The Scottish Government

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2 A WEALTHIER AND FAIRER SCOTLAND

This government has 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 this 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 its 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:

• Creating an attractive business climate that delivers a competitive edge and more Scots in better paid jobs;
• Creating greater fairness and more opportunities for people in all parts of Scotland to share fairly in the greater national prosperity; and
• 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 will detail the steps we will take to achieve this and other targets around competitiveness, productivity, population and business growth.

During our first 100 days in government, we took a number of important first steps that will set strong foundations for future Scottish success:

• We established a Council of Economic Advisers to bring together international experts of the highest calibre to help us develop our Government Economic Strategy. This will provide the vision and the practical measures needed to break the cycle of underperformance in the Scottish economy. The first meeting of the Council will take place on September 21st;
• We began work on our proposals for fairer local taxation. Across the political spectrum in Scotland, there is consensus that a fairer form of local taxation is needed and we have made clear our intention to work with local authorities to freeze council tax at 2007-08 levels;
• We confirmed to Parliament our intention to deliver lower taxes for small businesses in Scotland, freeing the companies that sit at the heart of our local economies to flourish and grow;
• We began work on a Saltire Prize to fully recognise and reward Scotland's next generation of talented scientists and innovators and inspire our young people; and
• We published our national conversation on the future constitutional position of Scotland and, as part of that, we set out the benefits to Scotland's economy that we believe independence would bring.

In the year ahead, alongside our Strategic Spending Review setting out our more detailed plans for using the resources of government, we will bring these 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, we will announce 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 will publish 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;
• We will introduce legislation to remove tolls on the Forth and Tay Bridges, delivering a welcome boost to the economies of Tayside and Fife; and will move forward with plans to deliver a replacement Forth Crossing. 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 recently announced. 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;
• Later this year, we will set out proposals in the Strategic Spending Review to reduce or remove the rates burden for small businesses in Scotland. There has long been a consensus that the current system is unjust for business and the adjustments we will make to the system will create new opportunities for small businesses across Scotland;
• We will also introduce legislation later in the Parliamentary year 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 introduce the annual legislation necessary to give statutory authority to the Scottish Government to spend money out of the Scottish Consolidated Fund in the next financial year. This will set the framework for progress and improvement across all our strategic objectives and, in the likely tight financial environment that will follow the UK Government's Comprehensive Spending Review, will demonstrate how this government will best use our resources to benefit Scotland and the Scottish people; and
• 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 for the coming year 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.

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