The great skills gap gamble as SNP is warned over tax hike

SCOTLAND’S economy faces the threat of a growing skills gap this year because of the SNP’s decision to increase tax rates, business leaders warn.

In a New Year’s Day message, the Scottish Chambers of Commerce says forcing middle and higher earners to pay more tax will result in ‘losses in talent and investment’.

The business group also demanded action to improve Scotland’s ‘underperforming’ economy amid dire growth forecasts and said the top priority should be addressing severe skills shortages in many industries.

Opposition politicians said the SNP must take responsibility for the impact its decisions will have on the economy – and also condemned Health Secretary Shona Robison for claiming Brexit is to blame for recruitment ‘challenges’ facing the NHS.

In last month’s Budget, SNP ministers opted to make 1.1million Scots earning more than £26,000 a year pay higher rates of income tax than people south of the Border.

Scottish Chambers of Commerce president Tim Allan said that, with no elections or referendums in the next 12 months, the top focus should be ‘growing Scotland’s economy’. He said economic forecasts ‘paint a challenging picture for the UK and for Scotland’ and pledged to ‘press our governments to help business to thrive. This means improving the supply of skilled people.’

Mr Allan added: ‘On tax, we will reinforce our view that gains from even marginally increased taxes on middle and higher earners may be outweighed by losses in talent and investment if Scotland is seen as the highest-taxed part of the UK.’

Mr Allan said that ‘for better and worse, Scotland’s political leaders have made their decisions in full knowledge of the views of the nation’s wealth creators’.

In a Budget that will shrink the pay packets of nearly one in three workers, Finance Secretary Derek Mackay added a new lower 19p ‘starter rate’ to the first £2,000 of taxable earnings but then imposed a new 21p ‘intermediate’ tax band at £24,000, while higher rate taxpayers will now pay a 41p rate instead of 40p and the top rate of tax will increase to 46p.

In acknowledging the NHS skills shortages yesterday, Miss Robison blamed Brexit, saying recruitment would be harder outside the EU s ingle market. Scottish Tory finance spokesman Murdo Fraser responded: ‘Now the SNP has confirmed its damaging plan to hike taxes, it must take responsibility for the consequences. Instead, it’s pointing the finger at everyone else.’

A Scottish Government spokesman said: ‘Our tax reforms, based on economic growth and revenue estimates from the independent Scottish Fiscal Commission, are needed in order to protect public services, and support our economy in the face of continued austerity cuts from the UK Government.’

‘Pointing finger at everyone else’