Scottish devolution can give NI food for thought
Nicola Sturgeon, First Minister of Scotland, has posed an innovative series of policy questions that will be a significant test of the skills and understanding of the scope of Scottish devolution. The Scottish Government is trying to influence an economy that is lagging behind overall UK performance and is facing budgetary problems as oil taxation produces reducing annual revenue.
Already the Scottish Government has found money and ideas that have created major local gains. Residential care for the over-65s is free and Scottish students pay no university fees in Scotland, for example.
Within the constraints of the existing devolution arrangements and the devolved budget, these proposals represent an enhancement of the influence of the Scottish Government on a wide range of policies.
The Scottish Government hopes to come up with policies acceptable to the UK Treasury that should make for a more successful Scottish economy.
Should Northern Ireland learn from the evolution of these ideas? There are distinct parallels to be considered for this region. However, there are also policy differences from which both devolved administrations might learn a number of lessons.
Even before the announcement of the latest Scottish programme, there was a sharp divergence on ambitions for fiscal policy. The Barnett formula determines the size of the devolved budget in both areas. Although the size of discretionary government spending in Scotland and Northern Ireland differs to give Northern Ireland a proportionately higher per capita public sector spend, both administrations have broadly comparable budgets and degrees of discretion.
Both Scotland and Northern Ireland have sought permission to vary some aspects of taxation, each constrained by a Treasury requirement that any fiscal concessions should be offset by changes in the Block Grant as determined by Barnett principles.
Although not yet implemented, Northern Ireland has sought agreement to vary the rate of corporation tax. In Scotland the preference has been to have flexibility in the administration of income tax. Already some differences in income tax rates on higher incomes have been made so that, interestingly, higher income earners pay more than in the rest of the UK.
Recently the Scottish First Minister announced "the time is right to open a discussion about how to use tax powers (to) help build the kind of country we want". This has been interpreted as willingness to consider higher income tax levels to help finance improved policies to tackle poverty and inequality. The Scottish First Minister, implicitly accepting the need to live within the available budget, has opened the prospect that Scotland may:
1. Deliver a real-terms increase in the revenue budget of the NHS;
2. Extend the scheme for free personal care for the over-65s;
3. Break from parity on some aspects of public sector pay rates, lifting the 1% pay cap;
4. Work to build a Scottish social security system based on dignity and respect;
5. Seek proposals from a poverty and inequality commission to advise on actions to reduce poverty;
6. Research the feasibility of introducing a basic income for every citizen.
In addition, the Scottish Government is considering how the new Land Commission can influence the supply and cost of land for housing and the potential for "some form of land value-based tax".
In a proposal that goes further than plans in England, the Scottish Government hopes to phase out new petrol and diesel cars by 2032, eight years ahead of Westminster.
This is an ambitious agenda. If it is to be successful, it needs serious efforts to improve the delivery of services in the public sector. It also sets challenges for the Northern Ireland Executive in considering these ideas as part of the next Programme for Government.
Company report: Haldane Shiells Group
Haldane Shiells Group consolidates the results for Haldane Fisher and several other subsidiaries, including GE Robinson and further subsidiaries in England.
The group also has a subsidiary based in the Isle of Man. The company’s main business units are located in both Belfast and Newry.
The diverse range of interests includes importing and machining of timber and the provision of building and plumbing materials.
As with other businesses supplying the building industry, this group has enjoyed a recovery in turnover and profits since 2012.
For the five prior years the group had to trade in an increasingly competitive market with reducing turnover.
The high point for annual turnover was in 2007 when it reached £102m.
Turnover decreased sharply in 2008 and 2009 and then fell more slowly to £68m in 2012. Now turnover has increased by over a third in the last four years.
Operating and pre-tax profits have improved sharply since 2012, but have not quite regained the levels of 2007.
Nevertheless, operating profits in 2016 recovered to £4.1m, well over 4% of turnover.
The group has annually allocated dividends to the shareholders costing just over £604,000 in 2016.
Market conditions for the whole group continued to improve in 2016.
The directors of the company report that the Haldane Fisher businesses enjoyed considerable growth in the plumbing and heating market where they benefited from the launch as a new brand — Plumbmaster.
In support of plans to increase market share, using both organic growth and strategic acquisitions, the group acquired the business of Craven Timber (Batley) at the end of January 2017.
Employment in the group rose appreciably in 2015 to an average of 522 people. Then in 2016, employment fell slightly to an average of 504 people.
The balance sheet value of shareholders’ funds reached a new peak in December 2016 at £32.1m.