Salmond: Time for action to stimulate economy

Scotland's First Minister, Alex Salmond has today said that Prime Minister Gordon Brown should come out of his bunker and introduce a major recovery package to counter recessionary pressures in the economy. Speaking in Turriff Mr Salmond said:

"In economic terms substantial action is required.  In political terms after Glasgow East it is inescapable.  In moral terms Government cannot stand aside and watch families being driven into fuel poverty."

The SNP Government has already introduced tax cuts saving Scottish businesses up to £165 million a year through the reduction and removal of business rates for 150,000 small businesses in Scotland.  Scottish Ministers have also provided the funds to freeze the unfair Council Tax for the next three years.

This is providing welcome relief for hard pressed families facing increased pressure on their household budgets as food and fuel bills continue to rise.

Measures the UK Government should take include:

+      Action to restrain energy cost rises for household budgets

+      Ditch the self imposed net borrowing constraint

+      Use the Chancellor's oil tax windfall to fund a fuel duty regulator

+      Allocate Scotland a share of the Chancellor's estimated £5 billion North Sea windfall.

+      Allow the Scottish Government to access last year's budget £42 million under  - spend to help with rising energy costs across the public sector.

First Minister Alex Salmond will say:

"Scotland has proved more resistant to financial pressures than other parts of the UK.  However, with deflationary forces becoming stronger by the day, Scotland is not immune to the economic downturn.

"Some of our first initiatives in the Scottish Government included tax cuts for 150,000 small businesses and providing the funds to freeze the unfair Council tax for the next three years.  As a nation we have also invested considerably in our green energy future, with, in the last two weeks alone, a total private sector investment of £800m helping to create hundreds of new jobs.  There is real resilience in the Scottish economy in the face of economic downturn.

"However, Scotland only has taxation control over 15 per cent of its fiscal policy and none of its monetary policy which obviously restricts what we can do.  Within these limited powers the Scottish Government is putting in place a series of initiatives to help address the challenges the Scottish economy faces.

"However, what Scotland, and the UK, desperately need is a major recovery package – action now from those who currently have responsibility to act.

"I urge the Prime Minister to come out of his bunker and tackle the deflationary forces in the economy.  Action must be taken to resurrect consumer confidence and thus to stabilise asset values, to moderate the rising energy costs which are hammering hard pressed business and households across the country.

"Given the Prime Minister has boxed himself in on monetary policy, action will have to be taken on fiscal policy. 

“Brown has surrendered any influence on interest rates and the Bank of England Monetary Policy Committee shows no sign whatsoever of reducing interest rates in the face of inflationary pressures. 

“Nonetheless there is room for manoeuvre in fiscal policy and a substantial economic boost is necessary.  For example the net borrowing forecast for this year was £43 billion.  The equivalent figure in the last downturn in 1992/93 was £68.2 billion. 

“Since inflation is rising fast then the heart of the economic initiative should be to bear down on the rising prices which are destabilising the economy as well as household budgets.

“Given that the Prime Minister, as Chancellor, gave a categorical assurance of no further changes in offshore oil taxation for this Parliament in December 2005 when he levied the latest supplementary corporation tax charge he will need to look onshore for a windfall contribution from the private sector.  In any case offshore taxation rates reach 75 per cent.  The biggest windfall gainer offshore is the Chancellor himself whose oil revenues are heading for £15 billion in the current financial year.

"However, there is no doubt that both the Treasury and the energy companies are seeing windfall revenues from higher oil and energy prices.  Taxpayers and consumers deserve a share of that windfall – to protect hard-pressed families struggling to meet their monthly bill payments.

"The Government and indeed the companies have a responsibility here and both must act now.  Given the windfall gains of the energy supply companies from emissions trading contracts there is a strong case for a windfall tax.  – a case made recently and powerfully by the all-party, House of Commons Business and Enterprise Committee.

“Certainly the idea that power companies can return super profits and dividends while pensioners are plunged into fuel poverty, and businesses are thrown onto the rocks, is insupportable.

"The Prime Minister is entitled to his holiday at the beach, but that doesn't mean he should have his head in the sand for a moment longer.

“There is no room for further delay - action is needed right now to get a grip on the economy.  This is the time for economic leadership to prevent a further downward spiral and to counter recessionary forces."