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  • Writer's pictureKenneth Gibson MSP

Scotland’s Blueprint for Recovery Published

A UK-wide £80 billion stimulus package should be created to regenerate the economy and reduce inequalities following the coronavirus (COVID-19) pandemic, a new Scottish Government report proposes.

The report, published on Monday, suggests the package could finance a temporary reduction in VAT from 20% to 15%, whilst moving the tourism and hospitality industries onto a reduced VAT rate of 5%.

A 2p cut in employers’ National Insurance Contributions to reduce the cost of hiring staff is also recommended in the report, entitled COVID-19: UK Fiscal Path – A New Approach.

Other action it proposes the UK Government should take to kick-start the economy includes:

  • Introduce a jobs guarantee scheme for young people and extend sector-specific employment and business support schemes

  • Create a National Debt Plan to help business and household budgets recover from the effects of the pandemic

  • Adopt new fiscal rules to prioritise economic stimuli over deficit reduction in times of crisis

  • Accelerate major investment in low‑carbon initiatives, energy efficiency and digital infrastructure

  • Extend Scotland’s financial powers to allow it to shape its own response to the pandemic

Finance Secretary Kate Forbes MSP said:

“This report recommends bold, practical steps which would provide an immediate boost to our economy, protect existing jobs and deliver new ones. It tackles public debt, employment and proposes measures to further support business. Crucially, it avoids any return to austerity. Economic stimulus must be prioritised over deficit reduction until the recovery has fully taken hold.

“Germany has already adopted a similar-size stimulus package, representing 4% of national income and the UK Government needs to be similarly positive, proactive and ambitious.

“Action is needed now. If the UK Government is not prepared to respond then Scotland must have the additional financial powers required to secure a sustainable economic recovery.

“Without those powers we will be at a severe disadvantage to other nations. It would be like trying to chart our way to recovery with one hand tied behind our back.”

Meanwhile, the Prime Minister has announced a so-called “New Deal”, comparing himself out loud to late US President Franklin D Roosevelt; however, it contains none of the abovementioned measures and focuses only on infrastructure.

Scotland was mentioned only once in Mr Johnson’s speech, as were the other devolved nations.

Kenneth Gibson MSP commented:

“Now is indeed the time to act, and the report sets out a clear vision of how to stimulate our economy.

“I am particularly keen on the proposals to cut the standard rate of VAT to 15% for six months once current restrictions are lifted across the UK and to reduce VAT for the fledgling hospitality sector to 5%.

“By contrast, rather than announcing a serious stimulus package today, Mr Johnson opted to announce that he is finally going to invest in England’s crumbling hospitals and to regurgitate some prior commitments about tree planting.

“When asked, he refused to rule out tax rises.

“Mr Johnson is no President Roosevelt – I think we all know which President he brings to mind.

“There is nothing new or innovative about the UK Government’s deal and as usual, for Scotland it will be another Raw Deal.”


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