An alternative to austerity
11 Feb 2015 03:31 PM
FM sets out plan to put fairness at the heart of economic growth.
First Minister Nicola Sturgeon has set out an alternative plan to tackle the economic deficit, by putting fairness at the heart of economic growth, increasing investment and maximising the skills of Scotland’s population.
In a major economic speech at University College London, the First Minister said there should be no “trade off” between reducing the deficit and having a fairer society, with a clear link between economic growth and reducing inequality.
Ms Sturgeon highlighted how successful economic policies such as gender equality and the living wage “have a sense of fairness at their heart” and help grow the economy by ensuring that Scotland maximises the skill and innovation of all its people.
The First Minister set out an alternative to austerity, and said that real term increases in government department spending, limited to half a per cent each year, would see debt reduce as a share of GDP over four years, but allow a further £180 billion investment in infrastructure, skills and education to further boost the economy.
The First Minister also renewed her calls to scrap the renewal of Trident, with the £100bn savings over the next 35 years to be invested back into public services.
The First Minister said:
“The Scottish Government has balanced its budget every single year and that’s something which has required genuinely tough decisions. But by and large, we’ve carried people with us because the policies we’ve adopted have clearly had a sense of fairness at their heart.
“In terms of the UK economy, we believe that debt and the deficit should be reduced as a percentage of GDP but more gradually than either of the largest UK parties is proposing.
“For example, if you limited real terms growth in departmental spending to half a per cent each year it would reduce debt as a share of GDP in every year from 2016-17. But it would also permit a further £180 billion of investment across the UK over the next four years.
“We could protect the infrastructure, education and innovation which will support sustainable growth. And we could take a different approach to the crude cuts that reduce work incentives and impact directly on disabled people and families with children. We could manage the deficit down, without destroying the social fabric.
“We could also release savings through some more straightforward choices. Deciding not to renew Trident, for example, would save around £100bn, at 2012 prices, over the next 35 years. That is money that could be - and should be - invested instead in health and education.
“By taking a different approach - by offering an alternative to the austerity agenda - we would ensure that fiscal consolidation is consistent with a wider vision of society. A society which strives to become more equal, as part of becoming more prosperous.
“We simply don’t accept that there’s a trade-off between balancing the books and having a balanced society; fairness and prosperity can go hand in hand. It’s basic common sense that as a society, we will do better if we can benefit from the skill, talent and innovation of all of our people.
"But there are other reasons too. Higher incomes would increase demand and boost the revenues needed for investment in infrastructure and education. More equal economies are more resilient and less likely to depend on borrowing and credit.”
The First Minister continued:
“But one thing we’re already very clear on, is that we see the private sector as being an essential partner in all of this. They are not only vital to but will also benefit hugely from helping to build a fairer society. And so we’re also encouraging and supporting business to contribute to a fairer society – because that’s clearly in their own best interests.
“Gender equality is a good example of that. The Scottish Government is leading by example – the Scottish Cabinet is one of only three in the developed world to have a 50/50 gender split. But we’re also launching a major drive – called 50/50 by 2020 – to encourage gender equality in public, private and third sector boardrooms.
“And we have a clear focus on the quality of work – people’s experience in the workplace. The Scottish Government already pays the living wage to all our employees; and we’re using procurement policy, where we can, to encourage its use in all public sector contracts. Now we are funding the Poverty Alliance to run a scheme for accrediting living wage employers.
“Essentially, we are appealing to companies’ sense of enlightened self-interest. In doing so, we are encouraging them to commit to good business practices - such as innovation or internationalisation - and to good employment practices; such as the living wage, gender equality or supporting workforce engagement.
“So we will make the case for a more rational economic policy at Westminster. And we will use the powers we have in the Scottish Parliament to pursue a different approach; one based on partnership, fairness and prosperity.”
Notes To Editors
Read the First Minister's speech
See pictures of the First Minister delivering her speech
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