By a Newsnet reporter
Writing in the Herald newspaper on Tuesday, Scottish Conservative leader Ruth Davidson has apparently contradicted recent claims by Chancellor George Osborne that the forthcoming independence referendum is damaging the Scottish economy.
In what many will interpret as a criticism of the Chancellor’s remarks about the Scottish economy, Ms Davidson began her article by noting that in recent months there has been “no shortage of doomsayers ready to talk down Britain and Scotland”.
In comments which undermine Mr Osborne’s claim that the Scottish economy is being damaged by the independence debate, Ms Davidson went on to say that Scottish Enterprise agencies had been effective in securing 7000 new jobs, and mentioned that the recent Ernst and Young business attractiveness survey put Scotland at the top of the league for encouraging jobs through inward investment.
Whilst Ms Davidson maintained that these successes were due to the policies of the UK Government, Scotland’s success has not been repeated elsewhere in the UK, as would be expected if the success was a result of UK-wide economic policies. On the contrary, economic forecasts for the UK remain poor, with the economy expected to shrink by 0.7% this year.
Ms Davidson used the rest of her article to list a number of Conservative initiatives which she claims will boost the economy, although critics have insisted most of these initiatives she mentioned would have little economic effect.
Ms Davidson praised the UK Government’s “Funding for Lending” scheme which was launched in July this year, saying that it would reduce lending costs for banks, which would in turn reduce lending costs for business.
However as a recent article in the Financial Times noted, there is so far little sign of banks passing on lower costs to borrowers. Instead, many banking analysts expect that the banks will simply pocket the benefit from lower borrowing costs in order to help them rebuild their own capital.
Alastair Ryan, European banks analyst at UBS, said:
“Funding for lending will help banks’ margins, but it won’t move the needle on lending volumes unless regulators ease capital constraints on banks.”
Another initiative praised by Ms Davidson has been fiercely criticised for putting workers at risk. UK Business Secretary Michael Fallon’s recent announcement that over 3000 health and safety regulations were to be scrapped was lauded by Ms Davidson as “relieving businesses of the burden of preparing for a pointless inspection”.
Unions responded furiously to the announcement, claiming that the measure may risk the lives and health of thousands of workers. TUC general secretary Brendan Barber said that the move would fuel an “occupational health epidemic” in the UK, adding:
“Health and safety regulation is not a burden on business, it is a basic protection for workers. Cutting back on regulation and inspections will lead to more injuries and deaths as result of poor safety at work.”
Although Ms Davidson used the bulk of her article to make a plea for Westminster and Holyrood to “work together”, the Scottish Tory leader made no mention in her article of the Scottish Government’s call on Westminster to release funding for capital investment. The Scottish Government has made repeated requests to the UK Government for these funds, but has consistently been rebuffed.
Many independent organisations and analysts agree that capital investment is vital to kick-starting the economy and have supported the Scottish Government’s call. Most recently the Civil Engineering Contractors Association (CECA) added its voice to those calling on Westminster to release the funding, saying last week that work on multimillion-pound infrastructure projects was the best way to create jobs and drive the economy.
SNP MSP and member of Holyrood’s Finance Committee Mark McDonald said:
“It is welcome to hear that Ruth Davidson wants Westminster to work with the Government to boost jobs and encourage growth.
“And if that is the case then surely she supports the Government’s call on shovel ready projects since David Cameron was ready to consider this.
“It was the Prime Minister who asked for the list six months ago but since then has continued to snub calls to release cash for the projects.
“The SNP Government has consistently argued for capital investment to boost, not just construction, but also the wider economy.
“But these calls have fallen on deaf ears – why do Cameron and George Osborne continue not to implement a policy of capital investment.
“Perhaps Ms Davidson, given her comments, will lobby her Prime Minister to do the right thing for the economy.
“These delays are just another example of why Scotland needs to have an independent Parliament that will have the economic powers to pursue a different policy from Osborne’s failed austerity programme.”