The Scottish Government

2. The Scottish data are defined to be GVA per hour worked, as no comparable data on GDP per hour are available. This graph is based on ONS experimental data.

3. The Scottish data are expressed as GVA per hour worked in relation to UK GVA per hour worked - no comparable data on GDP per hour are available (The international comparisons are based on ONS experimental data).

4. HM Treasury, Budget 1999: Building a Stronger Economic Future for Britain, March 1999.

5. Available online at http://greenbook.treasury.gov.uk/.

6. On 19 July 2004, Sir Tony Atkinson published the interim report. This report is available on the ONS website: www.statistics.gov.uk/.

7. The Scottish Executive has full discretion over its spending decisions. However, it raises only a relatively small part of its funds locally. The majority is provided by an annual transfer from the UK Government. At this time, most tax raising powers are reserved to London.

8. Explicit in the current arrangements under Scottish devolution is the basic principle that the same broad level and quality of services will be provided across the UK for each type of service, irrespective of regional differences and the revenue generated from each region. Indeed, this was the key principle underlying the Treasury's (1979) Needs Assessment Study.

9. Each non-domestic subject in Scotland is assigned a rateable value by independent regional assessors, based upon an estimate of the annual open market rent the property would generate. The level of tax levied is then determined by multiplying a subject's rateable value by the nationally set poundage rate. The Executive determines this rate each year. Revaluation of non-domestic subjects takes place every five years with the next revaluation in Scotland to take effect from 1 ^st April 2005.

11. Or compared to the increases the Scottish Budget received in the 2002 Spending Review - in total the Budget will grow by over 4bn from 2002-03 to 2005-06.

12. Other arguments might be cited in addition: for example, the costs of introducing this variation would not be trivial; and many have also argued that the establishment of a differential tax rate as between Scotland and the rest of the UK would provide a disincentive for individuals to reside in Scotland.

13. See Scottish Planning Policy (SPP) 2 Economic Development.

14. See Draft Budget, 2004-2005.

15. Women's Equality Unit (November 2002), "The impact of women's position in the labour market on pay and implications for UK productivity".
( http://www.womenandequalityunit.gov.uk/publications/weu_pay_and_productivity.pdf)

16. see Social Justice, a Scotland where everyone matters, Indicators of progress: Definitions, data, baseline and trends information - Annex to the Social Justice Annual Report 2002 ( http://www.scotland.gov.uk/library5/social/emsjt-00.asp)

17. Building a Better Scotland: Spending Proposals 2003-2006; Partnership Agreement (2003).

18. Building Our Future: Scotland's School Estate, produced jointly by the Scottish Executive and COSLA and launched in February 2003, sets the strategic framework for the improvement of the school estate in Scotland over the long term.

19. Department for Education and Skills (2003), Building better performance: an empirical assessment of the learning and other impacts of schools capital investment, Research Report No. 407.

20. Results of the 2003 day care census http://www.scotland.gov.uk/stats/bulletins/00264-00.asp

21. The problems in Scotland are shared with the rest of the UK and this chapter draws heavily upon work done by DfES to support their Skills Strategy launched in July 2003. DfES (2003), Skills Strategy: Underlying Evidence.

22. OECD (October 2002), Education at a Glance.

23. Some of the higher returns to academic qualifications may be explained by selection bias if they attract the more able students.

24. Scottish Executive (2001), Adult Literacy and Numeracy in Scotland.

25. Department of Trade and Industry (2003), Economic Impact Study of the South Dundas Township Fibre Network.

26. Total Health expenditure figures cannot be given since the level of private Health expenditure in Scotland is not known. However, across the UK, Private Health expenditure only accounts for 1.3 per cent of GDP (OECD Health Data 2004).

27. HM Treasury (2004), Public Expenditure Statistical Analyses 2004, table 8.10.

28. R.W. Fogel (1994), "Economic Growth, Population Theory and Physiology: The Bearing of Long- Term Processes on the Making of Economic Policy", The American Economic Review84, pp. 369-395.

29. S. Ahn & P. Hemmings (2000), " Policy Influences on Economic Growth in OECD countries: An evaluation of the evidence", OECD Economics Department Working Papers no. 246 .

30. W Carlin, J Haskel and P Seabright (January 2001), "Understanding the essential facts about Capitalism: Markets, Competition and Creative Destruction", National Institute Economic Review.

31. N.Crafts and M. O'Mahoney (2001), " A Perspective on UK Productivity Performance", Fiscal Studies, vol. 22, no 23.

32. DTI (2003), Competing in the Global Economy - the Innovation Challenge: Annex B, DTI Economics Paper No. 7, HMSO.

33. The Survey of Entrepreneurship 2003 was commissioned jointly by the Department of Trade and Industry's Small Business Service and the Scottish Executive and was published in July 2004.

34. The Global Entrepreneurship Monitor was published by the Hunter Centre for Entrepreneurship at Strathclyde University in February 2004.

35. In December 2000, Scottish Enterprise announced an independent review of progress with the Business Birth Rate Strategy since 1993. The Fraser of Allander Institute published its report in June 2001. Following the review and consultation with the private sector, Scottish Enterprise introduced its new strategic approach for entrepreneurship in February 2002. Focus is now on short-term attainable targets.

36. Provision of advice and support for businesses in Scotland is a matter for Scottish Enterprise and Highlands and Islands Enterprise. The Scottish Executive continues to work closely with both of these organisations to improve business start-up and survival rates and ensure easy access by new and existing small businesses, in all sectors, to the advice and support they need to develop and grow.

37. The problems in Scotland are shared with the rest of the UK and this chapter draws heavily upon work done by DfES to support their Skills Strategy launched in July 2003. DfES (2003), Skills Strategy: Underlying Evidence.

38. Influential studies by NIESR used "matched" plants, comparing establishments in the UK with similar establishments in continental countries.

39. Futureskills Scotland commissioned a Scottish Employer Skills Survey in 2002 and 2003, and plan another in 2004 They have also published reports on the labour market in Scotland, with further local details on their website, and reports on individual industrial sectors and on the labour market in rural Scotland.

40. S. Carter et al (2002), Lifting the barriers to Growth and Survival, FSB.

41. E. Argirova et al (2003), Omnibus Survey of Small Businesses in Scotland 2002, Scottish Executive.

42. DfES (2003), The Level of Highers Qualification held by Yong People and Adults: England 2002, SFR 03/2003

43. This complements a survey that has been carried out in England each year since 1999.

44. D. Bosworth and S. Massini (2000), Management Skills and Skill Deficiencies, Council for Excellence in Management and Leadership.

45 . M. Porter and C. Ketels (2003), UK Competitiveness: moving to the next stage, DTI Economics Paper No. 3.

46. Scottish Enterprise: http://www.scottish-enterprise.com/sedotcom_home/sig/sig-creative-industries/creative_industries-key_facts.htm?siblingtoggle=1

47. P. Edwards, J. Black (Warwick University) and M. Ram (De Montfort University), "The Impact of Employment Legislation on Small Firms : A Case Study Analysis", November 2003.

48. Databuild, "The omnibus Survey of Small Businesses in Scotland", September 2003.

49. Committee on the Medical Effects of Air Pollution: Quantification of the Effects of air pollution on Health in the UK, January 1998.

50. Cabinet Office, Performance and Innovation Unit (February 2002), "The Energy Review"http://www.number-10.gov.uk/su/energy/9.html

51. Scottish Executive ,( March 2003), "Securing a Renewable Future: Scotland's Renewable Energy".

52. DTI in association with Scottish Executive, Scottish Enterprise, Highlands & Islands Enterprise (January 2004), Renewables Supply Chain GAP Analysis Report.

53. Full details of the Review of Housing Supply can be found at: http://www.hm-treasury.gov.uk/media//B3F15/barker_review_report_494.pdf

54. he full analysis from which these extracts are drawn has been published on the Scottish Executive website and can be found at: http://www.scotland.gov.uk/News/Releases/2004/07/5777.