It’s foolish to clamp down on immigration
The Herald’s Business Editor presents his analysis on the week that was
THE views of Scottish business leaders on some hot political topics have been very much in focus in the last week. It was good to see, given the great importance of the issue, Scottish Chambers of Commerce president Stephen Leckie warn on Thursday of the impact on businesses north of the Border of the Conservatives’ plan to hike the minimum salary threshold for a “skilled worker” visa by nearly 50% from April 4.
Scotland, of course, has a need for workers from overseas given its particular demographic challenges. The UK as a whole also faces major difficulties with its ageing population, although the situation north of the Border is particularly acute.
And the challenges facing both Scotland and the rest of Britain have been made a whole lot worse by the Conservatives’ hard Brexit and the ending of free movement of people between the UK and European Economic Area.
Businesses, meanwhile, have faced a greatly intensified skills and labour shortages crisis as a direct result of the Tory hard Brexit.
From April 4, the minimum salary to be sponsored for a skilled worker visa will jump from £26,200 to £38,700.
Mr Leckie, presenting the findings of Scottish Chambers’ latest quarterly survey, said: “Changes to the UK immigration system also threaten to harm Scotland’s attractiveness, with a planned 50% rise in the minimum salary threshold for a skilled worker visa from April. This policy alone will make it impossible for many Scottish businesses to hire international staff as the salary threshold is far higher than Scotland’s average wage.”
This is a crucial point, which should surely be simple enough for any government to understand.
Mr Leckie also declared, quite justifiably, that the “UK Government must adopt a business-friendly approach which aligns with Scotland’s economic needs”.
Hard Brexit
THE fact he is absolutely right in this assertion does not, sadly, make it any more likely that the ruling Conservatives will do any such thing.
Their hard Brexit is a prime example of them doing quite the opposite, in fact. A survey from the Institute of Directors in Scotland last week also highlighted the challenges facing Scottish businesses in finding the skills they need.
Only 54% reported they were confident of being able to recruit sufficient skilled staff in the next 12 months, down from 57% last year. This is clearly not a good situation.
Catherine McWilliam, nations director for Scotland at the IoD, said: “The skills gap continues to be a key concern for our members.”
Both the surveys from the IoD and Scottish Chambers also highlighted views from the business community on the growing divergence between income tax in Scotland and that in the rest of the UK.
The divergence for higher earners is widening further as a result of measures announced in the Scottish Budget last December.
Around 82% of business leaders in Scotland expressed concern about income tax divergence in the IoD survey.
Asked how much of a concern income tax divergence in Scotland is for them or their primary organisation, 54% of respondents said it was a “serious concern”. And 28% declared it was a “slight concern”. Meanwhile, 14% said it was of “no concern”. When asked if the concern is serious about the areas on which divergence would have an impact, 39% flagged “hiring”, 27% said “investment”, and 34% opted for “choice of location”. Scottish Chambers also flagged concerns among businesses over income tax moves in Scotland.
Mr Leckie said: “Closer to home, businesses continue to express major dissatisfaction with tax policy direction from the Scottish and UK governments.
“Businesses are concerned about the impact of income tax divergence between Scotland and [the] rest of [the] UK in attracting and retaining talent.
“The message from businesses is clear – we need governments north and south of the
Border to reduce the tax burden.”
Room for debate
PEOPLE will, of course, have different views on whether or not higher earners in Scotland should pay more in income tax, through use by the Scottish Government of its devolved powers.
Those who support the divergence on income tax could point to very good uses of revenues by the Scottish Government. Free university tuition for people living in Scotland and the Scottish child payment are two fine examples.
Free university tuition seems very sensible indeed from a social perspective, ensuring not only those with the deepest pockets can seize this opportunity without having to saddle themselves with huge debt.
It is also vital for the Scottish economy in terms of its crucial part in enabling a highly skilled workforce. The Scottish child payment, for low-income families with children under 16, is obviously desirable from a social perspective, particularly given the grim economic times that people in the UK as a whole have had to endure for so many years now.
It also, of course, has a major economic benefit in terms of putting a bit of extra money into the pockets of those who have to spend all of what they have to live, boosting aggregate demand and supporting growth. So there is clearly room for debate over the use of devolved income tax powers. In contrast, the Tory hard Brexit and lamentable clampdown on immigration seen already, as well as the latest barrier to doing business being erected next month by the Conservatives in the form of the hike in the salary threshold for a skilled worker visa, look like pure foolishness.
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