Sir Tom Hunter slings Singapore challenge

When Sir Tom Hunter delivers a stern message to Scotland – it is up to our policymakers to sit up and listen very carefully.

You can sense his rising ire about the state of our nation in a scathing new report, which is likely to play a significant part in the economic debate and as an election backdrop over the next 12 months.

“The current state of our nation does not reflect our potential. In education, we have had falling standards for the past 20 years. Our health outcomes are the worst in Europe and amongst some of the worst in the world. We are sitting on a demographic ticking time bomb – the number of people over the age of 85 will double in the next 20 years while the number of working age citizens will decline,” he says. 

“We once led the world in almost all key areas from invention to education; commerce to philanthropy. Phones, TV and penicillin all came from Scotland and Glasgow was the second city of the Empire,” he adds.

He is spot-on when he says Scotland’s business leaders and politicians must unite to reverse the country’s ‘managed decline’.

The Hunter Foundation commissioned an independent study by Oxford Economics that draws on the lessons and successes of Singapore – one of the world’s most prosperous nations – to hopefully inform a debate on Scotland’s future.

The findings delve into the strategies used to transform its economic outlook over the past 60 years from a country with a GDP per capita less than a quarter of the UK’s, to the eighth highest GDP per capita globally, surpassing the UK along the way.

Sir Tom Hunter said: “Singapore and Scotland are two small countries with similar sized populations, but significantly different economic outlooks. Why are they getting it so right when we are going backwards in managed decline?”

The report delivers some compelling facts from Singapore juxtaposed to modern Scotland.

• Productivity per worker was £100,000 compared with Scotland’s £57,000;
• Public administration, education, and healthcare account for 25% of Scotland’s output and 30% of its workforce juxtaposed to a mere 7% of output and 12% of employment, respectively, in Singapore;
• Permission to build a warehouse in Singapore is 35.5 days. Here, at best 152.3 days; and;
• The highest tax band in Singapore, 24%, and in Scotland, double that to 48%.

“It’s not outrageous to think we could reclaim our place on the global stage once again, but we need to be truly radical, bold and ambitious if this is to be achieved.” Hunter continued.

Sir Tom Hunter added: “The status quo is completely unacceptable. Change needs to come and it needs to be radical – tinkering will only yield further decline.

“The most important lever available to incentivise entrepreneurs and business is tax. Neither the Scotland or UK governments have chosen to use these levers to their full potential.

“Let’s make Scotland a low tax economy where we welcome entrepreneurs and wealth creators. They will innovate, create new jobs, and our tax take will go up allowing Scotland to spend more on education and health care.

 “The UK and Scottish Governments continue to punish the entrepreneurial community – the value creators – with yet more tax. A different tack needs to be taken. Nothing is free in Singapore, but here everything seems to be, and the Pound printing machine can’t keep up. No country has ever taxed its way to growth.

On taxation, the report explains: “Tax rates tend to be lower in Singapore, although comparisons are complicated by varying rates, exemptions, and tax structures. As a purely indicative example, Singapore’s Goods and Services Tax (GST), a consumption tax roughly equivalent to VAT, is currently set at 9%, whereas the standard VAT rate in the UK is 20%.”

“Meanwhile, the highest tax band on personal income has a rate of 24% (for revenues over SGD $1 million) in Singapore, compared to 45% in the UK and 48% in Scotland (for revenues over £125,140). Comparing company taxation is more complex.”

In Singapore, companies are taxed a flat rate of 17% on their chargeable income, whereas in the UK, the rates for corporation tax are set at 19% and 25% of profits. There are many exemptions and reliefs in both countries, and a thorough analysis would be beyond the scope of this report—however, data suggest a roughly similar proportion of gains in both countries

……..

“To build Scotland’s economy and the future for the next generation of Scots we need a low tax regime, a new model for health and social care, and a housing and planning policy that works in an accelerated manner,” he says.

Sir Tom says Scotland needs a ‘coalition of all the talents, political, business, civil society’, to unite around a ten-year plan and draw our world class talent together as one.

“Leadership is key and perhaps we need to rethink how we reward our leaders – the Prime Minister of Singapore is paid $2.2m and our First Minister £165K. Why? Let’s unite to build and deliver a growth strategy for Scotland.”

The Hunter Foundation has tabled ideas to encourage discussion including:

• A new immigration policy fit for Scotland’s demographics and different to the rest of the UK.  The companies with the best talent win and the countries with the best talent win – it’s as simple as that.
• A 20-year economic plan around renewable energy, carbon capture, housing, and life sciences.
• A one-stop-shop for businesses and inward investors, with one enterprise agency and a singular focus on growth.
• A radical rethink on delivering health and social care including how it’s funded. 

Download the Lessons From Singapore for Scotland’s Economy Report here.

www.thehunterfoundation.co.uk

Read more from The Business in The Big Interview with Sir Tom Hunter here.