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Alternatives would fall short of addressing Scotland’s five key challenges.

The key reasons why Scotland needs the powers of independence - as opposed to just more devolution - were outlined yesterday by Deputy First Minister Nicola Sturgeon.

Addressing a Scottish Council for Development and Industry event in Glasgow, Ms Sturgeon set out the five key challenges Scotland faces and illustrated that only the powers of independence will equip future Scottish Governments to address them.

She contrasted what can be achieved with the powers of independence with the constraints that Scotland would still operate under even if the powers so far suggested by other parties are delivered. She said that the emerging plans for more powers from other parties fall short on three key grounds - substance, lack of a common plan and the absence of any guarantee of delivery.

The Deputy First Minister made the point that successive Westminster Governments and the Scottish Parliament have had the chance to provide Scotland with the powers it needs to tackle the economic and social issues it faces but have fallen short every time - even to the point of ruling out a 'more powers' option in the referendum.

She said that, even on a generous interpretation of what other parties seem prepared to offer in the way of more powers, the Scottish Parliament would still control less than one-third of taxation. She also said that each of the emerging alternative proposals would fail what she describes as the 'childcare test'.

Deputy First Minister, Nicola Sturgeon said:

“The experience of the Scottish Parliament demonstrates that taking decisions in Scotland works, and independence will mean that the gains of devolution will be extended to all areas of government.

“This - and only this - will allow us to tackle the five key challenges facing Scotland:

“How can we build a more sustainable economy better able to withstand the inevitable economic ups and downs? Independence will give us powers over tax and employment. In Scotland’s Future we set out how we would start to use these powers to grow and rebalance the economy, boost productivity and create an environment in which businesses will flourish - the kind of environment in which our existing businesses will want to stay and to which new businesses can be attracted to locate.

We would use tax powers to cut corporation tax. We would halve the rate of Air Passenger Duty, with a view to eventually abolishing it altogether. Both of these policies are examples of how we would seek to give Scottish businesses a competitive edge in the face of the gravitational pull of London.

“Using employment powers we would establish a social partnership approach – with a Convention on Employment and Labour Relations - to address issues such as productivity and the minimum wage.

“We could examine the best way of securing employee representation on company boards and set a target for women’s representation on company and public boards.

“Future independent Scottish Governments would also have powers to boost manufacturing – for example, by looking at issues such as capital allowances and access to finance. And we can use our vast potential in renewable energy as a basis for re-industrialising Scotland and rebalancing our economy.

“With the powers of independence, we can set a clear plan to put our economy on a more competitive, sustainable and inclusive path.

“How can we boost the number of people working in Scotland? Independence will give us powers over immigration and, by putting us in charge of spending and revenue, enable us to transform the provision of childcare in Scotland, a move that is essential if we are to raise substantially the levels of female participation in the workforce.

“The commitment for universal childcare to be available for all children aged one to five, offering the same number of hours as children spend in primary school, will create directly 35,000 jobs. But more importantly, it will enable more parents, particularly mothers, to enter the labour market. If we can reach the levels of female participation in the workforce achieved in Sweden this will mean an extra £700 million of taxes being raised every year.

“In an independent Scotland that tax revenue will stay in Scotland. This is not an ideological point – it is a practical point. It is additional revenue generated by such a policy that will enable us to fund the extra childcare places for the long term. Under Westminster however the taxes would flow to the Treasury in London and the Treasury would decide how much we get back.

“Independence would also enable us to set immigration policy in line with our needs.

“How can we protect, and improve, public services? The need for powers to be transferred from Westminster to Scotland is urgent. On health and education the Scottish Parliament has resisted the privatisation and tuition fees route favoured by Westminster. We have brought forward important reforms such as Curriculum for Excellence and a focus on prevention and early intervention.

“If public spending on health in England is replaced by private money, that will trigger cuts to public spending in Scotland. We already have policy independence in Scotland on health and education. But because of the way public services are funded in Scotland there is a real threat from this Westminster privatisation agenda.

“This will be on top of the UK-wide £25 billion of extra cuts promised by the Chancellor, and the £4 billion of cuts that could hit Scotland if the Barnett Formula is scrapped.

“To meet the challenge of protecting and improving public services it is essential that we gain the full financial powers of independence.

“How can we protect pensions and the post-war welfare state from those at Westminster intent on dismantling social security? A study from the National Institute of Economic and Social Research said it costs between six per cent and eight per cent less to provide the state pension to individuals in Scotland. Yet the age at which people in Scotland can claim the state pension is to rise with no consideration for our circumstances. And far from pooling risk and sharing resources, the current Westminster Government is intent on nothing less than the dismantling of the social security system.

“The Scottish Government’s plan for social security in an independent Scotland is for a system that supports people into work, prioritises employability, integrates with the tax system and provides a safety net that we can be relied upon by all of us in time of need.

“We believe in the universal principle and the imperative to protect the most vulnerable. So we would abolish the bedroom tax, halt the roll-out of Universal Credit and reform pension and welfare arrangements to better protect the position of women in work and in retirement. Choices that are only available if we trust ourselves to run the social security system.

“Lastly, how can we improve living standards and reduce the gap between rich and poor so that we have genuine equality of opportunity for all children in Scotland? Once again there is a clear need for independence. The UK is one of the most unequal countries in the developed world. Living standards have been falling for those on middle and low incomes. And the gap between rich and poor is getting wider. Scandalously it’s been estimated that at least 50,000 more children will – by 2020 - be living in poverty as a result of Westminster policies.

“Those on the lowest incomes have been suffering the most. The minimum wage has consistently fallen behind the cost of living. In an independent Scotland we will have the power to ensure the minimum wage rises, at the very least, in line with inflation.

“The emerging proposals of the other parties are at best inadequate and at worst damaging. They would not equip us with the powers to boost the number of people working in Scotland through sensible immigration policies of transformative childcare. They fail the ‘childcare test’.

“On the key challenges of growing the working population and creating jobs, building a sustainable and secure economy, protecting public services, maintaining a decent social security system and closing the gap between rich and poor we need the powers of independence.

“We need personal tax powers, business tax powers, social security powers, employment powers, powers over Scotland’s budget, powers over the minimum wage, immigration powers and the powers to represent Scotland internationally. In other words, the same toolbox of powers that other independent countries take for granted - if we are to make Scotland the country we all believe it can be.”

Notes to editors

The full text of the Deputy First Minister’s speech can be found at:

http://www.scotreferendum.com/blog/