A Wealthier and Fairer Scotland

We have no doubt Scotland can be wealthier and fairer.

Increasing the living standards of people across Scotland, especially the most disadvantaged, is central to our actions this year and in the future. On the economy, as in other areas, it is our intention to govern effectively and in partnership with Parliament.

We believe that Scotland can match the success of similar countries - Ireland to our west, Iceland to our north and Norway to our east, nations that sit at the top of world wealth league tables and form an arc of prosperity around our shores. Scotland has important lessons to learn from each of these neighbours in terms of competitiveness, investment and economic growth and it is the SNP Government's job to offer a vision for Scotland that enables us to match, and we hope exceed, their achievements.

Over the last generation, Scotland's economy has underachieved. Our growth has been unspectacular and certainly disappointing by international standards, averaging just 1.8% over the past 30 years - roughly half of the average rate of growth for small independent European countries.

We believe that Scotland, with its tremendous assets - not least it’s well educated and innovative people - is capable of achieving much more. That is why we have put sustainable economic growth at the heart of our programme for government.

It is time Scotland's economy and society flourished, and the measures we will take in this Parliamentary year are designed to create the conditions which will allow Scotland to achieve greater success.

Our approach involves:

Ø Creating an attractive business climate that delivers a competitive edge and more Scots in better paid jobs;

Ø Creating greater fairness and more opportunities for people in all parts of Scotland to share fairly in the greater national prosperity; and

Ø Enhancing the key building blocks for faster, more sustainable economic growth, including education, transport, planning and housing.

As a start, we will publish our Economic Strategy for Scotland, with challenging and achievable targets.

For example, our ambition for this Parliament is to raise Scotland's growth rate to the UK level by 2011. The Government Economic Strategy sets out the steps we will take to achieve this and other targets around competitiveness, productivity, population and business growth.

The first year

During our first year in government, we took a number of important first steps that will set strong foundations for future Scottish success:

• Announced detailed plans to reduce number of public bodies by 25%
• Signed historic Concordat with COSLA setting out a new relationship with local government.  Removed ring-fencing, enabling councils to allocate resources in line with agreed national and local outcomes and have received a draft Single Outcome Agreements from each Local Authority.
• Fully funded a freeze in the Council Tax
• Proposals for Local Income Tax published
• Introduced first phase of Small Business Bonus Scheme
• Published the Government Economic Strategy
• Created a Council of Economic Advisers to advise on how to improve Scotland’s sustainable economic growth rate.
• Secured Parliamentary approval for our budget
• Go-ahead for extension to the M74
• Ferry fares to be cut by up to half on all W Isles-to-mainland routes under new pilot scheme
• Removed tolls on the Forth and Tay bridges
• Refocused Scottish Enterprise and Highlands and Islands
• Tripled funding to help householders, small businesses and communities generate clean energy.
• Biggest wave energy project in the world given the go ahead
• Determined 13 renewable applications including for Scotland’s second largest wind farm at Harestanes)
• Increased support for the Third Sector by more than a third.
• Published our three year Spending plans in November 2007, including the National Performance Framework
• Set out our Infrastructure Investment Plan to promote investment in Scotland, and for the first time, covering plans for the whole of the public sector.

The year ahead

In the year ahead, alongside our Budget setting out our more detailed plans for using the resources of government, we are bringing some important supporting measures before Parliament for discussion and approval. We believe that, by working together in this way, we can deliver the sort of economic progress that will put Scotland firmly on a course for long-term success:

• We will build on our work to simplify the public sector delivery landscape and, in particular, have announced practical measures to refocus the work of the enterprise agencies. This will give the enterprise network better strategic direction and make it easier for businesses to get the practical help they need;
• We will encourage quicker and simpler business regulation - not least by creating a single environment and rural service to businesses who have dealings with SEPA, SNH and other regulatory bodies;
• We have published a consultation paper including proposals for improving Scotland's housing so that it supports economic growth and meets the current and future needs of Scotland's people. We have already announced the intention to pursue the creation of a Housing Support Fund to lever-in private finance to support first-time buyers. The Budget contained proposals for almost £1.5 billion of investment in Scottish housing;
• Legislation to remove tolls on the Forth and Tay Bridges has been passed by Parliament, delivering a welcome boost to the economies of Tayside and Fife; and will move forward with plans to deliver a replacement Forth Bridge. We will also explore ways of creating greater economic opportunity in the Western Isles and other remote parts of Scotland through reduced ferry fares;
• We will continue to support and improve our creative sector. Culture is good for Scotland in many ways, not least in terms of generating jobs and income for our economy. We agree with the planned proposals to enable the establishment of a new cultural development body, Creative Scotland, to replace the Scottish Arts Council and Scottish Screen. We believe this measure will be important for supporting a stronger creative sector in Scotland and we will, therefore, introduce legislation in the spring;
• We will ensure that the work of Creative Scotland will be informed by what emerges from the Scottish Broadcasting Commission, which we announced in 2007. We are clear that good links must be created and maintained between the creative industries and broadcasting;
• We will implement a £1.6bn programme to support business ventures and other ways of developing and diversifying the economy of Scotland's rural areas, while making those areas attractive for visitors and for those who live there;
• We will continue to develop Scotland's international aid programme in conjunction with the Scottish agencies and also continue to raise Scotland's overall international profile;
• We will begin detailed consultation on our proposals to replace council tax with a local income tax based on ability to pay;
• We will also introduce legislation to develop fair and consistent rules for the application of interest rates to payments of debt and damages in Scotland. This follows from recommendations made by the Scottish Law Commission and will reform an area of law that currently dates back to the 19th Century;
• We will continue to promote social cohesion within Scotland as part of the 'One Scotland' campaign. This will include efforts to achieve equality of life chances and equality of opportunity to share in Scotland's success between various communities and faith groups.

This package of measures will help put us further on track to becoming a wealthier and fairer Scotland.

Scotland's people have the talent, the ingenuity and the ability to compete effectively in increasingly global markets and therefore to grow national prosperity. Scotland's towns, cities and rural areas have huge economic potential. Our job as a government and Parliament is to create the best possible environment for business and personal success that improves the lives of individuals and families across all of Scotland. With this vision in mind, we will continue to move forward together so that Scotland flourishes in the decades to come.

Some highlights from the Budget

To help achieve a wealthier and fairer Scotland, the Scottish Government will as a result of the Budget:

• reduce or remove rates bills for around 150,000 small business properties across Scotland;
• provide funding for a freeze in council tax for the next three years;
• increase investment in Scotland's strategic transport networks, providing over £2.5 billion by 2010-11 to support the efficient movement of goods and people;
• increase support for ferry services by £37 million over the three years to 2010-11;
• invest £5.24 billion (£1.67bn/£1.75bn/£1.81bn) in the further and higher education sectors, on top of the extra £100 million capital funding package we are providing in 2007-08, to maintain the competitiveness and effectiveness of these sectors;
• launch the first ever Saltire Prize, with a £2 million annual fund to recognise innovation and a £10 million horizon prize - with the first challenge in 2008 focusing on renewable energy;
• support an enterprising third sector with a £63 million (£19.2m/£22.2m/£22.2m) development programme and a £30 million (£4.0m/£10.0m/£16.0m) Scottish Investment Fund to encourage greater investment in assets, business development and the skills of those working in the sector;
• support record levels of investment by Scottish Water's £2.5 billion infrastructure programme, which will deliver efficiency and levels of service to customers that match the best in the sector; and
• implement a £1.6 billion Rural Development Programme over seven years, including almost £200 million to improve the sustainability of Scotland's farming and forestry sectors.