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FAI Economic Commentary: Tackling regional economic inequalities

Tackling regional economic disparities has been a priority of successive governments in both the UK and Scotland.

The UK Government’s Industrial Strategy is their latest attempt, with regional growth 1 of 5 ‘foundations of success’. Here in Scotland, ‘cohesion’ – or its new term ‘regional inclusive growth’ – has been a feature of the Scottish Government’s Economic Strategy since 2007.

It is hard to disagree that a country will be economically stronger if every region has the opportunity to fulfil its potential.

However, Scottish and UK policy history is littered with well-intentioned – but ultimately ill-fated – attempts to narrow the gap in economic performance between regions. Many of the challenges are deep-rooted and structural, whilst attempts to tackle them throw-up challenging trade-offs and political risks.

Land value taxation: some issues

Sam MacArthur is a fourth year undergraduate economics student at the University of Strathclyde and had a summer internship in the Fraser of Allander Institute supported by the Carnegie Trust. This blog summarises some of Sam’s research from last summer into some of the issues around land value tax.

The Scottish Government recently released their Programme for Government 2017-2018, ‘A Nation with Ambition’, which reiterated their commitment to land reform.

Consequently, the newly formed Scottish Land Commission have been tasked –among other things- with carrying out and commissioning research into “a range of radical options for further land reform in Scotland, including the potential for a land value tax”.

In recent years, calls for a land value tax (LVT) have moved into the mainstream of political debate in Scotland, driven by perceived criticisms of the current system of local taxation, the Council Tax. One concern with fundamentally reforming the existing system is a concern about the potential impact of this change on different household types across Scotland. The lack of detailed analysis on this point is hindering fuller debate.

This blog reports on some work I undertook while completing a Carnegie Vacation Scholarship at the Fraser of Allander Institute this summer. It begins by briefly reviewing some conceptual issues in implementing local taxation, before moving to consider how (in principal) we might produce some estimates of land values.

The NDRI pool…

As the Scottish Budget for 2017/18 has passed through Parliament, the operation of the Non-Domestic Rates pool has risen to prominence. It has provided the Cabinet Secretary for Finance with flexibility to support local government spending and ease the burden of the revaluation to business rates.

So how does the NDRI pool work and what could be the implications over the medium term in the light of the additional cash taken from it to get the budget passed this year?Continue reading

Tracking local labour market performance since the Great Recession

On Friday, we published the latest edition of our new quarterly publication – Labour Market Trends – with our colleagues in the Scottish Centre for Employment Research.

The aim of the report is to highlight recent developments in the Scottish labour market and to bring to the fore some of the structural issues that underpin long-term trends in employment, unemployment and activity levels in Scotland.

This quarter we highlight a number of important issues, including the recent rise in inactivity and the uncertainty surrounding interpreting changes in the key headline employment and unemployment data for Scotland.