5. To ask the Scottish Government what its response is to the recommendations outlined in the final report of the economy 2030 inquiry, “Ending Stagnation: A New Economic Strategy for Britain”, as they relate to public finances in Scotland, including those relating to taxes and local government investment. (S6O-02970)

We welcome the report. In particular, I agree with its assessment of the United Kingdom economy as a “stagnation nation” characterised by low growth and high inequality. That combination has led to a fall in UK living standards relative to peer economies. The report also recognises the UK’s poor record on public investment relative to other countries in the Organisation for Economic Co-operation and Development and the need to provide sustained investment.

That is the key reason why Scotland needs full powers to drive economic growth—powers that independence would transfer to the Parliament so that we would no longer be held back by the UK Government’s anti-growth policies. Using the powers that we have, we will continue our efforts to grow the economy in Scotland, reduce inequality and invest in public services across the country, to deliver a wellbeing economy.

The Tories have imposed the highest tax level on record. Meanwhile, income inequality in the UK is higher than in any comparable European economy. The report calls for better, not just higher, taxes. Yesterday, we discussed the visitor levy, which is a common form of income generation in Europe. Does the minister agree that, although most taxpayers in Scotland continue to pay less income tax than in the rest of the UK, we remain hamstrung by the majority of UK tax policy and are prevented from fully delivering a fairer tax system and reducing income inequality?

I agree. There are two fundamental issues. First, the number of fiscal powers that are reserved to the UK Government means that we are exceptionally limited. Secondly, there is the way in which the UK Government conducts fiscal policy. Beyond the catastrophic mishandling of the mini-budget, we still have a cycle of fiscal events that seek to serve political purposes more than to soundly manage public finances. For example, we are still to find out what our final budget position is for this year through supplementary estimates. With regard to the financial position for next year, we are awaiting a budget on 6 March, in which—potentially or potentially not—rabbits may be pulled out of the hat. That is not a way to govern public finances, and it stands in stark contrast to the Scottish Parliament’s approach where, collectively operating within those restrictions, a budget is introduced and scrutinised long in advance of the start of the financial year. There is much that the UK Government and, indeed, the UK Parliament could learn from the way in which we do things in this chamber.