Barnett consequentials, capital investment funding and puffed up promises over insignificant sums spun as if to declare them revolutionary. Key to local finance is that Council Tax is local and spent on local things local people can recognise; and it is a household bill that we actually have to pay.

    How much better if the central state had the courage to re-assess this localisation of tax and spend and trust the people to understand what is good value for money. We think taxpayers would quickly stamp on too much debt being carried, too many staff being employed and any repeatedly poor performance in delivery.

    Audit Scotland points out that forward planning at local level is being severely hampered by slow short-term planning from the centre. That’s a shame; local councils can act quickly if they get a clarity of purpose built into their management style. TaxpayerScotland recently gathered together all the functions we could find that our local councils performed on behalf of their taxpayers. We found at least 175 separate administration tasks. No wonder they like to have cabinet governance and corporate services departments, but again what a nonsense that the costs of these management structures is added to the repetitive tasks of bin collection, schooling and looking after the frail elderly.

    The obvious thing to do with our councils is to break up their corporate conglomerate structures and identify separated cost and revenue centres across the board; including localised overheads for each function. All those costs should be reported separately so that taxpayers can see the use to which their pounds have been put - and compare their council with others. We need to put in place the strongest possible incentives not to waste our money or spend it unnecessarily.


    Wednesday, November 30, 2016

    Responsible for progressive enthusiasm

    The Scottish Government is taking formal control of revenues from income tax from today. Soon, it will have full control over thresholds and bands. This adds to its existing responsibility over Land and Buildings Transactions Tax.

    What is this responsibility? For SNP politicians it is usually couched in positives – control over economic levers, the chance to create opportunity in Scotland, to enhance fairness and equality. Such sentiments are packaged in the assertion that we have a “progressive” government.

    But there is another responsibility here; to preserve faith with Scotland’s people that a dedication to being progressive will be successful. Power over economic levers are negative if they destroy economic activity and curtail the freedom of ordinary voters to spend their incomes in ways they see are productive – the people will respond by kicking “progressives” out of office. That’s accountability through taxation with representation. Democracy operating as it should as a constraining force; not as a state-building mechanism.

    As dedicated low tax supporters we are resolute in our view that progressivity in taxation can be a force for bad. Over-enthusiasm for using economic levers to enhance endless promises for re-distributions creates many malign unintended outcomes.

    We say “unintended” because too often our politicians fall into the trap of thinking that a small additional tax levy will hardly be seen by taxpayers and as an accumulated whole can do great good. This is precisely wrong. Economists have spent a century and more emphasising that behaviours of the moment by individuals are governed by what they see at any moment. We do not make decisions on abstract averages; we consider our actions based on the changing impacts of today.

    So, when politicians decide to raise a higher tax rate, or lower its threshold, the taxpayer’s reactions are taken not on the global rate, but the fact that more pounds are missing from their salary docket. That change is weighed up against what future spending plans are desirable, feasible and affordable now that that money is no longer there. Work and spending patterns then adjust.

    Politicians ignore this at their peril. A numeric example relating to housing might help. If you are a higher earner and have a city apartment worth £325,000 in Scotland and are saving, perhaps because you have young children, for a larger family house, you will enter the 10 percent LBTT tax bracket.

    Let’s say you are trying to invest another £100,000 of new capital into your new home. To save this from spare income you have been taxed at a 12.8 percent NIC and a 40 percent marginal income tax rate before it enters your savings account, so you have already paid more than £100,000 in marginal tax to save that £100,000.

    You then pay £10,000 in 10 percent LBTT, plus nearly £5,850 of lower rate LBTT. Add in moving costs and the fact that you will lose around £3,000 in yield by moving your capital into bricks and mortar (while raising your Council Tax bill, energy bills, maintenance et al in your new home) and you are facing an effective marginal tax rate on your purchase of around 20 percent. Is that a good use of £100,000 that has already cost you the same again in income tax to accrue?

    The people are not stupid – they will make decisions on the basis of the change they see happening around them and the benefits to their lives of those decisions. For those “progressives” who believe that the control of economic levers allows them to control the lives of many hard-working middle-earning folk there are many lessons to be learned.

    Chief among those is that there are reasons why high tax economies across the Western world are growing very slowly, why young people are feeling disenfranchised, and why the poor are not improving their lives because good jobs are unavailable. The politicians spent all our money, badly, on their Big Government state. That’s not progressive.

    Less Spending >> Lower Tax >> Higher Growth >> More Jobs


    Thursday, November 24, 2016

    Statistical nonsense can lose us our liberty.

    Can taxpayers be blamed from turning their backs on politics and, across the Western world, voting to crush the political and media class?

    Yesterday’s budget could be viewed as cautious and measured, but equally it can be interpreted as the outcome of a UK Treasury captured in the headlights of popular forces it cannot understand. Its sheer nothingness is matched only by the empty vessel of the Scottish Government’s legislative programme. Is it any surprise that one MSP was helping referee a football match when he should have been in committee, while another has been lecturing at his university.

    Where has this immobilisation come from? In part, it is because “the data” has become hugely distorted. Politicians use statistics like managerial armour; they let them pontificate virally with obfuscatory certainty about things over which they have discretion but very little knowledge. Ms Sturgeon’s views on the value of the EU come to mind. The hound dogs of the media, lapping up all this claptrap in a permanent desire for a quick fix to societal problems catch this virus too and broadcast a melange of confusing, contradictory messages.

    The paying public are becoming more and more baffled; are these people really spending half our incomes? Can any of these numbers be believed? It really is bizarre when the Office of Budget Responsibility is required by statute to provide an aggregate growth figure that it itself says is vague and unverifiable; then politicians are asked to defend that projected performance, even as they propose actions might make it meaningless.

    But managerial difficulties over explaining a chosen policy mission in numbers that don't add up are not enough to explain the sclerosis of the political elite. There is a much bigger story here which affects all who pay for the central state.

    It is failing.

    Politics is about the expression of values, and it is in the nature of party politics to express these values aspirationally; offering a vision of a better world; goals of no child left behind, health and security for all, allowing the (ill-defined) “just managing” obtain higher incomes, harnessing skills and entrepreneurship; in Scotland we are replete with these goals.

    Damnably, politicians then try to use our taxes to make them come about, and here is where the failure begins; central planning, which we know did not work in the communist world, also does not work in social democracies. Instead, it has driven us into a sea of debt as aspirational spending programmes have sucked up our taxes and created a vast managerial bureaucracy which spends half of our money planning how to escape from its own failures.

    Every time it comes up with a new plan, it wants more money; every time it gets some more, it fails, and ordinary taxpayers pick up yet another bill for failure. It is worth stressing that Philip Hammond is proposing to spend another £122 billion of our children’s money; in the hope that it might get the state out of the mire of its own making.

    That continuing failure should worry taxpayers. Political science pointed out long ago (read Hayek’s Road to Serfdom) that the response of the repeated failure of central planning is not to stop planning, but the call for a “strong leader”; someone who will somehow be able to pluck methods that can turn aspiration into results out of the air. Well, history tells us that those methods are usually pretty inimical to peaceful and joyful living – totalitarianism as a follow up to failed majoritarianism based on the false notion that democracy is a tool for good decision making is a horrible outcome for personal liberties. Wealth-destroying high taxation morphs into wealth-crushing authoritarianism. We will have to see if Mr Trump’s accession ends up as a damp squib of populist anger or a genuine strong-man initiative that curtails free trade and enhances American isolationism. I doubt very much if the US can become totalitarian, its democratic structures are too plural for that, and constitutionally locked to remain so, but the illiberality of many Trumpist values is very un-American.

    And that’s where the UK, and Scotland, can offer so much if they could just discard this fetish with what is in essence big state socialism with a “nice” corporatist face – even when bankrupt. Scotland invented liberalism, and if we confuse that with laissez faire or even corporatist capitalism we are making a huge mistake. Liberalism offers a set of other approaches to social and economic policy. They’re based on the idea of plurality of economic actions through localised institutions, with a particular emphasis on private voluntary methods. Liberalism trusts the people.

  • That means welfare mutuals to which we subscribe as disparate communities to support us in need or old age.
  • It means localised trusts to run our schools, roads, streets and other community assets.
  • It means social insurance for integrated health and social care that leaves the state to concentrate on those who cannot cope.
  • And it means localised skills training for our non-academic kids funded by business as a private endeavour that it can see benefits it locally.
  • These are not massively radical initiatives, they are what Big Government does today, but done in a different way - with a lot less politics; which is what people want.

    They also have two things in common. The first is that politicians have to give up central power to community powers – to allow plurality, and innovation through experimentation and competition. The second is that they would allow us to pay a lot less tax to the central state; a liberal state may well still require us to hand over a third of our income for collective and personal support but taxpayers would be able to link what they pay to what they get for their money; and be free to choose what they really wanted to pay for, instead of being forced to support bad policies through their taxes – the source of such disrespect and despair of the political class. The focus would then be much less on the politics of spending than on the performance gained for that cost.

    The rocks being thrown around in the political glasshouse are making our nations’ parliaments a laughing stock among their own people. That’s a bad development; a strong core to any state is needed; untoward events can strike at any time; no nation can respond strongly if its people have no confidence in its leaders. Government must change and free us from its failure.


    Monday, November 14, 2016

    Let’s allow manufacturing find out more by itself

    The Scottish Government is keen to gain plaudits from supporting the manufacturing that makes up more than fifty percent of Scotland’s international exports (and that includes exports beyond the EU). Its chosen mechanism is to develop a Manufacturing Action Plan that establishes a new quango – a National Manufacturing Institute for Scotland to “promote continuous innovation, improve productivity and increase investment”. Well, there’s yet more of our tax money gone to people in suits proselytizing about what might be done, but actually creating nothing.

    If that makes you weep a little how about this; the action plan for this new quango is embedded in another quango – Scottish Enterprise.

    Now get your biggest hankie out because when you read the plan you will be treated to the usual anodyne verbiage that passes for action planning in bureaucratic circles. We need leadership and we need skills, they tell us enthusiastically … and then it all begins to go a bit wrong.

    We also need, they say, a circular economy – that’s re-cycling to you and me - a plan for higher overheads. And we need energy efficiency and de-carbonisation – that’s an offer of higher fuel costs and expensive power. And better infrastructure; well maybe, but does that mean raising more public debt that taxpaying firms have to finance.

    It goes on; we need more “digitally enabled units of appropriate scale and location” the plan then adds. No, we don’t really know what that means either, but we expect it means that they are making the assumption that if we get better and more widespread internet we will be able to compete. It’s a common assertion, and the consensus among the business support chatterati, but tell the wee foundry in Rutherglen that spending more on broadband will increase their exports and they will probably show you the door.

    They want to make Scottish business smarter, and for SMEs to improve their supply chains, adopting new materials and processes. For this, they offer the services of yet another quango, the Scottish Manufacturing Advice Service to assist in enhanced asset reviews (that’s where they tell you that your machines are clapped out and too old; and you say that that’s because you can only just afford to pay the NIC for your workers and the VAT for your sales). They cite “the Vanguard Initiative, an EU policy to help regions unlock their growth potential” as a tool for “leveraging Scotland’s many international relationships”. There is in addition another initiative “Enterprise Europe Network” that will be plugged into this smorgasbord of help.

    But who is helping who here through the use of copious amounts of our tax money. There is a very telling sentence in the Scottish Government’s announcement:

    “To secure industry buy-in, we need to demonstrate the value gained from a long-term commitment to innovation and technology adoption – particularly within SMEs. Coordinating the national innovation resources and assets appropriate for the manufacturing base will be key to our success”.

    Now hold on a minute. If we read this correctly, Scottish Enterprise and its minions are saying that Scottish industry is not really committed to innovation and technology adoption; and, to mend this, their approach will be use coordinated central planning of what we think might mean the universities, other publicly funded research entities and, presumably, themselves. (That’s the people who develop Scotland’s international relations by flying to the Middle East at our expense and staying in very expensive hotels).

    In the process, they will add to business overheads by politically correct environmental schemes; while subsidising an army of busy-bodies telling industry what to do. So, what taxpayers face here is its taxes being used by the central state, swimming in a politically favourable (to itself) sea of Euro money, ladled out across its own fleet of highly paid chums and buddies. There is clearly a political back story here to prove also that the EU is vital to Scotland’s future; politics that has no place in industry.

    Central planning has never worked – ever – and when the managerial bureaucracy gets into its stride in support of that sort of planning like this, industrial success will simply get further and further away from Scotland’s grasp – at great expense to ordinary taxpayers. It really is time that this sort of 1970’s nonsense was consigned to the dustbin – along with Scottish Enterprise and all its sub-quangos and initiatives.

    What manufacturing needs is to be left alone, with much lower payroll and capital taxes to find out on its own what innovation works and what does not work. These quangos work against this process which is solely in the remit of those on the ground doing the innovating.


    'Government is the great fiction through which everybody endeavours to live at the expense of everybody else.'
    Frederic Bastiat