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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.


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.


    Friday, November 11, 2016

    Trade Union Modernisation

    The Scottish Government managed to sneak through a new use of our taxes this week; on Wednesday when the Trump frenzy was at its greatest.

    Two hundred and fifty thousand pounds of our money has gone to "modernise trade unions". This is an oxymoron; it's admitted that the money is actually being spent to "mitigate the negative impacts of the Trade Union Act". That is, to avoid changes that many see as making trade unions more democratic.

    This is a wonderful example of double-speak; our money is in fact being offered as a subsidy to pay for staff support for what trade unions do - on the basis that the state should work "in partnership" with organised labour.

    That partnership is put forward as "supporting innovation in the workplace" by which is meant the "Fair Work Framework". You can find this here. It's the usual melange of woolly but well-meaning aspirations.

    But this is really a political use of money; the Scottish Government is buying votes, using our money for political purposes that raise a fist of contempt to Westminster and support their client constituency.

    The big problem with that is that it rejects most of Scotland's people in favour of supporting a minority with public money. As such it will always tend to make Scotland's working people more expensive to employ. That may or may not be a good thing for those particular unionised workers, most of them in the public sector these days, but it certainly will not help Scotland's growth prospects. It is more likely to deliver yet more rationing of public services as tax revenues shrink.

    Trade unions should be self-supporting entities, bringing the democratic will of working people to bear on bad employment practice. This self-reliance should also be mirrored by business, who also should not take subsidies - using the money from their customers to support their worldviews.

    The use of our taxes is meant to "underpin a fairer, more inclusive and more successful economy". No, that's wrong; the minute our tax money is ladled out to promote any specific political values; democracy is injured. Instead, privilege is given to one faction over another - and that leads to unfairness not inclusiveness. It will also curtail growth.


    Monday, October 31, 2016

    Welfare futures - we need more than more management

    On Friday, the Scottish Government’s consultation period for submissions on social security came to an end. Scotland controls 15 percent of the total of £17.5 billion we spend here, although around a third of that goes on state pensions, so we control nearly a quarter of non-pension spending.

    This comes on the heels of reports of a plan to ask thousands of welfare recipients to help design a welfare system that treats people with “dignity, fairness and respect”. (We have asked in a previous blog for some respect for taxpayers who pay the bills.)

    The consultation paper “A New Future for Social Security” is deeply frustrating. It purports, in the usual way, to rest on principles but actually it is a managerial document – a tour de force of arcane obfuscation that lays out an enormous smokescreen – a process by which the present, failed, welfare system gets moved from one set of civil servants to another. Angela Constance has a sentence in her forward that tells the truth:

    The Scottish Government has a steep learning curve in front of us when it comes to social security, but with the help of Scotland’s community of advisers, practitioners, public service professionals, representative groups and users, then I am confident that we will meet the challenges ahead.

    Political economists can smell the rat here. Look at that peculiar “us”, not just the choice of first person plural, but who it is that is involved in that plurality. What we see here is rent-seeker capture of the welfare system by those who spend our taxes, and learn how to do so at our expense. Those paying the bills are again ignored.

    Politically, this is only to be expected, by necessity the SNP must continue to compete with alternative promises that might be made by Labour. Economically, however, it is inept and unsustainable.

    In an op-ed this weekend Iain Macwhirter, the Herald columnist, showing his honest left-wing principles as always, suggests that taxes are raised to help pay more to the NHS with its new focus on integrated health and social care. He says that the hard choices on spending in the face of NHS cost increases, and the effect of the living wage on care services, can only be resolved by further cutbacks, privatization or increased taxes. We assume he would open the doors to more taxation to support child, disability and in work benefits too.

    He’s wrong; the real issue of principle here is interests and incentives. Social security has become a political hot potato; the rent-seekers are deeply in cahoots with the politicians as to how to spend our money. There are many institutional forms that lie between the fully nationalised monolith of today and total privatization. We need to find those that work best; and in the process discard the pessimistic leftist notion that, for many, a life as a ward of state is an inevitable necessity. Rather, we should breed self-reliance to make our poor people free. Then they at least have a chance to become wealthy by their own efforts.

    Sadly, the rent-seekers above have an interest to retain their jobs as providers of compassion; they are unlikely to look outside of their box – scan the pages of the consultation paper to see the minutiae which fill their days as bureaucratic administrators. Any idea that they are merely continuing along a failed road to a high spending, high tax, less employed and lower growth failed society is simply ignored.

    There is a strange statistic that, despite official figures saying that only one percent of benefit claims are fraudulent; those living in areas of deprivation say that three quarters of their neighbours on benefits are on the fiddle. While both those figures are bound to be wrong, the very fact that we do not really know tells us something; that the best way of serving taxpayers would be to introduce some form of contributory element into our welfare. That could be as simple as a paper account of NIC payments made and benefits received, but it would begin a process of introducing a social contract between payee and payer that helped match the competing interests and incentives of both. We might even generate a meaningful debate about deservingness and equalisation (aka fairness and equality).

    Through that we could know more about individuals and their circumstances, how those change and how they cope with that – and how we can help them cope. Smaller, innovative mutual societies catering for services needed and, through time and competition, specialising for particular types of individual would let bureaucrats become de-politicised and more productive in their outcomes.

    In the end, that’s what really matters, every earned pound that is taxed simply must be used productively; the alternative is a spiral of economic decline as everyone attempts to live off everyone else. That way, we all lose our liberties.


    Monday, October 24, 2016

    Finding how to make the best choices in child support

    Do taxpayers get good value from money spent on childcare? A blunt answer is that no-one has a clue. There are so many aspects to what different parents need, and multiple ways that those needs are met, that any generalities simply turn to dust. A recent Scottish Government report examines the influences.

    Yet varied roots of demand, and plural sources of supply are not unfamiliar in any economy – food, cars and household furniture show the same tendencies.

    So why then, do we see central government get so exercised about how much child care is on offer for families? The answer lies in a peculiar mix of decency about making sure every child is not left behind, and the desire of the state to make use of as many productive people as can be found to work. We probably ought also to mention the political aim of purchasing as many votes as possible from redistributions using taxpayers’ money to those without the money to pay for child care.

    These aims still do not remove the fact that complex patterns of supply and demand are best served by market mechanisms. To its great credit the Scottish Government has said that it will design the child support system such that “the money follows the child” – that is, children and their parents are seen as economic and not political actors. This is progress indeed from a left-leaning centralist government.

    For taxpayers, this approach opens up the prospect of genuine insight into who wants what and where – that is market information, as always, offering knowledge far beyond what any bureaucracy can find out. We would like to see the principle extended to individual welfare accounts where our tax money follows the claimant. Nothing would help the dependant less well-off more than being allowed to build their own pot of capital and learning to make better choices in life.

    The welfare system does taxpayers no credit if all it does is lock in claimants to become supplicants to the ignorance of the state; building knowledge of how to best become self-reliant is the sine qua non of a system that serves the long-suffering taxpayers who pay for it.


    Wednesday, October 05, 2016

    Oh … for a passage plan and a steady hand on the tiller.

    Scottish taxpayers should be watching the stramash over the timing of Scotland’s budget with some concern. There is some truth in the notion that this year's budget calculations are made more difficult by having a new UK Chancellor post-Brexit; but this should not be used by Derek Mackay as an excuse to haver.

    The problem is that political tactics are, as so often, overtaking common economic sense. It’s not this year’s budget that matters to Scotland; it’s this year’s and the five to ten years after that. It was notable that Philip Hammond, while maintaining his aura of the grey man in his quiet announcements at the Tory conference, concentrated on the adjustments to Mr Osborne’s Plan A up to 2020 and beyond. He knows that steadiness in policy is more important than delighting the media with budgetary surprises.

    This option is equally available to Derek Mackay. A Scottish Government with its GERS deficit needs a passage plan; the Fraser of Allander Institute has warned of the perils ahead; low growth and rising unemployment loom. The danger is that the Scottish Government is beginning to look like a rabbit caught in the bright headlights of today’s peculiar realities. Or, maybe that should be “headlines” as the First Minister continues her mischievous walk on the fence separating us from Indyref2.

    For taxpayers, these uncertainties are much more damaging than politicians realise. Those in boardrooms are not stupid; and they are not focussed on the minutiae of how our taxes are to be dispensed to the state’s quangos and planners. They can adjust to what comes their way, but they do need to know there is a passage plan and a steady hand on the tiller. If the impression takes hold that neither of these things exist, investors will jump ship and travel onwards elsewhere.

    The present uncertainty about the UK’s future actually offers a real opportunity for Scotland. In anticipation of the more devolved budgetary administration from next April, and with a Fiscal Commission emerging to calm uncertainties, the focus should be on showing the steady hand and the long term direction of travel; that is, our nation’s government should be acting as a responsible state intent on serving its taxpayers with frugality and responsibility. Tell us how the deficit and debt problem will be cured; show us where and when the growth for jobs will be created; offer hope to all Scots for a vibrant, creative and profitable future.

    There is nothing like certainty and respected authority to calm the crew of a ship in stormy waters. We don’t need to know who is due to scrub the scuppers on the next night watch; Mr Mackay should show us his vision of what is on the horizon without delay.


    Wednesday, August 24, 2016

    The means to live beyond yesterday

    We have some sympathy with the view that snapshots about yesterday like GERS are not hugely illuminating.

    However, they do beg an important question; precisely how can Scotland stop living beyond its means tomorrow, independent or not? The trend of change in the annual GERS reports, even discounting oil, is not good.

    In answering that question, the Scottish Government is perennially quiet – and is likely to remain so in its ignorance of supply side incentives. It nods at the fine sound of a “jobs and growth” agenda, but offers nothing but state corporatism, eagerly adopted by Scotland’s many state corporatists. The ideas of our nation, across all parties, appear to be caught in a time warp somewhere around 1975; Keynesianism rules – despite being bunk.

    The evidence that any growth and jobs will emerge from central planning of economic development is not just thin on the ground – it’s zero. That there is such a vacuum on how to create jobs and growth is a shame, because the GERS deficit may appear to be appalling but in an economy the size of Scotland a mere one percent additional growth would soon make a good dent in it. A few years of constrained spending and five percent growth would get rid of it.

    Is that such a hard task to achieve? Not really if the right low tax pro-entrepreneurial climate were found through policy decisions. We have the skills and the resources, the world is awash with capital desperate to find a home, the only problem is that perceptions and expectations about Scottish Government policy are entirely focussed on how much more of our money they might spend, and what they might do through taxation to obtain it.

    Those perceptions are important, because they tell us something else. If a perennial over-spend goes on, and a perennial subsidisation from elsewhere also continues seemingly ad infinitum, the Scottish “brand” becomes more and more tarnished. Brands also carry perceptions and expectations, but good ones; our grandfathers who built a powerful industrial Scotland traded heavily on Scots’ honesty, hard work, thrift and creative enterprise. How sad if tomorrow’s Scotland is seen instead simply to be quaint with a need for subsidy.

    We don’t want that, we want a Scotland that holds its head high across the world as a powerhouse of industriousness. To get there, we need the state to think again about its role and that of its taxpayers. Taxpayers can help the collective state achieve objectives, but only if it leaves them free to generate the wealth to pay for them.

    Government here is the problem, not the solution; most taxpayers know how to live within their means; it’s time our state did as well – and firmly stated its aim to do so as quickly as possible.


    Monday, August 08, 2016

    No White Knight will save us from Wonderland economics

    "It seems very pretty, but it's rather hard to understand". Alice’s words from Through the Looking Glass about the nonsense poem Jaberwocky seem to capture the confusions of the nation. Our leaders gyre, galumph and chortle with frabjous energy.

    Much is put down to the consequences of Brexit, but this is salving of the wrong wound.

    Milton Friedman would be aghast at the notion that monetary policy can somehow stimulate the economy. Not because interest rates are already at rock bottom, but because monetarists have never claimed that such dangerous footling could. Bizarrely, contrary to much of the commentariat’s claims that we have seen a major response, even in announcing his intent the Governor of the Bank said his powers are limited and that fiscal measures are also vital.

    On the other side of the looking glass we have the Tweedledum and Tweedledee posturings of the Corbynites and Sturgeonites. Their fiscalism adheres to an amalgum of Mad Hatter sweetmeats that went stale around forty years ago; national investment banks, wage and price controls, and nationalisation of industrial sectors. The Queen and King of Hearts laud it big time among a phalanx of supporters in a mad world of fantasy economics.

    Let’s get real. Social democracies of the state-sponsored corporatist kind who pretend that more spending and more borrowing is public investment that will improve lives have had their day. The bureaucratic managerialists who purport to “run the economy” don’t. They create unemployment and stagnation – and within the oh-so-old-school EU vast armies of permanently non-employed under 30’s. That’s dangerous.

    Employment and growth come from those who get to their workbench at six in the morning; who build networks of discovery about how to turn ideas into revenue; who negotiate, cajole and persuade others to become like-minds sharing mission goals; who manage the cash from sales cannily, balancing tomorrow and today in a never-ending re-appraisal of what happened yesterday.

    Ah yes, yesterday, today and tomorrow. As the Queen of Hearts said, “The rule is, jam tomorrow and jam yesterday—but never jam to-day”. That, sadly, appears to be where Big Government takes us. “There is no more money” has an addendum; any money at any time can only come from yesterday, today and tomorrow. In fiscal language, those three time periods offer financing from savings, taxes and borrowing; the state has gobbled all of them through its voracious appetite for more and more tax, and now we have no jam today.

    What is peculiar, and concerning, is that those who create new money at their workbenches, driving their vans and lorries, or staring at screens and coding machines know this. Free lunches are not part of their world, and the interminable vote-buying with our money by politicians is so transparent that it is inducing many to turn away from social engagement and, worse, turn inwards to protect themselves and their family's future; the very opposite of the social cohesion our politicians intended to create as they gleefully spent our money.

    Less spending, lower tax, higher growth, more jobs. Anything else is just Wonderland economics.


    Tuesday, July 19, 2016

    Aspirational tyranny

    Can you imagine what “the impact of a strategic decision on inequality” might mean in practice?

    Think about this.

    Imagine a public authority wants to put in a new cycle route as part of its climate change strategy. This might change the way some people go to work; for some it may get faster, for others it may get slower. It might take some money away from the local bus company who might reduce their service, making it more difficult for some to get to work. It may intrude on the physical space on the local streets, creating traffic bottlenecks and making trade deliveries more complex. It might increase the risk that some children will get injured going to school, but others may be safer. It may make it easier for some to get to the local factory in one industrial estate, but might change access for articulated lorries to another. For some town centre professionals and shoppers it might reduce local parking, making the local dentist practice and three local retailers less able to employ juniors. On balance, it could save about half a ton of CO2 a week, which might then be added back by traffic diverting to easier and longer routes.

    The reality – that any attempt to enforce policy design such as “to reduce the inequalities of outcome which result from socio-economic disadvantage” (the required legal provision) is doomed to be inadequate, complex and contradictory with wildly differing effects on the economics of advantage and disadvantage.

    Note that in the above very small example, it is not just that the planners making the decision do not have the knowledge to make such an assessment, it’s that they cannot possibly know the effect of their decisions; knowledge about the future is simply not available to them.

    It gets worse.

    Any authority with a capacity to tax us, or the capacity to use our tax money, takes decisions with an element of coercion based on their power – very often that of a monopolist. The streetscape example above is a change proposed by a local authority with such a monopoly. The way of assuaging such decisions is to allow localised democratic consultation and refusal.

    Mrs May is right to say such legislation is “ridiculous”. And it is more than “simplistic”; it’s downright tyrannical if followed through.

    We all know that public authorities, particularly quangos, hate their ideas to be turned down by the electorate; they will fight tooth and nail to keep to their chosen path, planners have long-term battle plans to construct their desired outcomes and they are paid to do battle unlike ordinary taxpaying citizens who purportedly direct the ideas of their civil servants through the political process. We should not kid ourselves that in the Big Government state our politicians can protect us. They too have also become bureaucratic managerialists – corralled into ineptitude by party prejudice and unable to act on proper principle.

    The outcome of this legislation is likely to be another huge overhead on the struggling public sector, another burden on taxpayers, and an even larger loss of the liberty of Scots taxpayers to design their own future as the public sector soaks up more of our incomes. In the process of enhancing Scotland’s economic impoverishment it will also reinforce precisely the inequalities it aims to reduce. It is the less well-off who always suffer from central planning.


    Tuesday, July 05, 2016

    Large rocks and very hard places

    As Ms Sturgeon “explores every avenue to protect and maintain Scotland’s EU status”, Scottish taxpayers can be forgiven for adopting a canny watchfulness. Our First Minister has made it quite clear, in what comes across as a form of Presidential crusade, that she wishes to “protect the interests of the Scottish people”

    But hold up, many would say, what are our interests, and is it possible for her to protect them? Let’s be clear, Ms Sturgeon is not posturing, she is fully dedicated to the benefits she sees are obtained from EU membership. Her speech to the Resolution Foundation makes these clear. She has, in that sense, nailed her colours to the EU mast.

    But real-politic considerations must include economic and institutional realities, and here our First Minister is on shaky ground.

    The EU’s performance in international trade is lamentable; it is losing global share dramatically. Its record in reaching new “trade deals” is worse; there have been only a few with tiny jurisdictions like Fiji. If you want to enhance global, innovative, entrepreneurial trade advantage it isn’t with the EU. In fact, OECD figures show that nations outside the EU have increased their trade into the EU faster than the EU has enhanced its own internal EU trade.

    There are no reliable and trustworthy measures or estimates of the proportion of additional UK exports to EU countries that might be attributable to the UK’s membership of the EU. Additionally, the EU struggles with vast administrative costs which its “Better Regulation” team say could be reduced by 25 percent, implying a total cost around 600 billion Euro per annum or 6 percent of EU GDP.

    Those figures should not be surprising to anyone who has looked at what is called the EU external tariff “nomenclature” – a 932 page document defining import duties for everything from flax table-cloths through golf balls to hang-gliders. The EU operates through rules rather than on liberal principles.

    None of the above, of course, may trump the notion that the EU provides a family of nations dedicated to social and moral good through legislation that purports to protect workers. That’s a desirable goal, but there are few economists who would suggest that the wealth and growth enjoyed by poorer EU taxpayers is supported by EU workplace regulation. Even the French government disagrees. And, we would add, the presence of millions of poverty stricken individuals from less developed nations wanting to enter Europe because their own economies are locked out of the EU trading club is not a good example of morality in trading practice.

    And there is an institutional link here to influences at play. Our First Minister is, today, meeting with what are described in The Herald as “business leaders”. Actually, they are not, they are business followers – the eternally confused trade associations trying to be all things to all their members. In some instances they are the toadies of the bureaucratic managerialists who proclaim that they can run an economy. These organisations live off bungs; subsidies that buy opinion in favour of institutional causes; taxpayers should beware, the truth and many facts are often twisted by subsidy.

    Institutions that live off the EU club are part of the corporatist tendency that afflicts the EU and some say is the source of its poor performance. Once again, central planning and price controls, rife across the EU nations, show their debilitating effect. Is it really in the interest of Scottish taxpayers to support these centralist practices; to turn away from the reality that open competition is the driver of the new knowledge that makes us all more prosperous and able to afford improvements to the lives of the vulnerable.

    None of this means that we should not decide that it is better to reform the EU from within; but the First Minister appears to have made this no part of her crusade to remain in the club. But, for taxpayers, there are good arguments that Brexit could offer the most effective route to a productive future.

    Equally, the perspective above may be in a minority in Scotland, but that does not mean it is wrong; the English certainly do not think it is. And if they are not wrong, trading beside an internationally focused free-trading UK offers enormous opportunity for Scotland’s taxpayers.

    Everyone knows that Ms Sturgeon’s stance is really about the politics of separation. By nailing her colours to the EU mast she has conflated two debates into one. That’s unfortunate, because to achieve her democratic need she has to win them both and offer an institutional framework betwixt EU and UK that a majority of Scots can accept. That’s a tough call.

    The interests of the Scottish people, who are generally affluent and non-politicised, are to stay affluent and non-politicised. The grave doubt in all Scottish taxpayers minds must be that Ms Sturgeon’s choices to do battle on two fronts will neither protect our affluence nor keep constant politicking out of our lives. That’s a mess of her own making equal to that of Brexit.


    Wednesday, June 29, 2016

    Hauding wur wheesht and keeping calm

    We are in a period of high political drama; but thank goodness for the common people and their interests. And what a contrast to the flounderings of the politicians and other commentariat.

    Scottish taxpayers continue get up every morning, go to work, do their business, earn their taxed income, spend their taxed money, put aside a bit for their taxed savings, and then flop in the sofa to goggle at England losing at football matches.

    And those that their taxes are paid to? Hammering lumps out of each other. Making mince of objective debate. Stramash, rammy, squabble and feud – at our cost.

    We are bolstered by a pair of axioms from political science.

    First, that those in politics have “discretion without knowledge”. In the same way that during the Referendum there were no real “facts” offered; there are, post-vote, no “facts” – the future is largely unknowable. Hence the spinnings of equity markets.

    Politics has its central role in the expression of values, not facts; and the EU exit introduces a huge clash of values between factions. We all now have to re-assess our opinions and design a new future.

    Second, that the interest of the mass media is for “a fix” to any issue; someone is always to blame, something should always be done immediately, and it is implied that it is possible to come up with a better way of doing things – quickly.

    This is simply politics as melodrama, with all the structure of theatre; set up, conflict, resolution contracted into a few hours of news cycle. Actually, progress in political economy takes years if not decades and involves sequences of trial, error and muddle with backtracking, contradictions and sheer stupidity thrown in. A liberal economist would add that it is impossible to “run an economy” and we should not expect either the media or politicians to be able to do such a thing.

    It is well known that politicians and journalists come very low down in polls about respectability; their biggest achievement at the moment is to spend a lot of our money successfully reinforcing that opinion. The teams of clever minds being put together to work out how Brexit can or cannot happen are going to cost us all a fortune.

    But as the common people, we have a role too. To haud wur wheesht in Scotland and keep our calm in rUK; to adopt the great British talent at “being steady” on the basis that the end of the world is rarely nigh, and roofs do not easily fall in. One of the great advantages of living in a country where freedom has induced affluence and the rule of law trumps arbitrary political rule is that we do not have to accept politicisation as a way of life.

    During the EU referendum, Ms Sturgeon made a speech to the Resolution Foundation in which she said: “Given the opportunity to truly engage in the issues, and realise the potential impact, good or bad, on their own day to day lives, then it is possible to generate a thriving democratic debate that leaves a positive legacy”.

    We think she is wrong on this. It is a tenet of the left, and an expectation, that a constant blether about politics is a normal part of daily life. The life stories of Nicola Sturgeon and Jeremy Corbyn both have this as a central feature – a continual focus on politics.

    As Nigel Farrage, with characteristic venom combined with insight, told the European Parliament yesterday, the people have rejected “big politics”. We neither need nor want to become politicised. In Scotland, we should continue to haud wur wheesht. We can be sure that the English will always keep calm. We are The People and we have the ultimate power over what values are used to govern us. Knowledge and discretion take time to mature.

    Pay your taxes, turn off the radio and hug the kids.


    Thursday, June 23, 2016

    Confidence can come from spending less

    Scotland’s local council budget estimates were published yesterday. They show that spending has increased by 0.8 percent to nearly £12 billion. Education spending us up by 2 percent and welfare spending by 1.9 percent. So, figures showing a growth in spending at around the level of inflation.

    Now, for those who repeatedly shout about “cuts” these figures are telling. Councils are to be congratulated that they have manged to curtail their previously burgeoning spending – although it is worth pointing out that they have spent one billion pounds from their reserves to achieve the figures above, and central government support funding continues to be on offer.

    The reality, however, is that there are no real cash cuts, but rather a hold in what had become continual increases. This is important, because it releases money to taxpayers that can create new real, long-term growth; not false growth based on the idea that “public investment” is an economic generator rather than simply more public spending that always contracts our economic potential.

    There’s a wider context here, we quote Audit Scotland:

    “As councils make decisions on how to allocate their reduced budgets, they need to be clear about both their short and long-term liabilities”.


    “Annual interest and debt repayments on borrowing have increased from £946 million in 2009/10 to £1.5 billion in 2013/14. Repayments for current PFI and NPD contracts totalled £488 million in 2013/14 and are predicted to peak at around £600 million a year between 2024/25 and 2027/28. Higher financing commitments leave councils with less money available to spend on the other day-to-day costs of running services”.

    Taxpayers should be under no illusion as to the consequences of past profligacy of the state. Councils thought that the gravy train would go on and on, until that note was left on a UK Treasury table pointing out that there was “no more money”.

    Simple arithmetic tells us that there is still no more money, and Scotland’s growth rate is so paltry that this is going to continue for some time. If you put the blame for that on “austerity policies” you have to find precisely where that austerity budgeting is being done; and it clearly isn’t in our Council’s current spending. It’s much more likely that those who create wealth are simply not inclined to invest for growth because they can read the accounts of our over-spending state and see the long term risks of their financial habits.

    Policies that promise higher taxes in the future through over-spending today are no way to induce investment and optimism. The people are not stupid; they have longer time horizons that many politicians seem to believe.


    Wednesday, June 15, 2016

    Who knows our children?

    It’s good to see the Scottish Government take up cudgels with the vested interests of state education. It looks like we might get a proper debate going on how we spend our taxes on schooling in Scotland.

    Predictably, the teaching unions, professional bodies, councils and other rent-seekers are coming forward and expressing disquiet. Mr Swinney will no doubt adopt his calm friendly persona and listen, but he must stand firm. These people are the servants of our children and their tax-paying parents, not their masters.

    It’s worth re-iterating what proposals about decentralising management are about. They are about improving knowledge about our children's needs.

    No-one denies that teachers know about teaching, educationalists know about education or councils about spending on schools; but it is what they know about each individual child that matters - and if they sit in administrating offices they don't know a lot. Yet this is where the attainment that we all want takes place and for which taxpayers pay.

    In order to maximise the connection between those who create attainment and the child, distance matters. Far too many prescriptive mandates are pushed onto teachers; usually wrapped in vague social engineering platitudes concerning inclusion, diversity and equality about which few would want to disagree but are in reality meaningless when faced with a child struggling to sit still and learn fractions. More practical learning and less educational theory should be our goal.

    Giving power to teachers and parents over how learning is delivered is the sine qua non of progress in educational attainment. Too often the educational bureaucracy delivers reams of broad-brush aspirations and then succumbs to micro-management in an attempt to make their generalised notions take hold. They don’t; teachers are well-burdened by wee Kevin busy chapping on a table because he likes the sound his ruler makes on the snot-encrusted cover of his sums book. They don’t have time to consider how wonderful it is that he is included in the diversity of a "learning environment enabling diverse learners to participate". They are far more concerned about each child learning something useful, than engaging in societal objectives - and a true liberal would add; objectives with which taxpayers may not always agree.

    The most important issue here is to give taxpaying parents and the teachers they employ the power to find out how best to teach the children they look after. Innovation comes from diversity and, yes, an element of competition between teachers as they try to find out what works best. As always competition encourages the discovery of knowledge and needs to be allowed. That means localising the production of learning to schools and their head teachers. Do taxpayers really want to pay one-size-fits-all schools? We doubt it, children are individuals not early years processing units.

    The educational support industry is replete with what economists call “rent-seekers”. These are those who earn an income from administering education but not about producing learning. They are masters at telling us how much they know about systemising “education”, but by default ignorant about each day’s realities in the nation’s classrooms. They have a huge interest in not letting learning be handled at school classroom level in a climate of diversity and innovation. Mr Swinney and Ms Sturgeon need to act on behalf of taxpayers to create this climate.


    Sunday, May 29, 2016

    Blobs and monoliths

    Scotland’s head teachers offered taxpayers a huge opportunity last week. Their suggestion that school budgets be handed over to them so that they can be directed towards local priorities opens up a desperately needed Scottish conversation.

    The opportunity is to open up a window to opinions held by those who control our blobs and monoliths; blobs are those armies of bureaucrats, academics and producer interests such as trades unions who have captured the sectors they operate within, the monoliths are the statutorily embedded nationalised sectors who hold high self-opinions about their importance and necessity – controlled by the blobs who benefit from the high salaries, less productive work practices, and fabulous pension entitlements.

    Scotland needs this conversation because repeated economic observation shows that blobs and monoliths cost taxpayers dearly. Not only do they conduct their operations less efficiently than competing entities, but a focus on the preservation of their political control over the status quo maintains those inefficiencies through time at great expense to the mass of taxpayers paid a lot less than the controllers. Inequality becomes embedded in our nation.

    There could be real light here, countering an increasing sense that the SNP have no policy ideas but rather are a management team intent on not very much while pounding their secessionist drums. Yet, the SNP resolute defence of leaving income tax alone during its electioneering showed that it has grown into government over the past years. A responsibility induced by the experience in power appears to be emerging; in stark contrast to the mad nonsense of Labour and the Greens.

    Nicola Sturgeon has made great play that her new government will have improvements in education at the core of its mission. John Swinney has been parachuted into the education brief as a sound pair of hands. Let’s hope they both take the gloves off on behalf of taxpayers.

    The issue here for policy progress is not, initially, economics but political power. Ms Sturgeon still talks too much about “partnerships” with the vested interests of blobs, while also claiming to act on behalf of all of Scotland’s people. Well, there is a contradiction here, many of the blob interests are the enemy of the interest of the people as taxpayers.

    What a new conversation about education in Scotland needs to do is to reveal the special interests of the unionised teaching profession, the educational bureaucracy, and the fellow travellers in academe who support centralism and social engineering through the school system. By revealing those, parents can then find out from each faction what its true interest is – and if it is not wholly a non-politicised focus on the educational success and enhancement of opportunity for their children, it is time for real change. It’s the parents after all who pay for our schools’ monolith and its blobs through their taxes. To serve the people, as Ms Sturgeon says she wants to do, our government has a public duty to stand up to the blobs and dismantle monoliths if this will improve the lives of our children.

    The prize is huge. Not only lower taxes, but a workforce that can compete on the world stage with Asia and America, offering productivity and creativity in a mixture of sheer bloody-minded, hard-grafting and enduring Scottishness. I have travelled the world, and I know that there are few like us; we are a grand people, well-loved and capable. Our teachers need to de-blob and de-monopolise to make us better – then we can keep more of our talented here in Scotland, to help all of us equally to be more successful.


    Monday, May 16, 2016

    Do we need a Cabinet Secretary for Uneconomy?

    On Sunday, Nicola Sturgeon wrote about her “vision for the first 100 days of my new government”. The usual presidential distemper brush was deployed, but modern government and its media management inevitably offer pap on steroids as it “works harder than ever to deliver”.

    Of course, economic liberals would suggest that this is precisely what government should not do; rather it should migrate to a firm stance of declining to deliver and work harder instead to undo its interferences. The promise of a “laser like focus on the economy and the need to generate revenue to invest in our future” tells the real story; our government sees the state as the driver of growth while growth is needed to allow it to tax us and then spend our money.

    Assuredly, the proposed new Cabinet Secretary for the economy will be handed this challenge, while the Finance Secretary will be freed to cackle like Scrooge and count our cash while thinking up new ways of expropriating our wealth and incomes.

    There is a flaw in this. Nearly all economists (there are still a few Marxists around) will tell you that central planning destroys wealth. Any new Minister for Doing More Stuff, which is what growing the economy involves, can only offer anything by declaring themselves to be the Minister for Decentralisation, Deregulation, Competition and Free Markets. If they don’t, they inevitably become the Minister for Central Planning, Wealth Destruction and State Corporatism – the Cabinet Secretary for Uneconomic Scotland.

    There’s something that business across Scotland can do in response to Ms Sturgeon’s promise in her vision to “engage intensively with business” and that’s only to engage while emphatically declining any subsidy, any sector specific support or other pecuniary relief that binds their business to a political policy. Of course, business can supply services to government, even at times help to design them if service design is its business – but it must not seek favours.

    The moment it does it obtains privilege over other taxpayers and becomes subject to the imperative of politicians to design their beneficence for maximum voter appeal – the opposite of the rational operational decisions that business people always seek. Too often, they are then baffled and distressed when their ideas are adjusted and wrecked by interfering politicians and bureaucrats. But, to misquote President Clinton – it’s the politics, stupid.

    Crucially, in this process, business loses all political influence over the one thing that it needs – the freedom to innovate to create more stuff more efficiently and produce more wealth. The paradox of course is that it is that growth in wealth Ms Sturgeon desperately needs. By declining to work ever harder with her, business too can help achieve her achieve her goal.


    Saturday, May 14, 2016

    Horrible history or horrible future?

    Yesterday we hosted a roadshow at which a group of free market liberal economists were let loose to explore and explain their world view. (See flyer in blog below)

    Now, the speakers were in the main Americans, and we are all aware of that nation's “can do” approach to life and opportunity. But we were all struck by their perspective in the way it offers up a mirror to the preconceptions in Scotland about free market liberalism.

    The speakers were mostly driven to their world view by:

  • A genuine concern for the less well-off; with freedom as a driver for jobs and growth.
  • The value of hard work and creativity by individuals as a root of economic success – rather than any notion that the state can conjure up jobs and growth.
  • The understanding that one person’s success becomes another person’s success if a flood of creative change is released through actions of individuals.
  • The total impossibility of such valuable discovery being possible through the agency of the state.
  • The inevitable gradual disintegration of the general wealth through the use of a politicised state as a central economic manager.
  • Now that last sentence may shock or even offend you; but note the word “inevitable” - if true, we have to sit up and think. Our speakers were practised professionals, intellectuals who use facts to find truth. Now think of Scotland, one of the most over-managed, centrally organised, politicised nations; governed in febrile aspirational fervour by politicians desperate to best each other and lord it over what gets done – by them.

    If the facts as analysed by such thinkers are right, ( their views on Scandinavian “success” are worth making compulsory reading for every MSP in this regard), then Scotland faces a horrible slow contraction of relative wealth if present policy stances are retained.

    And the worst thing about that? Those who suffer most will be the poor and vulnerable, the very people our politicians purport to defend.


    Wednesday, May 11, 2016

    Special Event - Austrian Economics Centre FMRS2016

    You are invited to a very special meeting hosted by TaxpayerScotland of the Austrian Economics Center Free Market Road show.

    Click on the graphic below for full details.


    Thursday, April 07, 2016

    Doing 'stuff' by ourselves

    Why is Scottish growth slower than the rest of the UK’s? The short answer is that we do not know. It is too difficult to strip out the effect of the oil and gas downturn from supply chains in manufactures and services that deal in not only oil and gas.

    It’s also the wrong question. What all Scots should be asking is why is Scotland’s growth not much higher than the rest of the UK? Politicians, of all hues, have told us that they are determined to create jobs and growth and have adopted policies that they suggest can achieve this; yet here we are trailing along behind the southern part of our federated nation and possibly even dropping behind.

    For us, the answer lies in the extent of central planning that is used and its inevitable costs in taxation. It’s fashionable in Scotland to castigate the “free market” on the (erroneous) basis that that was what created the wreckage in our traditional heavy industries and also that it is a form of dog eats dog capitalism that creates huge inequality.

    But allowing liberality and low taxes to induce “doing stuff” on the basis of private voluntary effort and ownership of your physical and intellectual property and freedom to price your efforts as you wish – which is what free markets actually mean – is really a quite different idea, it’s about a process. And note too the individuality of this progressive promise – this is not about corporates, this is about individuals with talent “making stuff happen” – and in a digitised world often without great environmental impact as well. We are in a new world.

    And every piece of data, every observation of growth trends, every statistical review in our world always comes to the conclusion that adopting those freedoms makes “doing stuff” happen faster. Our world progresses; and yes there is a lot of creative destruction that affects some negatively, but there is a lot more that affects others with huge positive gains. Just look at Asia.

    In addition, when things change and grow, we have options to consider civilised engagement with helping those who fall behind. Without growth, we appear to enter a different dog eats dog world of high tax and social redistributions that separates us into factions imbued with dissatisfaction – something you could call Scottish politics perhaps?

    We believe that Scotland’s talents, position in the world, quality brand, along with the physical and mental space that living here allows, are enormous capital assets that less central planning and freedom over pricing and property could release.

    We should be the most rapidly growing, educationally advanced, creative and outward looking part of the UK. All it takes is a stance of less spending and lower taxes for higher growth and more jobs to be released.

    During the election purdah period Taxpayer Scotland will be avoiding any party political comment. We will take the opportunity to use our blog to promote our world view that lower taxes and constrained spending are good for all Scots.


    Saturday, April 02, 2016

    Nannying us all to poverty.

    This week saw the publication of the first ever Nanny State Index. It looks at 32 criteria and 28 countries to identify the best and worst places to drink, smoke, vape and eat in the European Union.

    As with all indices, its categories are used as a cipher; in this case to give an overview of the extent of government interference. Future editions will be used to track the growth of paternalistic legislation.

    The author, Christopher Snowdon, head of Lifestyle Economics at the Institute of Economic Affairs, says cheekily:

    “By publishing this league table, we know that those who have a penchant for telling people how to live will take it as a challenge to get their country to the top next time. Public health campaigners, in particular, might be inspired to redouble their efforts to make their country less like the Czech Republic and more like Finland”.

    The UK comes third top with number one, Finland, being the least free. Scotland is not examined separately, but one has to wonder …

    Minimum alcohol pricing, named persons, sectarian legislation, corroboration rules potentially under threat, higher taxes using revenues for specific causes – the list is indicative of a way of thinking in Scotland which is the opposite of the cries for national freedom.

    Scottish “progressives” and their special interests so often appear to value what they call freedom as a method through which they can get the state to adopt their prejudicial opinions; whether that be dealing with absent landowners, impoverishing rich toffs, allowing welfare and housing as universal rights, or nationalising our railways. For all of the above add the rider – and using other people’s money to achieve these aims.

    Snowden points out, with reference to nanny state health measures:

    “if health is the goal, it should be remembered that our analysis finds no correlation between high scores in the index and better health outcomes, nor can we find any correlation between harsh laws on alcohol and tobacco with lower rates of drinking and smoking. Nanny state laws simply do not work very well”.

    If using other people’s money to design a progressive Scotland means introducing equally useless measures in the list above, the prospects for our wee nation could be grim; not only would there be no more money; there could be a lot less liberty.

    That’s a shame, self-determination for Scotland over its tax affairs is not necessarily a bad thing, especially if it brings a good dose of economic reality to our managerially socialist polity, still doing a fantastic job of harvesting imaginary money trees. It would be even better if it released liberties that bolstered what Keynes called “animal spirits” – there’ s nothing like a good profit being made by millions across society to generate social responsibility and enduring freedom from poverty.


    Tuesday, March 29, 2016

    Spending promises and tax certainties

    We are told that we are going to hear a lot about tax in this election. In reality, the debate in elections is always more about spending promises.

    Politicians are competing for your money. They believe that they should decide what to do with it. You have a democratic right to reject their offer and we offer some practical grounds for scepticism.

    If a politician tells you that the income tax rate is 20 percent:

    Remind them that the additional tax you pay for each pound you earn is 32 percent with both income tax and national insurance included; it's 44 percent if you count what your employer had to pay them in order to pay your wages.

    And when you spend what’s left, that rises to about 53 percent with VAT takings – in other words, of the turnover you create for the economy an almost equal amount has been taken by the taxman.

    And when they tell you that you have generous tax-free thresholds:

    Tell them that the average household spend on food (no alcohol), housing and transport (no car) (Table A1) is £147.60 per week. This uses up £7675.20 of your income tax threshold on must-haves.

    So, if you earn £400 a week and live like a mouse without a car or booze you in fact start with £116.59 net disposable income. Your effective tax rate is actually 39 percent of your wage packet.

    And if you do buy fuel, booze or VAT-able goods this will rise – a lot. In the end, again, the state will tax nearly half of the entire turnover in the economy. (It will then spend more than half by raising debt).

    And on the way, it taxes the less well-off through indirect duties and taxes as much as the wealthy who obtain reliefs; a hugely complex and contorted system that taxes proportionately but rarely in reality progressively (See Main points - para 4). Which tells us that, although few of us know these numbers, all of us can see this tax and spend money-go-round every day and we act accordingly; as householders we spend more carefully; as artisans, traders and businesses we invest more cautiously. Growth slows.

    So, when politicians say they are going to raise a tax rate:

    Do not accept for a moment that the revenue they foresee will be raised.

    Ask them what the loss of money taken from you will do to activity that creates Scotland's jobs and growth.

    And when politicians say they are going to provide an improved service:

    Ask them whether there is a similar service offered privately that costs less to provide. Care homes are a good example.

    Ask them if they can tell you the ratio of productive output to fixed overheads across what the service will own and what it will owe. (see page ten on Financial Reporting)

    Then you can decide whether all this spending is necessary rather than wasteful.

    All this economics gives me a headache

    Us too, but it isn’t all about economics. It is also about someone else deciding how to spend your money – declaring they can spend it better than you can.

    Every voter needs to ask if the state spends money necessarily and without waste. If you think it does not, you have a democratic right to vote, indeed try, to pay less. You are not being immoral. If by paying too much tax you are actually reducing what can be spent over time, you are protecting those in need from future loss through eternal "cuts" and low growth induced by the state spending beyond its means.

    And remember the last resort of the politician imbued with the idea that the way to use their power is to adopt central planning (which always fails) is to adopt the stance of “if it isn’t mandatory, make it compulsory”.

    That’s no joke. This is not just economics; less spending, lower tax, higher growth, more jobs offer greater liberty for all Scots through greater opportunity for all.


    Thursday, March 24, 2016

    Tax avoidance and spending incompetence

    What an extraordinary report from our Auditor General on the Glasgow colleges . It is worth reading; if only to learn how pathetic some of our so-called professional managers in the public sector are when they go about their jobs. Read between the lines and you see how much time you can detect has been wasted on internecine administrative battles rather than giving young people a good learning experience.

    If the losses built through this mismanagement were laid at the feet of those who made them, that would clear up some of the concerns. But, no, these are public servants who when faced with a major "oopsie" like this merely resign - eventually. No doubt they’ll be back in through some other publicly funded revolving door soon enough. Meanwhile, Scottish taxpayers are paying the bill for their lack of focus.

    We would like to see most of our public servants in arms-length organisations work to contracts that involve loss as well as gain. That is, they don’t just get bonuses if they do a good job, they lose out, substantially, if they do a bad job. As we have repeated often in this blog, in private business funded by hard work and earned revenue, it is the threat of loss that is far more important to performance than the promise of profit.

    There is a wider picture here. In a broadside today in Herald Scotland, Ian MacWhirter, talking about tax avoidance says:

    “Why should any group in society be freed from the obligation to pay tax because they threaten to avoid it?” and “revenue raising isn’t the only function of taxation …. it is about fairness, equity and the kind of society you want to live in.”

    There are two retorts to that.

    First, it’s an extremely illiberal idea, and dangerous, to suggest that “society” has some sort of divine right to do with our money what it wants as opposed to us deciding to do what we want. Yes, we have votes and parliamentary debate to approximate policy to crowd opinion, but we also have freedom as minorities and individuals to decline slavish acquiescence to government spending programmes.

    Second, when you get numpties like those in the Glasgow colleges unable to steward our tax money properly, and wasting many thousands on legal and accountancy fees to achieve almost nothing of value to their institution’s function, why shouldn’t we decline to continue paying them. Our labour created the wealth that was then taxed – we are sure Ian MacWhirter would not deny us the right to withdraw the use of that labour when it is abused.


    Tuesday, March 22, 2016

    We could not expect more

    In an emerging era of tax competition – which we see as a good thing – we need to count our blessings.

    The higher income tax threshold was always at threat after the UK welfare secretary’s resignation, but it does appear that the Scottish Government is beginning to understand the linkage between rates and revenue.

    They have stated specifically that raising higher rates “could put millions of pounds of revenue at risk” – and they have even told us that the reason for this is their own analysis. At last, a supply side win. We should offer congratulations to our civil servants and academics in persuading our politicians that the evidence is clear.

    Even better, they have offered to link the threshold for higher rates to the Consumer Price Index. This is at least honest; allowing more and more middle-income earners to be captured into high tax rates through stealth has been an utterly stupid way of funding the state. It destroyed productivity and aspiration not of the rich, but the skilled workers and technically talented staff upon whom Scottish businesses rely to compete globally. These are the people who produce the revenue for our welfare state. It’s a good move to offer them what is in essence a stealth tax cut (even although we think that a lot more revenue could be raised by cutting the rates).

    Income taxes are bad taxes at any time. Any takings above about 15 percent set off a process of avoidance involving pension reliefs, business expenses, service contracts and other shenanigans; raise the rate to 40 percent and equity deals, debt swaps, nested companies and capital migration all come into play. It has been said that up to 14p in the pound is lost on collection if you count in professional support services.

    Mrs Sturgeon will be criticised for being soft on the rich by giving any relief on higher rates, and mealy-mouthed with her additional £250 on the threshold for the less well off. But she should not listen to those who simply cannot grasp that tax revenue does not grow on trees, especially as the global recession continues.

    It’s slightly meretricious to suggest that the Scottish Government is “taking a distinctly different course to the UK government”. That’s precisely what tax competition will prevent. But if those Scots who believe that the most people in Scotland want a more re-distributive state are right, small changes will test this notion. That in itself is a good thing; as the social philosopher Friedrich Hayek said “competition should be seen at all times as a process through which we gather knowledge”.

    Scotland needs to find out how to be wealthier and more productive. Yes, we have to compete with our large neighbour, but we too are a global tribe with good connections. Releasing the animal spirits of the productive has, for us, always been the way to protect the vulnerable in need.


    Monday, March 21, 2016

    The crazy politics of welfare are not needed

    One of policy axioms that TaxpayerScotland holds to is that central planning is, always, a bad approach to policy design and, equally predictably, will always produces bad outcomes.

    That the UK government has managed to find itself in the bizarre situation of having forced the resignation of its own minister for welfare can be traced back to over-centralised policy.

    Consider. The Bedroom Tax was always a blunt instrument. We heard stories of elderly people being shipped seventy miles away from where they had lived for all their lives, young mum’s running home-working businesses losing their workspaces that kept them off welfare, and grannies using spare rooms for grandchild care duties that kept the child’s parents in work because they could travel and keep their jobs. Who knew so many could be so resourceful – seeking the dignity of self-sufficiency. Yes, there were some selfish super-beneficiaries, but the policy didn’t target them – it just painted all spare rooms as an unjustified benefit.

    Now we get the disabled treated, literally, with numbers. Scores plucked off centrally-designed distemper brush categories and sub-classes of relative incapacity that change capabilities adversely; often likely to cost taxpayers more money in the end than today. Foolish centralised policies become more than foolhardy when they run into the real world where human beings live in localised diversity far beyond the imagination of any civil servant. Politicians inevitably invent lousy policies if they try to use our taxes to plan central provision in the face of these glorious oh-so-human differences.

    In political economy, the process of self-destruction is called “producer capture” and “the tyranny of the status quo”. That is, the complex bureaucratic system required for a central plan becomes all powerful and self-serving, but entirely incapable of resolving the original goal – to provide diverse support for those in need. The central plan chokes on its own complexity and, too often, nasty mandated strictures follow.

    We believe that taxpayers everywhere would benefit greatly if welfare provision were localised to the smallest most caring entity possible. The family first, but localised community mutual assurance groups beyond that. That localisation would do something very special, it would bring knowledge about the needy into close contact with the compassion of those offering support.

    In tandem with that re-introduction of shared human decency into our welfare system - discarding at last the appalling dehumanising norm today of the thick rule book behind the glass window at the benefits office - localised fiscal responsibility can also put cash-out costs and cash-in revenues up against each other for proper evaluation of such services. If we could manage to get the politicians out of this effort with their useless central bureaucratic planning, localised taxpayers could make measured decisions about what is meant by the cliché “public investment”; that is, deciding whether services were worth improving, curtailing or disbanding on the basis of proper understanding of the varied predicaments of others and the costs of dealing with those.

    This has nothing to do with separatist policy; it’s to do with barring centralist policy. Taxpayers gain from de-centralised provision of services at all times. The closer we can get to seeing what happens to our taxes as they are spent the better. We’d like to see a ferment of innovation in this policy area; it’s bankrupting all of us to have it controlled by the grand designers – especially when they are at each other’s throats on how best to exercise powers that we can all see are not fit for their purpose. Let’s bring it all back to our own neighbourhoods.

    George Osborne enjoys goading Scots that Scotland can now raise its tax rates to spend more on welfare. In reality, as Reform Scotland have pointed out the £2.5billion of welfare powers coming to Holyrood are circumscribed through complex linkages with other benefits which are not being devolved. We are still beholden to someone else’s central planning – ironically today someone who has resigned because he disagreed with the curtailment of revenues for the central planning of his own department. You couldn’t make it up.


    Tuesday, March 08, 2016

    The arithmetic of no more money

    Anyone who runs a growing business has the dangers of over-trading hammered into them by their accountants. This phenomenon bankrupts more firms than anything else; usually when HMRC don’t receive their NIC or VAT payments on time.

    Over-trading involves buying costs that increase faster than selling revenues. A business can be in the peculiar situation of being highly profitable but continually running out of cash; and as it grows this cash flow shortfall wrecks it because it cannot afford to pay its suppliers bills. The arithmetic is horrible because it takes two mighty leaps to get out of it. First, you have to earn the cash to become a going concern without any growth and, second, you have to hoard enough cash to allow your next bit of growth to be financed from cash flow.

    Over-trading is intrinsic to all social democratic governments. They have been doing it for decades.

    They got away with it for that long because they were considered to have an infinite revenue source – tax payments – and an infinite loan facility – debt financed by taxpayers. But the 2008 crash and the aphorism that “there is no more money” changed all this.

    A report today by IPPR Scotland puts the realities of over-trading when there is no more money into focus with respect to Scotland’s new powers over spending and tax.

    As is usual from a "progressive" think tank its analysis is entirely conservative and replete with old-hat thinking about “cuts” and raising more revenue through reformed and increased taxes. They rightly point out that the arithmetic is awful for both taxpayers and spending departments but like many a failed business, their solution is simply to replace present over-trading with even more over-trading. There lies ruin.

    The analysis is based on their own “tax-benefit model” about which they make a startling admission:

    The model does not calculate the behavioural impact of changes to tax and benefit rates. This means that all tax-benefit changes analysed in this paper assume that household earnings, hours of work, employment status and other factors are unchanged as a result of a change in tax or benefit rates and rules, even though in practice these may change the incentives for individuals to work more or less.

    Once again, we have analysis based on what is called the static gains of tax changes. We are pleased to say that even John Swinney does not do this. Revenue Scotland has a dynamic model. Unfortunately by definition today it is an empty shell as it has no past evidence to go on.

    In a position of over-trading where your customers (taxpayers) are hard-squeezed for cash and your suppliers (state agencies) are howling for more funds – such analysis tells the real story about there being no more money. It’s – er - that there isn’t any more money. The cash flow of the state is simply not there and, just as with a business that is over-trading, escaping this situation is arithmetically horrendous to achieve.

    Even more unfortunate is that there is only one way of exiting from over-trading – and it’s a way that has nothing to do with shifting tax rates and thresholds around. That’s the equivalent of a business not answering the phone to its suppliers and raising prices in a way that shows disregard for its customers – loyalty dissipates and the business dies. For governments, such re-distributive tinkering does more harm than good – there’s nothing like shifting sands of policy to wreck confidence as is clearly shown in this new publication from the IEA this month.

    The escape route lies in productivity; output per hour of everyone in the country. An RBS report found that our productivity in the UK is more than 18 percent lower than other G7 economies. This is where all the efforts of any government should be focussed. How do we put more capital on the ground, how do we increase our workforce knowledge, technical talents and improve management skills and, crucially, how do we incentivise all our people to do these things, from the painters new van and ladder to the research house’s new autoclave and clean room?

    We know how, constrain spending and cut taxes.


    Tuesday, March 01, 2016

    Set Glasgow and Dundee free

    The Rowntree Foundation report on tackling city decline has been widely reported because it highlights Glasgow and Dundee as examples of struggling cities.

    It’s important to recognise that these two great industrial areas were singled out not for their absolute decline, but their relative decline. In this, they share a common characteristic of being cities being previously dependant on manufacturing.

    A few points struck us in our zeal for supply side reform in Scotland to re-build our potential.

  • While relatively declining industrial cities were seeing a decrease in full-time manual jobs – with Glasgow down 5.7 percent, and Dundee down 5.9 percent – where those jobs did still exist they were high paying, because they were technically skilled.
  • Cities that lost their young graduate skills, usually to London, were seeing higher relative declines.
  • There was no one route to reversing a declining trend. All sorts of skill set, physical fabric and environmental regeneration schemes are underway – with a mixture of success, although the majority of them do appear to be helping manage continuing decline rather than turning the course of cities fates around. The value of "development" planners is, as so often, moot.
  • These factors clearly have great importance for how Scotland’s builds its own future. Reversing relative decline in old industrial cities is a huge multi-faceted task. What struck us however was how much that task is human based – it is about what we choose to learn and teach each other to do – and that no-one in all the agencies dedicated to regeneration actually knows what the right choices are.

    But for us, the answer is staring us in the face. Focus on policy that maximises the learning of new manual and technical skills and retains our graduates to maximise the value of knowledge across all Scots. Glasgow and Dundee are key indicators for our success - and we would add Kilmarnock, Prestwick and Irvine too.

    In the next two days we are likely to hear new cautious measures on local council funding, and devolved welfare provision. We are also going to find out through the latest GERS report the extent by which Scotland is living beyond its means. There will be much erudition about policy, hand-wringing on debt and pious hope that state-centric measures will make things better. They won’t.

    For us, all of this re-emphasises the need to allow liberty in trade and property through lower taxation to light up the engine of creative destruction, to push well-meaning but essentially ignorant central planners out of the way. We need to make a really big messy gruel for growth in Scotland, created by those who are wild and crazy enough to try things out and not fear failure. The formula never changes:

    Less spending >> Lower tax >> Higher growth >> More jobs


    Saturday, February 27, 2016

    Let them compete for lardy cake

    Scotland’s councils are larding it good and proper with John Swinney over reductions to their budgets. Stand firm there, man.

    We’ve been heartened by Audit Scotland’s report on Edinburgh. The city has been battered by the tram debacle and other capital city overheads implicit in running a World Heritage site where it is difficult and expensive to do the basic duties of a council.

    However, Audit Scotland says the city is on top of its problems where, they say,“Councillors and senior managers now have a shared understanding of the problems”.

    For us, that’s a key point. Our councils are not running businesses aimed at sending people to Mars and back – although at times they make some of what they do appear to be as difficult. At root, they are serving their taxpayers with long-practised things like schools, dustbin collection and social care. There simply is no need to act like mini-governments; imbued with political wrangling and grand “strategies to cope with multiple agendas” – strategic plans for dustbin collection is gaein it laldy wi’ the flim-flam in our view, just get the job done and always look for ways to do it better.

    And that’s where the “cuts” come in. Our councils will be spending nearly £12 billion of our money this year. All businesses of that size need to be looking at their overheads, particularly their staff numbers – a “shared understanding” needs to include shared emphasis on serving taxpayers who pay the bills. No council worker has a moral right to their job greater than the sole trading painter or the hairdresser partners who lose their jobs because of council tax or business rates.

    Scotland’s councils have been far too lazy in their control of staff costs since 2008 when we were all first told that there was no more money. There were only 500 less employed in the public sector last year (See page 6 in the target pdf). They’ve now woken up and smelt the coffee as the saying goes; pity that it had to be thrown into their face to get them to wake up at all.

    Next week, we will hear proposals from the Scottish Government about our future local taxation. Whatever new ruse is thought up to tear more of our incomes from us we will be ever watchful as to the total burden and how it is spread between all taxpayers. Given the enormous pressures on care services and the mandatory imposition of the living wage across the care sector there are many who fear that once again our councils will be mandated to undertake missions to Mars.

    Too often, our government decides how to offer a lardy cake without finding a way to fund its ingredients. Let’s hope the new proposals give our councils some chance to decide locally for themselves how best to provide localised services. Competition through increased autonomy would work for all taxpayers.


    Thursday, February 18, 2016

    Charities should not be allowed to use our money to lobby the state.

    The Scottish Government has announced that it will not adhere to the new rules in England that mean charities receiving taxpayers’ money cannot use it to lobby government about policy.

    This is a mistake – it adds to unfairness and inequality by distorting our civic society debate.

    Here’s the context. Since 2008, Britain’s charitable sector has had more money from government than from individuals. In Scotland spending by the third sector is now nearly £5 billion with more than 130,000 staff. However, only around a third of the 45,000 voluntary organisations are registered charities and only about a third of those use taxpayer funding. What this means in practice is that many small charities struggle along on a highly localised basis without any taxpayers’ money, while a solid cohort of larger players funnel quite large quantities of our money to their causes.

    As such, those larger concerns have become self-perpetuating organisations with a keen interest in maintaining their presence. Three things have been notable:

  • They have become part of the “establishment”, locked into their need for state-sponsorship, essentially in many cases becoming quasi-independent providers of social care services.
  • As establishments in their own right, they have the induced overheads of large organisations, and as state funded establishments, they have adopted many of the practices and processes of state organisations to meet legislative requirements.
  • Their missions have shifted to match what they perceive as government objectives, since these are the source of their funding.
  • What this debate is about then is not the wee outfit from Auchtermabooie rattling tins at the local supermarket to buy a new bath hoist for the local cancer unit, it’s about quasi-autonomous quasi publically official entities using our money for lobbying about the social programmes that they administer.

    Now, council officials cannot lobby, civil servants cannot lobby, there are rules on corporates and other institutions, but for some reason, charities of this ilk can “advise and criticise” the state and use our money to do it. That’s wrong.

    It’s wrong because it is unfair that a pound forced from your pocket is used to fund opinions you may not hold; it’s wrong because there is no moral connection between the giving process and the ideas being lobbied for. It’s inequitable because those doing the lobbying are highly paid out of your money and most of us earn less than them, and it’s inequitable because the money they obtain is usually much higher than you would choose to give them if you were giving it through the goodness of your own heart.

    These things matter. Amplifying the voice of some groups over and above the voice of all who might have a view is unjust patronage and generates a cabal within a political elite where they inevitably serve their own ideological ends.

    This is precisely the sort of clique-ism that grassroots SNP supporters hate; with cries for bottom-up democracy and vehement attacks on Tory-ism, where landlords and privileged wealth owners are said to crush the Scottish demos through their “connections with Westminster”.

    Has it not occurred to our politicians that tax-funded charities lobbying for social policy goals are the landlords of their allocated tax revenues and so privileged wealth owners equally well connected to the Holyrood elite? And taxpayers are paying for this!

    What’s mind-boggling is that it would be so easy to adopt the strictures on government funding. Funding is not being cut, it’s simply being made a condition that it is agreed that it will be used for its stated purpose alone.

    Add to that some tough transparent auditing rules for the public to see how money is spent, and requiring all trading efforts using taxpayers’ money to be separated from all campaign work, including the staff doing it, and the issue can be resolved. Charity trading stands up on its merits as a service; charity proselytizing is seen for what it is. The days of the integrated part-service part-ideological organisation must be ended.

    Social Justice Secretary Alex Neil has said “we recognise third sector and equalities organisations play an important role providing a voice on public policy for communities” So do we Mr Neil, but the comment completely misses the point, these are not the moral views of the community we are hearing when tax-funded charities talk to you; they are the views of highly paid self-serving charities who suffer from mission creep, idealism and self-interest like any other lobbyist. More and more, they work for you, not the taxpaying public; social justice doesn’t get built through privileged cabals.


    Tuesday, February 09, 2016

    Huts and bothies in a small country

    A fascinating insight into how our country is governed came to light yesterday. It’s a consultation on “Regulatory concessions for huts and bothies”.

    These concessions are written up within the Building (Scotland) Regulations 2004. You can see them here.

    Two special interests; Reforesting Scotland and, later, the Mountain Bothies Association sought for huts and bothies to be formally recognised within the planning regulation system’s planning and building standards.

    Scotland’s Local Government and Planning Minister, the Cabinet Secretary for Rural Affairs and Environment and, also, Environment and Climate Change gave the idea the nod, so the civil servants have been at work.

    The role of the modern planner is to “set standards for the health, safety and welfare of persons in and around buildings, furthering the conservation of fuel and power and furthering the achievement of sustainable development”. That is, they are bound to consider multiple agendas in the way they plan. In addition, and because planning has often been found to be intrusive on development, the same planners have to produce a “Business and Regulatory Impact Assessment”

    They are now consulting on their proposals – which involve creating a new “type of building” within which a set of regulations apply. The consultation offers the choice of “doing nothing” but, not surprisingly, they are not proposing this, but instead suggesting a choice between a “schedule 3 type” which would not require a building warrant but would require compliance with technical building standards, and a “schedule 1 type” which exempts us from both building warrants and technical standards. (Keep up at the back there.)

    A formal Type which defines a hut and bothy has been carefully worked out (see page 6) and contains the startling insight that it should not fall down or go on fire. These are declared as “minimum requirements” and the implied requirement to build a safe building will be backed by a good practice guide, developed by Reforesting Scotland, Scottish Government officials and the Forestry Commission. This, it is stated, will improve health and well-being – along with a few other strategic objectives of the Scottish Government scattered around the documentation.

    You may think that we are generally allowed to do what we want to do in Scotland unless it is forbidden. But this is a good example of us not being allowed to do what we want unless it is written up by civil servants.

    Now, we are not against precaution over badly built huts and bothies, but we do think that this is a wonderful example of civil service capture. There is no mention anywhere of there being a history of climbers and ramblers being crushed when the roofs of huts fall in or their stoves burn them down.

    But what we do now have is a history of two Ministers, a hunting pack of civil servants, and a consultation process that taxpayers have paid for. In addition, it looks like we have two special interest groups, more civil servants and a quango looking forward to more taxpayer money to tell us how to build huts and bothies in the way they want.

    A trivial cost, you may say, but think of this as a cipher for how Scotland is planned across a wide array of much larger issues. It’s an enormously costly, often arbitrary and centralised bureaucratic system. When cries go up for more localism and community control over our local environment, this is one place where taxpayers could gain in large measure.

    Planning budgets should be localised right down to community level, with those communities dealing with most planning issues by themselves and contracting to council professionals for larger projects. That way public choices would lead to innovation in developmental practice. A rational localised choice for huts and bothies would involve sending a local retired surveyor who likes walking to talk to their builders and agree on the soundness of their design. The courts can deal with negligence and stupidity. Precautions on use would be a personal responsibility- as it still will be even with these regulations. Taxpayers wouldn’t need to pay a penny.


    Thursday, January 28, 2016

    Details, please, not dreams

    As battle lines are drawn up for the May elections, taxpayers can be forgiven for some scepticism. Fine aspirations will, as always, lead the barrage of promises. Such is the clunky nature of the five year changeover in power.

    Education is out of the starting blocks early, with Mrs Sturgeon leading strongly on improving attainment. Earlier this week, there was confirmation that 19 new schools are to be built using up £230 million in the final phase of the £1.8 billion "Schools for the Future” programme. Now Willie Rennie offers a one pence increase of the Scottish Income Tax rate across the board allowing a spend of £475 million on schools on colleges to “save Scottish education”.

    We said in a previous blog that we are doubtful that raising income tax will increase tax revenues, but instead will cut medium term growth, and increase inequality, but this is clearly a political move to put the SNP on the spot. Politicians competing to spend our money is not new in election battles.

    So, these are all fine words, but there is a difficulty. We have some figures on the £2793 million spent on education in Scotland that break down the overheads of this public service. What happens as the state spends more on education is that long-term overheads increase. That is, both the maintenance costs of buildings and teachers' salaries inflate.

    Of great concern for taxpayers is that the rate of increase in spending on overheads is nearly always faster than the rate of increase in total cash budgets. In other words, the amount of education we get for every pound spent is decreasing as time goes by.

    Now, that may simply be a reflection of a reality that in a new school with new equipment and better space it does in fact cost more to education a child or teenager. Or it may be a reflection of a reality that our monolithic education service dominated by the EIS and under proxy management of an education industry that ferociously protects its own educational ideology, the learning business is becoming ever less productive.

    For taxpayers, our general interest is in being able to know. Unfortunately, it is in the nature of the public finances to try to obfuscate such details, hiding overheads in council corporate and consolidated servicing budgets, hiding elements of payroll costs in pensions, supplementary payments and other entitlements. The costs and benefit details are thus lost in a welter of fine-sounding aspirations about doing the best for every child.

    There is only one way to give taxpayers proper information about how their money is to be spent, and that is to allow diversity of funding methods into Scottish education. In England, such diversity is emerging from the “blob” that Michael Gove managed to dissect with some success.

    It does not take an entire revolution to give the centralised monolith a shake-up and allow us to peer into the bowels of its financial mechanisms. A few direct grant schools, a few head teachers given full autonomy over capital and revenue budgets to innovate their services will do as a start.

    If taxpayers can be shown which arrangement provides the best value for our tax pounds, we might feel more inclined to listen to the aspirational dreams of politicians; especially if those aspirations were provided with proper realistic and detailed costings, through time, of what we get for our money.


    Friday, January 22, 2016

    “No detriment” should be scrapped

    What protects taxpayers? A good answer is tax competition.

    Take the eight year old Council Tax freeze. This was imposed, as always, for political reasons, buying votes. It combined overall control of local tax with a shift in some local funding to the Scottish Government with the power to raise revenues spread between them. Note that Councils are not legally banned from raising Council Tax; the Concordat merely lays out the financial consequences of doing so. Hence Moray’s recent flirtation with a rise required them to propose an eighteen percent uplift.

    So, two levels of government now compete for resources. And as neither wants to admit to wanting to hammer its taxpaying voter constituency – taxpayers are protected.

    There are parallels here with the arcane post-Smith discussions on Scotland’s tax powers. These have “a significant distance” to go according to John Swinney. That’s not surprising; they’ve locked themselves into a nonsensical debate.

    If you want the detail, go to the report here, you will be lucky if you can understand it. Actually, we would be stronger, it is by definition un-understandable. That’s because its calculations rely on diverse unknown future events with multiple origins that may or may not happen, and with unknown timings and durations. But, it does come to one specific conclusion; that no system can satisfy the twin ideas of “no detriment” – the idea that greater devolution should not be accompanied by fiscal punishment, and “tax fairness” - tax rules should not be created which benefit one nation’s population over another through time.

    The contradiction between these ideas is probably holding up progress in the discussions. We say “probably” because, as the House of Lords has pointed out, this whole process is secret. It too believes these two principles are incompatible and the Scotland Bill should be stalled. Paradoxically, the fiscal framework being discussed is not actually part of the Bill.

    To paraphrase what Adam Smith said about business people; politicians always like to say that they want to protect the national interest, when in fact they are protecting their own interests. In this case, they are acting like two nine year olds, neither wanting to give way to anything that might mean they lose face. In doing so, they face both ways, wanting both localised fiscal autonomy and wider UK largesse. That’s dangerous for all taxpayers across the UK.

    Meanwhile, the answer is staring them in the face. Discard the idea of “no detriment”, and discard the Barnett formula. Reject the idea that any change that closes down access to UK-derived public sector resources is always a negative; then accept that it would be in Scotland’s power to make any change a positive. Isn’t that what the SNP have been telling us ad nauseam for the last decade? That with the economic levers of fiscal policy they could improve our lives and re-build the nation? For us, the whole point of tax devolution is to introduce tax competition – to use the threat of detriment created by the actions of politicians to control their actions and protect taxpayers. If Scottish politicians want fiscal autonomy they must accept the risk of failure through their own ideals and decisions.

    The rot started here when Mr Cameron handed negotiations about constitutional change to politicians and not to a constitutional commission drawing expertise from outside party politics. We have a feeling that these discussions are being held together by a dedicated group of civil servants trying to herd cats. The politicians are circling each other trying to gain advantage for their future aims, not those of us who pay the taxes they are discussing. Perhaps it’s time for some stateswomanship.


    Monday, January 18, 2016

    Councils must change

    Moray Council is considering raising its Council Tax by 18 percent, Fife has been repeating its fears about a multi-million pounds shortfall in resources, COSLA is making louder noises about stresses on local authority finances. Is this how the Council Tax freeze might end?

    As far as our mailbox is concerned, and judging by some of the comments on the BBC’s Call Kaye programme last Thursday, many Scottish taxpayers still need to be convinced that our Councils deserve more. The transparency of the tax to household budgets and its impact on daily finances creates higher resistance than, say, a penny on income tax. This is despite the fact that a penny on income tax for those on the average wage would usually involve a greater financial imposition.

    The lesson here is that transparency about costs and benefits of taxes nearer to those who can see the spending they support, and fear the burden they impose, induces stronger democratic choices. Our local councils engage in a continual howling that they do not have enough money, but then again any household struggling to make ends meet doesn’t either.

    TaxpayerScotland rejects the idea that there should be any increase in the total tax take by the state on the basis that, in combination, all the taxes we face add up to an object lesson in how to destroy jobs and growth and slow down the creation of new wealth.

    Within that overall burden, the Council Tax freeze has focussed some minds, but not nearly enough. We have not seen anything near the innovation in the way our councils operate that is necessary, or indeed in the way the Scottish Government imposes obligations on our Councils as to what they should do and how to do it … and then lets local councils find the money to obey.

    A major issue is the culture in local councils about what spending is necessary. Some examples from our mailbox:

  • Overtime arrangements that go back to the 1950’s. Some of the cosy agreements between Councils and their unionised workforces effectively block any productivity improvements. Essentially, by locking into pay agreements that define how much is done when and for how much, change has become impossible. These agreements actually hold back wage increases because no-one can work more effectively and generate savings that could be used for other service innovations.
  • Unnecessary housing and environmental spending. Carpets replaced in social housing when tenants move after only a few months, excessive road signeage that adds nothing to safety or improved traffic flow, land clear ups paid for by taxpayers that benefit high earning businesses, land management and land use restrictions that create new repeating overheads to feed the local council with information that it never uses, and crush the change that would improve local lives.
  • Pointless economic development initiatives. Councils competing with each other through promotions, often involving informational web sites that no-one looks at, to entice businesses to develop locally, then falling foul of their own planning departments refusing to grant permissions. Meanwhile, local plans to improve local roads and bridges are buried in a mountain of “strategic plans” that are talked about but never acted on.
  • Over-cautious bureaucratic procedures. The sheer inward looking nature of so much of what councils do; checking EU rules, responding to “green” imperatives, acting as perfect employers with multiple, repeating, pointless and disruptive training, and not being productive through a workforce that enjoys good benefits, long holidays and sickness rates that are suspiciously high.
  • And all this poor productivity hidden behind a continual moan that jobs are being lost, workloads are too high, and stress is an issue for council staff. Well, take a look at the Public Sector Employment Statistics here and you will find that in the past year there were job losses of 0.1 percent - one in a thousand - among the 544,700 people employed in the public sector in Scotland. The half of those who work in local government saw the same tiny reduction, while the private sector increased by over one percent.

    The core issue here is leadership. Scotland’s council leaders are operating old-fashioned unproductive operational models, steeped in practices that have been followed for many years. It is truly time for radical change – a time to turn the cosy Council world upside-down.

    The way to start that is to adopt a key institutional change while retaining the overall constraint of the Concordat.

    All council functions should be split out and made to work within what the private sector would call profit and loss accounting centres. Responsibility for a share of fixed overheads should be allocated to each specific function – and where possible departments allowed to (indeed told to) cut their use of overheads where they can. And while any one function may in fact involve net costs, there is always a calculation that can be made on cash gains or losses in operations that can be adopted as a control.

    With transparent cost centre reporting, taxpayers would be able to compare the performance in specific operations of their own council against other councils. Comparative democratic oversight would quickly lead to some localities abandoning practices within functions that are generating undue costs. Top officers should have their salaries tied to performance agreements – the days that they can presume they will be paid however poorly they perform must go.

    The prize is an end to poor productive choices for our communities by obscure officials who spend our taxes in ways we do not see. That’s not local democracy, after all it’s our money being spent; we need to know the full price of what is being offered.


    Tuesday, January 12, 2016

    We need knowledge for growth

    The refusal of the UK government to allow Scotland to operate an expanded regime of post-study work visas seems curmudgeonly at best.

    A more liberal policy would cost taxpayers nothing, but it would give Scottish taxpayers more value for money spent in their universities. It would also offer the chance for entrepreneurial graduates to develop Scotland’s potential, supporting the jobs and growth agenda we so desperately need to be successful.

    Policy about our border controls, immigration and its accompanying security issues are not devolved, and no doubt the decision will be defended on the basis of overall consistency of these fundamental matters. But this is a smokescreen, there are still existing schemes that allow international graduates to work, the issue here was a specific geographically centred and controllable adjustment to optimise its value to Scotland.

    There is a deeper issue here, which relates to the ongoing discussions about power within the UK and adjustments in devolution through the Smith Commission and beyond. The refusal smacks of a certain amount of sour grapes rather than flexibility and principle. That can only feed more fuel to a tenor of grievance among those who enjoy adopting such a stance. Scotland’s taxpayers, above all, do not need arguments about economic growth and development to be side-tracked by that. A focus on generating new wealth means just that – harnessing knowledge and capital to make our nation grow.


    Tuesday, December 29, 2015

    Something stirs in the schooling monolith

    One of the trends of 2016 looks like being increased questioning of Scotland’s adherence to full central control of education. Today, we have had the Catholic Church suggesting “secular humanist” schools be set up. Earlier this year, there was a debate about Muslim schools in Glasgow and about parent power at St Joseph’s Primary in Milngavie with Nicola Sturgeon making a visit to sound out views.

    Something is afoot, and as taxpayers we could see this as a test of our “progressive” state. Does it allow change, or does it remain stuck doing “nothing to write home about” as David Torrance puts it in a recent column? And, we would add, beholden to the producer interests of teachers and the bureaucracy who decide what is best for our children through full control over the spending of our taxes. In doing so, they too frequently succumb to the temptation of doing what is best for themselves, raising overall costs, introducing complex performance monitoring that parents cannot understand, and choosing educational methods that act against improving attainment. There goes our tax money, not on productive schooling, but on the “system” of education.

    And there’s the rub – this is an issue about power. Some fear an educational apartheid, looking back with anxiety at an age of secularism and prejudice. But this is a smokescreen used to protect producer interests; modern Scotland is far too varied, focussed on the toys of affluence, and cynical about clerical piety to be taken in by bigotry.

    If a “progressive Scotland” is going to mean anything, is the Scottish Government going to allow a plurality and diversity through localised opinion? For taxpayers, a plural education system governed by transparent rules over spending and faith teaching offers a real opportunity. Parents should be allowed to evaluate the attainment on offer from local schools of all types and choose the costs they wish to pay. Is it not time for the state to release its control and let a alternatives progress in their own way under their own management on behalf of parents? They might learn something.

    It really is time to introduce some innovation and allow experimentation. Sticking with the monolith is mere died-in-the-wool conservatism at great cost to taxpayer wallets.


    Wednesday, December 16, 2015

    Steady as we go under?

    Few expected much from John Swinney’s latest budget. It was always going to be an exercise in political positioning prior to May 2016. Doing nothing on the Scottish Rate of Income Tax (SRIT) was predicted.

    However, the lack of any substantive content is concerning in other ways for Scottish taxpayers. A great deal now rides on perceptions as new powers are released. From today Mr Swinney is beholden to what he calls “reforms that will define the next parliament” – definitions that included “delivering a fairer system of local taxation” and the use of new tax powers “that support our central purpose”.

    The focus on SRIT seems to have allowed Mr Swinney to slip two new tax rises through without much comment – the first on large property owners, the second a copycat levy stolen from George Osborne on small buy-to-let buyers of second homes, an appallingly inequitable arbitrary tax that many think could have severe unexpected consequences.

    Such measures reinforce perceptions about the “central purpose”. Clearly, this is focussed largely on anti-austerity augmented public service delivery, based on the gradual introduction of a highly progressive tax regime that in time will inevitably include higher taxes as Scotland’s rate of debt accruals charges ahead.

    We think that bolstering the perception that Scotland favours a high tax, high spend approach to its public finances is the worst possible approach to creating jobs and growth. Scotland can only slip further behind the rest of the UK if it is burdened by an even larger state sector, with added taxes imposed on our biggest businesses. The Scottish Government is acting like an out of control social services department with its own money press.

    A recent article by the respected business commentator Bill Jamieson points out why it’s time to get real. Our growth is lower than the rest of the UK, our employment rates are still not improving fast enough and wages are not rising as fast as elsewhere. A major industry, oil, is laying off skilled operatives and purchasing elsewhere in manufacturing is contracting.

    Our view is that John Swinney needs to concentrate on where long-term sustainable tax revenues might come from in Scotland, and not simply assume he can milk us all through our wages, properties and purchases. To create economic success, he has to explain how Scotland’s economy can be rebuilt much more rapidly and not offer platitudes about “inclusive growth through innovation”; verbal psychobabble that could come straight out of a phrasebook from Soviet Russia.

    TaxpayerScotland believes that the only way that Scotland can reverse what appears to be a gradual decline driven by an intrusive government is to look to the supply side of the economy; to build the long-term wealth based on highly productive modern capital and entrepreneurship. Scots at all levels of commerce need to be released through low tax rates to make reinvestable margins. Only those can generate the much more favourable Scottish business climate we need that will induce a much larger increase in investment.

    The SNP will always couch its approach to policy in a “blame the UK” tone, iced with anti-austerity rhetoric. It needs to play to “the 45” and steal Labour votes. But larding it with that perception will only take it so far, and it will take Scotland nowhere. The time is coming when Mr Swinney will no longer be able to claim in his budget announcements how clever the Scottish Government is at spending UK block grant money while castigating London for there not being enough of it.

    The money instead will be Scottish money, being spent in Scotland, and if the perception changes to the realisation that far too much of it is being used by the state, and in addition is not being used wisely, the voter tide will turn. Mr Swinney needs to start being perceptive enough to recognise this early and not assume that the Scottish state can somehow create growth and jobs through more and more taxing and spending. It can’t.


    Friday, December 11, 2015

    Whose inequalities?

    Was it wise for the First Minister of Scotland to attend a trade union rally last night?

    Note the role; yes, Nicola Sturgeon is the leader of a party which professes a partnership with the trade union movement, sharing the same belief that state services, the spending they do and the tax rates that support that spending happily combine to improve the lives of all Scots.

    But as First Minister she also professes to support all Scots through governance which promotes fairness and equality. Is she now saying that this fairness and equality is always and everywhere denied when trade union power is unconstrained?

    The new trade union bill puts equality at its heart. By insisting on a minimum 50 percent turnout (but only 40 percent of the final vote) it gives dissenters who want to keep working to fund their families more equality of power over activists who often have other motives.

    And there are other inequalities.

    Britain’s larger trade unions are now exclusively collectives of public sector workers. Many of these workers are well paid, with benefits in pensions that are unavailable in private industry; they are entirely made possible by the fact that this pay is funded by the taxpayer. The accrued liabilities of these benefits are huge and some say unsustainable. Well paid union leaders have a long term interest in maintaining pay scales which involve private taxpayers funding people richer than themselves.

    In addition, the facility time which allows union officials to use our tax money to promote their union’s interests is a gross misuse of our money – unions should fund their own activities transparently. Company directors have to fill in a P11 for such emoluments, what's equal about giving trade unions tax free subsidies?

    Tick-box release of union subscriptions from pay packets is undemocratic, and the scope for unwarranted pressures on those opting out is well known. If unions are offering a service that other workers think is worthwhile the liberty to accept or turn down the offer simply makes that service equal to all the others that we buy. Any element of compulsion is inegalitarian, undemocratic and essentially another tax on work.

    A caution, not all about this bill is good. Allowing immediate access for agency workers who break into a workplace with a genuine grievance is a recipe for conflict. There must be appropriate processes put in place that will protect taxpayers from protracted conflicts in the public sector which we will, in the end, pay for. Liberality demands respect; we do not want to put too much power in the hands of the landlords of capital.

    And this is the nub of the matter – power. Scotland’s First Minister has the power of governance embedded in her actions. That governance includes a respect for all interests in society not just those who combine to express power. Indeed, the First Minister’s role as head of government in a free society is often to exercise her power in favour of the “wee person” who has no real power.

    Specifically, we would like to see a lot more respect for the wee taxpayer; too often in Scotland they are becoming the milch cow for organised interests, trade unions, corporatists, quangos, or simply free riders on the public purse. That way lies financial ruin.

    All power corrupts, it is the role of First Minister’s, constrained themselves by five yearly elections, to ensure that other factions, including organised labour, have their power constrained.


    Tuesday, December 08, 2015

    Scunnered by bampots

    To be a Scot sometimes involves being filled with despair. Here we are in a country struggling to retain its capital and income on the peripheries of Europe, challenged industrially by competition from vast and rapidly developing nations where workers are paid a tenth of our own.

    Yet our national debate resounds to a cacophony of lamenting by those who want more welfare, more housing support, more care for the elderly, disabled and vulnerable – paid for by a mysteriously endless source of cash – named as the government, but always in reality taxpayers, that is, all of us, including the elderly, disabled and vulnerable in need. Such is the zero sum Scottish circular game of pass the gravy boat through which we all eventually lose out when bureaucracy skims its agency fee for its own (high) pay.

    And then, when someone comes forward with an idea that might put more capital on the ground, creating jobs out of talent and knowledge, usually taking a risk on borrowed money and always generating new tax revenues, in step the tree huggers and their planning police to say “naw, ye cannae dae that”.

    We are reminded of Brian Souter’s remarks when denied the right to transport much needed commuting workers between Kirkcaldy and Portobello. He said he was “scunnered” and pointed out the incentive such refusal gives to enterprising people to take their ideas and capital away out of Scotland.

    Now the bampots who want Scotland to have a slow death from public sector strangulation have struck again and voted down Judy Murray’s Park of Keir development. Judging by some of the on-line comments this is seen as a good thing – she seems to be too well-known, too aggressive and too posh to be allowed to build anything new. We should all be scunnered again; Scotland has vast tracts of beautiful land, aren’t we allowed to use some of it to increase wealth for all, or are we at the point where everything has to be sifted through the grey caution of public sector planners monitored by the aggressive prejudice of an anonymised on-line army of nihilists? Who pays their bills, we wonder?

    We are reminded of a good friend who found a flyer from the enterprising owner of a newly re-opened highland village shop on the doormat of his mother's house. His mother waved it away with a snort; "och", she said, "they're only trying to make money".

    If this continues, and the liberty to excel and expand is negated in Scotland, a well-known unintended consequence of the high spending high tax economy will come into play yet more – it’s called voting with your feet. And why do I say “yet more”? Well, a colleague of mine who runs a national UK business came back from an annual Scottish tour last week to tell me he had met three friends in business who have decided to leave Scotland for good. They have had enough and don’t feel they can build a future here. While they move businesses to England, I know of another who has just stepped onto a long haul flight – to spend time with his daughter in Auckland. He’s got two other children on other continents as well. They all have degrees from Scottish universities – not used here.

    It's tempting to say "wur a' doomed and wid the last soul out of Alba please turn out the lights?" but, damnit, why should we? It's our nation too. Let's get mad as heck and fight back. Support us.


    Thursday, November 26, 2015

    Realism or hubris?

    Over the past few years, the planned share of our national income taken by the state has been reduced from 47 percent to 36 percent. For supply-side advocates this is the key measure of future economic success; that is, what is done with that 36 percent is a lot less important than the fact of reaching the 36 percent.

    However, it appears since yesterday that he has changed tack – rather than continuing to focus on the reduction of spending, he appears to be relying on forecasts for tax receipts of the future to fund a gaggle of locked-in promises and the continuing debt burden.

    In the process, his Treasury officials have found a few little tweaks that actually raise taxation – greater burdens on larger employers, council tax rises, and higher stamp duty on second homes. Meanwhile he seems hell bent on continuing with hugely expensive projects like HS2, and new decisions on what to do with Heathrow, nuclear power and Trident are following behind.

    This is a missed opportunity; kicking the tax credit issue into touch was a clever move, but slackening the pressure on containing the size of government will not induce the confidence in the future that is needed for a steady increase in repeating annual growth to take place so that real change can be made on the UK finances. The UK is still carrying far too much debt – Scotland alone pays £4.5 billion in interest on this each year.

    Dipping deeper into taxpayers’ pockets has all sorts of varied effects far outside of any politician’s control, especially so when the dipping is telegraphed as a future event. Savvy house and business owners, house builders, employers with large payrolls and existing apprenticeship schemes all have their own future aims. Where any one of Mr Osborne’s measures to increase the government’s income affect their perception of their own wealth planning they will take action; usually to preserve their income and so deny the state its aims.

    How much better to continue to address the role of the state and what it does – to maximise optimism and enterprise and the returns from those virtues. That way, a state sector in balance with a thriving sector will see its income rise steadily with growth.


    Friday, November 20, 2015

    Fiscal clarity

    One principle of good law within any democracy is that it should be clear and understandable by ordinary people. If it isn’t it will in time become undemocratic, subject to the whim of politician and bureaucrat to serve their own interests.

    As the UK parliament struggles with the new Scotland Act, this principle needs to be re-visited. The Lords has done taxpayers a favour by holding a red flag up to what is going on. Couched in the advisory language of the upper chamber it may be, but when the Lords say something is “most unwise”, lacks transparency and proposes a decision “made in the dark” they echo the doubts of many.

    Not many voters in Scotland will be aware that the debate over the delegation of powers under the new Act has been matched by tortuous and complex calculations behind the scenes in the Treasury, the Scotland Office, Revenue Scotland and the Scottish Government to follow the Smith Commission dictums of “no detriment” and the protection of the Barnett formula. Putting competing politicians in a room to resolve constitutional conundrums is never a good way to obtain clarity of legal principle or practice.

    The rot here is at its core a problem with the attempt to move tax powers from the UK to Scotland unevenly with the parallel move of spending powers. The core issue is the legacy of collective services for state pensions and welfare. The negotiations put taxpayers at the mercy of an early round of horse-trading in which issues of unionism versus separation are inevitably bound up with the issue of whether Mrs McIver of Perth and Mrs Blenkinsop of Eastbourne will get the same support from two different governments with divergent policy goals.

    Many pointed to Scottish devolution as letting the cat out of the bag. Devomax can now be clearly seen to be offering a whole herd of unherdable cats into our lives. Taxpayers must make a strong democratic demand for fiscal clarity. Complex cross-border laws about taxes will, as above, be open to gradual complexity creep and arbitrary adjustments for political aims. Such is the source of rotten tax policy and thick tax rulebooks that crush economic success.

    We all know that the devolved clarity most Scots want is that those who spend our money have to raise the same in funds. We stressed this as a sine qua non of a new settlement in our proposal to the Smith Commission - titled "A disengagement of centralised power" - and now also from the Institute of Economic Affairs in a new work about a federal Britain, which suggests that the proposed constitutional settlement in the UK is dangerously unstable. Yes, dangerous.

    At the core of the sovereign federalist approach is that power flows upwards, not downwards. That self-determination for Scots (not Scotland, it’s people) can be obtained by our consent to the structure of our own governance and thence to the value and importance of the UK. Only in that way can Scottish taxpayers be assured that they retain the true power, the power to decide on the extent of their liberty.

    The real trade off in taxation is our power as individuals to own our own endeavours balanced against the coercive power of the state to choose to spend our money on collective aims. Clarity in decision making about that balance is best done as close to the taxpayer as possible, and not muddied by Barnett formulas, offsetting welfare enhancements, cross border proportional margin adjustments and other constructed mathematical devices that bring a smile to the faces of Treasury mandarins, but leave Mrs McIver and Mrs Blenkinsop baffled.


    Monday, November 09, 2015

    Council Executive Pay

    A comprehensive list of local authority employees who had total annual remuneration over £100,000 has been published today by the TaxPayers’ Alliance.

    It shows that 251 council staff in Scotland earn more than £100,000.

    These payments come from council’s revenue budgets which we are told are under severe pressure across Scotland. Don’t be fooled, gross revenue expenditure on services in Scotland was £15.3 billion in 2013-14 , a rise of 1.8 percent from the previous year. The concordat freeze on Council Tax has led to interesting central support of spending from numerous sources (Only politician in cahoots with civil servants could think up the idea of offering additional millions through a measure called “Council Tax Reduction” funding).

    Across the board, executive salaries in many councils remain high, raising questions over value for money for taxpayers. In our view, there is a cultural shift needed within Scotland’s public sector. TaxpayerScotland Director, Eben Wilson, says:

    “With the average wage hovering around £25000, and 98 percent of businesses classed as small in Scotland, a £100,000 plus salary is a distant dream for most Scots. These remunerations put our council executives onto pay and terms far in excess of those they serve. We really need to look closely at what our councils do and how they perform for what we pay in our taxes. Are we getting value for money, or is the way they operate out of date and destructive to our economic growth?”

    You can see a summary of the figures for Scotland here.(pdf)

    In the figures remuneration was defined as including, but not being limited to: salary, fees, allowances, bonuses, benefits in kind, compensation for loss of office and employers’ pension contributions.

    You can see the raw data here for Scotland and for the UK as a whole here.

    You can find out how the figures were collected here.


    Saturday, October 24, 2015

    Growing up for Scotland

    Moving the status quo in ideas is a slow game. Political incentives mean that parties of all hues staunchly resist changes that operate against their interests.

    Yet, good leadership sometimes demands action which looks beyond electoral immediacy; promoting decisions that offer improvement in the future in the face of critical opposition today by vested interests.

    It appears the present SNP government is growing into its role in power in this regard. Mr Swinney’s announcement giving local councils control over business rates tells us that localisation and people power is not an empty promise in Scotland any more.

    Now, today, we hear that Nicola Sturgeon is “considering” allowing parents in Milngavie run their own school and has asked her Minister for Learning and Skills to engage with the idea. It would be easy to carp that this is a mealy-mouthed response; but we believe that a genuine interest in improving pupil attainment and school success is at the heart of this consideration that Scotland could have self-governing schools.

    As classical liberals we leave aside the illiberalism of the idea that any government should be able to control what local communities or parents want to do with their own money, but at last we are seeing some decisive grown-up government in which localising principle trumps political expediency which always kowtows to the producer interest. Scotland can grow this way, and any improvement will be noted by voters far greater in number than vested interests who control our councils and education today.


    Tuesday, October 13, 2015

    Dynamics matter for the less well off

    New analysis by the Institute of Public Policy Research has been widely quoted in the media. It suggests that 800,000 Scottish households will lose out by changes in the tax credit regime from this year.

    Within this group, the poorest 20 percent will lose more than others; with lone parents and couples with children losing most.

    However, reports in the press seem to have ignored this sentence in the IPPR statement:

    ”The model looks solely at the impact of the summer budget announcements, before considering any change in household’s behaviour”

    The IPPR report is therefore a statement of the obvious; if you cut benefits there are losers and those who rely most on benefits will lose the most. This entirely ignores the dynamic intent of the policy change – to allow work to pay and for those who need work most to gain most through lower taxes and higher incomes.

    Viewed in reverse therefore, those who focus on the static calculation of gainers and losers are really saying that the dependency on benefits is an irresolvable problem; stigmatising those who need support as irreducible insolvent losers with no potential. For us, that’s more cruel than Mr Osborne’s attempts to cap welfare spending through measures that attempt to offer a way out to self-reliance and solvency.

    Dynamic effects are important, we are reminded of the howls of rage after the first round of benefit restrictions; we were told that unemployment would soar and there would be thousands of homeless on the streets. In fact, employment increased as people adapted to the reality of their situation.

    There is no guarantee that replacing tax credits with a higher minimum wage will have the same effect, not least because the higher wages are a new burden on struggling businesses, but the policy at least offers an exit route for those dependent on welfare who are able to take it. Every productive working person offers a triple gain to every community; no need for welfare, new output that spreads income and, yes, tax revenues for those in need. The pessimism of leftward leaning minds about the potential of lower taxes and a constrained state to better the lives of all is very deep. The Scottish Government in its antagonism to any welfare constraint really does need to take a long hard look at its position on this for the sake of our nation’s economic success.

    How we wish their focus would be on the dynamics of success and its benefits for all. Instead, we get yet more carping about the 35 best paid executives of Scotland’s top companies earning around £55 million. We too think some of the salaried are paid far too much for what they do, but a quick calculation shows us that the taxes of this group would keep Scotland’s social support budget going for all of eight hours and forty six minutes. As Ian MacWhirter points out in the Herald today, we are all needed to support the less well off. It’s worth repeating that the top 1 percent pay 26 percent of all income tax; there is no route to solving the problems of social need by fleecing the rich.


    Sunday, October 04, 2015

    Time to offer constraint as a political value

    Scotland has so much to offer, yet our public debate appears to be captured in a morass of party politics. Of course, politics is important as it allows the electorate to weigh up the values held by those who would govern us. But values are not enough, Scotland needs new ideas. Instead, we get a battle royal over welfare policy which is not devolved, the nationalisation of railways, again a power that is not devolved, and multiple revelations of money mis-spent and wasted. As the Americans say, where's the beef in all this?

    For all taxpayers, our primary interest is in seeing our money well spent, and where possible that means mostly by ourselves because we have the incentives to spend it wisely, and will tend also not to spend it on politicised purposes, but on adding real value.

    Scotland desperately needs to see that added value across the board, it is the one thing that will help our poorer people, suffering badly due to the failure of the very socialism that so many suggest as a way to solve the plight of those with few prospects. That socialism has turned, as it always does, into centralised sclerotic debt-supported inaction because the money has run out. Competent managerialism of public money is not enough; we need new ideas for Scotland that induce new wealth for all taxpayers.

    Scotland deserves better than an endless series of political rammies between parties that compete to tell us how well they can spend our money compared to others. Given that we have a moribund centre-right, is someone on the left going to step forward with some ideas about how to generate the largesse they so desperately want to use to buy votes?

    Without these ideas, their world view is pure hypocrisy; pretending that they can do this and that, while conjuring the money to pay for it out of the blue. There are no free lunches, the price of these promises is in taxpayers' bank accounts; wealth at threat from unconstrained government.


    Thursday, September 24, 2015

    Time for a “connected party” statute

    The reports from North Lanarkshire are disturbing. Allegations abound about what Americans call “buddy contracting” in which opportunities to profit are alleged to have been on easy offer to contracted parties connected to commissioners.

    For Scottish taxpayers, such connected party transactions are bad news. Not only are they unlikely to involve best value pricing, they also create arrangements where added costs become hidden over the longer term without proper scrutiny. Once again, taxpayers are taken for yet more of their hard-earned cash.

    This hidden corruption becomes even worse when anyone who attempts to blow a whistle on sly practices is threatened with some form of comeback to their detriment. Things can very quickly slide into a morass of malfeasance accepted with a shrug and a blind eye. That way lies gradual demoralisation for all parties involved – and ossified graft.

    Using internal local council auditors to examine this rot when something becomes visible is not going to resolve a long-term problem in our small country where many commissioners and contractors know each other. There is too much temptation to ca canny and brush muck under a nearby carpet.

    We think it is time to begin a debate about connected third parties in all public service contracting with the aim of introducing some strong rules on service commissioning that assure the avoidance of connected party deals. We need our Councils to be focussing on constraining spending, protecting their officers, councillors and local taxpayers from shady deals.

    In short, we need to ensure a new honesty in contracting by a new Act of our Parliament. Commissioning contracts that deny buddy deals, independently verified, would ensure Scottish taxpayers that their money is being well spent.


    Tuesday, August 04, 2015

    Would it were so easy

    Jeremy Corbyn is interesting. He seems to carry little baggage of the managerialist Labour Party, offering instead some of the hope and vision of Nicola Sturgeon.

    He offers an emphasis on social justice, seeks to end austerity, and promises to allow the benefits of economic growth to be much more widely spread than today. This sounds familiar to us in Scotland, the SNP have been promising it for some years.

    But just as in Scotland, there is more than a slight problem with this; it assumes that it is within the power of the central state to achieve it.

    Mr Corbyn wants to create a “National Investment Bank”, he wants to release the Bank of England to invest in big infrastructure projects, he wants to affirm full nationalisation of the railways and the NHS. In short, it is a return to the idea that government can run the “commanding heights” of the economy.

    Sorry, Jeremy, it’s been tried … and it failed. Inevitably.

    How we should all wish that it might not, but there are good reasons for it not working. The first is that it offers a free lunch; somehow the state can find the money to turn on a tap of virtuous expansion. The second is that the state cannot know what money tap to turn on, especially if it has nationalised the tap and so destroyed that knowledge. The third is that when taps are turned on those who are in the know come in to take the money way for their own ends. It just isn’t that easy to expand an economy by pulling upwards on centralised strings using taxpayers’ money; economies grow by pushing from below across millions of individual points of private effort.

    You can cure austerity by showering the poor with taxpayers’ money from a helicopter, but only for a very short time; it very soon leaks away to those who can make best use of it for their own ends – and that includes political interests ; state-funded producers, unionised producer interests (especially professional unions) and the bureaucracy.

    The reality of this sort of approach is that the money gets taken from ordinary taxpayers, is thrown around like confetti and picked up by those special interests which have the power to gather it in. Wealth gathers around not the productive, but around those groups that will create the most immediate losses for the politicised state if they cease to co-operate with the central plan. Soon enough it becomes every group for itself, devouring taxpayers’ money until there is none left.

    And the worst thing of all? Those who suffer most are not those who have knowledge and access to power but the less well-off that we all want to see offered more from life. Centralised socialism has always and will always create poorer people at an astonishingly rapid rate.


    Thursday, July 30, 2015

    No more Taxes in the Park

    The spending of tens of thousands of our tax money on a music festival is a disgrace. This is a commercial priced event involving highly paid musicians and promoting the goods of some even more highly paid musical publishing companies.

    To take money from ordinary families, most of whom are presently spending money one of the largest discretionary costs of their year – the family holiday – and spray it around a field for young music lovers is a travesty of fairness and equality.

    It is completely crass of the Scottish Government to claim that it is simply another subsidy akin to others given to events which promote tourism, culture or whatever other collective notion our quangos think worth enhancing their empires by supporting. Every single pound transferred into this field of noise and glee has been taken from someone else who knows only too well the quiet of our old factories and the despair on our council estates. Why do we keep destroying jobs and growth this way? It’s deeply unfair.

    More than anything else what Scotland needs are real economic success stories; happenings in which individual or group investors use their own money to create their own property and capital which is sustainable through the revenue produced. The Tax in the Park episode is a corruption of this intent; giving the impression once again that only through subsidy can anything happen in Scotland. That’s an appalling message to be giving to a gaggle of young people; it’s unfair on their aspirations and its reinforcing a perspective that assumes them to be unequal.

    Our representatives in Holyrood – especially those on the left who are in office on the votes of the less well-off – should stand up and be counted when they get back; asking why some of their holiday money was thrown away like this.


    Thursday, July 16, 2015

    Take wind out of politics

    The Scottish Government’s position on energy policy, stated recently by Energy Minister Fergus Ewing, is that the UK decision to end renewable subsidies early was “anti-business”.

    For taxpayers, this is a hugely partisan comment. It was made at a so called “summit” in Glasgow of Scotland’s renewable energy producers. From the perspective of this expensive cabal of the producer and the political interest the removal of subsidies to a non-sustainable industry is hostile … to them; but to taxpaying Scots consumers, no.

    Subsidy reduction will reduce wind farm investment and so is “anti” to this so-called industry. It will also reduce the scope for politicians to buy votes with community schemes that trade acquiescence to local environmental despoliation in return for the whirling blades of expensive non-viable technology. Only yesterday the National Grid was laying out the need for additional expensive back-up generation to keep our lights on. The sound of our tax money sloshing back and forth in the producer and “community” interest in this so-called “market” is becoming overwhelming.

    The wind energy industry is an object lesson on how politicised central planning can wreck an economy. Households and businesses are paying more for energy because of these subsidies; we would give a figure but it appears that no-one can actually tell you what it is - which tells you something about how this "policy" is being conducted - estimates seem to range from £45 per household per year upwards.

    What is important is that it is ALL of us who pay an additional overhead across ALL transactions in EVERY market – adding massively to the cost of living and vacuuming money from other economy-building transactions – making us all a lot poorer. This expense for Scots and their businesses has come directly from our own Government’s capture by a green lobby that puts these costs behind a vision of climate temperature events that might take place over the next 100 years. This is the real “anti-business” lobby.

    We do not deny the need to reduce carbon dioxide emissions, but for taxpayers’ sake we do want this to be achieved at least cost and in a sustainable way. Vote-buying through a subsidised producer interest is not the way; especially in a country with a long history of engineering, metallurgy and, today, advanced technology. We should be spending our money on research into the potential for long-term disposal of energy dense nuclear waste, not disposing our money on the long-term inadequacies of putting electricity generators 100 metres in the air on top of a long pole to capture kinetic energy from thin air. It does not seem to occur to the Scottish Government that the jobs in the former route would be in the tens of thousands, including exports, while the jobs in the latter are overseas, with just a few here in Scotland for supervisors in Land Rovers to drive onto wind farm sites and record the fact that another one has turned itself off and is too expensive to maintain.

    The role of the Scottish Government is to set the rules for energy production. Its first focus, as always, should be on property rights. It is now firmly on a rack of its own making between its central cabal-based policy and local planning decisions. Energy projects are accepted and turned down through random decision-making based on local political expediency. Contrary decisions make it look foolish. Delays, obfuscation and shady dealings (think fracking gas) make it look devious and anti-democratic.

    The way to identify the value of a property right is to find out the perceived value of the property and apply prices. That plural is important, prices change through time and energy investment needs as much certainty as possible about long term prices about which there is serious uncertainty. De-politicising energy production prices should be a key objective for all politicians. It would let them avoid making fools of themselves trying to plan a key industry.

    That’s why Scottish Energy Ministers should not turn up at producer summits and bemoan a change from enforced obligations and taxpayer subsidy to a more sensible system of long-term contracted pricing. Cosying up to a subsidised cabal is inimical to the general interest of taxpayers in a government that works on their behalf.


    Thursday, July 09, 2015

    Wee, poor, stupid? Give us a real alternative.

    While good theatre, budgets always succumb to the free lunch imperative; chancellors give away with one hand while taking with another. In a period following a long recession, all groups look for relief, yet almost always calculations show that the lumbering ship of Big Government has seen only minor tweaks on its rudder and continues to burn vast quantities of fuel at an alarming rate.

    And yet … the stance and gaze of the captain looking out to the horizon matter – the working crew see and react to it. It sets beliefs about tomorrow.

    For Scotland, seeking more fiscal autonomy, those beliefs matter greatly. To continue the analogy, are those on the bridge planning to go somewhere that the crew do not want to go? But also for a Scotland that only recently voted on mutiny, it is more subtle than that; is the declared destination unwelcome and a clear alternative on offer, or is it simply that we want to continue with the way things have been done before?

    George Osborne cheekily used the word “progressive” several times in his Budget speech. He made clear his vision of a low tax, high wage, low welfare destination. He also offered supply-side measures through tax cuts, apprenticeships and planning reviews that might generate the higher productivity we desperately need. He clearly understands the need to release the vital sparks of his economic engine – the only known way to help the less well-off and vulnerable. So what is the response of the oh-so-conservative left-wing Scottish establishment? And not just the Scottish Government, but its satraps across the specials interests and third sector tax spenders?

    Almost entirely that Mr Osborne is being wicked, punishing and stupid – WPS, recognise that acronym?

    In Scotland’s new found part-autonomy, there are many who are agreed that our nation needs to get rid of the perception that it is too wee, too poor and too stupid to succeed. We do too, we are proud of our wealthy nation and its capabilities. WPS, we say, is simply not true.

    But, and it is a big but, we cannot disprove a mistaken perception by re-inventing another; that the attempt to squeeze down on the welfare bill, to allow success through productive work and lower taxes is simply not on and an evil imposition. It’s not, it’s an approach based on observed incentives and observed behaviours that generate economic improvement. If Scotland wants to be seen as progressive and make use of new autonomies, it has to do better than moan with grievance. We need to come up with some radical supply-side ideas that will make us bigger, richer and cleverer; trumping Mr Osborne’s two-handed trick which actually raises yet more billions in taxes.

    An alternative aspiration based on reality, not vague distemper brush utopian sentiments, and offering an evidence-based option to a better future is the only way to be truly progressive. We could start by laying out a long-term financial plan that did not involve higher taxation and yet more spending and instead used localisation, community involvement and incentivised canny productivity as a truly Scottish driver to resolve our pressing need to improve the lot of our poor.


    Tuesday, June 23, 2015

    We don't need a fishing bureaucracy to tax us

    We are not fans of many of the projects that the central planners of the Scottish Government’s environment, climate change and land reform department.

    However, they seem to have been reading the right books in their latest fishery proposals. At last, the idea that a property exists in the right to exploit the seas has been accepted. Taxpayers can benefit from this.

    Their proposals to restrict bottom dredging methods in the South Ross Arran and Wester Ross areas at last recognise that fishing as a hunter-gatherer activity has to be put in the dustbin of history. Predictably this has put two producer interests at loggerheads; the Scottish Fisherman’s Federation and the Scottish Creel Fisherman’s Federation.

    Richard Lochhead must stand firm. This is a chance to show that government is a rule-maker not a deal-creator. Too often his department, acting under the Scottish Government’s promotional strategy for “food and drink” or for the “green economy”, ends up extending the corporate privileges or producer interests against the best interests of taxpayers and consumers. Too often too, it promotes state-funded business activity that displaces private entrepreneurial endeavour costing taxpayers money and damaging our wealth.

    The potential gains from a properly executed, competitive system for allowing managed farming of the resources of the sea are enormous for Scotland. There is plenty of experience available in New Zealand how to maximise sea catches at a long-term sustainable rate. The key is to allocate ownership of the right to exploit, and all the costs and management of the exploitation to the industry itself.

    To protect taxpayers, we really do mean “management of the exploitation”. The fishing industry should be paying for its own marine biologists, its own catch police, its own audit of its abilities and production outcomes. The state has a small role only, providing a light touch independent scrutiny of the numbers that the industry uses to regulate itself.

    Directed like this, Scotland’s fishing industry can be a world-leader, developing its own assets without the costly interventions of multiple state quangos at great taxpayer expense. Our fish might cost a little more in the shops if the industry is policing itself, but we would have a choice between that fish and the equally good beef, lamb (and free range haggis) that Scotland produces. We’d also have a slimmed down bureaucracy and lower state planning overheads; the one thing taxpayers need to make Scotland more successful.


    Wednesday, June 17, 2015

    How we spend should govern how we tax

    There is a lot of noise in the air about local taxation at the moment. This is because there is a Commission collecting views from all and sundry on the issue. We too will be submitting to the consultation exercise.

    As so often in Scotland we hear a lot about those who want to spend our money locally, but not often about those who pay the taxes that our councils spend. A glimpse was however provided yesterday by the Scottish Government statistics team.

    Collection rates are up, a reflection of the fact that despite a lot of groaning from households, for whom the Council tax is a large visible bill unlike other payroll taxes and VAT, Council Tax is difficult to avoid. That’s a good clash – the payer sees the burden and the payee has to justify their spend.

    There is also an interesting change in Council Tax Reliefs down by 4.8 percent. While most reliefs go to genuinely poor and vulnerable households, it is good to see some constraint here. Council services are generally available to all; it is not good if the burden of this tax becomes disproportionately loaded onto fewer larger property owners. That creates division not cohesion.

    It is also important to recognise that council tax receipts are not shrinking massively and that in John Swinney’s 2015/16 budget councils get a cash increase in their central government stipend. Taxpayers should not be taken in by persistent howling about “cuts”. Cash spending within government, both centrally and locally, continues very much at the same levels each year.

    What the Concordat has done is made rationing of public funding highly visible. That’s a good thing. It shows us all that we need to think a lot more about what we want our councils to do, how to do it, and how to fund it.

    What our councils need to do now is find a lot more ways of gearing their huge assets in the public realm and its collective services such that they offer much greater added value. You only need to Google “101 ways to save money in local government” to find out how from across the world. Contracting out more, using arm’s length external organisations as service managers, simply stopping doing some things (promotional communications and spurious economic development initiatives come to mind), charging for some services, putting prices onto others, handing over responsibilities to local voluntary groups, the list of what Councils can do if they stop thinking politically and start directing their operations management effectively is huge.

    We won’t need to pay high taxes if we use our collective assets to generate jobs and growth through allocating revenue rights in those assets, transparently linked to their costs, to bright entrepreneurial local managers who can make something of them rather than merely service their losses and depreciation through subsidy.


    Wednesday, May 27, 2015

    “The right thing to do”

    The responses by politicians as they position themselves around the proposals of The Queen’s Speech are more interesting than its well-telegraphed content, particularly when it comes to the promise of no rise in national insurance, income tax or VAT for the next parliament.

    Is this a gimmick? Partly so, there are multiple duties, thresholds, reliefs and entitlements that can be adjusted; and that old hidden reaper – fiscal drag - which pulls in more revenue as wages or prices rise will do its work through time, as it always has, and top up the Chancellors treasure chest.

    Is it a lock? No doubt if were there a serious crisis a way could be found to expedite more extractions from our pockets. But it’s a lock in the sense that it is a clear statement of intent to limit government. George Osborne is taking a small risk, but he knows his numbers are improving. He’s more likely to cut taxes – hurrah – if growth continues.

    And for Scotland, that’s a genuine challenge. For the new Tory government, as politicians say, “the right thing to do” has been made “totally clear”. Shrink the state, cut taxes, especially for the less well-off, and create jobs and growth. How opposite can you get from spend more, increase tax rates for the better off, and – er – create jobs and growth.

    There is now a clear gap in opinion between statism and liberalism in the UK. The UK, with its OBR, its tax lock and its commitment to balance the books is beginning to realise limits to its powers in a post-Keynesian world. Scotland’s government upstarts still cling to demand management, with no sign of fiscal prudence, against all the evidence that centrally planned expansions simply cannot work.

    Let me be contrary. I think this creates an opportunity in Scotland. Here we are, with a dominant political force in the SNP, supported in large part by the vulnerable, less wealthy, lower earning voters, and so determined to re-distribute through the state’s taxing powers to better the nation. Be reminded that we have in the past week been told that our educational outcomes are poorer, and the NHS is missing targets. There are other failures in the wings, the centralised police force is becoming remote, and local authorities are beside themselves with fearfulness of their care bills.

    It’s going to get a lot more difficult for a Scottish Government to declare its failures to be the fault of “the other lot down South”; especially so if greater powers promised by Smith are actually transferred over with their responsibility costs. A long fall from grace is on the cards if the SNP fail to deliver their promise of a better nation.

    And yet, there is a political disconnect; the Tories who are very clear that they are doing the right thing have the same widespread support in the South of England as the SNP have for their inverted promises for Scotland. Some, like Nicola Sturgeon, may make a lot of this – even without Alistair Carmichael’s interventions; and some, like Ruth Davidson, will get nowhere because of it – fighting a battle over the epithet “Unionist” that is so last year. Changing this political reality to move the consensus in Scotland to a more sensible economic debate is becoming seriously important in our single party state.

    The real question today in Scottish political economy is where the heck are the supporters of stout Scottish liberalism who will stand up to be counted? Or to quote the economist Hernando de Soto “ `Are we going to make capitalism inclusive and start breaking the monopoly of the left on the poor and showing that the system can be geared to them as well?’


    Thursday, May 21, 2015

    Natural resources are not wealth assets

    It is beginning to grate with us that our government appears to equate natural resources with national wealth.

    Yesterday, Nicola Sturgeon is reported to have said: "Scotland's natural potential makes it a cost-efficient place to develop renewable resources".

    This non-sequitur offers up the most expensive of assumptions for taxpayers. Think on this, Australia in the mid-nineteenth century had vast quantities of easily extractable coal and iron ore, yet bought most of its steam powered mechanicals from Glasgow; industrial resources carved from the manual labour of shovel wielding deep-shaft miners from Ayrshire and Lanarkshire who built a wealthy nation.

    Resources and the ability to exploit them are entirely separate matters; the cost-efficiency of exploitation is driven by knowledge and technique not the presence of the resource. Grangemouth's importing of American natural gas as it sits on top of its own frackable gas resource tells the additional story; that alongside knowledge, liberty to produce and free pricing matters.

    This is where taxpayers are being taken for a ride. We have few offshore wind farms because they cost a fortune, and the techniques to build and maintain them are not yet fully worked out. We have thousands of intrusive and highly inefficient on-shore wind turbines (mostly manufactured overseas) for which we pay three times the going rate for electricity through energy price taxes hidden in our electricity charges. This money is being poured into a deep pit of doubtful physics and engineering, and pitiful environmental disruption - largely exploited by rich landowners and investors at the expense of the urban poor.

    And yet, the Scottish Government are determined to demand yet more subsidies for generation and transmission, all on the backs of taxpaying householders and business.

    All this for a product, electricity, that we all want to be securely available to keep our homes warm and bright and drive our manufacturing machinery. If the market were not skewed by politicians seeking power to command progress and, yes, even with carbon-reduction measures built in, taxpayers would undoubtedly pay less for more, while the knowledge and talent to ameliorate CO2 emissions would in our view be developed faster because our nation would be richer.

    The least cost-efficient approach to development known to mankind is central planning. Taxpayers do not need politicians to plan electricity generation. Their knowledge, beliefs and self-interest do not match those of their taxpaying electorate who pay for their bad ideas.


    Tuesday, May 05, 2015

    Caution - people at work

    With two days to go until we all vote for a new government, many are still baffled by the changes upon us. This is indeed a strange election, where we Scots appear to have captured a period when the Tory incumbents to the South are stuck between a fight over Europe with UKIP and a stand-off with a Labour Party desperate to atone for past mistakes when in power. We will know more on Friday, but the SNP appear to have found the moment when they are attuned to the bulk of the Scots people, who are looking for a change.

    But that’s democracy; the people discarding what they consented to before, and re-consenting to a new plan for governance. Of course, the other side of this coin is that those who offer a change have to perform, or they too will be discarded in another election; and in the case of the SNP, the 2016 election will be an early test. Their behaviour at Westminster could affect a result in Holyrood.

    As stout supply siders, we have often expressed doubts that the policy choices being offered by the SNP will achieve the goals offered. But we can always be wrong, and we certainly don’t believe that Scotland is heading to hell in a handcart as some do. Politicians in any new government obtain a lease on power for a limited period only; if too much wrong-headedness becomes apparent the people will get to work yet again and pitch them out of office. Democracy, like capitalism, enjoys creative destruction.

    Our concerns are for the longer term; and that the trend in spending and taxation in Scotland is always to support more spending and more taxation; a trend that we are fully convinced curtails the creation of Scottish wealth more than it promotes it. This trend is supported not only by the SNP, the growth of Big Government and high taxation in the UK has been reinforced by all parties across the past 50 years. Yet the results of this are bad; we are still plagued with lack of growth, squalor in our communities and widespread inequality and poverty.

    As economic liberals, and political scientists, we think we know why and, on behalf of taxpayers of all voting persuasions, will not hesitate to explain why we don’t want Scotland to continue down this path. We also believe there are alternatives which could be palatable to all parties, the old antagonisms of left and right are so last century. It’s time for new blood in politics for a new generation to offer real “progressive” policies.

    For now, it’s time for us all to have our say. We’re going to haud wur weesht until the votes are cast.


    Monday, April 27, 2015

    Credit cards and centrally planned missions

    Corporate credit cards have apparently been withdrawn from managers in NHS 24, Scotland’s centralised telehealth and telecare operation.

    We should applaud this move; especially as the reasons appear to be related to lack of proper control in reporting the use of these cards. Anyone in business in charge of its bought ledger will know how difficult it is to police credit card expenses.

    But this curtailment points to a deeper issue – the work of NHS 24 as a whole. One of the tenets of political science is that publically-funded organisations are subject to mission creep. They continually find more to do, and when they cannot see anything immediately obvious they often invent it, despite what they may have been set up to do.

    NHS 24 is funded by the Scottish Government and that lovely fountain of lard and gravy, the EU. Their chosen theatre of operations in telehealth and telecare lies at the frontier of what us stumbling, half-ignorant, muddled-thinking humans can do with our technologies. It brings together clinical practice, evidence based medicine, device hardware, electronic firmware, IT software, connectivity, remote working, call centres, data reporting and many other bits of our modern connected world.

    Think of the risks to taxpayers’ money when we let loose those spending other people’s money on such a wide range of foggy unknowns. Compare the costs of small telemedicine entrepreneurs struggling with a telecare system, and sometimes sleeping under their desk at night to get things done, with the NHS 24 bureaucrat attending meetings in Brussels using his corporate credit card and apparently spending £220,000 of our money in the last three years.

    AuditScotland castigated NHS 24 when it ran £23 million over budget on one of its IT initiatives – which has still not been put into place. Taxpayers have since provided a loan of £20 million to help sort the problem out. There are dozens of entrepreneurs spending their own money on telemedicine and telecare with systems ready for sale, some of which only half work, but which have cost us nothing so far. We could learn from such small scale localised implementations far faster than through grand schemes.

    One of the missions that agencies like these invent is the overarching “framework agreement”. At TaxpayerScotland we see rather too many of these for a small country like ours. These are the grand designs of the central planner. Not only are they unnecessary, because we should not be operating a central plan, they don’t operate effectively; they create managers who take foreign trips with corporate credit cards.

    Here is a small extract from the document you can find here describing the framework within which NHS 24 operates. Note particularly the nesting of central plan within central plan - how many people are reading each other's memos here at our expense?

    NHS 24 is to contribute to the achievement of the SG’s primary purpose of increasing sustainable economic growth by aligning its aims and objectives with the SG’s published Economic Strategy and National Performance Framework, and the NHS Scotland 2020 vision for health and social care.

    NHS 24 (the Board) is a Special Health Board responsible to Scottish Ministers through the Scottish Government Health and Social Care Directorates … For policy/administrative purposes NHS 24 is a Non Departmental Public Body (NDPB), classified as an NHS body. The Board has corporate responsibility for ensuring that NHS 24 fulfils the aim[s] and objectives set by the Scottish Ministers and for promoting the efficient and effective use of staff and other resources by NHS 24 in accordance with the principles of Best Value.

    If this top-down approach to our health service claims to offer best value for taxpayers, with its Euro funded “engagement” and 87 staff trips abroad in the past year and its “insufficient receipts supporting credit card statements”, we feel obliged to exude a loud raspberry in response. This is civil-service capture of the politicised quangocracy imbued with unproductive and costly ideas about their mission. It is worth noting that this special Health Board is run through five committees, including a wonderfully titled “Equality, Diversity and Involvement of Patients and the Public Committee”. (They should call this the Political Correctness Committee and be honest about it.)

    And in that politicisation of the service lies a serious wrong that contradicts a major plank of the Scottish Government’s political goals. This agency and its badly controlled costs embed permanent inequality between the taxpayers paying for health and those who claim to provide it efficiently. There has to be a better way.


    Monday, April 13, 2015

    That was our money that was

    Taxpayers could be forgiven for spending quite a lot of this election campaign with their head in their hands, moaning. The media are punishing us with their agenda choices through which they seek smoking guns and distorted mirrors – especially about spending and taxation, deficit and debt.

    In this, contemporary politics has changed in more ways than its new multi-party realities. Politicians of all parties are now operating in an arena where there is no more money. For economists, that is less than a surprise. Forty years ago, as the age of burgeoning statutory entitlements began to build a head of steam, there were those who said they would need capping or the engine of wealth-creation would stall.

    Today’s frantic attempts to dig out of “the facts” about the next parliament completely miss the point; government spent taxpayers’ money through promises on health and welfare made years ago. Today’s debate is like staring into an empty cupboard and asking what we might like to eat.

    It’s some comfort that new promises are now always questioned as to their affordability; but only some, taxpayers should be particularly wary of calculating politicians with eyes on the levers of power seeking more of our money from over-specific sources.

    Paul Johnson, director of the Institute for Fiscal Studies, has said the debate around tax in the election campaign is "deeply depressing". He’s right.

    What concerns him is the targeting of specific groups; the rich, tax avoiders, non-doms, owners of large houses, high earners with large pensions; big corporates; we draw your attention to the aphorism by Bastiat to the right of this blog; they may be the groups that can afford to pay, but we cannot maintain liberty and prosperity when factions in society are at each other’s throats. As Mr Johnson puts it “this is all real money and has real effects on the economy”. He adds that there is “no sense from anybody about a serious way forward for the tax system”

    What we really want to hear is that taxes should always have low rates and always be built on wide bases. What’s more those bases should be easy to identify across all economic activity. We then want a politician to step forward and declare that taxes that depart from these simple principles will not be imposed, and that the state must live with only the money that such clear taxation can provide.

    That would be truly people-focussed politics; trusting the electorate to organise their own local mutuality when needed; the central state need not apply. It destroys tomorrow’s wealth.


    Wednesday, March 25, 2015

    Our taxes in the food blender?

    One of our government’s loves is Scotland’s food and drink industry. In the land of the deep fried pizza and vast outpourings of chips with brown sauce our politicians want Scotland to become a “Good Food Nation”

    It’s ostensibly a worthy goal, until you look at what it entails and the taxpayer’s money that it assumes to be available to achieve its aims.

    First, a Food Commission; sixteen members from “the industry” plus civil service secretariat. We put industry in inverted commas because its members are in fact from “environment, retail, seafood, food security, public food, food industry, access to affordable food, civil society, chefs, local food, education, public health and food safety, primary production, children and young people”.

    That is, all the interests, with competing incentives relating to food are put into a room to chat, probably largely at our expense. These interests are so diverse that “members of the commission have been asked to participate as individuals rather than as either representatives of their parent organisations or associated with a particular position”. Fair enough, but think about the potential here for mission creep at our expense if these discussions are being held within the context of a state-sponsored “Scotland PLC”.

    And you don’t have to look very hard. This initiative is based on a wider strategy which can be found here. Priority areas are offered; “food in the public sector, children’s food and local food” plus “a commitment to a variety of approaches, including strong community engagement and celebration of Scotland’s food and drink”. Do you like us smell your money being churned through a special interest blender?

    If you have time to read the fifty-seven pages of “Becoming a Good Food Nation”, the report on responses to consultation about this initiative, you will see your taxes hard at work. We make no apologies for putting all of this in to make your eyes pop out. Publically funded entities and initiatives have been highlighted in bold by us.

    Cross-cutting strategic initiatives with a food and drink focus included those at local level like the Angus Council Framework for Food and Drink and the Fife Food and Health Strategy Group. However, a number of local authorities were also involved in national projects, the most significant being Food for Life Scotland (FFLS) led by the Soil Association. For some this had meant achieving the Food for Life catering awards; others were piloting the FFLS Education Framework (e.g., Stirling and Edinburgh); while both Edinburgh and Glasgow were taking steps in following the Sustainable Food Cities model, working in partnership with other local bodies.

    Local authorities and other public bodies also drew attention to more generic strategic work which was already supporting progress towards the Good Food Nation aspiration. Examples here included the Cairngorms ParkEconomic Development and Diversification Strategy; the Dumfries and Galloway Regional Economic Strategy; the Fife Tourism Partnership; and the Angus Council International Framework. More generally, some respondents noted the Single Outcome Agreement as an existing vehicle that would help deliver the Good Food Nation vision.

    Research and academic institutions indicated that they would continue to work with partners (other public sector bodies, the food and drink industry) on developing the evidence base, supporting innovation and sharing good practice, and participating in a range of knowledge exchange opportunities.

    There were also sector-specific initiatives such as the Year of Food and Drink and Taste Our Best in the tourism and hospitality sectors, and the Healthy Living Scheme and Supporting Healthy Choices framework in the public health arena which were cited as supporting the Good Food Nation vision.

    There appears to be more employment here in organisations and initiatives about food than among the people who actually produce and distribute our food. This is a disgrace – the industry should be paying for all of this so-called economic development itself.

    The Minister in charge of this waterfall of special interest and bureaucratic spending is Richard Lochhead. He has said of his Food Commission:

    “I have made it clear to the commission today that my vision is for Scotland to become a nation where it is second nature to serve, sell and eat fresh, healthy and sustainable food – by 2025 I want people from every walk of life to take pride and pleasure in the food served day by day in Scotland, and there is no better time to begin that journey than now in the Year of Food and Drink.”

    Mr Lochhead, there are people half-starving in our cities and relying on Food Banks to eat any food at all. Your middle-class ever-so-concerned self-serving cabal is raising the taxes of every business and individual in the land that produces their unemployment. Please stop this nonsense now.


    Tuesday, March 17, 2015

    Too weak and none too ambitious

    Scottish taxpayers should welcome the latest Audit Scotland report. It’s a start, but so late and so small (12 pages) that it tells a story about the way Scotland is being governed.

    We have said repeatedly that those who invest in Scotland need a lot more comfort about the direction of fiscal policy. We hear a great deal about fairness and equality, amelioration of austerity and redressing welfare cuts, but any real focus on letting Scots be free to invest and create wealth is missing. Too often, the jobs and growth agenda is simply political rhetoric about what the government has done to invest our own money.

    We remind all politicians that tax money used to invest is tax money taken away from many who would have invested. The net result is always claimed to be positive, but is usually less than neutral, particularly for projects that favour the unproductive while taxing the productive. Short term political gain trumps long-term economic gain and Scotland suffers with low growth and high unemployment. There are no free lunches.

    Audit Scotland stress the importance of transparency in their report along with the importance of accountability and confidence. But they pull their punches on what is really needed. They recognise that "qualified auditors’ opinions on the accounts of other public bodies in Scotland are rare”, and that “In the absence of easily accessible, aggregate information in one place on what the Scottish public sector owns (assets acquired from taxes) and owes (liabilities due in the short or long term that will have to be met from future taxes) overall, it is difficult for the Scottish Parliament, taxpayers and others to get a full picture and understanding about where money is spent and the longer-term implications for public finances."

    It is time that situation was resolved – and quickly. While the Scottish Government has a Fiscal Capability programme, led by a Fiscal Responsibility Steering Group, this is an internal administrative arrangement and lacks the real credibility that an independent Office of Budget Responsibility would have. Given the Scottish Government’s proclivities to spend we should have an OBR with real teeth; well-separated from political influence with its role written into statute – a statute that should protect Scottish taxpayers from endless spending promises and higher taxation.


    Wednesday, February 25, 2015

    Destroying wealth

    The potential for politicians to destroy wealth should not be underestimated. They can do this at no cost to themselves; most of the cost lands on the poorest in the land.

    Earlier this month, Lord Browne, the former head of BP which has a lot of revenue earning capital in the seas around Scotland called for the whole North Sea tax regime to be scrapped, saying that in conjunction with the low price of oil it was doing permanent damage to the oil and gas industry.

    He made an important point – he described the tax regime as “bespoke”. That is, it has been developed purely for the comfort and joy of the political needs of successive governments and their interests in spending the revenues.

    This is precisely the opposite of what Adam Smith meant by simple, easy and equitable taxes; principles to which both the UK and the Scottish Government purportedly adhere.

    This industry is facing an eighty percent drop in investment, it says that its costs are higher than its sales. Tax revenue has fallen by forty percent. With less than a hundred days to a UK election, the UK government is making promises about addressing the issues, but meanwhile we are told to expect a boom in the oil industry – for decommissioning rigs. You couldn’t make it up.

    What has been made up is an extraordinary merry-go-round of corporation tax payable at 30 percent of profits (10 percent of any other industry) from which is then subtracted allowances for capital spending. Interest payments and some other expenses are not taken off profits as is the case under the mainstream corporation tax regime. Then the government adds back a “supplementary charge” on the adjusted profits, using a rate that has just been dropped by a measly 2 percent. Then they grab a petroleum revenue tax; but only from certain oil fields, many have an “allowance” to reduce the impact of this charge; marginal small fields, ultra heavy oil fields, ultra high pressure/high temperature fields and remote deep water gas fields. This is no equitable rule-based tax regime; this is government planning at its worst - for political gain. The government has promised to "fast-track" some new tax relief, and has been “consulting” until this week on the matter. The whole oil industry is screaming at them to get a move on.

    What all this points to is a desperate need for the actions of politicians of all parties to be curtailed through the use of some general rules about taxation (and spending). The short five year cycle of politics is destroying wealth that takes from ten to twenty years to create. Business don’t like paying tax because they know how difficult it is to develop long term wealth , but they do accept their obligations as part of their cost structures.

    Those who shout that it is “unfair” that large corporates seem to be avoid paying taxes entirely miss the point. What’s unfair is that governments avoid creating taxes that are simple and certain enough to allow the steady creation of wealth in the quantities that allow all to prosper from the purchasing, wages and dividends that steady sensible trading produces.

    Crucially, the vast proportion of this wealth does not end up in the hands of the rich, but in the hands of the tens of thousands of working families and pension savers who benefit from the oil and gas industry. Steady wealth creation promotes equality of opportunity with much greater efficiency than any amount of tax re-distribution.

    (We are in a closed election period through which TaxpayerScotland, as an unaligned body, is unable to make any comment that might be construed as supportive of any particular party policy. Our Blog articles will be less frequent during the campaigning period and be limited to general advocacy in favour of constraints on government spending and lower taxes. )


    Friday, February 06, 2015

    Financial tactics and political strategies

    A government budget is a peculiar thing, especially in an election period – which in Scotland looks like becoming an almost permanent cycle. A government wants all its proposals to be an event; the media always want the event to be stirring; those that pay for it all want … well … clarity. The complexity of contemporary governance then turns budgeting into a sequence of announcements about plans, detailing of plans and follow-up “wows” about new plans and repeat declarations of old plans.

    We got the detail this week in a 195 page document which is quite clearly aimed at telling us more about how clever and dedicated those who are going to spend our money are at spending it, rather than politely and honestly explaining anything new about what they are planning to do. In that sense, the Scottish government played their tactical financial hand, rooted firmly in its political strategy.

    Strategically, the Scottish Government means what they say in all honesty. They want to re-distribute wealth and income while improving Scotland’s economic performance. This is wrapped in rather a lot of muttering grievance about austerity, welfare cuts and lack of access to the tools of economic power. A social democratic government which wants independence has a parliamentary majority and anything else we should not expect.

    But from the taxpayer’s point of view, any comfort from the tactics embedded in that strategy is sorely wanting.

  • There is mention of “cuts” but the total expenditure limit of the state’s departments is rising from a spend of £29,506 million of our cash to £30,167 million. It actually drops £495 million after inflation, but then inflation also attacks the incomes that pay the taxes to pay for this extra cash.
  • We are told that “austerity” policies must be ameliorated. Yet annual entitlement expenditures, which are not easy to curtail, are rising from £5,784 million to £7,129 million.

    Isn’t a world view with a strong political but vacant economic strategy rather Alice in Wonderland? Some of the line item detail suggests so.
  • Scotland is committed to supporting its rural communities, but the budget slashes spending here; a £9 million Rural Enterprise, and a £4million rural communities spend drop to £100,000 each, while £600,000 more is being spent on the Royal Botanical Gardens in Edinburgh.
  • The “Financial, Employment and Sustainable Growth” portfolio has a £4,422 million budget, a rise of £1,231 million. How enterprising, until we note that fully £1.203 million of that rise goes to support the public pensions agency.
  • Meanwhile, the nation will spend £7 million more on concessionary bus fares – wealthy retired public servants from Hyndland and Morningside will be pleased at that. But should we really be spending £260 million on these subsidies? The bankruptcy of the pay-as-you-go state pension system is made clear again.
  • Strategic Communications rises from £3.0 million to £4.9 million, and they have put aside another £15.7 million for implementing the new Scotland Act. The focus on political spin knows few bounds to its costs.
  • Yet, “Supporting Sustainability”, for a government apparently devoted to ameliorating climate change is cut by £18.3 million. Supporting young people is a key aim of this government, but the Young Scots Fund apparently loses its £7.5 million budget completely.
  • We could go on, but recognise that there are always winners and losers in budgeting. What’s important here is that too often the choice of winners and losers appears strategically suspect.

    Scotland’s fiscal balance is usually laid out in the annual G.E.R.S report, but we are disappointed that the detailed budget does not seat its proposals in the vitally important wider context of “there is no more money” and a £12billion pound deficit. Compare this with the UK budget proposals presented by George Osborne which focussed on almost nothing else. The dissonance is startling, especially if this really is the budget of a government that proposes to operate independently.

    A final mention of where priorities lie; Revenue Scotland has its first budget in 2015-16 of £4.3 million (to collect £558 million). The much trumpeted Fiscal Commission, in our view the most important element to protect taxpayers through a sustainable financial foundation for a Scotland with more self-determination, has a budget of … precisely nothing.


    Wednesday, January 21, 2015

    Our taxes and social care remedials

    Leaving aside the party politics of elderly care provision, what are Scottish taxpayers to make of the £100 million of our money being spent to take the pressure of the NHS?

    Of course something has to be done, but will this money simply be wasted, and why is it necessary now? – the NHS has been under pressure over the winter months for years. Some clinicians have already criticised the spend as a “stop-gap” and that a complete re-appraisal of where resources are put is needed. To be fair, the Scottish Government is thoroughly committed to a process of integration of health and social care.

    And there’s the answer – the process.

    Governance here involves “integrated partnerships” that are offered “real and consistent support”. We’re back to “joined up” government with “key stakeholders” in health and social support, the third sector, users, carers, task forces, the bureaucracy and politicians all combining their interests in a centrally planned fashion.

    The core compulsion involved is the Public Bodies (Joint Working) (Scotland) Bill which, sadly, echoes similar methods used in rUK to achieve the desired integration with its parliamentary orders and legislative regulations imposed on sub-agents of the state. That is, our devolved administration of NHS Scotland is using methods shared by similar gaggles of special interest paid through the public purse using our taxes.

    There is a nod to localisation in these measures in Scotland, Health Boards and Local Authorities are given the responsibility to integrate services with either one of them, or a Joint Board, given responsibility for planning and resourcing the services.

    Our problem is that all of this is the wrong way up. We nearly all have elderly relatives; we all have around twenty to thirty years to plan how to look after them when they become frail. We’ve handed this responsibility to swathes of planners and service resource allocators – creating vast overheads on a service that involves person to person caring and ends up paying carers a pittance while their planning managers earn many thousands. Taxpayers do not get good value for money using this process – observably we get a state-sponsored market failure with acute care hospitals bed-blocked and struggling social care services short of resources.

    A complete re-think is needed to obtain good taxpayer value; and it starts with institutionalising family responsibilities through contributory providence savings accrued over the years prior to old age. We can then get government out of this marketplace altogether and introduce self-funded and family chosen care services that we have saved up for. In the process, we can design a Scotland with a much smaller government imposing much lower taxes, creating a much wealthier nation than now. Certainly not one that sees £100 million spent on bed-blocking relief as a positive use of our taxes rather than more money spent following planning failure.


    Monday, January 05, 2015

    Inventing free lunches

    Should a nation with a deficit of £12bn less some diminishing oil revenue (if it were allowed it) be offering “free” lunches to primary school children? Possibly not, but at the same time we should not discard the notion out of hand – and instead consider the causes and consequences.

    If school lunches are part of the schooling budget, that is a political policy decision for the incumbent party in government to make. If they are part of the welfare budget, using taxpayers' money for one purpose in the guise of another, that is wrong. A moral choice is obfuscated for political gain.

    Children that can sit and talk at table, do not unthinkingly eat with their hands, who find out that food can be different and enjoyable as such, and that learn to be well mannered with peers and adults are given a fantastic equalising opportunity for a future life of sociability. That’s good schooling, deliverable with positive joy, and most taxpayers will happily pay for it.

    Children that arrive at school hungry and dulled by lack of nourishment are examples of failure of a 60-year-old centralised, dependency creating welfare system that has swapped people-processing for compassion. Delivered as succour for the less capable, free lunches will succumb to the fate of most mandated state services; low quality, non-innovating, rationed outcomes delivered in dismaying desperation. That’s failed policy that most taxpayers are deeply unhappy about.

    In practical terms, the free lunch policy must not through time become civil service codified compulsion; calories, vitamins and cooking costs delivered to financially struggling schools and overseen by distant “suits” with nutritional and behavioural advisers (however well-meaning) earning large salaries paid for by the taxpayer to ensure “quality service outcomes” which are usually anything of the sort, they instead become clouded by risk aversion and top-down advisories.

    Far better for taxpayer value if the provision of free school means was proposed as a general rule about availability for all at a price per child and let each school have free use of its budget. Some schools could then go all out to provide sustenance along with the schooling gains, other schools could charge richer parents who could afford to pay and contract to use their budget for other things, saving the exchequer money elsewhere.

    Localism always encourages innovation, a small country like Scotland can do things unthinkable in the rest of the UK. It’s time we did and stopped the one-size fits all approach of centrally led provision across the board that costs taxpayers more and more each year.


    Thursday, January 01, 2015

    Slogans and ideas in 2015

    These are fascinating times. When London based BBC correspondents offer opinions that “England has to have a debate about its own devolution” and “Scotland might hold the balance of power” you know that our referendum year thoroughly shook up the body politic.

    Ah, politics, the “art of the possible”, the “expression of moral choices”, the process of “running the country” – and, for many, a “load o’ blether”.

    We don’t engage in party politics – we follow John F Kennedy’s dictum “Let us not seek the Republican answer or the Democratic answer, but the right answer”. But we do think the arts and expression in the political process should not be about slogans but about ideas and how to implement them.

    Scotland’s governments are young, still learning the art of the possible; we think they need better ideas. Yes, we understand the desire to promote “social justice” and “equality” but very often we feel we have to put those slogans in inverted commas. Too often the processes offered do not, in our view, offer the outcomes claimed. Very often, they curtail the freedom of many to grow.

    We want to make 2015 the year of ideas for Scotland; a time that we look past the UK election of 2015 to the election of 2016; when the increased powers now being debated demand more responsibility from Scottish politicians, and indeed we can re-address the more creative use of existing powers which, in our view, are too often used simply to do what Westminster does but in a slightly more old-fashioned, dirigiste and, frankly, conservative way.

    And the touchstones for this world view? To be sure, that a reduced tax burden on individuals, artisans, professionals and businesses would increase economic growth and improve the general welfare, but also:

  • That localising powers on welfare, housing and health to individuals, co-operative mutuals, and communities such that they can make their own choices would release democratic energy and build a togetherness about social justice and equality driven by bottom up decision making.

  • That controlling the zeal of the central planners in a small country is essential. A Scotland of five million plus must discard the machinery of the fifty-five million plus of England.

  • That the liberty to spend your own money on your own moral choices is held up as a proper course in life for those Scots who wish to be self-reliant and so defend that liberty.
  • These three axioms are not about “capitalism” or “free markets” or “Thatcherism” as Scotland’s sloganeers would have it; they are about Scottish liberality, Scottish personal growth and Scottish ethical communality that relies on personal choices not controlling powers. We want the political debate in Scotland to move onto this new ground, eschewing labels of “left” and “right”, bringing the huge energies of the post-referendum engaged into common sense thinking about how Scots can grasp their political choices in their local area.

    Aristotle said; “Democracy is when the indigent, and not the men of property, are the rulers”. We’ll buy into that, especially when the property right in question is the right to rule our lives through planning, policy and regulation. Too often, the state acts as a thief of our liberty and as Aesop said: “We hang the petty thieves and appoint the great ones to public office”.

    That we put liberty before justice, to allow the latter, runs counter to the assumptions of many in the Scottish political class, but we stand firm on the need to explain the unintended consequences of the burdens of the large state. The American political comedian Bill Maher put it succinctly: “Freedom isn't free. It shouldn't be a bragging point that "Oh, I don't get involved in politics, as if that makes someone cleaner. No, that makes you derelict of duty … Liars and panderers in government would have a much harder time of it if so many people didn't insist on their right to remain ignorant and blindly agreeable”.

    Happy 2015, let’s all get engaged. We will be. Join us.


    Tuesday, December 23, 2014

    Justice and Giving

    This is a time for giving. Not just the baubles of the retail experience that so much of Christmas has become, but an outpouring of love to all. Each year private individuals in Scotland pour large quantities of hard-earned cash into charities of their choice.

    That they can make that choice is vitally important – it’s their choice, not the choice of someone else offering declamatory “social justice”. We agree that we have an obligation to those less blessed than ourselves to give through love. A duty to give and an agreement that there is virtue in that giving is held to be social.

    Economic liberals are often seen as dry, uncaring, concerned only about utility and efficiency, of productivity and profit. We are asked to “feel” about social issues, to offer empathy with the poor and the vulnerable - to show what is sometimes called “emotional intelligence”.

    We do feel.

    We feel enraged when leftists claim the moral high ground; when we know their desire for control is increasing dependency on the public purse. Is that loss of freedom just?

    We feel scorned when statists claim that only they can provide the route to jobs and growth; when what we see is crony capitalism and tainted subsidies that unjustly destroy individual enterprise.

    We feel demeaned when socialists say “the rich” need to pay for the “poor”, when what they really mean is that the productive should have wealth-generating imagination and aspiration curtailed so that politicised compassion is delivered by impersonal processes that destroy dignity.

    We feel despair when politicians strut the stage of so-called succour, meanly dispensing debt financed centrally planned guesses as to what our people need. Hiding that debt is not just.

    And we care, with great feeling, when these wrongs are presented as rights. When, as we look at the numbers, the taxes the poor pay are as high as the rich, when the future of the poor is curtailed by those taxes, when the rich manipulate allowances and exceptions through complex rules that are thousands of pages long, and only those who are rich can afford to pay agencies to avoid those rules. These are real injustices, perpetuated by our large state.

    And most of all we feel angry when the liberty of all is taken away by a state that thinks it knows better, but patently knows less, than we do; using the so-called discretion of gradually increasing power to usurp the knowledge of our personal realities. It is those realities, known only to each of us, through which we can learn to give to others justly by creating sustainable newness in wealth and eternal compassion through the fruits of successful enterprise.

    Liberty creates wealth and goodness- and we really care about that. Those who want the state to create social justice need to consider that giving is not just about taking from some to give to others. That has vast unintended consequences, often unjust. We need an outpouring of liberty to allow all to share the creative giving made possible by personal success and individual choices about moral goodness.

    Happy Christmas.


    Thursday, December 18, 2014

    All at sea (is ours no longer)

    If we are sometimes baffled as to quite why the state needs so much of our money, reading the recent publication of Scotland’s National Marine Plan tells us.(Yes, we do read these things)

    This 139 page report and its surrounding documentation is a fabulous example of civil service capture. Couched in the calm erudite language of the central planner it takes its raison d’etre from the Marine (Scotland) Act 2010, an Act of the Scottish Parliament for inshore waters and, for offshore waters, from the Marine and Coastal Access Act 2009, an Act of the UK Parliament. These in turn are beholden to EU Directive 2014/89/EU.

    The plan purports to offer “a common vision of having clean, healthy, safe, productive and biologically diverse oceans and seas.” (as always making the assumption that such outcomes are not contradictory and offering no real guidance should they be so). Further, “it does not replace or remove existing regulatory regimes or legislative requirements. Rather it provides a consistent framework for their continued operation”. So, enhanced regulation - another tax.

    Bear with me, because we are not there yet.

    “A Sustainability Appraisal, which includes Strategic Environmental Assessment, and Business and Regulatory Impact Assessment for the Plan have been carried out”. In addition, “marine planning will interact with other planning and consenting processes within, and adjoining, the Scottish marine area”.

    And it goes on; “Marine Planning Partnerships will take different forms in different regions. The core Partnership should be representative but of limited numbers in order to facilitate decision making. However, this core structure should be supported and informed by a broader framework of groups focusing on particular issues and engaging the full range of stakeholders and interests. In particular, the involvement of Local Authorities will be important (the island Local Authorities will lead the Partnerships in their areas) and inshore fishing interests should be represented by Inshore Fisheries Groups whose management plans will inform and reflect the regional plan”.

    So, welcome to the world of strategic integrated planning of environmental, technical and industrial systems. We count at least seven layers of administrative discussion – and it sounds like half the population of Scotland hauled in to meetings - but for what?

    Well, consider this line; “There is a presumption in favour of sustainable development and use of the marine environment when consistent with the policies and objectives of this Plan”. That is, you can only do what we allow you to do in the marine environment; in civil service language, “integrated coastal zone management” with its licensing and conservation rules define what ordinary people can do near, on and in salt water. To put it more bluntly, the state through its civil service has nationalised the administration of the sea.

    In all this, our politicians fail us, because they too have become administrators and not representatives of our private productive interests as free people. Scotland will not thrive this way; we will just pay ever more tax to pay for people to tell us what we cannot do.

    We thrive through private property rights that provide complete clarity on what it is possible to do through innovation and new capital formation. Yes, there have to be rules, but the role of politicians and civil servants in our view is to keep those rules as general as they can, along with a presumption of wealth-creating change being a good thing, and using pricing wherever possible to produce information as to what is good or not good to do.

    When instead they turn to seven layers of administration, their focus moves to expensive codified minutiae which replace the acceptance of risk with perpetual precaution. That way lies ruin through perpetual pessimism about the possible, high taxes and low growth. We need better leadership than this.


    Tuesday, December 09, 2014

    The opaque glass of welfare

    Not unexpectedly, to us at least, the meaning of “there is no more money” is coming home to roost. The problem is that its roosting place is among the struggling poor and vulnerable. A Scottish Leaders Welfare Group (SLWG) has been set up; the BBC is asking if the welfare system is broken; local groups are getting increasingly angry.

    The people we need to listen to are those on the front line; or as the new group puts it: “The SLWG will use its collective voice to provide witness to the impact of welfare changes and will challenge government policy and practice where we believe these have a negative impact and result in deprivation.”

    But this is not the only front line that matters.

    For us, the problem lies at the glass screen between recipient and provider. On one side is an individual who deserves to be empowered through respect and dignity; on the other a struggling functionary of the gargantuan state. And when we say struggling, we mean totally and utterly bamboozled, captured, irritated, flummoxed, over-burdened and de-humanised by a system of astonishing complexity, illogicality, contradiction and unproductive oversight.

    If you do not believe us, visit the Child Poverty Action Group website and look at the latest publications.

  • Universal Credit – what you need to know – 159 pages

  • Guide to Housing Benefit – 486 pages

  • The Child Support Handbook – 494 pages

  • The Welfare Benefits and Tax Credits Handbook – 1740 pages.

  • Housing Benefit and Council Tax Reduction Legislation – 1800 pages
  • THIS IS MAD! It’s time that everyone in Scotland says it is not fit for purpose and we are not going to take it anymore. We have to change course.

    Taxpayers should rightly be nervous if the only response to this is to tax us more and spend yet more money on a failed system. That would be doubly mad; it would only go to pay for yet more managerial nonsense strapping up a crumbling system.

    The answer is staring us in the face. We have to remove the opaque glass that divides those who give from those who need because of the hundreds of pages of bureaucratic mumbo-jumbo above. That means localising welfare budgets as far as we can, and we can start with those that have been given to the Scottish Government by the Smith Commission, putting welfare provision back into the hands of those who can offer support with dignity and compassion to those they call part of their community.

    Involved personalised welfare must take over from bureaucratised civil service welfare. We’ve proposed doing it this way.

    It’s time to stack the rule books against the door of locally funded local offices and not allow the big state in to tell local people what to do; take the opaque glass panels down and give to each other in the full knowledge of the recipients predicament.


    Tuesday, December 02, 2014

    Less flannel, more active verbs please

    There’s a famous cartoon strip in the Washington Post called “Doonesbury” – featuring various characters. One, a political journalist, is famously pictured writing his notes while listening to a Senator (based loosely on the less than erudite Edward Kennedy) bluffing his way through a press conference. After one interminably long sentence full of flannel, generalities and nested sub-clauses, the journalist looks up and calls out “a verb Senator, a verb”.

    That strip has come to mind in the past weeks as Ms Sturgeon has begun what is known in politics as a “honeymoon” period; where new post holders are allowed to lay out the tenets of their thinking, their vision and how they see their mission in government.

    This period of calm has introduced taxpayers who fund government such fabulous phrases as:

    “Using our powers to create long-term comparative advantage and genuine economic value”

    "Equality and prosperity shouldn't be seen as enemies of each other, but as partners so that the benefits of economic growth are shared more equally”

    “A vibrant business base earning the wealth”

    "The Scottish government's vision is for a strong relationship between the people of Scotland and the land of Scotland”

    Well yes.

    Excuse us, but while we enjoy this flannel, we rather feel that we are being prepared for a cloud inside this silver lining. We’ve already been phone twice this week by the stouter members of the Tory press asking us if we think Ms Sturgeon is going to introduce even stouter collectivism.

    The dark cloud is in the execution. The left in politics absolutely adores its own rhetoric; the endless trumpeting of aspirational outcomes, but without an iota of the mechanisms and, dare we say it, unintended c*ck-ups that inevitably accompany the creation of Utopia.

    For taxpayers, this is not good. A honeymoon is all very well, but there is a return to work at the end of all such nuptial delights and the hard reality of the long grind of staying on the right side of Micawber comes home in the end.

    And that’s what concerns us at TaxpayerScotland. The central focus of any Scottish Government should not, today, be on social justice and equality as end-outcomes (we all want those), but on the means by which such decency and largesse can be earned in a world where, frankly, there is still no more money and little sign of much being made. Until this nettle has been grasped and Ms Sturgeon’s countenance takes on the frown and furrows of George Osborne, we fear we are in for more and more sheer innumerate balderdash in a world of low incomes, poor productivity and slow capital formation.

    Friedrich Hayek, the social philosopher, pointed out that when central plans fail, the reaction of the politician is always to re-work the central plan, introducing more and more draconian controls in a form of desperation to attempt to create the wealth and vibrancy that ordinary messy complicated individuals can do when left to their own in liberty. So, now read this:

    "The Scottish government's vision is for a strong relationship between the people of Scotland and the land of Scotland, where ownership and use of the land delivers greater public benefits through a democratically accountable and transparent system of land rights that promotes fairness and social justice, environmental sustainability and economic prosperity.”

    Could someone in the Scottish government explain to us what “a strong relationship between the people of Scotland and the land of Scotland” actually means in terms of practical actions? Indeed what does “delivering greater public benefits” mean in terms of practical actions? Does it cost us money? Does it restrict some people from doing what they want with their own property in favour of others given new privileges? Will achieving these virtues actually lead to “environmental sustainability and economic prosperity?”

    As so often, the weasel words of the state sound ethical and grand, but if they would give us a few active verbs in their proposed policy actions, we might be able to assess more clearly whether they are telling the truth or obscuring it.


    Friday, November 28, 2014

    Political limits

    What should Scottish taxpayers make of Lord Smith of Kelvin’s report? Clearly, he has cleverly managed to carve an outcome from politicians standing their ground on their positions. At this point, until England and the other home nations become involved in discussions about the consequences, we can know little more than what might be.

    There’s a lesson here, politicians can only go so far in re-arranging constitutions; time, experience and principle are a better test for success. The media cacophony that is aroused from the proposals tends to focus on minutiae, but in a very important sense that is the wrong focus; we all know we are going to be taxed by either a UK or Scottish government. The real issue is how much tax our politicians decide to take for their grand designs and whether this can be limited.

    There are two sections in the report that are crucial to the taxpayer interest. Both lie in what is called “Pillar 3: Strengthening the financial responsibility of the Scottish Parliament”.

    First, we are promised “an updated fiscal framework for Scotland”. What is vital for taxpayers is contained in the line that there is a need to ensure that the Scottish Government “bears the full costs of policy decisions that reduce revenues or increase expenditures” with a proposal to “expand and strengthen the independent scrutiny of Scotland’s public finances”. It is absolutely essential this principle and promise is retained.

    Second, we are not convinced that the report provides adequate protection of taxpayers over additional borrowings by the Scottish Government; our preference is that all such new borrowing must be collateralised solely on the basis of Scottish revenues rather than benefitting from UK backing. Simply “keeping them under review” is in our view not an adequate protection for taxpayers given the known propensity of the Scottish Government to overspend and overtax.

    We need to remember that Scotland has a deficit of around 8 percent of its GDP presently, 5 percent above the Maastricht limit, and that our government is determined to spend more on social re-distribution on the basis of a small and mobile tax base. The limitation of tax and borrowing powers within Scotland is a vital counterpart to any devolution of those powers to Scottish politicians. Otherwise we risk re-creating the profligate unaccountable Holyrood we suffer from today. (The same principles apply to our profligate UK government, equally in debt and deficit.)

    A central principle we adhere to is that spending our own money is in almost all cases more efficient and productive, and when access to our money is reduced through punitive levels of taxation by people spending other people’s money on other people economic growth and development is curtailed. Public spending is a voracious monster that needs proper constitutional limitations on politicians’ power to spend.


    Tuesday, November 25, 2014

    Thanks for nothing, Jim

    The ability of politicians to ignore reality about human behaviour gets more and more astonishing. Jim Murphy’s latest promise to introduce a 50 percent income tax rate, a banker’s bonus tax and a mansion tax are promises of nothing.

    A 50 percent tax rate is known to produce no additional revenue; but as we have said before it also has damaging effects on the way even middle earners behave – institutionalising inequalities through avoidance manoeuvres.

    Mansion taxes do the same – even with a 4 percent stamp duty vast swathes of the middle class now have second homes; renting them out, or filling them with their own children at university. Others are in southern Portugal where 25 percent of the local population is now British. Again, inequality becomes embedded.

    Banker’s bonus taxes are arbitrary; what is a banker? what is a bonus? who decides? Taxation is too blunt an instrument to succeed; change in institutional risk arrangements and more competition is needed to deal with self-serving excess. Arbitrary taxation is lousy policy; it entices change in behaviour by its targets – once again ossifying privileges in avoidance measures.

    If Scotland is going to have government by vindictiveness, those who govern us should remember that today’s world has open borders. Central planning of our incomes has the same chance of success as central planning everywhere else. It simply creates inequality through state-sponsored privileges and those who feel unfairly treated will move themselves and their capital elsewhere.

    Unless … and this is the frightening part … those being vindictive start mandating success of their nonsense measures through the exercise of government power. That’s the all too easy way to deliver equality; hobble the productive, crush the talented and take over the enterprising – so creating a dull grey herd of equal ordinariness where no-one is comfortable least of all the poor.

    We should remember that all these measures are being proposed due to one thing. The greedy state has overspent, has no more money left and needs to service its debts. What we need is a behavioural change of governments, not measures that change the behaviour of those who create the wealth that generates the jobs and growth that reduce inequalities and gives everyone a fair opportunity to savour success in life.


    Thursday, November 20, 2014

    Handing over social justice to others

    In the brief handover period between the Salmond and Sturgeon era of leadership an event took place that can be seen as a perfect example of what Scottish taxpayers need to be cautious about with regard to the use of our tax money.

    While Ms Sturgeon was making an eloquent and moving speech about the privilege and responsibility of leadership, her civil servants were announcing the appointment of two of their kind to lead our newest quango - Food Standards Scotland.

    Highly qualified, and highly paid, careerists, these two men will run an Aberdeen office with a staff of 90 plus 70 more “in the field” whose job it is “to protect the public from risks which may arise in connection with the consumption of food, including risks caused by the way food it produced or supplied”. They will have a starting budget of twenty million pounds of your money.

    Why do we need 160 bureaucrats to carry out these tasks? The answer is that our Food Standards bureaucracy sits within a cascade of regulation running from Brussels, through Westminster and now Aberdeen, and on to a small army of environmental protection officers working in local councils. Fife Council’s budget alone shows £5.5 million for “protective services” which includes the wages of the health and standards officers who check the food chain.

    Your tax money is hard at work in a swathe of what will inevitably be repeatedly duplicated effort; justified by strategies, initiatives, action plans and reporting audits all liberally soused in endless meetings and paperwork designed to try to match the actions of one set of enforcing administrators with another. The caustic-minded among us with long memories may say that this vast apparatus is one heck of a way to solve a throwaway remark by a certain Mrs Edwina Currie that most eggs have some Salmonella in them.

    But there is more to this – these costly efforts are put beside another army of highly entrepreneurial small-scale food producers; ordinary Scots producing new cheeses, jams, pickles and plum duff trying to add to their income. Not one of them is doing this to poison us and they are perfectly aware that food contamination during production, and spoiling in transit, can happen. The damage to them of tainted product is very high. Put another way, the standard of food generally self-regulates through a few sore tummies and a certain amount of puke when things go wrong - both of which destroy sales rapidly.

    Civil servant oversight of food standards imposes proportionally higher burdens on small producers, while bigger producers producing bland packaged food can absorb such costs more easily. That difference damages a key, highly localised, Scottish productive sector and once again distributes income from the poor to the rich. It also entices our poor to mass-produced food whose salt and fat destroy their health and well-being. And the response of government to these wrongs? The second objective of the Food Standards Scotland is “to improve the extent to which members of the public have diets which are conducive to good health”. So the state regulates and mandates yet more intrusion through ideas like salt and fat taxes, dietary initiatives and costly adult food education designed to alleviate the harm their previous regulations have created. Taxpayers should be livid about this; it’s costing us a fortune in money and human happiness. The taxes to pay for it, especially the indirect ones, make the poor poorer.

    We are told that Ms Sturgeon is good at detail, with a forensic mind that gets to the important heart of what matters in governance. Her stock-in-trade mantra is “social justice”; we wonder how often we will hear from her about the danger of social injustices imposed on the entrepreneurial by over-wheening bureaucracy and its taxing impositions.

    Scotland needs new ways of tackling these burdens that do not cost us so much in taxation. The answer has to be in localisation. Yes, there will be bad eggs (sic) among food producers as in any industry, and bacteria can kill, so we do not belittle the work of the regulator, but does a Scottish regulator have to be in a swanky corporate office with executives in suits that fly at our expense to Brussels a few times a year? Does it really need 90 staff there? We are a small country, why are we copying the big country model? How about five in that office, co-ordinating localised standards advice to local officers supplied by our Councils who know their own patch and the suppliers within it? There is a saying that governments have power without knowledge, while local officials have knowledge without power. That’s your challenge for small nation governance, Ms Sturgeon; localise and make your government efficient, creating social justice as its by-product.

    The Scottish people are endlessly feeding a huge faceless monster, beavering away at our tax expense, while our politicians prattle in aspirational slogans. Food Standards Scotland has a third stated objective; but this one should frighten all taxpayers because it copies the anodyne nothingness of contemporary Scottish political policy posturing. It says merely, “to protect the other interests of consumers in relation to food”.

    A blank cheque to allow our bureaucracy to decide what is good for us – paid for by you.


    Tuesday, November 04, 2014

    Sovereignty, Smith and Sustainability

    These are peculiar times. The outcome of the Smith Commission’s deliberations and negotiations appear to hang over us all. What should taxpayers make of it?

    There comes a time when uncertainty turns to risk - and jobs and investment are affected. Any opacity over what is being done cannot go on for too long. Our stance is clear:

  • Scotland must not be left with the running sore of a people split in their view of the future. We do need a new constitutional settlement, not just horse-trading over devolution spending done at taxpayer expense.

  • Any solution must be People led, not a top-down political fix. Our sovereignty frees us to consent to our governance and our taxation, not to have it decided by the Civil Service.

  • What is agreed has to be lasting; for taxpayers that means adjustable in response to mistakes made through central planning by the state. Taxpayers need to be able to say “no” to grand politicised schemes.

  • Taxpayers are concerned about debt. In Scotland, we are paying upwards of four billion pounds in debt interest alone before we obtain any public services. That’s a huge waste of resources.

  • Our views are laid out in our submission which can be found here.

    We are not unhappy about a new federal UK, or home rule, or devo-max or whatever you want to call it. We simply want a Scottish Government to be constrained by constitutionally defined taxpayer power limiting their control over us. Economic liberalism is the only way we know of creating prosperity, and indeed the equality of opportunity that so many in Scotland desire.


    Friday, October 10, 2014

    Beware the Unexpected

    Scotland’s first tax introduced from its own Parliament for 300 years was announced today by John Swinney in his pre-budget announcement.

    It was good to see John Swinney suggest that any new Scottish taxes should be based on sound principles. We were prepared for the emphasis on re-distribution and we welcome the change from a slab system to a proportional system, which removes distortions.

    We recognise the importance of reducing the cost burden of new entrants into the housing market and for those with less wealth trying to move up in the market. However, we note with dismay that the estimated collections are £558 million in 2015-16. Total collections for “Stamp Duties” in the 2013 GERS report were of £472 million. More of our money appears to be destined to go to state coffers.

    In addition, the removal of the slab system is largely negated by the sudden leap in rates at £250,001 from 2 percent, through five percent, to an astonishing 10 percent - the effective tax rate of LBTT therefore quickly climbs above the old 3 percent rate for any house valued above £310,000, prices which in Scotland’s middle-class urban areas are common.

    The effect of these high rates on the pricing of higher quality housing is not possible to determine, but there is a lot of evidence that the behaviour of the mobile and talented middle-class adjusts rapidly and robustly to any attempt to diminish their personal wealth. Scotland needs as many talents as possible to re-build its economy and create jobs and growth. Over-zealous equalising threatens many livelihoods, especially those of the poor.

    It’s all very well choosing principles that suit your ideas, but Mr Swinney has forgotten another of Adam Smith’s principles – that rates of tax should always be kept low. Scotland sees a net migration of skilled and graduate talent every year; the concern has to be now that this will become a torrent.

    You have to ask what a young graduate will do if they have an ambition to own a decent flat in one of our urban areas, followed by a detached home in a suburb. They now face a future bill of above eighty thousand pounds at today’s prices, and there has been no mention as to whether the percentage bands will be adjusted with inflation which could make this figure higher. We should note that Scotland now operates in competition with England with this tax.

    In the modern world, abilities to manage commercial matters and administer technical systems are paramount; without them, growth will not only disappear, but reverse as commerce and its systems fail. The SNP and its electoral constituency may be right that within Scotland there is a cultural agreement about fairness and equality that demands comprehensive distributions. Believing in such ethics is one thing but human nature, as pointed out again by Adam Smith, leads us to protect our interest in family and self prior to looking after others.

    There are unintended consequences to every policy decision – with respect to changes in personal wealth these can be severe. The prospects for jobs and growth in Scotland are damaged by these high tax rates and once again it is the less well-off and less mobile who will suffer.


    Wednesday, October 08, 2014

    The cries of the dinosaurs

    The impending announcement of a change of franchisee for ScotRail has raised predictable howls of rage from Scotland’s union dinosaurs. Anyone might think they had lost their jobs, rather than obtaining a guarantee at taxpayers’ expense of continuing work for at least another ten years.

    It’s a shibboleth of the left that “privatization” of what used to be their very own train set should be seen as a crime. This despite the fact that in the year that the old British Rail was released from state control the total investment in our railways was zero. Yes; nothing, nil, zilch as Mr Cameron would say. Since then vast quantities of public and private capital have poured into both the network rails and signals and the rolling stock. Passenger numbers have gone up massively.

    There’s an irony, and a lesson, in the fact that it would appear that Abellio, the proposed new incumbent is also supported by its taxpayers, in this case Dutch ones. Imagine what rage the idea that Scottish taxpayers should subsidise Dutch taxpayers would cause. The lesson is that large infrastructure systems are just that, large – and only trans-national companies can service such contracts. Britain, and Scotland, does well out of them, Stagecoach being a case in point, with substantial operations abroad. What is good for taxpaying consumers is that competition for contracts introduced by regulators is gradually squeezing down on costs and improving efficiencies – it’s also allowing prices for public transport to adjust such that fewer poor people who do not use trains pay for wealthier people using trains. That’s only fair.

    Our trains still receive considerable public subsidy, but those are now a lot more transparent than in the days of British Rail so that taxpayers can judge the costs of their rail services. The idea that a fully state owned controlled and run railway would have a hope of being anywhere as efficient as these contracted trans-national competitors is laughable; it would once again become a vehicle of producer power, in this case the producers being the union that laments its loss of control over the railway. No state could continue the present level of capital investment when faced with competing claims from social services, the NHS, and tens of other worthy causes. We’d be back to stoppages, beer and sandwiches in Bute House, price manipulation and rationed funding very quickly; poorer taxpayers would end up stumping up even more for the preservation of a highly paid workforce; the opposite of fairness and equality.

    Predictably, the unions hark on the referendum vote as a just cause in the name of left-wing desires. (The Greens, as so often, need to go and have a good think in the darkness of their own contradictions; making us poorer so that we can have a worse railway is just environmentally daft.) While we did hear from some hardheads during the long debate that we should re-nationalise the commanding heights of the industrial economy; the left are kidding themselves if they believe they were talking to anyone other than themselves. Had they not been, a lot more Scots would have taken fright and voted "No".

    These dinosaurs really are living in the past, the SNP government is to be congratulated in following due process in its assessment of our rail services and allowing Scotland to remain globalised and open to competitive tender. Taxpayers would be best served by chopping the contract up into even more competing services if that could be organised.


    Friday, October 03, 2014

    Retrospective Untaxation

    The First Minister is playing with fire with his proposal for retrospective untaxation. In our view he should be showing more statesmanship and stop thinking about votes.

    There is a core principle of the democratic state – that we consent to be governed. In that consent, we have a democratic contract with the state; that the taxes we pay are matched by the representation we have as an electorate on decisions about public policy.

    Sometimes the contract breaks down and we have tax revolts. In days of yore, the response of rulers was to chop a few heads off and make the masses cower. Today, we use our representatives to address the wishes of the people, declare a policy and amend legislation. That’s what happened over the Poll Tax; democracy worked; the representation of the people changed bad policy.

    However, there is a caveat; those who revolted were party to the democratic contract. Many de-registered after the imposition of the tax, but that impost was made only because they were registered.

    The question then arises; can democracy allow people to have it both ways? Can they contract to pay tax and receive representation when they want to; and not contract to receive representation when they do not want to pay tax? Clearly, that would be absurd – the state would never know how much its public purse might contain or on whose behalf the spending of its money was being spent. Anarchy would follow, and no doubt draconian alternative un-democratic rules to take our money from us, accompanied by random spending decisions.

    This is the fire Mr Salmond is staring into. If he lets some people off payment, those who did pay are, rightly, affronted. If he decides retrospectively that paying up is a bad idea, what’s to stop him deciding retrospectively that others should pay more tax in compensation. (Something that will de facto happen anyway because any losses in collection will have to be made up somewhere.)

    Administratively, any amnesty gives his collectors, the local authorities, a problem. Is it their job to collect unpaid taxes or not? They can be forgiven for being less than enthusiastic if the rules are uncertain.

    Rules are important where governments are concerned, and this is where Mr Salmond’s lack of statesmanship is important in this issue. If Scottish governance is to be done on political whim, through which democratic principle is discarded in the face of party-political electoral gain, we have a real problem. Scotland has an immature institutional structure for its governance. Post referendum we have a horribly split democratic mandate and a government intent on strutting and puffing about its control over the levers of power. Government control by presidential decree is the opposite of what Scots want.

    A statesmanlike First Minister would have announced his concern for the hounding after many years of those who had been unable to pay Poll Tax. He would have bolstered the trust of his collectors by re-iterating that there is a difference between “can’t pay” and “won’t pay” – even recognising that both stances can be legitimate - and he should have reminded non-payers of the democratic contract implicit in their registration to vote; that the rule of law matters to the nation’s stability. He should have said the state recognises the people’s right to protest by marching against any tax, but the state does not take U-turns without parliamentary procedure.

    He should then have declared as a matter of public policy that parliament, as the representatives enabled by taxation, would discuss the rules regarding historic tax payments.

    A clear rule that after six years the liability for any tax falls would easily pass a parliamentary vote, would please the people, and calm the tax collectors. That policy vote would also bolster our democratic polity, clarifying our contract of governance, and strengthen parliament. It would also win Mr Salmond more votes. He is a decent man, with the interest of the people of Scotland in his heart, but his style of doing politics appears to have let him down this time.


    Wednesday, October 01, 2014

    Deep blue flag waving

    The Scottish Government could be beginning to look a little strange.

    Dedicated to the idea that it is the role of the state to be a large part of our economy, to dispense more spending to those it believes need it, and to crow incessantly about its "success" in boosting the jobs and growth agenda through state funded jobs ... it has to face up to the fact that the "effing Tories" it despises are beginning to show a completely different approach.

    Tax cuts for the less well off, and for the struggling middle hammered by un-indexed thresholds, freedom for pensioners to keep their own money for their own families to inherit, the deep blue water between the two world views is becoming starker by the day.

    So much of this gulf is about liberty and belief in individuals and their abilities. What a contrast a tax cutting agenda has from the fearful pessimistic re-distributive socialism of our managerialist leftist government. And yet, the latter sticks to its old conservatism, that it is in charge and only it is capable of making Scotland better.

    Both Scotland and England are wealthy nations - what's the best way of keeping them that way, AND being able to help the less well-off? Enterprising individuals free to make more wealth for all, or dedicated re-distributionists controlling everyone by using others' wealth on others.

    Take your choice and wave your flag. And check it isn't looking a little threadbare.


    Friday, September 19, 2014

    We’re back!

    No not us, the People.

    Our views are visible following our two year conversation. David Cameron’s comments outside Downing Street this morning suggest that he has had to listen. There is a key advance here; devolution, regionalism, localism, federalism – call it what you will, has been forced on the UK state by the Scots people.

    If new powers are distributed, one of the most important will be those that match taxation to spending. Scotland must now take more responsibility for the taxation of its people consequential to its spending decisions. The ethic of “fairness and equality” extends beyond a moral consideration for the less well-off – it extends to all taxpayers.

    Our sister organisation in London, The Taxpayers’ Alliance, has today called for the Barnett formula to be scrapped, saying it is unfair on English taxpayers. We concur as it is also unfair on Scottish taxpayers, hiding the reality of the burdens imposed by Holyrood. In fact, it actually encourages Scottish politicians to spend to the maximum.

    The TPA paper on the Barnett formula is worth reading , especially the final section which highlights the real problem – tax centralisation. From this morning, the door is now open to a constitutional settlement that removes this economic wrong. Scots have made their choice over both the costs and benefits of the UK as a political entity run from London; we also need to be allowed to make choices about both the costs and benefits of Scotland’s spending from Edinburgh.


    Sunday, August 31, 2014

    For Scotland - peace and low taxes!

    As we are a non-aligned group, we have decided that, during the final run up to the referendum vote, our blog is being put into abeyance.

    Whichever way the vote goes we will maintain:

  • An ever watchful eye on wasteful and unnecessary spending by the state which governs us.

  • A continual campaigning effort for transparency in spending our tax money.

    We will also continue to:

  • Champion the release of Scotland’s private supply side energies to promote growth and jobs.

  • Suggest policy ideas that release individuals from undue burdens in taxation in order to promote success through creative and economic liberty.

  • Obtain observable evidence to examine the proposition that spending proposed by the state is the best way of improving Scotland’s economic prospects.

  • Engage in the debate about fairness and equality with new ideas that champion self-reliance and personal improvement over dependancy; and so allow our less well-off the freedom to improve their lives under their own control.

  • We wish all our readers our best wishes as they make their decision about independence. Whichever way the result goes, may Adam Smith’s maxim of “peace and low taxes” prevail.


    Friday, August 15, 2014

    Localism – remember Liverpool

    A new report by the Commission for Strengthening Local Democracy, sponsored by COSLA, champions more localisation of taxation and localised governance. It proposes that our local councils should take control of more of our taxes, have at least 50 percent of their spending locally financed, and that the number of councils should be increased, possibly to more than a hundred.

    The proposal, described as radical, deserves a hearing and it is a pity that it arrives just as the heat and bluster of the referendum campaign reaches fever pitch. It raises exactly the sort of questions Scotland needs to answer; independent or not.

    Taxpayers need to be cautious about these proposals because the “local democracy” they propose needs a thorough examination with respect to the allocation of powers.

    The clue lies in the title – “Reconnecting with Communities”. The document very occasionally mentions “people” or “individuals” – but rather too often it reveals its world-view by using the term “community” with an active verb. A community is of course a collective, and a collective that does things is in fact a good description of a Local Council. In that sense, the report succumbs to a false conflation between “community” in the sense of togetherness and “the community” in the sense of the collective power of its local governors. In fact one chapter is called “A new democratic partnership with communities” – that is, there is us and them; which is at least honest about the power relationship, although not what the sentiments throughout the document suggest.

    Within that context, the report has many useful suggestions on organising utopia, enhancing equality and providing opportunity and sustainability – the lexicon of local government is well-used throughout. The problem is, that in its definition of democracy, it does not offer a protective framework for individual taxpayers. Rather, it presumes that a form of majoritarian democracy, however local, will always produce good outcomes - favoured by the spenders and not the payers; and we all know that activist councillors and council officials are those who perennially and continually demand funds to do what they want to do.

    That this approach has led to high taxation, and a radical failure of public services to achieve opportunity and equality its promoters desire, is mentioned – but, as always, the solution is more funding, better applied, but this time sourced locally. At this point we need to remember Liverpool, a city whose localised government was captured by ultra-spenders and order broke down in the face of fanatical zeal in favour of vote-buying largesse.

    The Commissions ideas are to be welcomed; localisation and, above all, competition between councils on spending and tax would be an important step forward from Scotland’s creeping centralisation. However, we would like to see a lot more scope for methods such as local voter initiatives and rules on spending and tax transparency firmly in place before any re-organisation.

    There is a role for central government, and one of those roles is to set the limits of, and processes for, organisational power for those who govern over us at local level. As taxpayers, we need to remind politicians over and over again that spending other people’s money on other people in a marketplace where votes keep them in power is usually quite different from what we really want; that they spend our money wisely on what we have requested.


    Saturday, August 02, 2014

    No cap-in-hand corporate state cabals, please.

    One of the biggest threats to taxpayers’ wallets is the long-term commitment made by central government to various key infrastructure sectors.

    Once made, the political capital that becomes tied up with these monuments to state beneficence is extremely difficult to remove. The problem is that the whole life costs of these projects are rarely calculated in political circles, and there is little incentive for large corporates to point them out; they will be those who will come back for more of our tax funding at a later date.

    If the 1970’s and 1980’s should have taught us anything it is that both accrued trading losses and capital unavailability in nationalised industries grow to the point of irresponsibility. Here are a few things we may have forgotten.

  • The coal industry was losing upwards of £10billion pounds annually; selling at world prices while producing at UK deep coal prices.
  • The steel industry lost £2.5 billion between 1979 and 1985, even as it cut its workforce from 191,500 to 67,800.
  • In ten years, British Shipbuilders needed £1.26 billion in subsidies.
  • The water industry was short of £6.5billion in capital to keep its reservoirs and sewers intact.
  • The railway industry was spending precisely zero on new capital equipment, its entire operational revenue reserves were committed to maintenance.
  • The telephone industry was selling Bakelite phones and taking more than two weeks to renew a line – protected by regulations outlawing competition from now universally available technologies.
  • Public housing between 1979 and 1988 cost £5.3 billion and had an income of £2.8 billion.
  • BOAC made repeated losses, as did the National Freight Company, the Ports and other now profitable entities that replace their capital productively and in a timely way.

    In Scotland, we all know the visible costs of closures and privatisations, but, despite the sloganeering about “Thatcher’s hatchet”, these costs were not the work of one woman, but the inevitable result of long-term bad public policy choices based on public sector control. The real hidden costs were the vast extraction of money from ordinary taxpayer’s pockets to support the losses above. While these magnificent dinosaurs ploughed on under state control, we could have re-built the new industries that Scotland would now have had instead.

    This week, there were two announcements that we need to be watchful about.

    First, Community Broadband Scotland has been given another £2.5 million of our money to support the development of broadband in rural areas.

    Second, £200 million has been committed by the UK to renewable energy projects following approval by the EU of this beneficence under state aid rules.

    Both could be seen as well-meaning, targeted, sensible “pump-priming” policies – in the early stages of development of an industrial sector. In the first case to “transform the way people live, work and learn” and “control their own digital destiny” in rural communities, as a visionary Nicola Sturgeon puts it. In the second place three-quarters of the money is for “less established technologies”; less-established that is than the appallingly inefficient wind-farms now scattered across our fair land.

    Fair enough for a kick-start, you may say, but look at the small print. Among the proposals of the Scottish Government for the powers that they would like to have over broadband development are to:

  • Use spectrum licences as “vehicles for coverage obligations”.
  • Consider the case for a broadband Universal Service Obligation.
  • Consider linking mobile and broadband coverage obligations by requiring 4G operators to provide faster connectivity in specific rural areas.
  • All this is to be delivered by Community Broadband Scotland – “a partnership between Scottish Government, Highlands and Islands Enterprise (HIE), Scottish Enterprise, COSLA and Local Government”. Just think of the self-interest in agreeing these coercive controls in those partnering meetings!

    The renewables initiative is billed as a doubling of investment in renewables creating green jobs and green growth – with sums committed rising to £1 billion eventually.

    What this investment actually does is introduce “Contracts for Difference” (CfD). That is, money paid to renewable providers to compensate them for the fact that the energy they produce is more expensive than other non-renewable sources. This replaces the previous Renewables Obligation which is being phased out, not least because of the howls of domestic energy consumers who saw their heating bills rising too fast for comfort. Purportedly, these CfDs will be reduced through time; at least taxpayers have some commitment to transparency in this proposal. We'll be watching.

    Let’s go back then to the idea of whole life costs. When any politician has a big idea, backed by the eager approval of big industry, for a fine-sounding initiative that will allow us all to communicate with our distant granny, learn new ways to shop, keep warm, boil up our gruel, and do most of this more sustainably than before while creating jobs and growth, they are very unlikely to be correct in anything but the very short term.

    Look out for the “community partnerships” and “public sector partnerships” and sound the trumpets, check your bank balance and remember the days of nationalised industry. Our taxes are being committed without any real analysis or knowledge of the on-costs of these large-scale commitments. With separate agendas involving coercion of producers over “obligations” thought up by central planners are proposed, these on-costs are likely to be large and growing. Re-inventing controlled industries as commanded vehicles for the un-thought-through ideas of non-technical politicians and civil servants is going to cost taxpayers a small fortune.

    There is a positive suggestion for all of these ideas; introduce sunset legislation that demands a re-consideration of, and re-voting for, the use of taxpayers’ funds for them every year in parliament; especially if large corporates are coming cap-in-hand to ask for more tax funding. If the numbers no longer add up, the state should back away and act on behalf of its taxed electorate; parliament needs to let the finding out of how to run infrastructure systems be at the cost and risk of the corporates not the individual working taxpayer.


    Wednesday, July 16, 2014

    Quasi responsible expensive bodies

    The ability of tax-funded organisations has been revealed once again this week in a report by Reform Scotland revealing that our 72 quangos have more than 100 staff paid more than £100,000.

    Some of these salaries may well be necessary to obtain the scarce skills and the professional commitment required to achieve the objectives of these organisations. But this misses the point; what are these organisations doing and do we need them?

    To answer that question, taxpayers need to view the “quasi autonomous” character of all quangos with a critical, and often jaundiced, eye. There is a principle in political economy that when a honey pot of public money is made available, hungry bees that feed off the nectar of the public purse will crowd around. When that nectar is generated by the vote-buying interests of politicians, a dangerous alliance of self-aggrandising justification becomes normalised between the payer and the payee.

    The result is huge pressure for “mission creep” in which the very “autonomy” and its “quasi” nature make it even more difficult to prevent more and more taxes being spent on new objectives and plans. Accountability for how our money is spent shrinks in a buck-passing exercise with politicians and quangocrats each referring to the other: “we only set the policy” says one; “we only execute what the government requests” says the other. And so the struggling worker or business owner sees more and more of their disposable income captured into the maw of a voracious state purse.

    The reality is that, by their very nature, quangos are inefficient, and the more of them you have the more inefficient they become. Why is this? The key here is the fact that they are “government bodies”. As such, they lose the focus adopted rigorously in the private sector on discarding hopeless causes and useless plans. Instead, they become submerged in strategies and partnerships with multiple goals, roles and actions; few of which ever disappear – rather, they grow like topsy.

    As an example, in the spirit of the moment as the Commonwealth Games begin, have a look at a document called “Reaching Higher” which identifies the roles and actions of Sport Scotland. There are 25 of the first and 120 of the latter. Then add in monitoring and review of outputs, quality and performance indicators and all the other panoply of the quasi-government bureaucracy as it tries to retain its dignity as an equality focussed, inclusivity targeting entity. What do you get?

    Buried in the financial statistics is the fact that out of the £38 million Scottish Government budget on sport (with an additional £24 million from the National Lottery) this quango spends £5 million on "planning" and £11 million on "effective organisation". No doubt at least this amount again is spent on administration of the plans and their effective organisation in the daily grind of low-productivity meetings and cross-departmental consultation that characterise bureaucratic endeavour.

    Taxpayers need to ask, is this really the best way to put a hockey stick in the hands of a wee girl who needs to run about more and keep fit? Is it the best way to promote excellence, to spread accessibility, or to foster local community facilities? The problem with the quango model is that it is almost impossible to find out when the productive process is buried in an impenetrable mush of self-justifying promotion by the high-paid quangocracy. Go and look at any of their web sites and see how long it takes to find their annual budgets.

    Reform Scotland support re-absorbing our quangos back into the central government or making them contract directly with government and face censure for failure. We would add another requirement; that they are required to show all expenditure over £50 on their web sites, properly laid out and transparent for the taxpayers who pay these expenses to see.

    Nine quangos couldn’t even find the time to respond to Reform Scotland’s FOI request about their executive pay. That’s a real disgrace and shows contempt for the ordinary individuals who pay for what is almost always a transfer of income from the poor to the rich.


    Monday, June 23, 2014

    Hidden spending - time to get real and rational

    A report from a respected team at the London School of Economics suggests the set up costs of independence would be £200 million rather than a number higher than one billion that the UK treasury promotes.

    While the huge disparity in those headline figures does not help taxpayers much in making their personal decision on independence, the basis on which they are obtained does.

    At TaxpayerScotland we have been resolute that any government, independent or not, must be as transparent about its proposed spending as possible. We have also put a particular emphasis on “whole life costs” of all state-funded projects. It’s far too easy for politicians to crow endlessly about new government money they are spending on "us"; when of course we all know this is our money being spent on those who might provide a vote; almost always with additional future costs that have not been made clear to the electorate.

    The report highlights that any "set-up" for independence would not be a one-time lump cost, but a series of investments, many of which will have to be done by a UK or newly independent Scottish government whatever the result of the referendum. The juggernaut of the big state is a mighty ship with huge embedded whole life costs that taxpayers were committed to some years back.

    We are back to the need for transparency here. Many economists, us among them in our paper on the currency, have proposed the need for economic constitutional requirements in modern democracies that force governments to come clean with taxpayers on their future spending plans. Those requirements in turn would be backed by powerful rules on recall if spending went out of control. Those who fund the state have had enough of bail-outs for rich bankers and profligate politicians.

    The report says that a critical factor in containing the costs of independence would be “the realism of the Scottish government” along with a “moderate and rationalist approach” by Westminster to the process of separation. As an unaligned campaign with a focus on our tax burden, we say hurrah to that; there are great gains to be made by this whole debate with respect to where we are governed from and how much that costs. Those ideas were part of the argument for the initial measures of devolution.

    We will continue to seek realism and rationalism on the dangers of the intrusive state to taxpayers’ bank balances but also demand that those virtues are backed with genuinely constraints holding the state to account on its own numbers - with added mandatory sanctions against hidden wayward spending.


    Monday, June 02, 2014

    Tax competition - an idea whose time may have come

    Liberal economists have always been in favour of tax competition. It is another tool to constrain the state in its interminable capture of our own money for its own ends.

    If the reports are true, it is possible that the closeness of the referendum polls have put the UK into a defensive mode where yet more new tax powers may be offered to Scotland. There is even talk of some sort of “Council of the Isles” as a forum to discuss the relationship between centralised UK power with other localised democratic bodies. The interminable referendum conversation has at last reached Westminster and some good will surely come of this.

    What we need to avoid are falsehoods. Nonsenses like Gordon Brown’s claim that cuts in Corporation Tax could lead to a “race to the bottom”. Piffle, this tax on workers and customers should be pushed to the bottom as quickly as possible. David Cameron is equally as mistaken on this. His feting of multi-lateral government action to create a level playing field on corporate tax is illiberal and misguided.

    As for claims that UK national taxes for nationalised welfare are the best way to help our poor improve their lot and secure the futures of the elderly - God help our children who will be paying for these bankrupt schemes on the debts we are accruing. Localised, properly funded pensions and welfare are going to have to come or we will be impoverished at all ages.

    Scotland’s distaste for the “Bedroom Tax” has shown us that tax competition would allow for policy competition. Ms Sturgeon et al may be completely misguided in their approach on this and other subsidies like child support, but putting the price and costs of these ideas nearer to those who choose to offer them is what taxpayers need.

    Alex Salmond has repeatedly separated the economic and political union from the social and other unions that Scots enjoy within the British brand. Global realism also requires us to recognise that Scots enjoy a togetherness within the world of free trade, the European regional family, and the NATO pact. The 21st Century world has changed; what anyone of a liberal persuasion wants is effective government at as small a scale as possible.

    Whatever your view on independence any discussion about localism and tax competition is a welcome development and we should all applaud the more subtle aspects of democracy; whereby the opinion of the “crowd” is heard, listened to and acted upon due to not only voting opinion but also voicing opinion. Some natural Unionists are now even talking about “a necessary re-alignment of the Union” – a conversation in which the word “federal” is expressed so far with a shudder, but needs interpreting in a truly British context.

    That interpretation is both about what “states” exist in the UK and what “internal affairs” they should be responsible for. Localising taxing and spending decisions is good for individuals as taxpayers. We should not be fearful of this idea as it curtails state power.


    Monday, May 26, 2014

    180 ways to cut spending

    If it is true that HM Treasury is about to suggest that Scotland will have to replace 180 UK “departments” at phenomenal cost** then the pro-Union camp may have shot themselves in the foot yet again.

    You can use this argument in reverse; why would a small agile state want to belong to a larger state had the need for 180 tax-funded entities?

    Viewed objectively from an unaligned position, the 180 department revelation tells us that Big Government has run amok and the Scottish Government’s proposal in its White Paper that a small wealthy state could streamline its bureaucratic entanglements is a worthy goal.

    Worse, the UK analysis is based on the idea that it takes £15million of our tax cash to start a department. Tell that to a small entrepreneur starting a business on a few hundred pounds, long hours of dedication and zero sales. UK government entities always start with new offices, new computers, gold-plated employment practices and a guaranteed budget. (In our experience they usually invent their “sales”). Is that fair? Could it be changed in an independent modern Scotland?

    So for us, the message for both sides is to take the statistics as part of yesterday and tell us what they intend to do about tomorrow. In this, the “Yes” camp would appear to have the upper hand; localised governments competing on their offers about our tax burden tend to be more cost-effective than megaliths. That was one argument for devolution.

    Our view has always been that the Scottish Government needs to come forward with a hard-headed realism about its deficit, a dedicated commitment to smaller less bureaucratic government and an equal commitment to discuss with all Scots what localisation of administration might mean for a newly independent Scotland. We realise that offering largesse to all and sundry under the fairness and equality agenda is a necessary electoral tactic to capture the necessary votes of the Labour Party’s clientele, but we think there is language that can be used that reassures low-tax supply-siders like ourselves that the future intent is not all spend, spend, spend.

    And of course that message applies to the other lot in London as well with the 180 departments eating up our hard-earned cash. Less spending; lower tax; higher growth; more jobs; Mr Osborne says his government has started getting that message; can 180 departments also get the message to complete it?

    (**It is by no means clear that this is true, we are in a pre-release news management war over these latest figures at the moment; there will be papers coming out from both sides this week.)


    Wednesday, April 30, 2014

    Work that needs pensioning off

    We have just finished reading HM Treasury’s 116 pages on Work and Pensions “Scotland analysis: Work and Pensions”. While the document is a useful reference for policy wonks like us, we can’t see many Scots sitting at their hearth and with dedicated ferocity ploughing through this.

    A colleague of ours who is a university lecturer familiar with marking students’ essays (Scot in England, no referendum vote, no axe to grind except a love of Caledonia) says the tone of the text reminds her of someone who didn’t really want to write the piece and “sort of” believed what they were saying.

    The core problem is that the paper appears to be proposing reasons why we would be better together and avoiding risk, but what the numbers show is just what an enormous risk the gigantism of the present UK welfare state is. That in itself is no reason for turning to the endless promises of Nicola Sturgeon, but equally it does encourage turning away from the observable risk of having Gordon Brown spew our taxes to all and sundry.

    There is another recent released report, this time by the House of Commons Scottish Affairs Committee called “Zero hours contracts in Scotland”. For us, this is vastly more important in its view of the future than the backward review of the Scotland analysis paper.

    It tells a story of what is happening as unemployment apparently plummets as we emerge from the recession. Tens of thousands of not very skilled working people (possibly 90,000 in Scotland or 18 percent of those in work) have work that is variable, probably involving multiple jobs in multiple workplaces and with many potentially devious agented payment structures in tow that put worker security at risk.

    Two reasons are repeatedly cited in the paper. The first that this is the way the world of work is today. Technology, lean production methods, and variable needs for “operative time” in services (particularly carers) have pushed employers into flexible hiring. The second is that regulations on benefits, pensions, hours worked and, above all, high payroll taxation lead employers to protect margins by belittling worker participation.

    This is a long way from the world of heavy industry and permanent jobs which Beveridge knew and designed our present welfare system around. Zero hours contracts are here to stay and paradoxically offer both the best arrangement for some workers who need flexibility and the worst for others who want certainty of income.

    And that’s where the Scotland analysis falls down; it’s “soooo yesterday” as they say. Work is atomising, our welfare system needs to do so too. At TaxpayerScotland we repeatedly concentrate on the rot being created by high payroll taxes – taking portfolio working as a given. This is where our politicians need to start from too; whether in favour of independence or not.

    They could begin by reading our paper “Building our own providence” which suggests that everyone should be saving some of their income – from the first pound earned – into their own Personal Providence Savings fund. Just imagine a population of working Scots with their own capital kitty turning up for work with an employer offering a few hours now and then, but with much lowered payroll taxes. Power to object and turn away, power to stand firm on exploitation, personalised support should times change and allowing for personal choices that bolster self-worth. All without the state. Now that’s real wellness fare.


    Tuesday, April 22, 2014

    What were they thinking?

    In public policy circles trade associations are notable special interests. As such, their aims are transparent – to represent the aims of the members they represent.

    In this light, the decision of the CBI to register as a campaign on behalf of the “No” decision in the referendum is odd. The immediate resignations of some of its members, and the calls to reconsider the decision could be seen to reduce the influence of the organisation. It could also be seen as unwise, in the sense that the CBI has taken a hardball stand in favour of a certain constitutional stance that could backfire badly.

    But there is a silver lining here; for the CBI itself. The organisation has been frequently been criticised in the past as being the Corporatists of British Industry, the managers rather than owners of larger entities keen to engineer state favours on behalf of the business community. In Scotland, where crony capitalism and shared partnerships using public money abound this tendency is reinforced.

    Those who have ejected themselves in the past few days are, in the main, the public sector entities – quangos and educational institutions – who many would not have thought were members of the CBI. So there is a cleansing process here, the CBI is purified in its representation of the business interest by this.

    A second benefit could well emerge. In this purification, the members of the CBI will have to consider what their own organisation is doing. If its raison d’etre is to be a wine and canapés employers’ version of a trade union beer and sandwiches delegation to Bute house then it is truly living in the past and living up to its corporatist image. This is not what Scotland and its taxpayers needs.

    What we need is a business organisation that shreds regulations, destroys barriers to business entry, demands cuts to payroll taxation, champions a huge upgrade in knowledge skills, teaches young entrants about entrepreneurialism, explains why profit is essential and valuable to all and castigates governments of all colours for getting in the way of those who get into work early and leave late. Scotland needs those things whether independent or not.

    What were the CBI thinking? Probably that they were politically important; that their voice would have clout in matters of income re-distribution, legislation supporting fairness and equality, technical matters in monetary regulation, and European issues. These are all part of the great national conversation we are having and do affect trade, but politicised contributions need to come either from parties or from impartial specialists in these fields, not from corporate interests seeing everything through the lens of whether another state bung is available to help their balance sheet.

    We think this decision was a mistake; the “No” camp seems to be struggling to get its message clear, free trading and access to critical mass in markets are vital for a successful Scotland, but for the corporate special interest explaining those truths is enough, campaigning on them is a step too far.


    Tuesday, April 08, 2014

    Politics and posturing don't help poor people

    We continue to try to separate the political posturing from any real principles within what our politicians tell us; nowhere is this more difficult than in welfare.

    According to the Scottish Government, reforms to the welfare system could see Scottish welfare spending reduced by around £6 billion over the six years to 2015-16. Most of this reduction is expected in the next two years.

    They focus as always on child poverty. With a bit of ducking and weaving, and some help from the Child Poverty Action Group, they paint a picture of thousands of poor families heading for food banks and 100,000 wee wains in deep trouble.

    Well excuse us, but let's get real here. Here are their own numbers for social support from their own GERS report:

    2008/09 £18,543,000,000
    2009/10 £20,076,000,000
    2011/12 £20,692,000,000
    2012/13 £21,159,000,000
    2013/14 £22,458,000,000

    So these "reductions" are nothing of the sort, they are in fact reductions in the planned growth in using our tax money to support the poor and their children. By the Scottish Government's own admission nearly half of what is being reduced are what they call "upratings", that is, automatic increases. And generally, over the six year period analysed, these clawbacks have been spread about as much as possible.

    Which leads us to the principle we are looking for. Nicola Sturgeon says:

    "We are committed to mitigating against the harmful effects of Westminster welfare reforms where we can".

    Well that's an administrative aspiration, but it could hardly be called a strategic policy statement about how the Scottish Government would propose to run a welfare system. Such a proposal would in our view have to include consideration of harmful effects such as:

    • That anyone who earns £10,000 plus has 45 pence in every pound taken from them.
    • That high tax rates like this make our trained graduates leave Scotland.
    • That the less well-off you are, the more you pay in indirect taxes especially duties.
    • That those that save pay taxes on money they have already been taxed on.
    • That businesses are taxed on their payroll, sales and profits to the extent that they stop investing in new jobs and new growth that would help the poor.
    • That local planners make housing hugely expensive through draconian land use, building and environmental regulations.

    We could go on (and on and on) about these harmful taxation effects, but suffice to say that all of the above make all Scots poorer and more frequently in need of support. So, mitigation against the harmful effects of welfare itself would be a good start to a strategic policy overhaul.

    Evidence that we are right and those who would spend more are wrong appears to be emerging. Those who want to spend more on welfare really do have to tell us why it is that as these "cuts" have taken hold, and new curbs on easy-money-welfare-without-work payments are introduced, unemployment is falling and, more recently, wages have been rising. If that really is happening , it might be that the reverse can be proven, that too much welfare creates dependant poverty. What then would "mitigation against harmful effects" be?

    As for the principle? Well, we could start with all governments coming clean that their unfunded welfare systems are wrecked because there is no money available except from what the state can borrow from our grandchildren.

    What this is really about is power over us. Politicians want to strut their stage; and they've locked their audience in to the stalls; despite that fact that their play is a failure. There are ways we could extract ourselves from this and hand power back to the people - taking politics out of welfare. We have our proposal coming out in the next few days. Watch this space.


    Tuesday, March 25, 2014

    Investment and consumption

    The UK is not investing enough for sustainable growth. This opinion is offered by John Mills, a UK Labour Party donor, and he backs his claim up with ONS figures suggesting the UK ranks 142nd in the world for net investment at 13.5 percent of GNP. Compare this with the world average of 23.8 percent, and China’s 46.1 percent.

    There is a challenge here for politicians. To re-invent the way we do business, specifically to address the balance between consumption spending and investment. In Scotland, John Swinney makes much of the additional capital spending that the Scottish Government is doing. But this is sophistry; these government sponsored projects are almost all non-productive – that is, they may offer some improvement to our infrastructure; possibly making productive output easier, but with accompanying whole life costs, but they don’t offer the direct perennial revenue streams that manufacturing or services offer.

    To redress the balance, Mr Mills suggests that 10 percent of current consumption spending would need to move across to investment spending. That’s a tall order in a nation where discussions abound about more welfare spending to combat housing benefit constraint, about how to redress other welfare changes, and about to spend more on child care.

    Sadly, he is precisely right; Scotland needs to change its discourse to a confident direction, focussed on what we can create, not what we can consume. At TaxpayerScotland, we are optimists; but about the talents of individuals, not governments. If there is one thing the Scottish Government could do, now, it’s to declare what rules it suggests for its own proposed Fiscal Commission. And in this declaration it needs to show how a minimum 10 percent shift in resources from consumption to investment can be achieved.

    Its own report from the Fiscal Commission Working Group tells us why:

    “Fiscal rules can be useful if there is a concern of an inherent bias in favour of deficits or if a country/government is seeking to establish a reputation for fiscal responsibility.”

    “Commissions are believed to provide effective constraints on policymakers running unsustainable deficits”.

    German owned Siemens and Associated British Ports announced a £310 million investment this week in wind turbine development - in Hull and East Yorkshire; one of the industries that the Scottish Government considers strategically important to Scotland’s future.

    Actually, we are not so keen on industries that rely on government enforced subsidies to develop, but the fact that this investment came to England and not to Scotland may be telling us something. It’s all very well saying that Scotland is a good place to do business, it has to be made to be so; and central to that is showing that hard-earned revenues are not going to be swallowed up in an ever growing government consumption tax bill.


    Thursday, March 20, 2014

    Fluff, flavours and falsehoods

    The melodrama of the budget circus is fun, but does it tell us anything about our futures?

    It’s worth pointing out that all the fluff and flounder involves around five hundred million pounds “given away” with around £1.25 billion taken back over the following three years. And this within total managed state expenditure of around £775 billion. So this is largely about politics, not economics; the UK spends the above five hundred million pounds in two working weeks in debt interest alone.

    But, flavours matter, because they set the agenda for how our body politic thinks. In that respect the release of how we spend our money in our pension pots is long overdue. It brings forward an agenda where we are considered responsible and thrift is a price of that responsibility. That introduces great potential for further personal financial liberalism.

    Similarly, halting automatic rises in duties is welcome. It’s small beer (sic) but it brings forward the idea that such automatic stealth taxes are morally wrong. Chancellors should stand up to the plate on all their takings from us and come clean on what they are doing.

    A bit of principled honesty would not go amiss on investment allowances and Air Passenger Duty changes. Essentially what the Chancellor is saying is, “oops, we have over-taxed business and need to back off to create more wealth”. How much better to find a formula to limit spending that does not allow those complex and costly-to-collect imposts to take hold at all? They are so difficult to remove once imposed.

    And with respect to honesty, we thought John Swinney’s response to the budget was, frankly, devious – and possibly dangerous to his own aims.

    Selective quotation of “cuts” in discretionary budgets bely the fact that total managed expenditure is due to rise over the next three years; George Osborne is hoping that a risky balancing act between revenues from growth and these growing expenditures will, on balance, reduce the UK deficit and then his debts.

    Scotland, in Mr Swinney’s own commentary, will receive another £65 million on its budget from Mr Osborne’s manoeuvrings this week. However, in his rejection of what he calls “a diet of austerity” Mr Swinney falls into the trap of offering his own Scottish flavour to the political debate; that our fiscal commitment is entirely Keynesian and spendthrift. Even Ed Balls has said he sees a need for public sector budgetary constraint. All Mr Swinney can boast about is that each Scot produces more tax than in England. Why is that a good thing?
    May we remind Mr Swinney that the UK has an Office of Budget Responsibility; Scotland only has an options paper from its non-institutionalised Fiscal Commission. That commission suggested fiscal rules that would govern an independent Scottish Government’s approach to its budgeting, but we hear not a squeak about pre-emptively adopting them, or even suggesting in virtual form what they might mean for today’s budgets.

    We think that is a major mistake. It means Mr Swinney falls straight into the beady gaze of Mark Carney, Nick McPherson and of course George Osborne himself in their assessment of the risks of a currency union. It gives them yet more ammunition for their assertions that such a union cannot work. That’s a pity, because it is not true, although only if Scotland can cure itself of its spend and tax culture. Budgets do offer good drama; possibly because economics is real and has observable voter consequences, while politics gives flavour to values that politicians see as vote winners, but paradoxically run counter to good economics.


    Wednesday, March 12, 2014

    Forget the fine words – look at the numbers

    Today’s GERS report shows that the Scottish Government is spending £17,639,000,000 more than it receives. That’s leaving all oil revenue calculations to one side. A per capita share of those revenues reduces the deficit to just above £17,000,000,000.

    The first figure is a 14 percent net fiscal deficit, nearly five times the 3 percent the Maastricht Treaty proposed as a sensible deficit that would allow for membership of the Euro. Leaving aside any view of the Euro, that tells a story about the state of our public finances.

    Putting those numbers into a time period, the Scottish Government is over-spending by more than £70,000,000 a day or £150,000 each minute of that day. Funding this are your taxes (which provided £46,315,000,000 two years ago and £47,566,000,000 this last year) and the raising of yet more debt to pay for this fiscal deficit.

    So, our lords and masters are hauling in vast quantities of money from our wallets and then find themselves unable to stop spending yet more.

    This has little to do with the independence debate, and a lot to do with modern government with its finger into every area of our lives trying to create Utopia. In our view it is morally reprehensible that a gaggle of politicians and bureaucrats can take so much from us and yet still want more and more.

    Some claim that this is simply the outcome of a Keynesian stimulus designed to haul the economy out of recession. But again, the numbers don't tell us this; growth did not turn around suddenly as the Scottish Government pumped money into capital projects. Indeed, the claims have changed from "stimulus through shovel-ready projects" to "boost the economy in the long term".

    It’s time to constrain our government, constitutionally if possible; they are bankrupting every single Scot (including our children) at the rate of £3400 each on average per year. Don’t let them kid you that oil revenues make any difference; Scotland’s per capita share makes very little difference and is a good benchmark showing that we are emulating the rest of the UK's profligacy. A geographical share looks better, but we still have a near six percent deficit and – er – wasn’t that money meant to be used to build a Sovereign Wealth Fund and back our nation against currency shocks as well. Add in a few promises about child care, welfare benefits, free this and that and more social and capital investment and we think we are entering cloud cuckoo land with spots on.

    We have to stop this …. join us as a supporter. You only have your tax burden to lose.


    Sunday, March 02, 2014

    Fiscal Positives

    Some weeks offer us hope. The fiscal world threw up a couple of positives this week.

    1) Willie Walsh expressed the view that the Air Passenger Duty cut would be good for Scotland.

    It's been one of the good points made by the "Yes" campaign that this tax does Scotland no good and he would like to get rid of it. (It doesn't do Britain any good either).

    A bizarre comment by the "No" campaign about it being "a tax on holidays" only serves to irritate. If Scotland is to thrive, we need more business people taking more flights to more overseas markets. It's a prime tenet of marketing that overseas markets need more visits to make each sale; why saddle our businesses with an overhead that makes this more costly.

    2) George Osborne indicated that he might rename NIC "Earnings Tax".

    At last some honesty - we think taxpayers will be well served by being told the truth that they are taxed 45p on every pound through "earnings" and "income" taxes - which will sound pretty much the same thing to most people. Maybe he could come even cleaner and describe the employers' NIC element as a "Jobs Tax".

    3) ReformScotland found a really good use for our national insurance payments

    While George struggled with tax transparency, Reform Scotland brought out a paper showing how to end the present state pension Ponzi scheme . It starts by taking our NIC payments (sorry, "Earnings Taxes") and putting them into our own pension accounts and so letting us build up funded capital assets that each generation will use to fund their old age.

    This proposal is welcome. If workers in Chile, who have had a similar system since 1982 can now retire on up to 80 percent of prior earnings, while our pensioners get a measly 25 percent (at best) of average income, then it's time our younger generation got the chance to get rid of our lousy Ponzi scheme. By the way, the ReformScotland proposal would take more than 45 years to clean up the mess we have now. That tells you just how big a burden yesterday's collectivism has made.

    We have a paper coming out shortly, based on our submission to the Expert Group on Welfare, on how to do a similar clean up on the welfare burden.

    So, perhaps Spring really is coming, both literally and intellectually. Take hope.


    Sunday, February 16, 2014

    Is it time to accept the UK fiscal challenge?

    The announcement by George Osborne last week that the UK could not accept a currency union with Scotland offers the Scottish Government a challenge it should accept. The UK says we’re not totally committed, we’re too wee and our banks are too big.

    So, perhaps plan A has gone a bit wobbly, even although a properly negotiated currency union might have resolved any issue about our commitment; smallness could be considered a benefit; and banks can be re-located; although we would prefer just to tell those banks that if they go bust, they stay bust and re-introduce full moral hazard risks for bankers and savers.

    No doubt, money wonks will continue their commentary on the currency debate, but there is something the Scottish government could do now. It emerges from a fourth complaint by Nick Macpherson, the Permanent Secretary to HM Treasury who advised George Osborne not to allow a currency union. He says:

    ‘Treasury analysis suggests that fiscal policy in Scotland and the rest of the UK would become increasingly misaligned in the medium term. Of course, if the Scottish Government had demonstrated a strong commitment to a rigorous fiscal policy in recent months, it might be possible to discount this. But recent spending and tax commitments by the Scottish Government point in the opposite direction’

    At TaxpayerScotland, we spend our days trying to impress on central and local government what “rigorous fiscal policy” means at both the practical level and in terms of policy choices. We are completely convinced that there are vast quantities of taxpayers’ money being both wasted and spent unnecessarily, and that the high UK style tax rates, and complex taxes we suffer from destroy jobs and growth.

    For us, the source of the lack of a rigorous fiscal policy lies in the prevailing fiscal consensus within our government. Bad ideas are repeatedly promoted. Some examples:

  • That greater progressivity in taxation through higher tax rates can raise more revenue for re-distribution. No, high tax rates destroy growth.

  • That Coalition attempts to curb runaway costs within a welfare system imposing huge burdens taxpayers should be reversed. No, spending more of our tax on welfare punishes the self-reliant and supports dependency.

  • That imposing higher taxation on business property affects only landlords. No, it reduces jobs and raises prices.

  • That regulation to control prices or adjust market mechanisms directly improves economic performance. No, it creates crony capitalism and favours larger corporations with no allegiance to Scotland.

  • That public sector pension liabilities cannot be challenged. No, they must be curtailed; they hugely affect the productivity of our tax pounds on public service provision.

  • That there are no alternatives to fully centralised monopolistic state provision in health and education. No, NHS productivity is worse than ever, and even Sweden allows its schools to make a profit.

  • That Scotland should continue to commit to renewable energy goals over and above internationally agreed targets. No, not using wind power at six times the price of world gas prices.

  • That an insouciance about declaring a stated route out of a repeating current budget deficit and burgeoning future state liabilities can be assuaged by the presence of future oil revenues. No, there is no chance those revenues will pay for those liabilities while simultaneously creating an asset in a sovereign wealth fund.

  • The fiscal ideas above may seem desirable to our politicians, and any representative government is free to choose them and tax us accordingly but, as Sir Nick has pointed out, ideas and high taxes have consequences.

    We said in our currency paper “Whose money?

    ‘if the popular consensus is that these fiscal policies are immutable; embedded in what Alex Salmond, Nicola Sturgeon and John Swinney have described as “Scottish values”, we believe that any move by a newly independent Scottish government to a currency union would be likely to lead to capital flight and skills migration very rapidly.’

    Nick Macpherson also believes this. But, crucially, there is an “if” in both his quote and ours, promoting the thought that there are better fiscal choices which would not induce currency failure. Here is what the Scottish Government can do about that.

    The Fiscal Commission Working Group report on “Fiscal Rules and Fiscal Commissions” recommended establishing an independent Scottish Fiscal Commission. The recommendation was to “ensure it is in place by the time the key tax powers are fully transferred as a result of the Scotland Act 2012”.

    No. Alex Salmond should set it up now - immediately.

    A Fiscal Commission is a keystone of TaxpayerScotland’s vision for a modern Scotland with a constrained state and low taxes. It tells us that Scotland's economic advice is good, and that the social democratic consensus is not necessarily all powerful; the consensus is being told that is has to live up to its fiscal responsibilities. We would see it forming part of a wider commitment to economic constitutionalism which must run alongside any other constitutional framework devised should either a “Yes” vote be realised, or a “No” that leads to some extension of devolution. We need formally to limit our government.

    Think how such a move in response to Osborne would be seen from Westminster. We’d be saying to them, “Ok, you think we cannot control ourselves while you sit on your £800 billion plus debt and £150 billion deficit, just watch us”.

    The Fiscal Commission report proposes four classes of rules that would bind our government: balanced budget rules, debt rules, expenditure rules, and revenue rules. At TaxpayerScotland we would add two more; rules on transparency, and rules allowing testability – in essence binding open audit methods that deny the state the right to pull wool over our eyes about its spending and taxation commitments.

    Scotland desperately needs those rules today. It’s time to finesse our UK critics, to state clearly that in our eagerness for self-determination, devolved as now, maximally devolved or independent, we accept our responsibilities to ourselves.

    As for the currency, who cares? We’ll use the Pound, the Euro, the Dollar, the Yuan, indeed any shilling that people want to spend with us. That’s a problem for the bankers to work out – and given the last five years of taxpayer support - we should be in no mood to protect them from their risks.


    Monday, February 10, 2014

    The 1970's or the 2020's?

    It was in the 1970’s that political economists noted that as elections approached in countries where Keynesian doctrine held sway, politicians would begin to ease up on budgetary control and instead offer voters more spending.

    Given that, with six months to the referendum, Scotland is firmly in the grip of election fever, what do we make of recent pronouncements by our Government?

    Two policies spring to mind; the mitigation of the impact of the “Bedroom Tax” and the recent announcement of a Tax Incrementing Finance scheme for Oban.

    The cost to taxpayers of the Bedroom Tax mitigation is £35 million, with another £68 million to counter UK imposed welfare cuts. (You can see the savings that have been eschewed here.) The cost in future taxes of the TIF scheme in Oban is £18.9 million.

    In both cases, the Scottish Government has made it absolutely clear that these are instances where they have grasped the “economic levers” as best as they can to choose their policy priorities. Those fit precisely with the “fairness and equality” and “jobs and growth” agendas. And they make the fair point that it is bonkers that these policy choices are not localised; (we would propose more local than Holyrood however.)

    In both cases, however, absolutely zero consideration is given to the impact of this tax and spend approach to economic management. It’s apparently all positive for Scotland, and we would say it is also all politically motivated – the Scottish Futures Trust, which is purportedly looking after the Oban project, does not even have news of it on its web site a week after it was announced!

    There is a lesson here for our choice in September. The polls show that the fiscal responsibility of the Scottish Government, and the sustainability of any currency sharing post-independence which depends on that responsibility, is a core issue for voters. Many of the “don’t know” voters needed by the “Yes” camp for referendum success are fearful of Holyrood’s propensity to spend. The White Paper lays great store, and rightly, on the Fiscal Commission rules proposed to put a lid on spending, and hopefully taxation.

    There is a balance missing here in our government’s pronouncements. It still has a deficit, despite DEL budget cuts, and it plans to borrow £296 million in 2015-16 – the full amount it is allowed to do. Its £35 billion budget was passed the other day by 108 votes to 15.

    Given that huge majority in favour of tax and spend, we’d like to see a much more rigorous clarity to the overall future path of state spending and taxation. While our politicians may think they can buy votes today through spending promises of the 1970’s variety, they need to remember that the referendum is about the 2120’s and beyond . Scotland desperately needs not only a fiscal commission, but a defined fiscal constitution to which all Scots can agree. Those in favour of free lunches need not apply.


    Monday, January 13, 2014

    What is tax for?

    To ask such a question may seem strange, but as Scotland enters its crucial referendum year it has a relevance to our nation’s success.

    This last weekend saw the 215th anniversary of a “temporary” tax; one that has become ever more important to central government – income tax. It was introduced to fund a war with a 0.8 pence in the pound lower rate on earnings over £65,000 in today’s money, and a 10 percent rate on earnings over what would today be £217,000.

    Today, with 20p and 40p rates starting at much lower thresholds, income tax is the primary revenue raising and re-distributive tax. Its purpose has changed – it funds (extensive) state spending but it has also become a vehicle to impose social equality. Of course, the real rates are a lot higher because we pay two National Insurance taxes (generally 25.8 percent) on gross earnings as well.

    It is the balance of these two reasons for taxation that is important to Scotland. We are a nation that today favours extensive public provision of services, and we also favour equity among earners. Within these desires, sadly, there are some destructive myths.

    First among these is the idea that the needs of “the poor” can be met in any substantial way by the re-distribution of gains earned through the abilities of “the rich”. Actually, the few who paid income tax in 1799 have been replaced by the many. Today, nearly all pay tax and nearly all take benefits. We have collectivised mutual re-distribution.

    Second is the idea that there are enough rich around to pay more. Five percent of all earners pay 45 percent of all income tax. Some of them (very few in Scotland) are those paid startling amounts as the salary men of the FTSE corporates who could afford a few pounds off their massive and astonishingly insensitive burgeoning pay rates, although it is worth pointing out that if you increased the tax of all the chief execs of the top one hundred (average wage £3,400,000) by ten percent, you would obtain enough funds to run the Scottish Government for precisely 3 hours 55 minutes and 17 seconds. Other highly paid executives who carry the 45 percent revenue burden are of course those who live in large well-maintained houses, have expensive children, buy premium cars, furnishings, art and holidays and use expensive restaurants – all of which create the wages and employment of many others. We risk those quality jobs if we impose too much of a burden.

    Third is the idea that if Scotland tried to impose on these people and demand more of their earnings they would all stay here. Those who rely on global business for their earnings tend to be highly mobile.We are an open economy, and the ability to speak English is in high demand elsewhere.

    We desperately need a debate here about our fetish with “equality” and “public services”. Taxpayers at all levels have been milked for long enough and deep enough to show that Big Government does not create wealth, but rather a form of sad sclerotic stumbling of confusion and missed targets. True economic liberalism offers something else, the release of creative energy within good institutions that deny privilege but relish freedom. That’s what Scotland needs to find this year, ideas that combine productivity with sharing goodness. We have a few, and they all rely on low tax rates and self-reliance that empowers all Scots. Watch this space …


    Monday, December 30, 2013

    Making 2014 transparent about the 7/49 ratio

    A defining facet of modern government is its sheer size. For a small country Scotland has more than its fair share of core departments, mission rich quangos, and third sector commissions all fed from the taxpayers’ wallet.

    This spending is essentially an outcome of central planning, a layer cake of top-down decision making (or avoidance) to achieve collective objectives. Technically, these missions are meant to be agreed and then monitored by parliament, but our representatives cannot possibly have the time to effectively oversee the vast swathe of administrative “stuff” that its bureaucracy plans and administers.

    As a result there is rot here which affects every taxpaying household. Government waste and unnecessary spending abound across the public sector. A key reason for this is that taxpayer-funded entities have not been told to be totally transparent in everything they do as a key priority.

    Our colleagues at Reform Scotland have just released a report showing that 48 heads of quangos earn more than the ministers who oversee them.

    Now many of these executives are top-drawer individuals and such high pay would be fine if they faced personal loss when things go wrong in the same way as business owners lose their dividends or their companies when they fail. But they don’t, usually taxpayers are simply fleeced for more funding to re-invent their missions under a new plan, while the Chief Exec stays in post.

    Reform Scotland has repeatedly called for better accountability and transparency across the public sector and we support that strongly and urge you to read their report. If there is one thing that the debate over independence in 2014 can do for Scotland, it is to offer new ideas as to how oversight of, and constraints on, public spending can be designed.

    We’d like to start with a simple suggestion. Any entity using public funds should be made to publish its budgeting on-line, and as it spends our money, every item spent over £50 should also be published. That would make our future transparent, and also show us if these Chief Executives are worth their pay. Ideally, we would put them all on independent contracts with performance elements within their pay structure. There’s nothing like putting risks into the Boardroom to get some common sense into decision making and motivate directors to push management to perform efficiently.

    We may have a new Scotland by the end of 2014. If so, let’s rid ourselves of the old deferential UK legacy idea that those from the Ministry always know best. They have taken over the management of half of our national income; a good figure to remember is that 7 percent of our population are in the senior management positions on the public sector who control the spending of 49 percent of our national income. (Those of a left-wing persuasion may like to compare with the richest 10 percent of individuals who earn 29 percent of total income )

    It’s time we demanded accountability for what they spend, and if they don’t spend it well, remove that privilege from them and contract with someone else who will serve taxpayers more economically.


    Thursday, December 12, 2013

    Choice by us and not "them"

    One of the failings of the recent White Paper which we, and others, have voiced is its apparent capture by the Civil Service. The fattened document succumbs too often to weasel words and pudder – probably in a desperate attempt to find “detail” - instead of offering the clarity of principled argument. A future for a Scotland designed by the bureaucracy is not attractive to many.

    However, credit where credit is due. An event yesterday shows that there is bite yet among our politicians. Holyrood’s Public Audit Committee has won over Sir Peter Housden, our top civil servant, to come clean on “compromise agreements”, itself a weasel phrase to describe pay-offs for people paid from the public purse to avoid claims against their employer.

    Labour MSP Ken Macintosh set the ball rolling some time ago when he used FOI to reveal that there had been 12,500 such payments worth £52million over six years. This revealed also that the civil service was not even collecting data on such agreements, preferring to hide its dirty linen in a cupboard to which it had the key.

    Now, all such deals will have to be notified to the Scottish Government, and reported publically in accounts. Taxpayers should wave flags and shout “hurrah” at this common sense move.

    Both politicians and civil servants have got to get to grips with what we call “the transparency agenda”. Times have changed, the public (aka taxpayers) need to know how their money is being spent. Politicians have moved ahead of the civil service in this respect; the expenses debacle started that off and this week’s reaction by the political parties to IPSA’s proposed pay awards for MPs continues a welcome openness.

    It’s time our civil servants also opened up, and completely. Every expense that uses taxpayers’ money should be openly stated and available for scrutiny. We are not claiming that outsiders can know everything about what is properly spent, although open governance does at least give us a chance to provide our view. The real issue is to recognise at all times that there is the seen and the unseen. For every choice of spending there are alternatives of not spending, or other spending, which may generate growth and jobs, or equality and fairness, more effectively. Real Scottish democracy for a small country demands that we allow proper scrutiny and choices made for all, not just by the few.


    Tuesday, November 26, 2013

    The devil is probably not in the detail

    Well, we’ve read it, we’ve listened to others who have read it, and we’ve shared views on what we have read in it. It’s a manoeuvre; clever, but in the end a duck and a weave.

    And no-one can be blamed for that. The “No” camp want lots of detail that they can rail against – or possibly even mock – the “Yes” camp don’t want to promise too much for fear of scaring too many horses – they need our votes.

    And that’s where a certain sense of disappointment sets in. We don’t live in a period of great intellectual enlightenment to feed a radical debate about freedom, we live in an era of state-centric managerialist governance – so a White Paper that offers a future for a new Scotland, modern and democratic, gets bogged down in child support, inflation proofed allowances and living wages.

    That bit of vote buying, aimed at the female vote apparently, is matched by not unexpected proposals to cut corporation tax and air passenger duty, aimed at the business vote. Hurrah to both tax cuts, in Scotland by gosh, but these are expediencies, not principled realignments of how Scotland will govern itself. In fact, one of the odd things about the White Paper is how often it refers to changes NOT being made on present arrangements.

    This is where the independence project, in our view, is struggling. It is not offering to open up new ideas, to challenge the doubters over their stick in the mud conservatism, to shout about what we might be able to try to do on our own. In short, to be radical and different, based on sound principles.

    That’s a shame, because Britain has for sixty years been involved in a Big Government experiment that has hauled us and our freedoms into tax burdens that circumscribe our business enterprise and personal creativity. If there is one thing that Scotland could do as a small nation it is to burst through the bonds of government, challenge the devil of overbearing statism and offer progress through institutions that promote rapid growth and re-building.

    There is a glimmer of light however. A new entity is about to be launched called Wealthy Nation – a gathering of the liberal-minded who happen to support independence, but as a vehicle for the development of a newly free Scotland. They deserve heartfelt applause – we Scots can take on the world again with low taxes and less government. Just imagine; Scotland telling Westminster that it wants less spending and lower taxation. Now that’s a light that’s blindingly different.


    Wednesday, November 20, 2013

    Political policy making

    We appear to be in an interminable election campaign which for observers is not unlike watching a tumble drier in which the same pair of boxer shorts comes past over and over again.

    For the electorate in Scotland faced with an important plebiscite in less than a year, confusion and irritation in equal measure can be expected.

    At Dundee University, Alex Salmond has offered a warm-up act for next Tuesday’s White Paper. We have heard most of it before, but impressions matter in elections, and clearly all sides now want to make an impression.

    It’s quite possible that the vote you make will be nothing to do with what is being offered, but rather a punt on an optimistic versus pessimistic view of life for us Scots. From an unaligned and agnostic corporate position, but firmly in favour of constrained government, lower taxes and economic liberalism, we offer a few ideas which might guide your optimism or pessimism – all drawn from statements made over the past few days.

    The optimistic Yes:

    A “menu of options” for growth, greater international trade and increased population is proposed. Hurrah.

    Methods include “a new industrial strategy that promotes manufacturing”, “growth that can be achieved through targeted policy making”, “business growth through tailored tax policies”.

    For us, optimism here has to be based on the idea that this sort of politicised, civil service driven, mercantile capitalist nonsense can be put in the dustbin following a Yes vote. Believe us, there are a host of thoughtful people who believe it can. Political posturing aside, we are a wealthy nation that allows free trade. Anything that allows dynamic supply-side improvement to take place (and Mr Salmond’s heart is in the right place on that) is welcome. Those putting sand in the engine need to be put back in their box. The recent report by the Fiscal Commission Working Group offers some hope of constraint.

    The pessimistic No:

    The general thrust here - but oh, so soggy - seems to be that “an independent Scotland would face even tougher choices than those faced by the UK” – so we are better together.

    At that point, what this actually means is ducked. Is Scotland being told to stay subservient to a beneficent UK state which will help it out in its difficulties? Are we being offered any way to move on and learn to succeed? No, it’s all a bit maudlin, suggesting we’r a’ doomed because of: “fantasy economics that beggars belief”, “tax rises for families and service cuts to communities”, “ageing population and falling oil revenues”.

    Now, you can interpret this pessimism as canny common sense in the Scottish tradition. And you can add in a genuine belief that a bigger open market, all together, with monolithic UK focussed public services will always work better than localised, and locally funded, provision. Unionism like this is clearly rational, but is it reasonable? Or in any way progressive for Scotland? The UK too is a high spend, high tax regime.

    So we have two pathways; one optimistic that needs our pessimism about state methods to be overcome, the other pessimistic that requires an optimism about the UK’s interest in Scotland’s differences. Neither side is offering proper supply-side dynamism. No wonder our heads are spinning as we watch the politicians tumbling about (quite often with their knickers in a twist).

    Our conclusion is that, whatever the outcome of this vote, the debate it has engendered is massively important for Scotland and its view of itself. We want to see burgeoning confidence and freedom, and are resolute in our opinion that a smaller state, with lower tax burdens, will offer us a prosperous future.

    How is that to be achieved? Well, that’s what your vote is for.


    Tuesday, October 29, 2013

    And now .... for tomorrow ....

    It’s one of those days when you could be forgiven for being punch drunk. Opinion formers are pouring out ideas as if there’s no tomorrow. Except … they are all about tomorrow in Scotland.

    In one day we have had two reports about fiscal matters from the Institute of Fiscal Studies, and from the Centre for Public Policy and Regions. The UK government has been banging on about security and independence, and about the value of HS2 which The Taxpayers’ Alliance have once again castigated as a huge cost for all families, and we would add, for little benefit here. Reform Scotland has published a clever report proposing road charges and we have been outlining some plans for a Universal Income Tax – a single rate with a high threshold.

    Who said there was no detail in the Scottish political debate? Now, of course, we can pick and choose the ideas we like and reject everything else but all this does tell us something – the political choices we are now being offered are those that are important to our tomorrow.

    We’re cheered by the fact that some of these new ideas support the idea that a confident Scotland, independent or not, favouring lower taxation and the proper allocation of resources, properly localised, could thrive:

    For example, the press concentrated on the need to balance our budget in the two reports about our fiscal position, but the IFS also says that we deserve “lower optimal tax rates in Scotland” and that a “less unequal income distribution means there is less need for redistribution via heavy income taxation”, while “independence would give Scotland an opportunity to design a much more efficient tax system than the one we live within the UK. But to do so would require tough political decisions.”

    Yes indeed, like understanding the dynamic effects of a lower tax burden.

    In their paper ReformScotland say that “we do not believe the objective of current motoring taxes is clear” suggesting a pay-as-you-drive road charging system, predictably castigated by the Scottish Conservatives who claim it would “hammer” commuters, despite the clear stress by ReformScotland that Vehicle Excise Duty and Fuel Duty would be abolished and replaced by a fair system of motoring charging. There’s another tough political decision, but offering fairness and helping create widespread growth in our view.

    And that’s the point; with ideas like these, the squeeze is on the politicians to come forward with a properly considered vision for tomorrow. One of the wonders of democracy is that we, the people, can raise a quizzical eyebrow to those who want to rule over us, asking what their idea of our tomorrow might actually mean. The upcoming White Papers are ever more crucial.


    Wednesday, October 09, 2013

    Renewables – too much, too fast and too costly

    Total UK support for renewable energy through its main subsidy scheme (the Renewables Obligation and/or contracts for difference) will rise from around £2 billion in 2012-13 to over £5 billion in 2018-19 as more capacity is added to the network.

    This is our money, taken from us and spent on a risky project involving new technology that any physicist knows cannot offer productive energy intensity.

    The subsidy provides guaranteed prices. Onshore wind will receive a guaranteed electricity price double the typical wholesale electricity price. Offshore wind will receive triple the typical wholesale price.

    The UK Government wants to reduce the cost of renewable energy, gradually reducing the subsidy per megawatt hour. Yet offshore wind will still receive a subsidy £135 /MWh in 2018-19, falling from £155 /MWh next year (in 2012 prices). And even with this subsidy, many experts who know about the technical difficulties of installing and maintaining off-shore wind farms have warned that despite the subsidy there may not be investment forthcoming.

    The great worry about all this is that when politicians put their weight behind something, they find it hugely difficult to back away – even when proved wrong again and again and again. Instead, they turn to those with a vested interest in the proposed systems, seeking and almost always getting the reassuring answers they seek; that everything will be all right in the end. Find out who was on the committee of advisers of the latest Audit Scotland report on renewables here.

    We deserve better from the Scottish government. We are a country with some of the best engineers and technicians and a legacy tradition of doing things well and properly. Here we are subsidising technically suspect technologies that will create significant costs for Scottish consumers.

    Someone has got to step forward and say “it’s time to slow down and think about this”. The facts can be found here.


    Monday, September 30, 2013

    Not all are feckless

    The plan to make some people work for their social support is a good one. It’s also largely misunderstood by its critics. You can read a good rationale for the decision here from the Taxpayers’ Alliance.

    It’s so easy to shout foul at “the Tories”, saying that they are without compassion, heartless and mean. They’ll take that on the chin, and wait for an alternative, and wait and wait … the centre and hard left seem to have no answer except to say there are no jobs and this is forced labour. They have no positive suggestion to make.

    The work for the dole idea has a longer track record than any of today’s politicians. What has changed is the mountain of evidence that something has to be done. We cannot continue allowing quite poor people in one street, who go to work, support other quite poor people in another street, who decide not to. The vast quantities of money being wasted for no policy success have become too obvious. Consider the evidence:

  • When welfare recipients were asked to come to interviews to check their eligibility, around ten thousand in Scotland simply did not turn up and disappeared off the welfare rolls. Many hundreds of others were found to be fully capable of working.
  • When the employment figures for immigrants were checked, it was found that they had higher employment rates than indigenous workers. Many sectors, catering and agricultural cropping in particular, reported recruiting up to 90 percent non-native workers.
  • When academics began to report in from the US, Australia and Canada that by introducing Workfare they had slashed welfare costs – and put a lot of people back into work, they also reported something else. In their investigations into entitlement; interviews, work programmes, mentoring and other devices they were finding out a lot about the workless – that they were not simply indolent, they were different and needed different support.
  • This is where the attack on Work for the Dole is so misguided – it attempts to say that the idea stigmatises people, and defines them all as feckless. No it doesn’t, it only comes in to play a long way down a compassionate and careful welfare response that precisely does not do that. It’s great gain is that it allows those in social support to find out more about those who fail, to tailor support, to show real compassion based on their differing needs.

    If the choice is between leaving a young person spending their day sitting on a doorstep smoking cadged fags and drinking Special Brew – at the mercy of the drug dealers and other thugs who prey on them – and supportive social work putting some sort of focus into their life, however menial, that might show them a ladder back to freedom – then we are all for it.

    Oh, and by the way, if we cut welfare costs, we can cut taxes - and create proper wealth and jobs not more state sector non-jobs.


    Wednesday, September 18, 2013

    Leadership, choice and confidence

    One year to go. An arbitrary moment perhaps, but with everyone else reflecting on the independence referendum, we decided we could not duck the moment, despite our corporate agnosticism.

    Our starting point, after many hours ploughing through the statistics, is that there is very little difference between the “conditions of the people” in Scotland and elsewhere in the UK. Yes, there are pockets of deprivation in a cold climate that seem different, but there are many places elsewhere with equal hardship and discomfort.

    Industrially, we are different with respect to our weighting of manufacturing and services, but again not massively so as the connected world develops beyond its digital infancy. The internet really does change everything; we have only just begun that journey.

    Seen in this light, the campaigning so far has been phoney; too much talk about finances and survival, cash flow and control, all based on yesterday’s figures. What this referendum must be about is tomorrow.

    We hope this referendum is won on leadership; the brave laying out of future choices that could well be risky, but offer something special for Scotland – a new confidence. The end of empire and the disappearance of large-scale manufacturing left a vacuum for Britain’s northern territory. Us Scots need to fill it with a new optimism and energy to progress.

    As limited government, low tax campaigners (some would say zealots) we would like to see less talk about re-distribution to generate top-down mandated equality, more thinking about bottom-up growth generated through individual creativity. We want Scots leadership to offer more choices, especially to the less well off, allowing the freedom to become confident and not have us all turn to the state for answers. Every bit of evidence and observation we have tells us that a smaller state and lower taxation offers this type of future.

    Whether our potential to grow is released through the Union or an independent Scotland is up to voters to decide. Recently, we have been told that decision will be made on the basis of an expectation of economic gain or loss. Actually, we hope it isn’t, we’d rather it were made on the basis of a desire for tomorrow’s freedom. Liberty generates prosperity, not the other way around.


    Thursday, September 12, 2013

    Stuck in a groove and going round in circles

    John Swinney’s budget peroration yesterday should concern all Scots. Forget the detail, that was almost entirely predictable, it’s the direction of argument that taxpayers should note.

    Once again, every measure proposed involves the Scottish Government doing more not less. In the newspeak of the media department the overarching purpose is to “support jobs and growth, protect Scotland’s people and invest in public services”.

    This is not a government, this is a sweetie shop gone mad, with its owner scrubbling around in his stock room trying to find some old sticky gumboils to put on the counter and attract the kids. It’s a backward looking, un-enterprising strategy for a gradual decline, pandering to the “more, more, more” brigade. “It’s the votes, stupid” can be the only conclusion.

    On the same day, the madness of the renewables policy being followed by the Scottish Government is outlined by Audit Scotland. Their report is strange, less an audit and more a distemper brush review of the balderdash being offered for the benefits in energy and employment from the vast subsidies we are paying to large corporates for the wrong technology. A D-minus for this effort by the Auditor General frankly.

    Taxpayers have spent £209million so far with another £264million to come in the next two years. The claimed 40,000 jobs are not yet materialising (they won’t), the private investment for offshore installations is not coming through (it won’t), and the energy output that has been promised is not yet appearing (it can’t). It’s all late, slow and uncertain.

    Scotland Against Spin – a powerful new group doing the numbers on this entire boondoggle have exactly the right policy – re-visit our entire energy policy from the bottom up. And it isn’t just energy policy that needs re-visiting, our tired government is completely stuck in a circular groove of spend, spend and spend. Nothing but bad will come of this. Stop spending, cut taxes – that’s where real wealth creation will come from.


    Thursday, July 18, 2013

    Gravy boat development doesn't work

    Revelations in a new report on the Riverside Inverclyde project showing that a great deal of taxpayers’ money appears to have been wasted should not surprise us.

    Grand projects run by quangocrats that involve a lot of initial property development have a terrible track record across Britain. Southampton has a huge Itchen riverside development that has stalled, Newcastle had an empty industrial area for years dominated only by the One North East development agency offices, and we all know the carbuncle in the water at Hunterston that built precisely one oil rig.

    In this case, it seems that the James Watt Dock development in Greenock has had £60 million of our money, but has ended up in a mire of contaminated ground, poor management and missed targets on jobs and homes. One estimate suggests that only 7 percent of proposed jobs have been created at a cost of £321,000 each, while only 5 percent of the new homes planned have been completed.

    The land value of the development area is now thought to be worth minus £6 million pounds.

    We should not find this surprising.

    The repeating difficulty on all projects like these is the focus of the participants – who are inevitably in a cabal called a “partnership”. Few are real business people. They wear suits, they talk the talk, but their interests are not in doing real sustainable value-added activities.

    On the property side, agents want big deals to go through on which they earn large commissions. On the quangocrats side, quasi-bureaucrats want to achieve politically decided targets that will gain them kudos, not in the market through profitable pounds hard-earned one by one, but from local and national politicians who want to see “economic success” through modernising the local scene with new houses, marinas and industrial units.

    All forget that earning margins is a long, hard slog – combining knowledge and hard work – lots of downs as well as ups, and time to learn and change tack to discover how to make any money. That’s business; whereas doing deals on waterfront property is trading, managing them is more often than not horse-trading at taxpayer expense.

    For Scotland to thrive, we need more people who do real business, and less traders. That way, taxpayers will be relieved of the burden of bureaucratic failure – and there will be more revenue for public services from more real trade, selling things that customers want.


    Sunday, June 30, 2013

    Time to think about Scotland’s direction

    Parliament is in recess. We sincerely hope those engaged in the hurly-burly of its daily business – and especially those in government – take some time to think about policy.

    These are strange times. While today’s government uses today’s devolution settlement to execute policy, that same government is desperate to tell us that tomorrow’s policies will be different. And yet, when new policy measures come forward; in housing benefit, in what to do with the EU, in what to do about pensions, and in removal of automatic salary increases for civil servants, the Scottish Government too often appears simply to flounder in the conservatism of negativity – “we’re not having that here”.

    The scope for public confusion is obvious. The people who are promising us a new Scotland appear short of principles and any new direction. Such are the trials of politics; going canny to retain votes is the prime driver. Yet, it’s disappointing.

    In the hope of bringing some new ideas to the table, TaxpayerScotland is involved with a new initiative called The Network for Civic Enlightenment. This is a gathering of like minds affiliated only to classical liberalism and objective analysis of what is good for our nation (in TaxpayerScotland’s case it's taxpayers).

    In association with the NfCE we have just produced an Insight Paper about currency union, “Whose Money?” in which we offer the benefit of the doubt on the many difficulties this proposal brings.

    Our conclusion is that the perception of a persistent trend to over-spending, without constraints on annual deficits and a coherent plan to eliminate those, would mean that markets would quickly put huge stresses on debt funding costs. That in turn could (probably would) strain the currency union to breaking point.

    As a solution to this, the paper suggests a new constitutional approach to government in which the Scottish Government would be democratically constrained - by taxpayers - across parliamentary terms by a vote on its budget balance by the people at each election.

    Economic constitutionalism is an emerging trend across the developed world, with set rules on taxation and spending used to lock governments away from profligacy. We think Scotland has a huge opportunity to introduce a democratic form of economic constitutionalism that lets the people decide the size of their government.

    Read all about it here – it’s quite dense for holiday reading, but Scotland needs some new ideas.


    Thursday, June 27, 2013

    And yet more for them …

    The Scottish Government has been quick to suggest that it may attempt to maintain annual pay increases for its employees. That’s predictable, but once again it’s not a policy. It’s a dull, conservative stick-in-the-mud response to thinking from the rest of the UK that attempts to get to grips with the astounding fact that every single democratic state is spending its grand-children’s money to finance yesterday’s debts.

    Mr Swinney talks about “taking our workforce with us”; what about taking the taxpayer with him? Taxpayers will be paying upwards of £200 million annually for automatic increases to a workforce that, at the professional level at least, is already paid between 15 and 20 percent more than in equivalent jobs in the private sector.

    To quote Mr Osborne himself: “Progression pay can at best be described as antiquated; at worst, it’s deeply unfair to other parts of the public sector who don’t get it and to the private sector who have to pay for it.” Can we really have an idea that is antiquated and unfair in the UK, but caring and progressive in Scotland?

    The consequences for “us” and “them” becoming entrenched in Scottish society are obvious. Mrs Sturgeon should be up in arms about it.

    On the same day, having found that its trams might make an operating surplus, Edinburgh Council announced that it is investigating some financial engineering which would allow certain payments to a sinking fund for maintenance of its tram system to become tax deductible. This in the face of many in the public sector who want to curb tax avoidance to help feed the voracious public purse.

    The Janus faced state sector continues as always to serve its own interest and not that of those who pay for what they do. A little noted calculation of the “Barnett consequentials” of yesterday’s budget plans shows that Scotland faces “cuts” of only 1.5 percent in its block grant and will actually have yet more of our money to spend on capital infrastructure. The Treasury's own documents show that discretionary spending will actually continue to rise between 2014 and 2015 from £26.4 to £26.7 billion.

    Don’t let claims of “cuts” fool you. They still want more of our money.


    Wednesday, June 19, 2013

    Dull, and ducking the issue.

    Sometimes you cannot do much other than stare at another's opinion in astonishment. This was my reaction when I read about John Swinney's commitment to a "triple lock" on pensions at yesterday's meeting of the Institute of Chartered Accountants in Scotland meeting.

    By this he means that taxpayers , through their government, will guarantee themselves increases in pensions at a rate which is the highest of either earnings, or 2.5 percent or inflation. Judging by the press reaction and even reader comment, this promise is being met with some doubt, and occasionally derision.

    Politicians are known for their vote-buying tendencies, but this proposal is breath-taking in its audacity, not least because Mr Swinney did not provide any numbers to say how he would pay for his proposal - in front of an audience of accountants. Perhaps he has a magic wand tucked away somewhere that generates wealth.

    Mr Swinney could do little better than look at the report from his own Working Group on Welfare. The chart below shows the forecast of the total burden of welfare expenditure for Scotland until 2017. These are the Scottish Government's own figures.

    The blue section at the bottom of each bar is the cost of our growing elderly population, who take around forty percent of all social support expenditure. Notice that it is the one part that is projected to grow proportionately to other outlays. Low income families, those out of work and the sick and disabled generally hold their proportion of total expenditure.

    Now add in three observations.

    First, government welfare expenditure projections have no track record ever of being accurate - they are always under-estimated.

    Second, a promise of benefits better than the rest of the UK provides an incentive to enjoy those benefits. What cross-border effect will the triple-lock have?

    Third, if the political commitment were adhered to, the tax consequences would demand higher rates through time to pay for it. What wealth destroying effects would this have?

    We like to offer the SNP the benefit of the doubt where we can, taking no corporate view on the independence debate, but on this one there can be nothing but real doubt as to the costs. It really is dull when all that is offered as policy is to "match the English and add a bit more to make us better". It's as if no-one in St Andrews House has ever read anything about "the pensions time-bomb" that has given actuaries cold sweats for the last thirty years.

    A far better way of dealing with this issue would be to say that British state pensions policy has been a costly failure based on a Ponzi scheme arrangement; then propose a fully-funded re-start for the young Scots being allowed the referendum vote. Yes, take them out of the bankrupt old system altogether - allocate their National Insurance payments (and some) into their own nest eggs. Then deal with the socialist legacy separately and transparently - it costs us about a quarter of all our tax payments. With the young looking after themselves that would be a reducing debt, and it would be paid off by those nearer in age to the elderly generation that raised it, and not be left as a burden for our grand-children, a truly immoral stance.


    Tuesday, May 21, 2013

    What price healthy food?

    As Alex Salmond re-states his case for an independent Scotland, capable of efficiently looking after its own affairs, the Scottish Government continues to prepare for the proposed new future.

    It has just announced a consultation on the creation of a new food body to replace the present Food Standards Agency – a devolved power but operated as a set of sub-agencies across the home nations.

    As a case study in our nation’s approach to governance it is telling – and worrying for taxpayers across Scotland.

    It is a standing joke in Scotland that our diet is not good. The deep fried pizza and chips wi’ broon sauce staples are too prevalently scoffed to deny this. The consultation document says:

    “Scottish Ministers have an overarching ambition to help people in Scotland live longer, healthier lives through eating safe, healthy food.”

    Then they set out to tell us how “they” can achieve this. The result is a classic example of multiple objectives; food safety and standards, feed safety and standards, nutrition, food labelling, and meat inspection policy and operational delivery. But as if this is not enough, this is followed up by:

    “The new food body could widen its scope to encompass public health generally, for example by introducing more health based schemes to tackle problems like alcohol or obesity, tracking and measuring food poverty, or enhancing consumer information such as advising on health claims in food advertisements. Other suggestions are that its scope could include considerations of environment, provenance, sustainability or food security.”

    So now we see reality. The gannets of special interests are circling the public purse, deliberately introducing what in government are called “multiple agendas”.

    Taxpayers pay for multiple agendas – through the nose. Quango operations are staggeringly inefficient and when quango after quango after special interest after pressure group get into the act, the output of these bodies is slow, expensive and inevitably confused. Worse, the producers in an industry subject to such oversight get drawn into the bureaucratic morass, consumers' interest in cheap quality produce gets left behind in what has to be done to pass inspection, not what is good to eat. This is how plastic packaged plastic food gets into your supermarket carrier bag. It is also how small quality producers get disadvantaged with higher costs on lower turnovers.

    We don’t know whether the author of the consultation document was being ironic, but do the two sentences below not sound to you as a taxpayer as a contradiction?

    “Scottish Ministers are open to innovative ideas that will increase the efficiency or effectiveness of the new food body. These could involve an extension of the scope of the body beyond that currently covered by the FSAS.”

    Clearly enforced competition rules and minimal regulation avoiding the precautionary principle except through advice is the way to go. Scotland needs to take advantage of its smallness and not re-invent yet bigger quangos.


    Thursday, May 09, 2013

    Layering it on

    The Scottish Government has announced that “a planning tool is being developed to ensure that hospitals and communities have the right beds in place to treat patients”.

    It will be used by all health boards to ensure the NHS has the right type and number of beds and staff in the right place. The planning is to be delivered this through the boards’ "joint strategic commissioning plans".

    The governance goal appears to be to “instil a consistent approach across Scotland”, part of a general trend integrating adult health and social care.

    Well, excuse us, but isn’t this a perfect example of duplication in government that costs taxpayers a fortune. A little examination shows us that this “plan” is delivered by:

  • A ministerial team of civil servants.
  • A strategic working group inside NHS Scotland.
  • The planning teams inside each Health Board.
  • The strategic plan managers in individual hospitals.
  • The managers working on bed availability in each hospital.
  • And then in addition, there will be a set of cross-discipline administrators delivering both the beds and the co-ordination services between clinical care and social care services.

    Ensuring that “hospitals and communities have the right beds in place to treat patients” strikes us as something so central to a health service that we would have thought such plans would be part and parcel of daily life for the NHS. But this is how Scotland’s Government works; note that the tool does not yet exist; “it is being developed” in response to changes in demographics and needs.

    Is anyone asking if this is an efficient and productive way to run a health service? Top down, in one monolithic block, dedicated to a centralised planning process? We doubt it and it is costing taxpayers in Scotland a huge amount of money that does not go on clinical or social care.

    Finally, a little addendum that might make you laugh if you are not weeping already. The government says: “The new tool will be used alongside the established workforce planning tools which have been made mandatory for all NHS boards.” They’ve already got plans in place, this is more of the same!

    And as for the consistent approach, something beloved of central planners? They also say: “The tool will take into account the demographics and health needs of each local health board area, to help NHS boards plan their services.” So it’s centrally consistent, but locally inconsistent, to obtain consistency?

    Time to let go from the centre in our view.


    Friday, May 03, 2013

    Think Big, think Global

    Something is stirring in the consciousness of the English – and offers a lesson to Scots.

    The election results favouring UKIP can be read two ways. This could be Little England voting against more immigration, or it could be Bigger England voting against Euro-power. It’s probably a bit of both. Whatever part of the distaste for Europe involves the latter; it has parallels in Scotland’s relationship with the rest of the UK. Nationalists don’t want to be ruled by London as London does not want to be ruled by Brussels.

    If that is so, then the question for all of us is what sort of place do we want to have in the world if we are an independent UK, or an independent Scotland? And there is one clear reality here that we cannot avoid – globalisation.

    The comments today by Simon Henry, chief finance officer for Shell, tell all Scots something. Free lunches from oil and gas are not on offer. We have to earn our extraction rights in a competitive global world. Mr Henry is quite clear that the North Sea tax regime means that “developments in the North Sea at the moment remain relatively unattractive”. That sentiment could apply to all industries: whisky, food, engineering, software, creativity and tourism. They all need investment, or we slip slowly downhill to penury.

    This is the real challenge for Scotland; we need to look outwards and remember that we live in a world where real wealth is created globally. This understanding should not exactly be difficult for a nation that built ships, steam engines, bridges and other engineering miracles worldwide to earn much of its present wealth. But it will be difficult if we are permanently inward looking, juggling super-progressive personal taxes and carbon sequestration schemes, over-taxing business property and discussing wealth taxes.

    England is ahead of us here, largely because London is not England, but the world at work and play. Hopefully, some of the English who voted UKIP also recognised that Europe itself has become inward-looking, defiantly defending its social democratic traditions while ignoring the changes in the rest of the world. If Scotland can avoid the same fate, there is no-one like us for productivity, practical creativity and sheer international acceptability – that’s a true global asset.


    Monday, April 22, 2013

    Re-distribution is creating poverty - low taxes will reduce poverty

    The Labour Party’s interim report on devolution is a strange document, with some interesting ideas on de-centralising power, but often hedging its bets on actual proposals. For taxpayers it would have to be described as “more than disappointing” as it panders repeatedly to the spending constituency, with little apparent regard for ordinary households trying to cope. In that sense, it repeats so much of the Scottish debate – what can be re-distributed by the state; with little apparent concern about what is available to be re-distributed.

    The Fabian Society today has not pulled it punches. It just wants to take more of our money for the less well off. And we mean take – in spades. Tax increases for pensioners, a tax on property wealth, even a tax on private pension lump sums. Now, we really are finding them meaning of “there is no more money” to those of the taxing tendency. They’ll go and steal some.

    There is great merit in a hugely simplified and equitable neutrality in taxation. But only if the total tax take and tax rates are reduced dramatically. Without that, behaviours adjust and productive incentives dissipate. Those who want to distribute consistently ignore the fact that high taxation makes life very expensive for the poor, and generates a daft money-go-round for the middle (See the previous Blog post on this page). Just use the Tax Buster at the right hand side of the page to show what it costs to do simple things.

    A poor man fills his car with £30 of fuel to get to work – he has to earn £52.24 – with 75 percent of that taken in tax. It would cost only £13.25 without tax.

    A struggling family of four spends £60.00 on entertainment and a meal out – they have to earn £104 to do it. 52 percent goes on tax. And by the way, that £60.00 didn’t earn the supplier much. VAT, employee and employer NIC, business rates and corporation tax see to that.

    If in despair the poor man goes for a drink and a cigarette – fully three-quarters of what he spends will go to the taxman.

    More re-distributive spending is not an answer to poverty. It helps create poverty. In the process, it destroys liberty and choice. That in turn destroys incentives and personal improvement. We have to fight back. Less spending >> Lower Taxes >> Higher Growth >> More jobs.


    Thursday, April 11, 2013

    Are we being prepared for more spending?

    Two announcements by the Scottish Government in the last two days have the air of an orchestrated campaign to buy more votes through welfare spending.

    The first came in the form of some re-hashed figures from the GERS report about public spending , suggesting that the share of GDP taken by the Scottish state is proportionately less than that of the UK and that social protection spending is also lower.

    Both calculations assume that oil revenues are Scotland’s. Both calculations ignore any past transfers from Barnett supplementaries in the spending that has been done. But the figures are used by Nicola Sturgeon to say she wants “to take welfare and pensions into Scotland’s hands and use the full strength of our economy to provide the support people across Scotland deserve.”

    Now, this morning, Holyrood’s Welfare Committee has released a report saying that welfare payment constraints over the next year will “take £1.6 billion out of the economy” from the poorest areas in Scotland.

    To say that "the financial losses arising from the reforms will hit the most deprived parts of Scotland hardest” is a statement of the obvious – of course welfare constraint will impact on the places where welfare payments are made - but it is the conclusions being drawn from this which are worrying.

    We are back to the idea that the government is the economy.

    Billions taken away from public spending do not just disappear, they become available to unseen others who create wealth and jobs. Or rather, they would, and quite quickly, if the state did not have such huge debts that the number one priority has become the reduction of our massive deficit – slowing down the return to growth because the money does not go to the producing sector, but to bankers and bond savers.

    It is this latter problem which the Scottish Government repeatedly ignores in its politicisation of compassion for the welfare dependant poor.

    The same GERS figures used to suggest public spending in Scotland is lower than the proportion within the UK also show that the Scottish Government spends £7.5 billion more than it receives (allowing for oil as “ours”). Scotland also has a contingent liability to the UK national debt of around £120billion which suggests an additional debt financing burden of at least £3.5 billion and more likely more.

    Balancing constraints on payments of welfare to the poor against a ten to twelve billion unavoidable overhead is not a pleasant political choice. What is concerning in Scotland is that not one of our politicians seems to want to come forward and be honest about the dilemma.

    If we want jobs and growth we have to allow the supply side to create wealth at a much faster rate than today - gearing capital such that it generates revenue. Simply moving money sourced from more debt to the deserving poor, however compassionate, is not going to do anything for them except lock them into non-work for longer. It's a tragic dilemma that needs real political courage to resolve - the supply side matters.


    Saturday, March 30, 2013

    Shouting in the bedroom, but too quiet about the house.

    Scotland’s political debate has not been graced by much gravitas with the UK Welfare Secretary being denounced as a "ratbag" and the disabled suggesting that it would be better to shoot them than suffer a cut in their benefit.

    At the same time, you have to have some respect for Tommy Sheridan and his verbal claymore howling outrage at the effect of benefit cuts on the most vulnerable. This is a blunt instrument measure which gained cracks early on as the complexities of the lives of those on welfare came to the fore. The disabled, the separated, carers, helpful grannies and many others make good use of the so-called “spare” room. The measure does not just ask them to move house, it asks them to change their lives. That’s a huge ask, and politically very brave or very stupid depending on which side of the debate you are on.

    Such is the fate of managerialism in government – when management is practised on a system built on the wrong foundations. The Universal Credit changes will suffer the same howling from diverse interests wanting “their share”.

    For Scotland, this noisy debate is crucial, because the Scottish Government has declared its commitment to “Scottish values” among which is a strong dose of re-distribution by the state. Unfortunately, the social support programmes involved would continue the existing Ponzi welfare schemes and use exactly the managerialist methods of helping the less well-off as today. It’s notable that the Scottish Government has only offered sticking plaster measures; “advice and support” and “no evictions” in response to these benefit constraints. They would say their hands are tied; we would say they have no new ideas to offer.

    The key is the Ponzi approach because the victims of these are taxpayers. Where welfare is entirely paid by current account disbursements from a deficit-ridden public purse, taxpayers get milked as and when the money is needed. There is no buffer for bad times, either at an individual or a national level. That’s bad public policy and it has led to the oddest result – fully one third of households pay the same amount of money to the government in taxes as they then get back again (less a fee for bureaucratic services) in social support.

    In addition, we get Ian Duncan Smith struggling to contain welfare - and even admitting that that is all he is doing, while recipients howl about “cuts” that, in the total budget at least, do not exist. The national debate, especially in Scotland, becomes a battle of machismo – and zero enlightenment.

    Scotland could do much better. And it could start from a de-nationalisation of social welfare to allow individuals to build thrift funds; held on their own by individuals, or in industry or area based mutual trusts. Benefits could then be tailored to trust members’ needs; no blunt policy instruments necessary – social support would be de-politicised. Scotland could then also ring-fence its other Ponzi debts and agree to pay them off as a socialist legacy and base itself on truly sound finances.

    A Scottish Government taken out of welfare management could then turn itself to the real requirement for helping the poor – easing the rules on house-building. We need a complete re-think of planning regulations and environmental rules on buildings; one that opens up opportunities to build tens of thousands of new homes and at economic cost. The need for so much housing benefit (a doubling of recipients in the past five years!) comes from high rents and high house prices.

    There’s capital galore sitting on its hands – with much of it going overseas to Asia to build houses there – in the coffers of the middle classes and the fat cat capitalists. Scotland’s poor could benefit from that largesse; we have the space and by golly we have the demand. Planning is a devolved power, its time the Scottish Government offered us a new direction rather than trying to manage yesterday’s disasters.


    Sunday, March 17, 2013

    Regulation for the Dark Ages

    We have been reading a document about how regulation might be “streamlined and reinvigorated” within the Scottish Government’s vision for an independent Scotland.

    It’s called ”Economic and Competition Regulation in an Independent Scotland” and appears to be an offshoot position paper hooked into the work of the Fiscal Commission Working Group which is looking at monetary and fiscal policy and financial stability with industrial policy and regulatory policy as subtexts to that macroeconomic framework.

    TaxpayerScotland has no corporate view on an independent Scotland. We just want our country to thrive. So does our government; they want to “reflect Scottish values of fairness, prosperity and social cohesion”. We’re not sure that “prosperity” can be a value, (we are surely unlikely to aspire to impoverishment), but your taxes are being spent on such claims as part of the Scottish Government's explanation of its vision of independence.

    The document is important to Scottish taxpayers because it gives us an insight as to how our bureaucrats think – or are told to think by their political masters. As such, it is really rather worrying with respect to our wallets.

    The general thrust is the idea that an independent Scotland might integrate its regulators for Fair Trading, Competition Policy, Civil Aviation, Communications, Gas, Electricity and Rail into one, or perhaps two super-regulator(s). So far so good, it’s been done in other countries and appears to be possible with the prospect of some saving on administrative overheads.

    We doubt anyone knows whether the standard gold-plated civil service approach to IT, premises and processes in the UK would release the productivity gains envisaged in back room savings and corporate governance. The document succumbs to some Pythonesque double-think when it admits we would need more staff than currently employed in economic regulation in Scotland. There is also an admission that any integrated regulator would need to maintain “sector specific focus within the combined body” and technical expertise across its plural remit to allow “decision making mechanisms adequately reflecting the range of its responsibilities”. Such are the ways in which economies of UK scale might be lost with Scotland alone.

    But it is in the examples of what the regulators might do with their “power to deliver an effective, simplified and stable regulatory framework” (their words) that is concerning. What do they think might be useful to use this power for?

  • In energy, gas and oil price rises are “pushing more households into fuel poverty”. Their answer; introduce a regulatory approach tailored towards supporting renewable and low carbon technologies.

    Golly. Haven’t they read their papers on the cost of wind turbines being from seven to seventeen times as expensive as fossil fuels? The price of oil and gas has been dropping, and it's the renewables obligation that is making our bills higher.
  • Again in energy, they propose that households without mains gas should be allowed access to dual-fuel tariff discounts.

    So the purpose of the regulator is to manipulate price structures, distorting supplier markets? What pricing will then be offered to consumers who already have dual fuel arrangements? There's a "free" lunch proposed here.
  • In telecoms, broadband coverage in rural areas is still a problem. They want to discard “cost effective deployment” for “maximising access”.

    So, the regulations would mandate subsidies for the rural. At whose expense would this non-cost-effective deployment be? Using what technology? Preventing what innovation that would solve the problem anyway without regulation?
  • In the postal sector, there is a “current absence of a UK regulatory approach”. Charges to remote regions are high and not good for business and consumers.

    Their new regulator is not yet in place, but they are already thinking up new things to regulate!

    The aim is described as being to “reinvigorate the regulation of these critical infrastructure industries”. Taxpayers beware, what this means is price controls, supply mandates, and producer restraints all aimed in grand doublespeak as providing “a far greater focus on the specific requirements of customers in Scotland”.

    That is outrageous balderdash. The only focus here is on political vote-buying through manipulation of markets to provide financial advantage to specific voter groups. There is no understanding here of tendencies to rent-seeking by consumers, of the lock-in of non-innovating favoured suppliers to subsidised markets, of the destruction of innovation through regulatory sclerosis, of the value of competition and consumer choice to new ways of delivering services.

    The mind boggles as to how these economic regulators with such bad ideas might find themselves in the same room as the competition regulators who would, one hopes, have some notion of how competitive markets work to create change, progress and consumer sovereignty. Maybe they would invent a new sport, throwing bricks at each other across their Chinese wall.

    Please Scotland, if we are going to be independent, let’s not go back to 1975.


    Thursday, March 14, 2013

    Short and Long - Up and Down

    Oil and gas investment booming, manufacturing gloom, stock markets soar, lending scheme stuck, shop sales up, house prices down. The yammer could make your head explode.

    But within these ups and downs, there is a hidden truth. Time and taxes tell a story. Politicians and press demand “a fix” – presuming that it is possible to have one.

    The oil and gas investment cycle tells us about time. Investments now are based on decisions at least two years old and nearer to five. Actual spending is highly dependent on oil or gas prices and the margins to be made from their exploitation.

    A clear explanation of what has been happening can be seen in the Oil and Gas Industry 2012 Report. The Supplementary Charge on Corporation Tax introduced in 2002, was increased in 2006 to 20 percent, and a further increase to 32 percent was imposed in 2011. These impositions combined with several other factors to reduce investment and output in the middle part of the first decade of the 2000’s. The downturn was so severe that the government (twice) had to introduce new allowances which have led to fifteen additional fields being developed.

    So any “fix” is highly sensitive to future oil and gas prices, the tax regime and, crucially, time which can be longer than the electoral cycle.

    Manufacturing and the lending scheme also tell us about time and taxes. A view of the future in business is taken on the basis of uncertainties and again with a timescale longer then the electoral cycle. Most business investment loans are at least six and more often ten year arrangements. Politicians live in a world where what is called investment is not investment at all; but merely a series of cash deliveries. This week, on one day the Scottish Government boasted about £40 million for housing, £1 million in health technology funding, £4 million for the Theatre Royal in Glasgow, and £56 million in Less Favoured Area payments to rural farmers.

    These figures are meaningless without associated costs, the potential for associated capital deepening, the future revenue streams against those costs, and a risk assessment about the potential for margins. The Oil and Gas survey is replete with such calculations. The announcements of the government are not; and most use up wealth that might create gains elsewhere.

    Business is not borrowing because the numbers do not yet add up. Rather, they are moderating their activities and risks, and securing present margins; why borrow if you are only going to lose money in the longer term? And what’s the fix for this? Make it cheaper to be successful over time – by cutting taxes.

    Mind you, cutting taxes does take time to have an effect. It is not a quick fix. The numbers still have to be calculated and the uncertainties assessed for the years ahead. Importantly, investors have to believe the tax cuts will be permanent, or at least in place for the long term. This, for Scotland, is a serious problem, every utterance of the Scottish Government, backed by the fumblings of the UK Treasury, raises further suspicions that more tax and more cash transfers are the sine qua non of our leading politicians; they are even embedding such notions in catchy phrases such as “Scottish values” and constitutional provisions. That’s no way to create a successful country.


    Friday, March 08, 2013

    Not certain about being a GERS supporter …

    A lay observer could be forgiven for feeling more than a little punch drunk this week. The GERS report, the latest commentary from the Fraser of Allander Institute, and Mr Cameron’s speech pounded our brains with economic analysis. And then on top we are told that the Scottish Government might be having a big wobble about how to afford its vision of an independent Scotland.

    We’re wondering how much this tells us. So much of this has been macro-economic analysis, the distemper brush approach to economics that too often offers as much smokescreen as bright light. Crucially, all these commentaries declare (honestly) uncertainties about their own figures and estimations. Such is the lot of Keynesian economists, particularly those who believe you can “run an economy”.

    This is important, because the reality is that in the overall swing of things not much is happening. Growth is hovering around zero, and other indicators on spending by households, productivity, investment, and saving stay alarmingly in the mischievous “nought point X” area that are oft-quoted in the media but are in general statistically suspect.

    Looked at from the other end of the telescope, however, that nothing is happening is outrageous. Despite all the talk of “massive cuts”, the total cash taken in tax has gone up, and spending in cash terms has not been cut – it’s stuck around £58 billion with £22 billion of that on social support. The public sector spending ratio is stuck above fifty percent and we still have a large deficit if Barnett transfers are balanced against oil revenues. Inflation is now skewing these figures rapidly. Big Government pressures abound in Scotland's finances, the ratings agencies would have a field day with our future prospects.

    In summary, our managers are failing – and their leaked report shows us that they haven’t a clue what to do about it. The trouble is, it appears that their advisers do not know either. They offer only more of the same, the Fraser of Allander’s “massive infrastructure programme” being a crazy case in point. As our recent paper on this explained, that would only create inflation, massive imports and a huge tax bill stretching into the future for all Scots.

    There is another band of economists and commentators who are asking, what on Earth has happened to confidence in the supply side? If there is one place where people have to have self-belief, confidence and a long-term viewpoint it is in the private sector among artisans, self-employed traders and business. Their business is dealing with uncertainty and learning to defeat risk.

    They only need one thing: the taxman off their backs. Cut national insurance, cut income tax, cut property taxes and, yes, cut Corporate Taxes – but more than that, our confused economic managers need to tell those who are not uncertain and who take a long term view about risk that they will not reverse those cuts in tax. Only that will create real growth. The real problem is uncertainty – both among the tax imposers and the tax imposed.


    Thursday, February 28, 2013

    Coercion in access to learning

    The Scottish Government continues to announce highly specific social goals in its favoured areas of health education and welfare. What's worrying is the coercive nature of some of its latest proposals. This time it is Education Secretary Mike Russell who says he wants to enable young people from deprived areas to go to our best universities. The goal is twenty percent because that is the “population share that comes from those kind of areas”.

    Once again, this is one of those fine sounding aspirations, and we do not doubt the decency with which is proposed, but it does cross the line from enabling in the sense of not discriminating against, and enabling in the sense of coercing providers of a service.

    Apparently there is legislation coming forwards with targets and methods for each university to adhere to. What we seem to be obtaining here is some sort of social engineering based on distemper brush politics. It’s being justified because universities get £1.1 billion a year from the public purse – about a third of their budgets, but students from less-well-off backgrounds are usually less than 10 percent of any intake.

    We need to analyse the nature of the brush strokes for unintended consequences.

  • Is this the best use of taxpayers’ money when education is provided free to all? Would it not be better to start charging some of the well off to release funds to help the less-well-off?

  • Is he really saying that there would be quotas based on geography? What happens if you are deprived and not living in one of those areas? We are sure some civil servant has worked this out and will introduce some expensive “method” of re-balancing this imbalance within the imbalance.

  • Is access to higher education really about the availability of money? Isn’t it more about cognitive ability and the enjoyment of thinking?

  • Can you imagine what it would be like to be at a university and obviously there as a result of some affirmative action program? Deprivation is one thing, but perceived reverse discrimination is possibly worse.
  • How quickly the state moves from high minded ideals to coercive practice; and how quickly too it starts engaging in Orwellian double-think when it talks about “wider society” addressing issues. These issues are being addressed by a tight cadre of re-distributionist egalitarians. The time and taxes that will be spent on this engineering could be far better used to produce competing institutions like sustainable employment in businesses where learning is part of the culture. Practical folk made good are as good as any donnish student in an ivory tower.

    University education is not valuable for every child, it could become even less valuable if those coerced into going “up” find themselves making up targets with no attention to their real educational needs and aspirations and no jobs at the end of their courses. Distemper brush coercion is not the best use of our hard-earned taxes. .


    Wednesday, February 20, 2013

    Politicians and a country spurned?

    The hunt for other people’s money to spend on other people takes up a lot of politicians’ time.

    The announcement that the “cut” in the European budget over the next allocation period may adversely affect Scotland is causing a stramash across the political community –they see their gravy train being drained off.

    As Nicola Sturgeon says: “The allocations across the UK which are now emerging were not envisaged, significantly lower spending on encouraging investment, growth and jobs would be extremely unwise in these difficult economic times.”

    The cut in question relates to what are known as Structural Funds. They have been worth about £730m, a figure that could fall to £470m between 2014 and 2020 according to the Scottish Government. The funds are generally used to transfer capital from the thriving core of the EU to its periphery.

    But let’s look at those numbers more closely. A £260 million cut in funding over six years involves £43 million per year. Total public expenditure in Scotland in 2010/11 was around £63.8 billion – so the Scottish Government spent £43 million every 5.9 hours .

    We should not underestimate the ability of politicians to generate great leverage out of small numbers; the amount of money in question can undoubtedly be used to convince some voters that the government is on their side, but with respect to Scotland’s overall economic success it is chickenfeed and certainly not “significantly lower spending”.

    We need to “get real” about the numbers in Scotland. It’s said that the Structural Funds support more than 250,000 people into employment and training and create more than 30,000 jobs. However, if this money is a transfer from taxpayers elsewhere, the reality is that the net balance of jobs is more than likely zero –most likely industrial Germany loses jobs to rural Scotland. And in the medium term, if we sell to Germany, it will cut our growth and actually reduce Scottish jobs.

    The Scottish Government collects more than £8 billion pounds annually from National Insurance Contributions. Around half of this is employer contributions – a direct tax on jobs with a disproportionate effect on younger, less experienced and less knowledgeable workers. The government therefore collects about £43 million from private business every two days – destroying jobs and growth in the process.

    Keep this in mind as the horse-trading starts around the home nations between politicians wanting their wee-bitty pie.


    Wednesday, January 30, 2013

    LTBs and Scottish Values

    It is reported that one of the contracted companies tasked with checking whether welfare recipients are genuinely entitled to their benefits have referred to them as LTBs or “Lying Thieving Bastards”. This comes against the backdrop that new UK figures on the reassessment of incapacity benefits show that 32 percent of people had been cleared as fit for work and were no longer entitled to employment support allowance.

    This also at the same time as Alex Salmond indulged in powerful oratory about a “new form of alienation” and the “brutal effects being felt on our doorstep here in Scotland” within a “Britain on track to become the most unequal in the world”; on the same day that RBS announced it will pay large bonuses to its investment bankers.

    As so often, Mr Salmond makes an angry point, but stops. He makes no counter claim, no proposal for any institutional change, no reasoned case for change. Rather, he falls back on the slogan “Scottish values” – by which he means more re-distribution and public policy aimed at greater equalisation in rewards. This is a very tired old socialist song.

    What should his response be – at least as proposed by a liberty-seeking liberal tendency for civic enlightenment?

    Well, first, that to accuse another human, who has sought welfare due to perceived need, an “LTB” is an absolute disgrace. Governance without dispassion becomes arbitrary by default, and if decisions are being made by an administrative cadre acting like a latter-day “stasi “ dishing out rulings based on prejudice, Mr Salmond is right to shout foul.

    Second, however, to deny that among the 32 percent judged fit for work there will indeed be some who are feckless is to duck the real issue of dependency within Scotland and the work done by those in the department of re-distributive welfare who have tried to find out who they are. The key is the idea of “perceived need” from the point of view of the welfare recipient. There are those whose indolence is self-decided and then self-justified for various slothful reasons, alongside those whose ignorance makes it difficult to find work, or whose incompetence has become physiological or mental to the point of personal inadequacies that need compassion and care. Such is the human race.

    If Mr Salmond wants his Scottish nation to practice “Scottish Values” he needs to tackle this diversity of internalised impoverishment with some new institutional practices. If he does not, his re-distribution for greater equality is simply the same old-fashioned, and failed, blank cheque system where money is taken from hard-working taxpayers. This is rather like what the banks appear to practice with their bonuses, a blank-cheque system based on past failed practices which also needs institutional change and not outbursts of angry rhetoric to correct. The culture of investment banking, as we know from recent horror stories of bankers’ behaviour suffers its own internal cultural impoverishment.

    There is a benchmark that can be found in both of these spheres of activity which is to make sure that the participant’s pockets are affected by their behaviour. In short, the risk of being lazy or arrogant, for both the slothful and bankers, needs to have consequences imposed by the institutional framework in which these gifts of largesse in welfare and banking are obtained.

    So, why doesn’t Mr Salmond suggest the scrapping of the present monolithic welfare system and offer personal thrift accounts to all based on their record of contributions? Those few with no capacity to work can be supported, but the many with marginal capability can be eased and teased to make the best of their abilities with incentives such as matched funding or quarterly dividends for positive thrift. Their capacity to defeat their own uncertainties can therefore be rewarded with those escaping welfare dependency helping to lower our taxes generally.

    At the other end of the scale, let’s make those bankers of the “casino variety” operate with unlimited liability. Their capacity to overcome their gambling risks will be well rewarded, while those that do not escape the rigours of the market while using their own money can come a cropper with no cost to the rest of us.

    In each case, the incentive of being able to account for your destiny through choices about our own money, far outweigh the massively burdensome tax-funded re-distributionist state. We are all equal when it comes to expressing choices via our own opinion on the risk of our own loss.


    Wednesday, January 09, 2013

    Finding out what “there is no more money” really means.

    The total social support budget in Scotland is around 21billion pounds – about a third of all state spending. Around a third of households obtain some form of support, although not all depend on it, and not all are of working age.

    Mythically, Scotland has more dependant families than the UK average. The situation is more complex than that; Scotland has a number of geographically overweight problem areas and the problems in those areas are deeper than in many other places with drug problems, family breakdown and other cultural traditions that generate chaotic lives. Similar concentrated pockets of disadvantage can be found in Newcastle, Sheffield, Manchester, and London.

    The noisy political debate about funding choices is extremely well described by the BBC’s Stephanie Flanders – as an economist she knows the consequences of “there is no more money” for political choices. She also alludes to the deeper problem of what is known as the “money go round” – the state taking high taxes with one hand from those “they” decide can pay, cycling that money through its bureaucracy, then ladling it out to those “they” decide that need it.

    And here’s the problem for Scotland – a nation traditionally supposed to be inhabited by thrifty canny self-reliant types. “They” have taken our thrift, “they” corrupted our canniness and “they” destroyed our self-reliance. High taxes to pay for welfare have changed the financial choices made by us Scots out of all recognition. Personal independence has been politicised.

    This approach to welfare via state re-distributions is a mantra of Nicola Sturgeon and others in the Scottish Government. Ironically, they can huff and puff about this with abandon, because in social support policy, Holyrood acts largely as a Quango and not a Government. As such, they can always sound off critically about UK actions, and use this disapproval as another lever for their goal of independence. Again, compassion and fairness become politicised.

    It is therefore perhaps not strange that the independence brigade have not put forward any real proposals for how welfare support in Scotland might be organised post-separation. Yet this is one area where genuinely radical change would be a lot easier to arrange for five million in Scotland than fifty five million elsewhere.

    We’d like to see the present welfare system thrown away. It’s bankrupt, divisive, and dysfunctional. Its revenues are obtained with appallingly high marginal tax rates of 70 pence taken from the striving poor for every new pound earned. That makes it nigh on impossible to escape poverty, and the high tax rates that are used to pay for this disaster destroy jobs and make the overheads of daily living far too high.

    Once again, the real meaning of “there is no more money” should be the recognition that giving power back to Scots people through a contributory system that we own personally, and provides incentives to strive is the only sensible option. Since 1944 the state has made a total mingin gorroch** of engineered compassion through managed re-distributions.

    We feel for all those who will struggle with a one percent cut in benefits over the next few years. Welcome to the world of no more money and sorry for the break in support service, government has failed yet again. It needs to go home and think again.

    ( ** mingin gorroch - Galloway phrase for “stinking total mess”)


    Sunday, January 06, 2013

    It’s time for some numbers …

    It’s been interesting over the festive break to watch Scotland’s various sectional interests appeal for attention. Positions are being hardened up.

    The business community in Scotland is clearly nervous about what may or may not be offered by any autonomous Scottish Government.

    The Institute of Directors in Scotland robustly calls for a focus on a "wealth creation agenda", our business owners and leaders know where the jobs come from and how they can be created. They create our future.

    The CBI has a "referendum toolkit" offering guidance on issues considered essential to "due diligence" by business. The toolkit raises many questions about the nuts and bolts of business from taxes, through health and safety, to regulation and competition. They have to manage the present.

    As for the government sector, the Scottish Government has re-iterated that they are looking at the tax system, the regulatory environment and consumer and employee protection. Maybe some detail will at last come forward on their macro-economic plan for an autonomous Scotland. They can control our future.

    In social policy, Nicola Sturgeon has been pressing the case for a re-distributive state, centrally planned with nationalised intent. She offers us “a welfare system that better reflects Scotland's values and ensures fair and decent support for those that need it most”. These policies prescribe our humanscape.

    As for Scotland’s unions, the Educational Institute of Scotland has called for a return to collective bargaining on pay and conditions in further education. National pay disappeared after colleges were removed from council control in 1993. The EIS, like many unions, hark after an earlier age where they had power.

    But statements of a position only go so far. To be frank, what the above shows is a horribly divided Scotland; between those who make money and those who spend it.

    A proper debate needs some numbers. Without them, Scots will remain confused and uncertain – a lousy position from which to take a decision on further autonomy. There is also a growing divide between a Scotland shackled to left-wing conservatism and the centralised institutions of the 1970’s and a changing, progressive 21st competitive reality elsewhere in the UK.

    We enter 2013 with some ambition. We plan to keep asking the Scottish Government for the numbers; what size of state sector do they want to have? What level of taxation will that require? What will that do to the trend line of their debts and deficit? What will they demand of the well-off? What will they ask of the poor? What are they doing with our money across their multiple agendas? To re-phrase Bill Clinton – “it’s the money, stupid.” (Especially as we have been told that there is none left.)

    Taxpayers are only well-served by an open, transparent and numerate government that gives proper detail of the costs and benefits of its policies through time. The Scottish state needs to start giving the Scots people the prices of its promised goodies. And crucially, prices both today and tomorrow. Happy New Year.


    Friday, December 21, 2012

    Twelve taxing questions for Christmas.

    We wish all our readers well for the New Year. Peace, freedom and low taxes to all …

    Here is a list of questions that Alex Salmond now needs to answer. Perhaps he could ponder them over the Festive Season.

    1. You say that Scotland can operate successfully as an independent nation. Why have you not published a projection of what you want Scotland’s current deficit to be after independence?

    2. What total level of national debt do you expect that an independent Scotland would carry at the point of independence and what would the cost of servicing that debt be?

    3. What do you intend to do to replace the subsidies in the Barnett funded elements of the Scottish national budget after independence?

    4. Your new “shovel ready” projects are clearly not ready as no contracts have been signed. When are you going to provide us with full scheduling details?

    5. When is the Scottish Government going to adopt a responsible attitude to whole life costs for its capital infrastructure projects?

    6. Why, when England is pluralising its education and health system to introduce more competition, are you still wedded to a centrally controlled nationalised education and health service?

    7. Why are you not clearly stating the additional costs to households of the alternative energy technologies you are promoting?

    8. When are you going to scrap the poorly used GLOW network for schools which costs a fortune, with that fortune going almost entirely to two large companies?

    9. Why is spending still rising on your communications budgets across your own departments and that of your quangos?

    10. What plans do you have for allowing individual authorities and government agencies to set their own localised terms and conditions of pay and employment?

    11. What exactly is your position on our membership of the EU and the Euro? (Frankly, we're totally baffled)

    12. When will you recognise that raising any tax over which you have power, and grumbling about any tax over which the UK has power is not likely to encourage us to believe that your government will ever do anything other than spend more and tax us more?

    Here is a list of questions that George Osborne now needs to answer:

    13. The Office for Tax Simplification was tasked with looking into simplifying National Insurance and Income Tax. Why have their findings not been announced?

    14. Now that Corporation Tax for large companies appears to be agreed by informal discussion between HMRC and their Finance Officers, when are you going to scrap corporate taxes altogether?

    15. With public sector employment down 6 per cent, why have pay bills increased by 2 per cent when taxpayers were promised a public sector pay freeze?

    16. What impact will minimum alcohol pricing have on inflation and the uprating of benefits bills in the future?

    17. Scrapping the planned 3p rise in Fuel Duty was welcome but, with pressure on living standards expected to worsen further in 2013, why will an increase be appropriate next September?

    18. Why will bureaucrats distributing the Regional Growth Fund spend an extra £350 million better than the businesses themselves, who could be left with the money by cutting their taxes?

    19. Do you accept some responsibility for the public confusion over the difference between the debt and the deficit? Just 6 per cent correctly understand that the Government is increasing the national debt, not cutting it.

    20. In 2005 you said: "we may be able to move towards simpler and flatter taxes". When do you think that could be possible?

    21. You have promised greater freedom for individual schools to set pay. When can we expect the same for the NHS and the rest of the public sector?

    22. You missed your debt target. Do you think that a target for spending itself would have been more effective, as research by international institutions suggests?

    23. Now that flights are included in the EU's Emissions Trading Scheme, do you think Britain's uniquely high Air Passenger Duty is justifiable?

    24. Why have you given the Scottish Government more than £300 million in new capital funding when economists all over the world, including those in the IMF, are telling you that capital projects do little more than increase the wages of those already employed, increase imports and increase long term taxation needs to service infrastructure?


    Tuesday, December 18, 2012

    Big numbers matter

    The census of Scotland published yesterday showed an encouraging rise in population for our cold dark country. However, it also showed a continuing ageing of our population.

    Much has been made of both facts. The first suggests that we could, with the right policies, attract and retain a larger population - a valuable way to growth and new jobs. The second unfortunately tells us just how hard it will be to obtain that future under the present state-controlled pension system.

    Recently, at a meeting of the Intergenerational Debt Foundation, the Office of National Statistics revealed that the contingent liabilities of the state pension system were in the region of 2.8 trillion pounds. (A trillion is a thousand thousand million). Take these figures with caution; statistical methods, policy changes, medical discoveries, lifestyle changes and other factors can raise or lower this figure. BUT, we know it is a BIG number and it is a liability that will bear down on the younger generation and our ability to improve our lives for many years to come.

    As an example of government failure, it reigns supreme; not surprising really as it involves a social contract of 40 years and more, managed via the vote-hunting motives of politicians serving four to five years in power. This is yet another of those centrally planned nationally managed tax-funded monoliths, like steel and coal, that has gone onto the rocks of bankruptcy. Is it surprising that pensions have become a punch bag for regulatory reform and a milch cow for successive Chancellors? Is it also not surprising that the Scottish Government in its negotiations for more fiscal power appear to have done nothing to suggest that they might take on this poisoned taxation black hole?

    What to do? Well, there might be a way of migrating ourselves away from this liability if we can, at the same time, wean politicians off control of the system. Surprisingly, it might also be possible to do this at a cost that does not cripple us.

    Like any errant debtor with huge loans outstanding, the first thing to do is to admit to the losses and make them clear to all. The state then has to declare that it wants to get rid of the debt. Fessing up like this is free, but is needed to set a lead and define the need.

    The second thing that is needed is to let the younger generation have some hope that they are not going to be drowned in past socialised excess and re-build a habit of thrift. We favour allowing them to have a proportion of their tax payments ring-fenced into their own "thrift" account. That allows them to see that they are building their own capital - the one thing that allows them long-term freedom. Correctly structured, a thrift account would build in special incentives to maintain thriftiness throughout life, allowing the young to own the responsibility of taking control of their future. So far, so middle class, not quite libertarian because it would be compulsory saving mandated by the state. But at least "they" would not be involved. This is our money.

    Two things then follow; what do we do about re-distributions to those unable to save much, and what do we do about the inter-generational debt. There are ways of dealing with these and, unfortunately, all of them inevitably involve taxation. There is not room to go into what to do here in detail, but let's supply some hope at this Christmas period. First, separating taxes paid for the less able from capital saved by the capable would make intra-generational giving transparent - moral goodness would become more visible and thereby politically accountable. Second, tax paid to lower a recognised inter-generation debt would also be visibly transparent. The next generation would see their burden in the future gradually diminishing. There is nothing to bring on good cheer and incentivise enterprise and creativity than that you are living on the right side of Micawber and there is a brighter future ahead.

    Now here's a plan for the Scottish Government to digest. Has anyone in the separatist camp got the guts to leave the tired nationalisation of the 1970's behind and offer our younger generation some real hope?


    Thursday, December 13, 2012

    Government, inequality and intractability

    The health inequality debate tells us a lot about how we “do government” in a modern statist centric nation.

    Audit Scotland reports that after many years of attempting to reduce health inequalities there has been little progress. It’s important that all Scottish taxpayers recognise how much time and effort has been put in to achieve this government failure.

    A review of the bureaucratic labyrinth provides the following:

    • At least 20 highly educated top level organisations were consulted on the key “Equally Well Framework” that drives Scottish Government policy in this area. These are the COSLAs, the NHS Boards, Royal Colleges, Quangocrats and other “suits” who dominate public policy management.
    • The framework has 21 separate areas of task targets from mental health, through fuel poverty, to alcohol, drugs, and smoking.
    • There are 75 separate recommendations to be followed within the framework.

    A little deeper digging throws up telling indicators such as “There may be a lack of shared understanding about what is meant by "health inequalities". “The Scottish government has “shifted the emphasis of our approach from dealing with the consequences of health inequalities to tackling the underlying causes.” And that this is all “about major and intractable social problems that are interlinked and work across generations”.

    Well, we read all that pretty much as “we know we are failing, and we haven’t really much clue what to do about it”.

    Recognition that localising the issue is the only sensible way forward is apparent across the well-meaning, but frankly hand-wringing community, who are trying to use government methods to improve things. The Scottish Government is “developing a Community Empowerment Action Plan jointly with COSLA that will help to make community empowerment a core way of delivering change”.

    Unfortunately a little digging again shows that community empowerment looks suspiciously like the same old tired special interests looking for a government bung to “do something”. And when doing something emerges in sentences like this: “The Government’s Mutuality, Equality and Human Rights Board has established a group to promote good relations within communities and recognise the impact of discrimination and disadvantage on health”, we can know we are in deep dung – at the taxpayer’s expense.

    What to do? Well, for a start let’s get rid of the task forces, action plans and other distemper brush mechanisms that cover the gaping holes of government failure. We can save millions off our tax bills straight away. (This, by the way, is where all the platitudes about the need for better performance monitoring and published targets become nonsensical - they would just cost more, papering over yet more inevitable failure.)

    Then (and we are sorry to do this, but it is important) let’s look at the long list of task areas in the “Equally Well Framework”. We join them up deliberately, because we want you to imagine you came into an office one morning and realised that you were the manager in charge of these bureaucratic responsibilities:

    Early years - Education, information and engagement for young people - Mental health and wellbeing - Poverty - Fuel poverty - Business, employment and health -Public sector employers - Physical environments - Transport - Whole community demonstrations - Alcohol, drugs, violence – prevention - Joining up of drug treatment - Domestic violence - Anticipatory care - primary care and dental health - Smoking - Health literacy and learning disabilities - Self-directed support - Offenders’ health - Delivering change through the workforce - Third Sector.

    This list is what is known in government as “multiple agendas” – each one has a separate special interest group (or groups) with its own executives, managers, secretariat, and associated sub-contractors and other hangers on.

    In private industry, a Board of Directors would see this list in its strategic agenda and the first things they would say are “we are doing too much”, “this will never work”, “let’s keep this simple”, “what do we not want to do”. In government, those involved go into meetings – and flounder. Aligning all the special interests using bureaucratic managerialism is impossible.

    Is there a way out? Yes. The “cure” for poverty is to enfranchise the impoverished into their route out of poverty. To provide them with the incentives to move away from the behaviours that make them poor.

    Give them back their taxes (actually, initially, our subsidies). If we want to be paternalistic – and we may have to be where chaotic behaviours are involved – we give them vouchers (essentially, access to money) that they spend for their services presently provided by the social support and clinical care bureaucracies. With the vouchers, however, must go incentives in the form of good behaviour dividends. If they retain some of the voucher value, maybe coming of methadone, maybe buying better food than carry-outs, maybe exercising so that they don't need so many pain killers or anti-depression tablets, they get an additional bonus of some form – discount entry to the cinema for their kids, a free café lunch, a health spa routine – and let’s get those benefits provided from communities giving voluntarily as much as they can. Giving through love is free.

    And behind it all, let’s get rid of the national insurance taxes and income tax rates that make moving from poverty to work so difficult. We need flat, simple and low rate taxes to allow the impoverished to get on, turn a behavioural corner, and join us in our happy wealth.


    Wednesday, December 05, 2012

    So what were we looking for?

    If over-spending by one hundred and eight billion pounds in one year isn't terrifying enough, what about the thought that despite "the cuts" the total debt of Britain isn't actually going down yet.

    George Osborne has raised tax rates since the fiscal crisis hit but the extra revenue he has pulled in has not been great. Getting spending to go down is proving difficult. This is the reality of Big Government. It's a monster with a huge appetite.

    There is some inkling that the UK government realises that taxpayers' burdens need to be reduced. However, the reaction of John Swinney today is telling. The Scottish Government's news machine has said:

    "The UK Treasury today allocated £330 million of new spending to Scotland over the next two years, as they agreed to Scottish Government demands to support investment in capital projects. The announcement follows measures already taken by the Scottish Government, including a £485 million of economic stimulus already announced by Finance Secretary John Swinney."

    “After two and a half years in office the Chancellor has finally heeded Scotland’s calls to boost capital spending.

    "There is still a lack of a coherent plan to return the economy to growth. I will confirm shortly how we will allocate this funding for the coming year."

    So, "spending", "allocate funding", "economic stimulus", "coherent plan", "spending" (again). It's the same old broken record, the Scottish Government is the Scottish economy in the minds of our governing politicians. This from a man presiding over a deficit of 15.6 percent of GDP as opposed to the 9.2 percent within the UK as a whole. See G.E.R.S 2012 and ignore the tosh about the oil revenues - they're neatly balanced by the Barnett subsidies.

    There will be screeds written about Mr Osborne's weasling over a thoroughly rotten British financial situation. He's absolutely strapped for cash, there is no more money, and our trading partners are similarly stuck.

    The great irony is that, even without independence, Scotland has the capability to turn away from imbued British statism and free the creative abilities of its people. Sadly, our leaders do not believe in ordinary Scots - they just want more of our money. Time to fight even harder for less spending and lower taxes.


    Monday, November 19, 2012

    Steady as we sink ...

    The Institute of Fiscal Studies have just produced a report "Scottish independence: the fiscal context" which looks once again at the value of oil revenues to Scotland.

    Once again, it points to the volatility of receipts and the uncertainty that surrounds what may or may not be "given" to Scotland in any independence settlement. It also performs a good service in looking once again at the perennial tendency for the Scottish Government to run a deficit on its current account.

    We remain resolutely agnostic on the independence question, but there are causes for concern in yet another confirmation about Scotland's future deficit potential that should worry all Scottish taxpayers.

    Mr Swinney wriggled on the hook on BBC Radio 4 this morning when challenged on the idea that oil and gas money might be used to fund current spending. He tried to sound reassuring; again using the mantra that Scotland has huge opportunities that our energy wealth can help achieve. By this he means capital investment spending - which he describes as a method of providing sustainable growth.

    There are two responses to this. The first is that clearly the Scottish Government still adheres to the idea that state spending will lead to economic advance - the Keynesian multipler reigns still. The second is that his chosen method - capital infrastructure is the method through which advance will happen.

    It has now been four years since the credit crunch, and governments across the developed world have been pouring our money into "stimulus" programmes - to little effect. Economists from all over the academic community and even the IMF have been pointing out that Keynesian demand management is at best neutral and at worse positively harmful. TaxpayerScotland has looked at Mr Swinney's own "shovel ready" proposals and we too are not in any way convinced that the state can expand our economy any better than millions of hard-working Scots spending their own money on what they know is of proper value.

    One day, our politicians will be persuaded that their over-spending is most of the problem, not the solution to the lack of economic growth. Until then, watch your taxes - they are likely to grow. We'll be fighting back.


    Thursday, October 25, 2012

    Higher taxes approved for Glasgow’s children

    It is reported by the Scottish Government today that Deputy First Minister Nicola Sturgeon has given “final approval to plans to unlock hundreds of millions of pounds of private investment to regenerate Glasgow city centre”.

    Glasgow City Council is using an £80m Tax Incremental Financing (TIF) scheme for the Buchanan Quarter.

    Under TIF, councils fund infrastructure by borrowing against future business rate income. The notion is that this revenue “should be” (the Scottish Government’s own words) generated by regeneration and development following the initial investment.

    So, tomorrow’s taxes are being used for today’s borrowings.

    Now, tomorrow’s taxes will be paid for by future consumers and businesses. This tax burden will come from the results of what is hoped to be upwards of £300 million in private investment (hopefully creating 1,500 jobs) as the seeds of the first £80million flourish.

    So, politicians, to show how clever they are, are leveraging more debt in the expectation and hope that it will generate more tax that our children will pay.

    Do they have a choice in this matter? No. Future burdens are being created that will retain Big Government with even bigger debts at high levels.

    That’s a moral crime. Inter-generational debt is already huge – the state pension, public service pensions, our railways, nuclear waste disposal, and other contingent liabilities hang over tomorrow’s taxpayer. We don’t need more of it. Glasgow in particular should set its house in order and find out how to pay its own way, funding its own capital needs out of present income, and not that of our children.


    Sunday, October 21, 2012

    The Values of Society

    We are keen to avoid being partisan - our interest is in the tax we all pay and the spending that means those taxes have to be levied. In Scotland, the debate about this has woken up - we are being asked what sort of society we want to live in.

    Johann Lamont, Ruth Davidson and now Alex Salmond have been battering each other over our "society". To de-politicise this into eighteenth century enlightenment terms, we would use the term "sociability"; how we value and treat each other.

    In modern parlance, sociability has a focus on "fairness" - one person should not outgun another through privilege, discrimination or undue riches. But it also still contains the enlightened values of decency to others, protecting the weak, caring for the unfortunate.

    As a small wealthy nation, Scotland has a huge opportunity to express and act on these values, but there is a catch ... how you do it?

    • It is observably true that the nation is in deep debt.
    • It is observably true that we have many who are dependant on the state.
    • It is observably true that our young people cannot find jobs.
    • It is observably true that government is still growing.
    • It is observably true that "cuts" in spending are nigh on impossible for politicians to achieve.

    We are unshakeable in our belief that these truths are created by Big Government and its big spending. Nothing we have heard from Alex Salmond or John Swinney (or Johann Lamont) suggests that they understand this.

    Incredibly, we are being offered more spending; Family nurses, more infrastructure and so on, but with absolutely no explanation of where the money is to come from.

    We know where it could come from, enterprising Scots would go out and earn it; in Scotland, from the rest of the UK and across the world. Our people are decent, do not seek privileges and want to care for the weak and unfortunate, but they cannot afford to do so unless given the economic freedom to makes these sociable choices.

    Less spending >> Lower tax >> Higher growth >> More jobs.

    If you agree with us - sign up now as supporter.


    Tuesday, October 02, 2012

    Two against one …

    First Johann Lamont and now Ruth Davidson have come to the conclusion that there are no Free Lunches. A further salvo against the “blanket approach” to funding services of the present government was unleashed by Ms Davidson on Sunday.

    The difference of course is that Ms Davidson says she would pass any savings on so called “free” services back to the people of Scotland - including cutting a penny of Income Tax, hurrah - while Ms Lamont would probably spend it on other government re-distributions.

    It’s conference season and our politicians have to take a stance on something or look soggy. But let’s be optimistic; for those who want to see less government, the idea that this might be a good idea has raised its head.

    We should not underestimate, however, how difficult all politicians find cutting spending. The Scottish Government budget is actually £2 billion higher than it was four years ago. Yes, around five and half public servants have lost their jobs, but look at the trends here at http://www.scotland.gov.uk/Publications/2012/09/8779/9 since 1999 when our devolved parliament was set up.

    We are gradually returning to where we were, having been through a period of profligacy, waste and unnecessary over-spending.

    Compare this with how the private sector operates – continually taking out overheads, increasing productivity and achieving more with less. The public sector, with its propensity to be “people heavy” needs to re-double its efforts; not just to get back to where it has come from, but to offer us major productivity gains, new ways of providing services.

    Scotland is small enough to be experimental, and we claim to be brave. We’d like to see a politician stand up and offer real change away from the monolithic approach to services; the only thing that seems to be on offer today. Maybe the Lib Dems will come forward next with some genuine localising suggestions. That would be three against one …


    Thursday, September 27, 2012

    Into the long grass

    Johann Lamont has clearly been doing some thinking as befits an ex-teacher from Anderston who knows about the lives of the poor. She has had the guts to re-think what she calls the "something- for-nothing" culture.

    The commission she has set up will look at Scottish Government commitments over the next two years. Let's hope they come up with some new ideas on how to hold down the burden on taxpayers.

    Ms Lamont also captured in her recent speech the arithmetical linkage between so-called "free" entitlements and how these so often subsidise the rich rather than add real benefit to the lives of the poor. We applaud her in saying that. There are far too many middle class benefits around.

    Any politician who stands up and re-explains again and again "there is no such thing as a free lunch" gets a round of applause from us. Her intervention into the "giveaway" tendency of our present Government might bring some reality to the debate in Holyrood about what Scotland can afford and what the best use of scarce resources to benefit the less-well-off might be.

    Freebies abound across the patchwork of Scottish Government interventions. Earlier this week, the Scottish Government announced an Innovation Fund of ten million pounds for the Oil and Gas industry. The first call will be for "projects looking at improving the integrity and reliability of assets in the oil and gas industry".

    Projects funded under the scheme will help ensure offshore assets can continue to run effectively and safely in the future, through inspection, change management, and analysis of their future integrity.

    Er - excuse us - but what on Earth is our government doing providing hand-outs to the wealthiest industry in the world? However much this giveaway is surrounded by doublespeak about innovation and quality and local industry competitiveness, it cannot hide the fact that this ten million is no longer available to support other policies which might help the less well off. A cut in business property rates and some way of making new employees cheaper to take on would be a good start on that (given that autonomous fiscal powers to act properly are not available).

    We doubt we will agree with a lot of what Johann Lamont may want to do with our money, but we applaud her intellectual intervention - standing up to the present Scottish government's tendency to spend spend spend without seeming to understand the perverse distributive effects of many of these money transfers.


    Friday, September 21, 2012

    Playing the fourth hand

    If you have ever played Bridge, you will know that there are some hands that you are dealt that offer little entertainment. There’s little that you can do but “shell peas” on the basis of what others are doing. Should we pity John Swinney on the same basis as we evaluate his latest budget?

    At first reading, he admits as much himself, saying that most major decisions were set last year and earlier, and his hands are tied by Westminster. George Osborne has said as much of his own dilemmas - blaming debts and deficits.

    But then, like all politicians, Mr Swinney attempted to pump up the volume; his summary listing of new measures was clearly laid out – despite being small beer, small millions here and there are made to sound like marvels in support of the overall strategy for growth and jobs.

    But we need to look behind the noise; the reality is that Scotland does have options – devolution offers potential.

    Mr Swinney has £28.4bn directly under his control from Scotland's total £34bn budget. This latest budget has adjusted around £200million of that – less than one percent.

    In that proportion, the Scottish Government has not been dealt the fourth hand, it has decided to play a fourth hand. The potential of devolution has simply not been taken on.

    Why that is so is a different story; about the ideas that are being adhered to. We are governed by centralists imbued with statism who are cowed by union-dominated public servants and unwilling to lay down their political lives to get a different and distinct Scottish governance underway.

    Horror of horrors, Holyrood’s inmates are the most conservative of administrators. If the SNP really want to free us, they need to give us some indication of where they want to go – their £28billion spend stuck in the practices of the nationalisation era of the 1970’s would be a good place to start.


    Wednesday, September 12, 2012

    Backing winners in sport

    It’s great that Andy Murray has cracked a grand slam tournie at last. However, judging by the special interests bouncing off their trampolines to make hay from his success and that of our Olympians, taxpayers need to be a little cautious.

    Holyrood’s Health and Sport committee has been having “hearings”; shorthand in Scotland for what appears to be a long procession of track-suits asking for more money. All these special interests claim how important it is that their sport gets funded from taxpayers’ pockets.

    Swimming, tennis, football, golf, rugby, and a load of others, plus their representatives from local communities, educational organisations, sports clubs, councils and national associations have all been snuffling at the tax trough. Has no-one told them that there is no more money?

    Now, I am in favour of sport – my mum was a PE teacher – but once again we need some principles to decide what might be supported and how much should be spent. This exercise has been an object lesson in rent-seeking. Scottish society is full of people who want to spend other people’s money.

    Physical activity, physical education and sport are all part of a continuous spectrum. We all know that physicality is good for you, but do we really need “a range of policies to ensure we are doing all we can to produce another Andy Murray, another Sir Chris Hoy” – suggested by the Labour Party. Sounds expensive.

    The government throwing money at “sport” as a whole will not guarantee improvement – each politician will tend to spend money for local electoral needs. Yes, money on sport should be part of the education budget – and possibly a large part if that is the people’s will. I think there is also some justification for public funding elite sport – which amounts to research into how far physicality can be taken and acts as a promoter for others less able.

    In the middle, sport should be a voluntary activity, funded privately by clubs and their fees. Let’s keep the state out of this area of individual development. Lower taxes as a result would allow us to spend more on our own sporting choices - with the added advantage of not letting the Nanny state and its agents to tell us to take more exercise.


    Friday, September 07, 2012

    Time to put a roof on the tax burden

    With little noticed stealth the Scottish Government is introducing a new tax burden. The Unoccupied Properties Bill allows councils to remove existing discounts and increase council tax on long-term empty homes. The reforms also include measures “to incentivise owners of vacant business premises to bring up to 5,500 properties back into commercial use”.

    The measures are not a Holyrood born idea; they echo similar moves in the rest of Britain to try to use property stock more fully.

    In politics, however, perceptions matter and what is important is that property tax is one area where the Scottish government has full devolved powers and how it acts shows us how it thinks.

    The opening of the debate on the proposal by Local Government Minister Derek Mackay was hedged with comments about “Scotland’s reputation as the most supportive environment for business in the UK” and the total relief package “offered by the Scottish Government”.

    In a nice example of Orwellian doublespeak he then said “we plan to introduce new incentives which will potentially bring up to 5,500 vacant business properties back into use.”

    Incentives to productive behaviour by freeing up enterprise are always vital, incentives to force change through higher tax are more dangerous. It is true that property owners have taken advantage of discounts and reliefs on empty properties – leaving roofs off factories was clamped down upon some time ago.

    But what is the Scottish Government trying to achieve here; to raise more revenue where it can or to cure an empty property problem? If it is the latter, it should be using its imagination and considering a counter-balancing general tax reduction on properties. It has the means to do this transparently through a re-think of its premium “Tesco” tax on larger properties.

    If it does not do this, the proposed rise in taxes on empty properties is not an incentive aimed at re-distributing the tax burden on property so that they get used more productively. It is another increase in the tax burden in one of the few places that the Scottish Government has powers to raise taxes.

    That tells the lie about any “reputation as a supportive environment for business” in Scotland; rather it shows us that the Scottish Government will tax where it can and when it can. There’s no route to a successful economic recovery there.


    Tuesday, August 14, 2012

    Pooling and Sharing - are there any new ideas out there?

    It's summer, the Festival is on, and we have all been distracted by the "Games" and weird weather. Time to sit back, enjoy life, and think up new ideas ... maybe.

    Gordon Brown (remember him?) came to the Festival and talked about "pooling and sharing". He said: "fiscal autonomy means more taxes in Scotland, not in a progressive way at all but simply to fill the gap that's left by not pooling and sharing the resources of the UK."

    There are a few assumptions and some special language in this remark. "Progressive" is a slogan which I think can be summarised as politicians spending other people's money on other people to do "good things". The money in this case is that of Scots taxpayers.

    "Pooling and sharing the resources of the UK" means - er - politicians spending other people's money on other people to do good things, this time the money is the UK taxpayers' with quite a lot of it heading North.

    So once again we are stuck in a rut of a world in which politics is all about choices over how we all live off each other. Hmmmm ...

    There are some good ideas out there, but they are not getting through, and if there is one thing that the idea of fiscal autonomy (which Gordon Brown was attacking) ought to allow it is that they should get a hearing. Most of them are in America. (Although even there they are not getting much of a hearing - that nation is as bankrupt as everywhere else in the developed world with the re-distributionist canker well embedded.) Here are two:

    1) How about a flat tax regime? See this article which explains its aims - properly progressive taxes taken from a broad tax base.

    2) How about making the tax take visible? See this article which explains how we could all know exactly how much our government costs us..

    None of this is rocket science. It's simply that our politicians and civil servants make public choices that are based on past evidence of state actions and looking forward to a future of more state administration to keep Big Government going.

    Don't believe us? Go to http://www.scotland.gov.uk/Consultations/Current, the listing of what our government is thinking about.. The priorities are entirely administrative; digging themselves out of deep holes made by past policy.

    It's time "they" took their heads out of the trees and had a good look at the shape of the wood. It isn't growing, it isn't thriving, its trees face being stunted for many a year. Time for real change. Enjoy your summer.


    Thursday, July 19, 2012

    No way to oil our country's wheels.

    A little hurrah for the Office of Budget Responsibility - pointing out that oil revenues are volatile with oil and gas described as the "most volatile of the main tax streams"..

    We should be betting our bottom dollar on that.

    The forecasting of oil prices has been pretty much useless more than three months away for many years.

    The incentives for politicians to milk the oil companies for all they can get are notable. Big corporates don't like to get involved in politics, some say the oil belongs to the people anyway (they're wrong) and it allows governments to spend more without raising other taxes.

    But what a lousy way to run a country. It's perfectly obvious that relying on the ups and downs of Petroleum Revenue Tax in a world where fossil fuels are becoming pariah products, where engineers are working hell-for-leather to use other sources of energy and where mobile oil capital can up sticks and move to the South Atlantic in a few months is bad policy.

    Taxpayers need to shy away from any promises made by any politician about oil revenues being a route to economic success. If anything, they de-focus attention from our rising welfare and elderly care bill - and other eagerness to spend taxpayers money on wasteful ideas. If used for anything, oil revenues should be used to provide a stabiliser for infrastructure investment across the years from a Sovereign Reserve Fund - putting Scotland's windfall outside of politics.

    In the continuing debate about how to make Scotland thrive, whether independent or as an integral part of Britain, oil is not that important; much more important are the institutional arrangements that allow individuals and businesses develop and grow - creating new jobs, wealth and, yes, social gains for the elderly and needy.


    Tuesday, June 26, 2012

    We should not expect specific answers

    Politics has been described as “the art of expressing values” and two events of yesterday have shown this to be apt; and annoyingly so for anyone seeking clarity.

    The “Better Together” campaign in favour of the Union and David Cameron’s peroration on welfare had a common theme – more questions than answers. Reading the commentaries, both professional and cyber-reactions to those comments, there is a general sense of irritation that our politicians offer us little that is concrete.

    But that is the nature of the art of expression, to display flavours and tease us with shadows. Offer us real meat in a world of voracious media and there is no going back from any mistake.

    At the same time, we can read between the lines, and it is important that taxpayers do so. Let’s draw the two strands above together.

    1) There is a real question mark over the nature and safety of independence in the financial markets. The staggering Eurozone is a cipher for how markets would treat us were our running deficits and capacity for borrowing remain prevalent. Danny Alexander has said we would have higher interest rates with dire consequences. He’s wrong, we might, but we might not if Scotland’s finances were sound and our balance of trade favourable.

    2) There is a desperate need for revised methods of looking after those in need. David Cameron is right to open up a debate; we would like to see his challenge taken up by Holyrood politicians with some imaginative Scottish focussed thinking. With its smaller population and pattern of local government, dealing with the welfare juggernaut in Scotland would be an order of magnitude easier than across the whole of the UK.

    Taxpayers suffer major, and in our view unnecessary, burdens of Big Government through paying for state debts that are too high, and supporting welfare dependency. Together, these two items cost us nearly half of the entire budget of the state. It’s a scandal that around a quarter of our young people are unemployed, with another quarter “in education” which is too often the equivalent of make-work to keep these “students” off the streets. Were these kids to become working taxpayers Scotland’s financial accounts would be on the road to a proper balance – and our tax base would be increased enough to lower tax rates without which growth will not take place.

    The referendum “campaign” is going to drive us all mad with frustration. Politicians seeking power over us to will do little other than express values. Their incentives are to avoid the risks of fully worked out suggestions that are then challenged. That’s not a great help to Scots trying to make a reasoned decision. Our stance is agnostic, but founded on a principle; we think we should be allowed to keep more of our money.


    Friday, June 08, 2012

    Out of the starting gate … into the fire

    In his role as a potential Scottish Chancellor with his own Treasury, Mr Swinney has a certain gravitas and clearly has Scotland’s interests in his heart. One wonders if he realises that he is playing with fire.

    This week he announced a consultation exercise about a proposed Scottish Land and Buildings Transactions Tax to replace the present Stamp Duty Land Tax. The general thrust of this new tax is to make it more progressive – skewing payments to favour the less well-off and increase the burden on higher capital values. No surprise there from a left-of-centre political party.

    There is great merit in the idea of fiscal autonomy where politicians who spend also have to tax us to obtain the funds spent. But Mr Swinney would do well to remember that in a world of free exchange of capital and labour, fiscal autonomy also means fiscal competition. The Scottish middle class feels as much strain as those in England and elsewhere, and he needs to remember that Scots are, more than many other peoples, a global tribe.

    Nothing will be easier for many educated, enterprising Scots than to leave Scotland. There is a lot of academic work which shows that attacks on hard-earned capital lead to massive personal flight and other behavioural changes. The Labour government of the seventies examined a Wealth Tax and found a very hot potato that could only go on fire if implemented. They quickly dropped it from their policy agenda. Mr Swinney's transactions tax is a wealth tax.

    The arguments against capital taxes are well put in the recent 2020 Tax Commission report by the Institute of Directors and the Taxpayers’ Alliance. (Page 323: Wealth taxes lead to capital flight or constitute retrospective taxation). The report called for Stamp Duty to be abolished to enhance economic growth and success.

    So here we have a Scottish “Chancellor” declaring he wants to tax the capital of the people more “to generate sustainable economic growth and support our public services” up against a cohort of economists and business people who want to abolish such taxes to encourage economic growth and so find the money for public services.

    In his announcement, Mr Swinney repeated ad nauseum his mantra that stimulating economic growth is a major aim of his tax policy. However, he repeatedly qualified that with secondary remarks such as “supporting public services”, “building social cohesion” and “meeting distinctive needs”.

    Once again, the Scottish government shows its Janus face. Taxpayers are thought of as fodder for the voracious state; not as actors in a free nation where you can generate your own success and benefit others while doing so. Ironically, Mr Swinney quoted Adam Smith at length in his speech – the man who said it is not through benevolence but self-interest that drives people to beneficial social behaviour.

    To be fair, it was good to hear Mr Swinney use Adam Smith to talk about the principles of “good” taxation policy. Although I fear he may have been confused about 18th century language. He quoted Smith as saying taxes had to be “convenient”, interpreting this as a managerial remark about creating “a simple and administratively efficient tax collection system”.

    While Smith himself was a tax collector, I don’t think the idea of “convenience” had anything to do with tax collection paperwork. For Adam Smith, taxes are inconvenient when they are an undue burden on our freedom to live our own lives and choose our own path. That urge is hugely powerful and threatens to consume the Scottish government’s state-centred ambitions should fiscal autonomy be permitted.

    Mobile capital and high earners are much more beneficial than the Scottish government appear to understand – Mr Swinney experiments with higher capital taxes at his peril; all Scots are threatened if we make wealth creation impossible by driving our entrepreneurs across the border.


    Saturday, May 26, 2012

    We are at the start …

    So the referendum debate has started in earnest. The Yes Scotland campaign is out of the starting gate and declaring that the debate is “very very special”.

    Hmmm … the idea of a “Yes” win is clearly exciting for many – have a look at the comment sections of the on-line media – but many others, including ourselves, are more intrigued by what policy propositions offered by each campaign might justify a “yes” or “no” win.

    The claim is that Scotland could be economically, socially, politically and culturally better off as an independent nation. We would like to see some meat on the argument; particularly the economic and political. Speaking socially and culturally as a 100 percent Scot, I feel independent now – at least within the unavoidable context of being a citizen of the globalised economy and, more locally, 300 years of Unionist Britain; that is, I don’t feel downtrodden and carry any chip on my shoulder about the English whom I have to say I find rather more dull and parochial the further South you go (outside the large body of internationalists, many of them Scots, in London).

    For taxpayers trying to decide on the basis of what we are told would be good for us, we can only judge as we go, and I would hope that we do not have to judge everything in this referendum debate through Alex Salmond as much of the media seem to do. As charismatic as he is, it would be unfair to cast him in the role of Moses.

    In that context, the line up at the Yes Scotland campaign launch was slightly disturbing. The green lobby who prosletyze against economic growth and some dinosaur socialists who adhere to a collectivist creed that has created enormous damage and human suffering worldwide were uncomfortably lined up with an SNP who, while imbued with modern statist managerialism, at least have the advantage of some experience of government.

    Scottish taxpayers are rightfully leery of those who promise a grand new nation through the use of failed ideas that have bankrupted half of Europe. We need some meat that offers a different path to a proud new successful independent nation. In particular, we need some sort of agreement with England on the fiscal autonomy and hence accountability of the spending done by the Holyrood super-quango.

    I fear we are not going to see those changes when comments such as “£100 million could lead to 1,400 jobs in construction and infrastructure” are released as positives on the Glasgow section of the Yes Scotland website. They are going to have to do better than promise “jobs” costing £71,428 of taxpayers hard-earned cash each to get my vote.

    One of the most concerning things about the SNP is that they claim that if they could cut Corporation Tax in a new Scotland in the future that would bring capital and hence future wealth into Scotland. Yet their public policy aims today consist almost entirely of spending, spending and more spending – much of it borrowed money from south of the border.

    You have to ask; what happens if Britain climbs out of recession and the English restrain public spending and adopt the idea of cutting taxes and regulation while a new independent Scotland keeps state spending and new additional taxes like the Tesco Tax? Capital will move very fast away from us, and our downward spiral would be rapid given the amount of debt that we would be starting out with. Policy would have to change force majeure so that aspect of independence is probably a chimera.

    I am convinced that Scotland could thrive, we are not the perennially deficit ridden basket case that the British media claim us to be. But we can only thrive if we compete against other global players (including England) – many of whom have more favourable tax regimes than us for business, as well as thriftier and less dependant workforces.

    TaxpayerScotland remain unaligned on independence, with no corporate view; but we do have the conviction that without a smaller state and less taxation, we will not achieve the growth and jobs that an independent Scotland needs.

    Like many now signing up with great hope and excitement to the Yes Scotland declaration of independence, we await with hope in our hearts to hear such classically liberal views enter the debate. After all, like purportedly everything else, they were invented here.


    Monday, May 21, 2012

    There is a way out of this

    A certain sense of despair hovers over the world. Sovereign debt issues, the stumbling Euro and ever more elusive growth that might bring new jobs create a feeling that “nothing can be done”.

    Yet those who believe Big Government to be a major part of the problem and want to limit its reach into our lives – particularly through its tax impact - do have proposals that offer a way to more prosperity with higher growth and more jobs.

    Our sister organisation, The Taxpayers’ Alliance, has published a major piece of research today which offers a way out of our perennially stagnant economy. The 2020 Tax Commission is an entirely non-government investigation, in partnership with the Institute of Directors. That independence and quality tells a story; this is not a report from economic administrators and managers, this is a report from those who want to see more wealth created and those who actually create wealth.

    You can download both a summary and the full report here.

    There’s no space here to summarise the wide-ranging proposals put forward except to mention that the Commission believes it both possible and necessary to reduce government to a third of the economy. In the process a huge simplification of our tax regime would be introduced. The outcome would be much increased growth and, yes, more jobs.

    For every Scottish politician, indeed every Scot, this should give pause for thought. Whatever you may think of economists, business people and “policy wonks”, when those that are practised in the ways of economy, business and public policy tell you that your government is twice the size that it needs to be, they deserve an audience.

    You can download the ideas from the 2020 Tax Commission from http://www.2020tax.org


    Wednesday, April 25, 2012

    Strategically Better ? Get real!

    A little noticed report by Westminsters' Public Account Committee has criticised the Coalition government for "short term thinking" - citing poor strategic thinking for the turmoil of recent weeks for the UK government.

    "Strategy" is an over-worked term in government. Used properly it defines a way of approaching change that incorporates a coherent vision and a well-defined set of missions with clear objectives.

    Can we ever expect politicians to adopt clear and coherent strategies? Specifically - in their spending and taxing efforts?

    We doubt it, there is too much political capital vested in being seen to do the right thing. In cahoots with a voracious media appetite for "a fix" to all problems, this forces politicians to be universally "working hard" and being "totally determined" to do something, anything, so that they appear to be working on our behalf.

    This is not just a UK phenomenon, it's an issue we see across the slow car-crash we are seeing in Europe, and it also applies in Scotland. We are grossly over-governed, with multiple strategies being administered in an attempt by good people to do good things and create good results.

    Yet, has anyone really been enthralled by the fact that there are local elections due? The political classes are beginning to appear removed from ordinary people's lives. They chatter, they spend our money, they tax us. We ignore their strategies, instead concentrating on our own highly localised strategies to cope with changes in the missions of our own lives.

    Scotland has a real opportunity to break the mould; to localise, to turn to community, to allow private voluntary provision for the common good. Where are these long-lasting, fundamental ideas visible in the chatter of our governing masters? Nowhere, they are too busy spending other people's money on other people for their own benefit.


    Wednesday, April 04, 2012

    A Viking invasion - into our need for good government.

    The Scottish Government has today announced that permission has been given for a £556 million wind farm in Shetland.

    The capital spent is private money – the government (again) crows about 140 jobs during construction and 34 (yes, 34 - £16 million per job!) operational jobs later.

    The Viking wind farm on Shetland, it is claimed, can power more than 175,000 homes. That may seem weird, given that it’s around 15 times the 11,500 homes of the 22,000 people who live in Shetland, but it is said that the wind farm will “make the case” for the construction of an interconnector allowing Shetland to export electricity to the mainland.

    The wind farm is rated at 370MW and it is said that it will help the Scottish Government meet its target of 500MW from community and locally-owned renewable energy by 2020. That “help” suggests that at least someone in the Scottish Government knows that a 370MW rated wind farm probably produces only a tenth of that in reality.

    What is not said in all this is that these Mega Watts come at a mega price. A recent study from the Royal Academy of Engineering reported that gas-fired generating costs are between 2 and 3 pence per kWh. On-shore wind costs around 3.7p on its own, but 7.2kWh if you count the need for standby generation - usually gas. However, gas generation used intermittently in tandem with wind, costs 6p per kWh.

    So the Scottish Government's “targets” are being reached at costs that are twice what we might have to pay if generators were left to their own devices. Why?

    The stated goals of Energy Minister Fergus Ewing are “benefiting communities, cutting emissions, and helping to keep energy bills lower.” The first two goals are aspirations, the third a simple untruth.” Even when paying carbon emission fees of £30 per tonne, gas generation is cheaper than wind power.

    Our energy bills are rising fast because fossil fuel providers are being subsidised through renewables obligation transfer payments that entice them to use our money to move from cheap fuel to expensive unproven methods like the Viking wind farm. The fact that private capital can be found and sunk into a half billion pound project with sweeteners for a local population who largely voted against it is an example of state corporatism at its worst.

    Scottish taxpayers are being milked by centrally planned nonsenses, justified by clichés about climate change and global warming and “the need to act”, with absolutely no proper investigation as to whether and how much the new technologies use less carbon, meet carbon reduction targets or change the lives of the many who burn carbon. These plans are simply the exercise of power in support of being seen to do something and to hell with the cost to taxpayers. It’s more than likely that they will lead to a slow-down in energy use efficiency – the one thing that might cut carbon emissions rapidly and economically.


    Sunday, March 25, 2012

    We're all in this together - with an incentive to take what we can get.

    Mr Osborne’s budget has led to the predictable howls from various interest groups. Pensioners claim the freeze on their allowance is a new stealth tax, the green lobby declare that Cameron is retreating from his environmental promises, re-distributionists damn the Tories for helping the rich and the oil companies.

    These objections to how the public purse is raised and used highlight the dangers of our muckle state. The more the state takes for itself, the more the populace demand their share of what the state takes. That proves divisive and we are no better off for it. It encourages government to spend more and then tax us yet more to pay for an even bigger money-go-round.

    TaxpayerScotland has to ride a bucking bronco on these matters. We have supporters who are retired and losing out, we have supporters who are young, hard-working and support many retired elderly. We have supporters in business who want tax relief, and we even have green supporters who believe that small is beautiful.

    Yet, in their commitment to limited government and lower taxation, TaxpayerScotland supporters also subscribe to the idea we maintain on our website home page that 'Government is the great fiction through which everybody endeavours to live at the expense of everybody else.'

    And crucially, they understand the great truth in that more recent quotation by the Chief Secretary to the Treasury of the last Labour government that “there is no more money”.

    Modern budgets are largely a farce. They shuffle deckchairs on a foundering ship; not yet a Titanic, but with the potential to be so. They maintain a fiction that economists are able to forecast outcomes and politicians can construct policy that will change the size of the ship.

    All of us lose through high tax policies. Pensioners have seen their savings reduced through dividend taxes, quantitative easing, and pension tax regulation. Young people have seen ambition quashed through high tax rates, and taxes on expensive housing created by planning and regulation. Business entrepreneurs have cut back and cut employment because of National Insurance taxes, Corporation Tax and yet more regulations – taxes in all but name. Big corporations survive with huge cash mountains, withheld investment plans, and despair over business rates that punish success. And let’s be brave; the rich are looking on in askance at Scotland versus Asia or tax boltholes.

    It’s likely that George Osborne would agree with all of the above, and say he is trying to do what he can to escape the stranglehold of the national deficit. Sadly, Holyrood politicians would disagree and return to their nonsense about spending more to “create jobs”, usually measured in public sector posts. All politicians however are part of the large state and cannot help but be absorbed by its incentives to buy votes.

    That leaves ordinary people who see the value of individual liberty and distrust government to act. To shout louder than ever about Big Government and the rot it creates. In Scotland in particular we need to say that we no longer wish to pay for the mistakes of the past sixty years. The days of Scottish politicians preening themselves about programmes that create high taxation politics must end.

    Tell a friend that TaxpayerScotland exists; calling for less spending, lower tax, higher growth and more jobs. Sign them up.


    Thursday, March 22, 2012

    Scotland, a British Budget and Jobs

    There’s a clutter around any budget these days that has to be stripped away to understand its real impact. Among all the talk about “winners and losers” lies the reality that our competitiveness is what matters in the medium term. Are the burdens of the state’s needs going to change to the benefit of Scots and hence Scotland?

    By competitiveness, we mean the personal ability to thrive as well as a corporate ability. Scottish competitiveness matters; with the debate about independence also cluttering up the airwaves we have given ourselves an additional factor on which we are judged.

    George Osborne is hugely constrained. However, he clearly understands that tax rates are important, as is simplification. The cuts in corporate and top rate taxes offer incentives to invest and innovate. Scots can generate more jobs this way, creating wages where none were before. Higher personal allowances will mean we keep more of the money we earn.

    The focus on the wealthy and how much they pay is to some extent a red herring. From the practical point of view of state budgeting, there are so few in Scotland who earn the high sums or own the large mansions that can be punitively taxed, that the noise about “rewarding the rich” reflects political prejudice and has nothing to do with deficit reduction. However, it does send a bad message that Scotland is not a place to be successful and competitive.

    The real lesson of the budget is that Westminster has the idea that they are part of a problem. Their propensity to spend is damaging to competitiveness and economic success. Contrast this with the view from Holyrood, where the consensus is that state spending is necessary for jobs and wealth creation. Too often in Scotland the fiction is maintained that Holyrood subsidy or local council largesse are what matter to enhance our wealth.

    It doesn’t. What matters are low tax rates and a policy framework that release Scots to create and earn more. The Scottish statist consensus damages our wealth.


    Saturday, March 03, 2012

    European Economic Constitutionalism and Scottish fiscal stability

    The signing of the European Fiscal Stability Treaty comes in a week where our First Minister has been reported as back pedalling on his idea of building a sovereign wealth fund.

    Too many commentators, including ourselves, said that the Scottish Government’s deficit is so large and its propensity to spend any money it can get its hands on is so strong, that it is more than unlikely that any money for such a fund could ever be invested.

    This highlights how important it is to Scotland that 25 countries have signed up to a “"Treaty for stability, coordination and governance in the Economic and Monetary Union".

    Mr Salmond’s attempt to create a new Scottish economic autonomy will be deeply affected by this. The reality is that if the pact rules are an emerging consensus across Europe on how countries must behave to compete globally, then Scotland – even with all its oil revenues – does not meet the fiscal rules that our closest competitors have set themselves.

  • European nations are declaring a target maximum deficit of no more than 3 per cent of GDP – Scotland’s deficit is more than 10 per cent.

  • There are sanctions in the event of persistent excessive deficits – Scotland has had persistent and excessive deficits.

  • To avoid excessive deficits, each Euro member has to submit a stability programme. The Scottish government has repeatedly rejected the UK austerity programme as a way of reducing government debt levels. There is no inkling of any such programme even being discussed.

  • Countries in the Eurozone are targeting long term debt levels below 60 percent. Scotland’s real debt is hidden, but our calculations suggest that it could be above 100 percent by a substantial margin.

  • Rules will be introduced into Member States' national legal systems at constitutional level that contain automatic correction mechanisms to be triggered in the event of deviation. These rules will be defined by each Member State on the basis of principles proposed by the European Commission and polices by the European Court of Justice. Is this what independence would mean; we leave the UK and get ruled by Brussels?

  • Member States shall converge towards the reference deficit level according to a calendar proposed by the European Commission. So not only ruled, but administered too.

  • Member States with excessive deficits have to submit to an economic partnership programme detailing necessary structural reforms to ensure an effectively durable correction of excessive deficits. So administered via submission.

  • The EU's highest court will be able to fine a country that does not adopt a standardised balanced budget rule in its constitution - with a penalty equivalent to up to 0.1 percent of GDP. That would be around £120million for Scotland – equivalent to its entire much vaunted infrastructure investment programme.

    The emergence of economic constitutionalism is a good thing – many in the the United States have tried for years to introduce some sort of balanced budget amendment to its constitution; it looks like the Europeans are going to beat them to it. I fully expect the US to adopt a similar set of rules in the next ten years - Congress has already been trying. Out of control health care will demand that they succeed.

    So what about Scotland? In fact there is an opportunity here, Alex Salmond could announce his own commitment to a medium term fiscal programme that would lead to a controllable balanced budget - his own autonomous declaration of economic constitutionalism. It would be a tough call to lay out how he would take Mr Swinney’s present extravagance and cut that back – but think of the gain. He’d bring Scotland into the 21st century, he’d compete with Europe without taking us into its bureaucratic clutches, and he would open up the reality that an economically successful Scotland would be able to stare Westminster in the face without blinking when intra-UK subsidies were mentioned.

    He might even be able to offer tax cuts to hard-pressed Scots families who need the chance of extended economic freedoms to build a thriving successful nation.


    Thursday, February 23, 2012

    Surpluses, Deficits and Oil Funds

    The Centre for Public Policy for Regions (CPPR) - based at Glasgow University has done us all a favour with its most recent briefing on the idea of a Scottish Oil Fund.

    This proposal has been floated by the First Minister, suggesting that up to £1 billion of North Sea tax revenues could be invested each year, building up a fund of around £30billion in twenty years.

    In a dispassionate analysis, the public policy choices and their effects are carefully analysed. The main dilemmas mentioned are a) how do we get to the point where this investment could be possible given the present deficits and b) what pain would be involved in diverting the funds to a long term fund as opposed to short term spending.

    Read the briefing - its figures are interesting. They highlight the difficulties that all politicians who subscribe to "spend and tax" have created for themselves. By taking charge of so much of the economy they have inadvertantly adopted responsibility for the nation's success or failure - and left themselves with no margins for manoeuvre. Finding one billion to save in a budget of sixty billion is tortuously difficult for them

    Except .... and this is the real rub ... if the events that lead to success go agley, and political capital has been invested along with the billion of oil cash into their Oil Fund, there is a fall guy in the choices that are then likely to be made. Political necessity will mean that they will have to keep investing their billion, but their margins will have gone into yet more deficits. In that event, it will be the taxpayer - yet again - that foots the bill for the Fund, not Big Oil.

    Scotland desperately needs more growth. Perhaps an Oil Fund could help create it. But while the state is convinced that only more state spending can generate growth, the margins in public cash to generate the Oil Fund are unlikely to emerge. Cutting taxes would let individuals, who have much longer time horizons than politicians, create their own mini-funds; potential funding for investments that would then create growth. That in turn might even raise state revenues to the point of surpluses on the public accounts. Then we could justify parking oil funds for future generations to enjoy.


    Wednesday, February 15, 2012

    What's wrong with bonuses?

    We stuck our neck out last week and said that no public servant should be allowed to earn a bonus. The Scotsman and some others picked up on our views.

    But why should taxpayers be leery about bonuses. Aren’t they a good incentive to higher efficiency and productivity among salaried staff?

    For us, the answer lies in those last two words “salaried staff”. A salary is, by definition, "fixed compensation for services, paid to a person on a regular basis". The two ideas “fixed compensation” and “regular basis” are key. The Inland Revenue defines services by employed people as operating under what they call a “master-servant” relationship. That is, decisions on what is to be done are made by someone at the top of the tree and no equipment is provided or risk taken by the “servant” beneath that. You get your money come what may.

    Anyone who runs a business or operates as a freelance professional knows that the provision of equipment and the taking of risks is fundamental to the amount of money made from services provided. Central to this is the idea that every business or freelance has a God given right to make a loss when supplying any service. Losses hurt, and losses cost money. The servant is the master in any (freelance) business and losses are paid out of their own pockets.

    Can salaried staff operating under a master-servant make a loss? Yes they can, but they do not have to bear the financial losses – unless they actually break their organisation’s financial viability – a rare thing in large corporations and unheard of within public services who charge taxpayers to pay for, usually hidden, loss-making activity.

    Bonuses reward performance, but not the risk of loss-making performance; rather they are designed to reward success alone. As such, they become ingrained within organisational practice as implicit rewards for doing work reasonably well – the bonus culture.

    Unless bonuses are in some way linked to results that can be seen not only to be outcomes of good practice, but also outcomes that avoided real potential losses which can affect individual pockets they are not real performance bonuses – they are simply salary supplements.

    Can bankers make such losses? Not as players hiding behind corporate limited liability, but if the rules were changed so that all bankers, investment houses, fund managers and other money-changing jobs had to trade with unlimited liability then personal loss would be possible and a bonus for success would be justified. Some commentators have suggested just this change and we applaud that.

    Can bureaucrats make a loss? Not for salaried players hiding behind taxpayer funding that limits their losses to a loss of face and difficult negotiations about the need for more taxpayer money next year.

    There may be ways of making the managers of Quangos face losses that affect the underlying asset value of their operations. Any bonus arrangement would be a payment based on asset and earnings value – so that both Quangocrat total salaries and bonuses truly reflected both negative and positive performance. But to create such an arrangement for any civil servant is, in our view, impossible. Such servants are exactly that, salaried staff that do not suffer the results of losses. As such, they are not entitled to any bonuses and these should be removed from public service employment practice.


    Friday, February 10, 2012

    Holyrood's Lardy Cake

    Listening to Holyrood's politicians yesterday debating their budget reminded me of my first experience with the delights of a lardy cake. As a wee boy I can remember watching a stoutly built farmer's wife in Ayrshire smearing a thick screed of full fat butter across a thick chunk - and then adding gobbets of sugary jam on top. A real tummy stretcher.

    For taxpayers, there was little succour. Voice after voice announced how wonderful it was of them to spend our money on colleges, roads and bridges, housing and other delights for their electoral comfort. Amidst this gorging, I felt a sense of deep disquiet for Scotland.

    The first point is that a lot of the "new stimulus" was not our money at all. Mr Swinney was able to announce some relief on his previous budget strictures. These new giveaways were largely English money in the form of a Barnett supplement! £137 million for 2011-12 with £450 million later.

    The second is that the new so-called Public Health levy on large business is clearly a lie. The money raised is not allocated in any direct way to that purpose, it simply goes into general funds. Holyrood has taxed who it can where it can because it can. Businesses that are generating a lot of jobs are being burdened with a tax that, if the money does end up in health promotion, will see a transfer of wealth from youthful retail employment to higher paid clinical staff. It's enough to drive you to drink.

    Never mind that academic studies across the world will tell you that capital spending by government has a poor record in creating new jobs, and that tax programmes to change behaviour show few signs of any success other than making the poor spend more on bad choices. Politicians need to pose and strut - it's what they do.

    Now the real rub. These lardy cake slaverings reinforce the view once again that the Holyrood devolution settlement is rotten to its Barnett core. Mr Swinney has zero incentive to slow down spending; the money has been given to him by George Osborne to an automatic formula that fills Scottish government coffers and you can bet your last tax pound that he'll use his butter knife and jam pot to spread the money around to his choosing.

    What sort of democratic representation does that offer the thrifty, the productive and the enterprising? And what sort of message does it send to the English and the international capital markets? That we have a pack of unaccountable, Keynesian minded, quangocratic, electorally challenged spendthrifts without constitutional brakes who want to take control over their own affairs, but presently gorge on lardy cake payments from their neighbours.

    Whatever the present debate on where Holyrood is going ends up, it's vital for taxpayers that our representation there is linked directly to the taxation they take from us and spend for us. Yesterday shows us that that connection is presently non-existent - we're being run from a lardy cake factory.


    Monday, January 23, 2012

    Enterprise Zones, Taxes and Taxpayer Risks

    Following the recent announcement of new Enterprise Zones across Scotland, there has been a series of comments by property developers, business advisers and others.

    For any taxpayer reading these, it might come as a bit of a disappointment that so much criticism has been generated from what is, after all, an attempt to boost Scottish business prospects.

    But the criticism strikes at a deeper issue relating to any government intervention in a free-trading economy where full knowledge of who trades with whom, when and why is not available to the governing politician.

    There is a tacit admission in the idea of Enterprise Zones that tax reductions will lead to more work and jobs. However, when Holyrood adds in some second-guessing as to what those jobs should be and where they should be created, taxpayers need to be on their guard.

    The problem is that no-one can ever know which of these choices are going to succeed. For all we know, a similar venture as that proposed for a Scottish Enterprise Zone might be being proposed for Slovakia, Slovenia or Sweden. In that sense, we face the prospect of government competing to spend our money on business propositions that may well fail, just as private business so often invests in ventures that are not successful - about 70 percent of all capital programmes is one figure that has been suggested.

    Now here's the rub; when the state provides special support to business and the idea that is tried then proves to be a failure, politicians find it hugely difficult to turn away and do something else. There is too much of their own electoral capital involved. That then leads to taxpayers supporting failing ventures over a long period - usually without being told that they are doing it

    Enterprise Zones are a good idea in as far as they open up the chance to do business at lower cost because taxation is lower. But, why not make the whole of Scotland an Enterprise Zone with lower taxes? Then the choices made to invest can be private, based on knowledge being maximised by the inevestor, and the risk of loss being where it should be - with the business taking the risks and not the taxpayer that supports the state.


    Tuesday, January 17, 2012

    Tomorrow's Debts - Today

    TaxpayerScotland today publishes the first in a series of research papers on "The State of Scotland"

    The first in the series is "The State of Debt" which examines the elements and extent of debt accrued by Scotland. The paper can be read here.

    Scotland's accrued debts are so high it could take more than a generation to get control back over spending, according to the report.

    In addition, we suggest that Scotland's real deficit is nearer to £30 billion and the nation could soon be running a deficit of more than £30 billion each year if it tried to go it alone financially. At the same time, it is possible that Scotland's accrued debt levels could rise to 100 percent and more of GNP should accrued past debts have to be taken over with independence.

    In "The State of Debt", Taxpayer Scotland examines three forms of debt; current, uncertain and risk debts, listing all the commitments of the Scottish government from local pensions, local authority capital spending to environmental policy. There is no specific summation of all debt, but the report points out that the proclivity of Scottish Governments to increase spending and a history of additional taxation measured against the assets of the nation suggests that Scotland's financial position is not good.

    Click here to see the full breakdown of debt in "The State of Debt".
    (PDF file - opens in new window)

    Scots Taxpayers have a bleak future if every spending commitment of the Scottish Government is realised in continuing borrowing. It's well known that Scotland obtains subsidy from the UK at a number of levels. What is not often realised is that there are other hidden obligations. These are often of uncertain size, but we know they exist and will have to be serviced through debt repayments.

    There is a desperate need for Scotland to re-consider how it manages its economy. The size of the public sector and the realities of a small peripheral economy demand new thinking. We cannot go on believing that the state is the economy. We need to find other private ways to flourish and create jobs - with lower taxes being the starting point.


    Wednesday, January 04, 2012

    Schools and the schooled

    There are some worrying things coming out of the "conversation" about Education Scotland - the Quango that the Scottish Government is making ever more powerful.

    Education Scotland aims to improve school standards. It was formed from the merger of HM Inspectorate of Education (HMIE), which inspects schools, and Learning and Teaching Scotland, which develops classroom materials and provides school support.

    Some people are already saying it cannot deliver what it aspires to. It suffers from "fluffiness" - that horrible strategy-ridden set of multiple objectives that sound grand but no-one can really understand. At the same time, it is meant to work "in partnership with authorities" and somehow share responsibility for the provision and promotion of quality in education.

    A Scottish Government spokesman comments: "Education Scotland was created to complement the work of councils by helping to deliver a stronger focus on performance, raise attainment and ambition for all our children and young people, and continue to roll out Curriculum for Excellence."

    Well yes, sure, but - er - would it or the local authorities ever want to do anything else? We are back in the land of bureaucrat-speak telling us the "bleeding obvious".

    Our worry is that this is another way for Holyrood to spend money on not very much except the centralising of power. And that in turn tends to mean more of our tax money going on not very much that does any of us any good - in this case our children.

    Scotland has an interesting education system, with some element of localisation in practice that allows for competition that leads in turn to innovation. Ideally, taxpayers would get more control over their local schools, not see control go to a central quango.

    We^ll be watching where the money goes on this.


    Saturday, December 17, 2011

    Unrecommended Christmas Reading

    Like fingernails drawn down a blackboard, some things in the public policy arena make the TaxpayerScotland team and its supporters wince.

    We wish we could recommend that you read the paper we refer to below, but it is getting near to Christmas and we really do not want to wreck your festive season.

    It's called "Achieving a Sustainable Future" and is the Scottish Government's "Regeneration Strategy". You can read it here - if you can bear it. .

    For those of us who despair of Big Government and its propensity to govern such that our pockets are sucked dry by wasteful and unnecessary spending, this so-called "strategy" is a gem of self-serving administrative bunkum. It takes 40 pages to state the obvious over and over again, using all the management psychobabble that can pour from the pen of the planning bureaucracy. And all to laud the fact that it is spending £150 million plus of our money on .... well, what?

    We dissect these papers, for our sins, to see if we can find out where our taxes are going. We can tell you that in this instance they are going to a quite incredible set of self-interested public body agendas through a maze of partnerships, strategies, audits of outcomes, performance measure and "sustainability and equality" constraints.

    Here's an example:

    In partnership with the Improvement Service and SLAED (the Scottish Local Authorities Economic Development group), the Scottish Government has jointly funded the production of an improvement guide for local authority economic development services. Developed in partnership, this guide will support local authorities in delivering economic development and regeneration (including tackling market failure); exchanging good practice; assessing overall performance in delivering economic development; benchmarking performance; and identifying practice improvements to strengthen their performance and impact.

    We think it is worth forcefully pointing out that anyone involved in any of this balderdash is going to be earning a great deal more than the people that it purports to be wanting to help - Scotland's disadvantaged communities.

    What is worse is that it repeatedly refers to "market failure" as the cause of our run-down communities. Well, excuse us, but if there is one good example of markets successfully telling us something, it's where a lack of capital meets a lack of knowledge and productivity in a world of equalisation through high taxes on the low paid. If you get the worker to pay 11 percent plus 20 percent of income on their effort, then charge the business 13 percent on each worker, 20 percent on their sales and then 20 percent on their profits, it's no surprise if those businesses go off to choose easier pastures to do their trading.

    Rundown communities are much more a product of government failure. Throwing more money at them from state coffers will do nothing. What's needed is to take less money from them. That would allow them to be truly sustainable.


    Wednesday, November 30, 2011

    Pause and consider – the dangers of the large state

    The UK Chancellor’s Autumn statement was all engrossing – not only for Mr Osborne’s ducking and weaving , but for the frenzy of comment that follows – pundits trying to make sense of what he said in the context of the really horrible predicament we are all now in.

    I decided to pause and not write anything about the statement until I had identified some sort of consensus. There is one – we’re well and truly stuffed; no money, no confidence, no clear daylight ahead, no resolution to Euro pain.

    That set me thinking about Scotland and its taxpayers - which is where our focus asTaxpayerScotland must always lie.

    Two hundred thousand public sector workers in Scotland went on strike today, unhappy that their taxpayer supported pensions are to be curtailed. This is about the same as the number of Scots that could not go to work – no jobs we are told – and have to live off taxpayer supported welfare. Somewhere in Scotland there are around one hundred and fifty thousand enterprising people who actually pay net tax, and we all know that there are 60 million non-Scots in the UK who fund Scotland via Barnett.

    The concern about this state of affairs has to be that it is actually dangerous. While Mr Osborne and Mr Swinney wrestle with the numbers, they do so in the context that the Scots people have built themselves such a large state sector that its failure to fund itself is a real risk to all of us.

    The large public sector, the high welfare bill for the non-working, the low count of hard-working net-taxpaying folk and the trans-national subsidy are symptomatic of contemporary Scotland, stuck as a supplicant in an essentially bankrupt UK whose latest additional borrowings over the next few years are going to amount to £111 billion.

    These are enormous deadweight financial levers that, should they go wrong, will drag all Scots into real financial mess and disproportionately so because the Scottish public sector is disproportionate.

    By financial mess we are talking about horrendous unemployment and high inflation leading to real impoverishment and worst of all, Scot against Scot because so many of us have become used to fighting for the contents of the same public purse as if it is our money. It isn’t, as we can see from the Euro tragedy, it’s not even real money, simply a fiction.

    There is only one way out, to rely less on the state for our future, to push it back to a proportionate size within Scotland and to release its takings for personal use and thrift through lower taxation. Personal capital and savings are the one thing that protect us from the dangers of government failure.


    Wednesday, October 26, 2011

    'Could', should and would for Scotland

    The conditional tense in the English language is a wonderful gift to politicians. It allows them to make assertions with enough ambiguity to back off later when their promised outcomes fail to materialise.

    Taxpayers should be sceptical of Mr Swinney's claim that Scotland "could" be the world’s sixth-richest nation with control of all its natural resources after independence.

    The concentration on resources is telling. Mr Swinney repeats a common error. If resources were what mattered, Africa would have the richest nations, Hong Kong would be an insect-ridden swamp and the Dutch would be wearing wool and wellies in the biggest bog in the world.

    Resources have no economic value without the institutional arrangements that release their value profitably.

    Any new Scottish settlement will only come good for Scots if certain imperatives are adhered to:

    • The idea that "the state is the economy" is discarded
    • The idea that more state spending "creates jobs" is discarded
    • It is understood that economic progress comes from better use of knowledge not available to politicians and their bureaucracy
    • That from knowledge comes better innovative economic organisation - the key to growth - when that organisation is in private hands.
    • That in attempting to create equality of outcomes there are usually detrimental effects on prosperity for all, including those that you are trying to make more equal.

    Taxpayers need to remind the state again and again that sixty years of quasi-collectivism have led to enormous sovereign deficits with a vast carapace of obfuscation and double-think as the state tries to wriggle out of its abject failure to achieve its goals.

    Mr Swinney might do well to remember that sixth place in the world is a poor result compared to Glasgow's position as the second city in the world (after London) in the mid-nineteenth century. We only have to look around Scotland to see the economic and cultural legacy of free trade, free minds and low taxes.

    Set us free, Mr Swinney, these are our resources - not yours.


    Friday, October 14, 2011

    Oil and Toil - a creepy tale.

    Big Government has a bad habit of proposing things and then achieving something quite different through its actions. The way it is treating the oil industry is a case in point.

    Big Oil is an easy target - the oil majors generate a staggering amount of revenue from one or two source products - and you can't hide carefully measured output that comes out of a pipe from the seabed. How easy it is to tax that? Very easy. And voters in general are not going to grumble about the state getting its "fair share" out of the oil barons.

    But the way the Petroleum Revenue Tax has been adjusted and manipulated through time by the State is an object lesson in tax creep. PRT has always been an addition to Corporation Tax, but the latest imposition - the Supplementary Charge - began at 10 percent, was then raised to 20 percent and has recently been raised again by George Osborne to 32 percent.

    The burdens are now at the point where the vast revenue flows from oil fields are being siphoned off at such a rate by the state that the development of marginal fields is at risk. So do our politicians cut the tax - no, they think up new wheezes to make the pips squeak under their control.

    The Scottish Government's preferred option is now to introduce an Investment Rate of Return Allowance: this guarantees companies a minimum rate of return on their investment before the Supplementary Charge is levied

    In other words, the management of oil exploration risk is being taken over by politicians who know nothing about these risks. Just so that they can control a flow of money for them to spend on their electorate to buy votes. The policy appears to treat all exploration as if it were the same, needing the same minimum rate of return. But there is a hidden issue here, the civil servants who deal with the industry know that this is nonsense and the industry has been negotiating with the bureaucracy for many years to find adjustments and loopholes that soften the stupidity of a one-size-fits-all rule.

    If you can bear it, have a look at this document from the HMRC reference library (XLS, opens in new window) . It provides a map to the legislative somersaults that have been going on over the years as the Inland Revenue and Big Oil try to get to grips with simplistic policy-making by politicians as applied to the real world of oil rigs, engineers, hard work and pumping the black stuff out of the seabed.

    The First Minister yesterday said "the UK Government needs to give more certainty to the industry and restore confidence that has been badly dented." Well Mr Salmond, you could start by not offering yet more complications to a bizarre tax regime. Yes, Mr Osborne is desperate for cash, but the people are desperate for jobs provided by businesses with confidence.

    Mr Salmond smiles that the new investment by BP west of Shetland is extremely welcome. He says it confirms that the offshore industry has a key role to play in generating jobs, skills and revenue for decades to come. How many more jobs might be created if the politicians got out of the way and allowed cash flow from the UK fields to thicken to the point where more and more investment came Scotland's way. Investment too that would allow our young people decent apprenticeships in real industrial jobs with upgrades to engineering qualifications - not just makework from the Cooncil, being paid to be somewhere and do nothing,


    Tuesday, July 26, 2011

    It's just not us.

    Recent news that ninety percent of us are against the centralisation of our police force tell us something about the way we think as a nation.

    Ordinary taxpayers have an uncanny knack of adopting positions of plain common sense in these matters. We can see that one central police force is a recipe for over-expensive bureaucracy and non-efficient policing at the local level.

    But the Holyrood politicians see it another way. For them, it's another chance to take control of something, to find a role for themselves and their talking shop.

    COSLA - the association of local authorities - suggests that this boondoggle will cost £270 million just to set it up . Then they add that it may cost double that, citing their experience of "restructurings". Well, that's honest at least, as anyone who works in local government knows, shuffling deck chairs while taxpayers money goes down the cluggy is an endemic phenomenon across local councils.

    What should taxpayers think? Look at it this way; if you had a choice to pay directly for your police force - that is, they sent you an invoice each year to protect your property, control violent oiks and chase down professional criminals, what would you employ? Would you go to a large Edinburgh firm run by planners and overseers intent on creating a large scale policing firm that served everyone from the high-rises of Easterhouse to the dispersed tenants in Ross? Or would you contract with a local firm that knew the local terrain, people and problems?

    The answer is pretty obvious to me. All TaxpayerScotland supporters are urged to contact their MSP and express their concerns. This is a power play by Holyrood and centralised power costs taxpayers money .... lots of it and for very little practical gain.


    Friday, June 17, 2011

    Trains, Planes and horrible deals

    What is it about Scotland's governmental processes and capital projects that provides such rotten results?

    The Edinburgh Trams, the Holyrood Parliament, various bridge and trunk road schemes and now the Borders Railway project all seem to come unstuck in overspends, and a shortfall in results.

    In this case, it may not be a purely Scottish phenomenon, but rather a perennial conflict between any politician's desire to see a monument built during their period in office and the civil service need to avoid risk in decision-making.

    Add in the vagaries of engineering, particularly civil engineering ground works, and you have a recipe for rotten outcomes.

    In this light, the bizarre revelation that the Borders Railway project includes a "Mastermind" clause in its enabling Act - which has already been triggered - legally requiring the line to be built, is strongly contrary to the taxpayer interest.

    Essentially, taxpayers are hooked into an extortion scheme. Politicians committed to achieve a result have handed their contractors a loaded gun to take our money to build this 30 mile rail link whatever financial and engineering phenomena appear during construction. What a lousy way to run a railway.

    And now we find that the withdrawal of potential contractor Carillion leaves one contender for the job. So we have a monopoly supplier and a government negotiating team neutered by the knowledge that the job has to go ahead. Don't expect the £295 million cost to stay at that level.

    Holyrood needs to show some gumption. They can reverse the daft Mastermind clause as easily as they created it. For the sake of our wallets, they need to get that done fast. They claim to represent us, we need some leadership, and fast.


    Thursday, May 26, 2011

    Easy to say - can it be done?

    Alex Salmond has today announced his vision for a "fairer society" which will involve "Taking Scotland Forward".

    These slogans - and they are slogans - are touchstones of the centre left which is in Holyrood. No-one should under-estimate how deeply they are felt by those who espouse them. We should also not under-estimate how strongly Mr Salmond and his ilk believe that the alternative centre right view is "harsh". (There are echoes of the complaint that the Tories are the "nasty party" in this complaint.)

    Supporters of TaxpayerScotland have to face up to these sentiments. We would see ourselves as being practical and sensible in our views of the value of low taxes and using personal initiative to enhance growth. With the size of the public debt we would even claim that we are morally driven - defending future generations from the harsh excesses of Big Government

    We do not believe that it is "unfair" that someone who works hard, is productive, and generates wealth makes good money. We do think it is "unfair" if a lot of that money is taken from them - not least because too often the things that government does with our taxes are a lot less productive and often wasteful. This too denies wealth to those who can sell to those with money and so make some of their own.

    Equally, and more difficult to express, is the idea that giving money freely to others is nice for politicians to do, but may not be the best for the recipients. What can be seen as "caring" can in fact be harshly destructive to self-discipline and responsibility. Is it "fair" to do this to people - to make them dependant supplicants to the state?

    Many of these arguments are well rehearsed and concerned taxpayers can trade punches with Mr Salmond on them - hopefully giving him some pause for thought. For me, a more important issue is in his use of the term "Taking" in his second slogan.

    This tells me that our Scottish government still believes that it is the most important force for the future social and economic good of Scotland; that the collective polity drives the success of the nation. I am afraid I cannot accept that - indeed I find it insulting and dangerous.

    It is not Holyrood that will take Scotland to a better future. It is the Scots people; creative, hard-working, productive, working out through trial and error how best to make a little money here, to care for others there, to duck and weave through life's strife and muddle. It is our own personal choice how much we want to strive and how much money to make - we are not here merely to feed a voracious corporate and bureaucratic state. Its interests and incentives run counter to real goodness - the survival of the institution funded by our taxes always takes precedence over the targeted personalised caring and fairness that individuals can offer each other. Taxpayers beware.


    Saturday, May 07, 2011

    'Permission to be bold'

    Alex Salmond has asked for "permission to be bold". As the electorate that consents to his power over us, taxpayers have to ask a few important questions as to what he might mean.

    Q1: What slice of our daily bread and butter does he want? His government will be part of a national system that takes 50 percent of all we earn. Does his boldness recognise the damage that does to our spirit, our enthusiasm to work and our productivity in work?

    Q2: Does his boldness allow him to declare that "the Scottish economy" is not merely Holyrood and the local authorities; entities that by definition live on takings from the productive and so reduce the economic growth he desperately wants?

    Q3. Does he recognise that youth unemployment is far higher than any politician dares admit, that make-work programmes by the public sector destroy far more jobs than they create, and that cutting business taxes would be far more effective?

    Q4: Will he be bold enough to haul back his daft alternative energy plans when it is shown that they will cost taxpayers the Earth rather than save it?

    Q5: Does his boldness involve going to Westminster and for once not asking for more money; to instead discard the Barnett formula, recognising that it devalues Scotland, creates counter-productive spending incentives and makes Scots quaint supplicants to the London-centric English?

    Q6: Will he boldly state that his Concordat with COSLA is a genuine attempt to control and shrink public excess and not just a way for Holyrood to centralise control over ever-growing expenditures?

    Q7: Would he boldly place posters with the graph below onto the front door of every public sector building in Scotland, declaring that scandal of the nation's debt interest payments must be tackled for the sake of our children and grandchildren?

    We are not a party political entity. We have to maintain our quiet through any election. Now that the hullabaloo is over, however, we will fervently champion those who pay for Mr Salmond's ideas and their consequences. We would love to see a real "boldness" that allows Scots to flourish through independent effort and thought, not suffer from the cancerous dullness of state planning.


    Sunday, April 17, 2011

    Who cares about broken promises when all politicians sound like a broken record

    We've just done a rather unscientific count on Google of the utterings of Scotland's politicians on the election hustings. We were trying to evaluate the proportion of spending promises as against any counter commentary that mentions growth through enterprise and effort.

    The results show that roughly eight out of ten comments related to spending plans. Essentially, promises by politicians to spend our own money on - er - us.

    A cynic might respond that they were surprised that even two out of ten promises would be related to the idea that ordinary individuals spending their own money might be something to do with economic growth. However, we wanted to give the politicians the benefit of the doubt - until we did a separate measure. We checked whether the "private growth exists" comments stood on their own, or were accompanied by claims about what the state could do.

    Sadly, we got a full house. In every case, the state was mentioned as the first option for economic improvement. That is, every Scottish politician takes the view that it is the state that leads economic activity, individual enterprise follows from that.

    This "broken record" approach to the Holyrood elections has been mentioned by various commentators both in Scotland and the UK. The "grand consensus" of statism in Scotland is ingrained into the body politic.

    Some say it is an outcome of our quaint parliament, with no accountability for its spending up to the hilt and beyond. Others that it is the reflection of a communitarian socialism in Scotland. Others retort that such socialism is a lot easier when it is well funded by the Barnett formula, breeding dependancy and reducing the costs of stupid policy.

    We say it does Scotland no credit to have a public debate that repeats treacly gloop like a broken record about supporting the poor, improving education, developing green energy, engaging high tech skills, helping the elderly and so on, when all the participles in these Utopian goals are not spelled out with any financial credibility - wrapped as they are so often with the words "free", "support" and "spending". Seen historically, the record of improvement from all the tax money we have seen spent is poor indeed - new ideas are desperately needed.

    Perhaps our politicians could start by reading a recent paper from Civitas called "Economic Growth - Could the Government do more" It's only six pages, but it succinctly puts forward some sensible ideas that would reduce spending and increase growth. While written about the UK as a whole, it uncannily echoes many of the "buzz phrases" we have been hearing throughout the Holyrood election campaign.

    Politicians need to "get it", the most important message of our age - THERE IS NO MORE MONEY. They are spending ours, our children's and our grandchildren's at an enormous rate. We need to stop them.


    Wednesday, March 30, 2011

    What is not being foreseen …

    A gentleman called Frederic Bastiat wrote an article in 1848 in which he asked us all to think about the effects of actions by the state.

    It’s worth reading it again as you listen to today’s politicians. Here’s the first paragraph (you can read the whole thing here).

    In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

    Note the humility. For taxpayers, this is important. Politicians can say things like:

    “We could have had 3000 more teachers and 1,000 more classroom assistants and other services” (Scottish Labour leader Ian Gray referring to the effect of a two-year freeze on Council Tax.)

    "It is important to remember this oil is not theirs – it is ours”. (George Osborne to the Treasury Select committee).

    Well, hold up a minute, what is unseen here?

    Mr Gray’s claim assumes that extra money taken from taxpayers in Council Tax has zero effect on the taxed. We all know that’s nonsense, his 3000 teachers and 1000 more classroom assistants tax would inevitably destroy jobs elsewhere. And in addition, the payments of our incomes to his trained and semi-trained professionals would almost certainly be a transfer of money from the poorer to the richer.

    Mr Osborne’s claim is, frankly, scary. Our Chancellor confuses a potential resource with a realised resource. Oil deep in rock beneath the sea is valueless, until oil companies take the risks of digging for it. The real question is; who owns saleable oil? What is unseen here is the fact that a private property right is not just a right to a resource, but the right both to exploit and dispose of a resource.

    It’s quite clear that both these politicians believe that they own our intellectual property. In one case our knowledge of what it is best to spend our money on, in the other the knowledge of how to add value to deep earth resources.

    When their advisers get into the act, it gets even more frightening. The Chairman of the Office of Budget Responsibilty (sic), Robert Chote, told a Treasury Committee in reference to the new oil profits tax: “We are assuming there is no significant effect on the investment and production profile from that change.”

    So why have two major companies announced in the last 48 hours that they are freezing their investment plans, Mr Choate?

    And another adviser to the OBR, Graham Parker, said: “The conclusion we reached was that the high oil profits and the fact that, after all, this is an oil profits tax, it just increases the Government share of the profit on the oil production. Because of the high oil price we assume the companies will still want to go ahead [with investment].”

    Mr Parker is a retired Treasury official and clearly an economic dunce; he really does seem to be suggesting that taking more profit from the oil companies will change nothing – it just lets us share in their luck.

    How many times do politicians and bureaucrats need to be told that profit is not a reward for what has been done in the past, but the price that is needed to take risks in the future?

    Oil engineers, planning ahead a lot longer than politicians ever do, can see inflated input prices, higher skilled labour rates, higher interest rates, and a host of other uncertainties in costs in their UK operations. With the prospect of making less than before for greater risks, they will walk away.

    Whatever you think of the barking of politicians across Scotland as their beady eyes seek the prize of a seat at Holyrood, do take time to enjoy some of the claptrap with which they are entertaining us. It’s always enlightening to find out what is unseen in what they claim to be good for us. Usually, it’s an unseen burden on every taxpayer; through fewer jobs and lower growth.


    Wednesday, March 23, 2011

    Is a canny Chancellor what we need?

    Modern Chancellors tiptoe towards tomorrow exuding a mixture of carefulness and gravitas. Caught in the gaze of a thousand pundits they tease us with titbits of relief today and promises of more tomorrow.

    The reality is that fiddling at the margin with great canniness has effects that are minor in the grand scheme of things. A war, an earthquake, an oil spill, a couple of interest rate rises in the United States, a world shortage of copper and various other unanticipated events can quickly reverse the small effects of a canny Chancellor’s penny off this and penny onto that in a budget.

    We need to look instead for two things: principles and incentives.

    George Osborne has begun to show some principle. There are hints of a desire to cut taxes, amid a lot of rhetoric about enterprise and growth. Sadly, we think his principles are diluted by a morass of wee baubles that add to complexity rather than adopt a principle of simplicity. If business rates are too high, cut them, don’t clutter up business overheads with complex reliefs; if NIC is too high, cut it, don’t favour micro against big business with a mix of holidays and tax rises.

    As for incentives ... in a climate of despondency about past and present and uncertainty about the future, small changes to the tax regime hardly sway opinion. Measures that come as a surprise are needed to get individuals to gear themselves up to create a better tomorrow. What the Chancellor calls “getting the economy moving again” is a government-centric view – inevitably it involves taking money from the most productive and giving it to the less productive. The economy will move when individual producers and consumers take decisions on the risks of the future – incentivised to do so by the prospect of not losing money in the process.

    If Mr Osborne is serious that “today's budget is about reforming the nation's economy, so that we have enduring growth and jobs in the future” he needs to adopt more than canniness. He needs to be imaginative and brave. We know we are all paying for the foolishness of the past. Having learnt how we got here; too much government spending, it is time to release us from that burden – cutting taxes, allowing growth and creating new prosperity from the people’s efforts.


    Friday, February 25, 2011

    Scotland's Economic Non-Development Plan

    The updated Scottish Economic Development Plan is a splendid piece of bureaucratic boilerplate. What is worrying is that anyone should think that anything in it might accelerate growth.

    Most of its proposals appear to be about how government proposes to plan its plans – frameworks, strategies and conversations abound. Were it delivered by Sir Humphrey, the line “Scotland’s future lies in the development of a low carbon economy …. we are starting a conversation on what that will mean in practice” would be a great joke in its juxtaposition of determined commitment and feeble methodology.

    Its main failing lies in the repeated implication that the spending these plans demand will be costless. Government can commit to wind power, carbon storage and other endeavours to create new activity employing new workers, but the tax cost of these is huge and the net outcome for growth will depend on the returns on what they use our money on and what we might have used it on.

    I very much doubt that building windmills and digging holes for carbon will ever be as revenue intensive as the value generated by thousands of self-motivated workers, artisans and private businesses spending their own money. It will tend simply to mean a transfer of income from the less skilled to the richer skilled contractors employed to service the state\'s grand soviet-like schemes.

    Equally, a commitment to supporting innovation and management skills sounds wonderful, until you ask where the knowledge actually lies. It certainly doesn\'t lie in an army of seconded quangocrats in suits who in my experience arrive on company doorsteps to tell them what they already know but without an ounce of practical knowledge on how to make new things in new markets work commercially. Government employees and university boffins are lousy at that sort of thing. It also strikes me that offering “a renewed focus … on supporting and developing leadership and management skills in Scottish businesses” is a real slap in the face to some extremely bright and helpful people in the legal, management and accountancy industry who earn their fees from the results of what they do, not on the back of taxpayers.

    We really do have to open a debate in Scotland about how we get the state to concentrate on what it should not be doing. Not attempting to “plan” economic development and implement “strategies” using taxpayers money would be a good start. Let\'s keep government small, operating at the level of true public goods where those can be found. The words “state” and “enterprise” do not lie well together with respect to taxpayers pockets.



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