Given Rachel Reeves lamentable performance as Chancellor to date, she is in dire need of a reminder of the basics of economics and taxation.
At its simplest, when circumstances change, people change their behaviour.
For example, as the tax on tobacco kept going up, many people chose to give up, or smoke less.
Eventually, a succession of Chancellors pushed the tax so high that organised crime started importing untaxed cigarettes. These now account for about a quarter of all cigarettes smoked in the UK, so total revenue has declined.
Predictably, when Jeremy Hunt ended non-domiciled status the foreign billionaires left the UK, taking their spending and investments elsewhere.
Again, unsurprisingly, when Rachel Reeves heavily raised employers’ National Insurance contributions, it caused businesses to fail and destroyed wider confidence.
Ms Reeves needs to understand that beyond a certain point (which, of course, is different for each tax) raising the tax rate will not raise the total yield. (Professor Arthur Laffer’s famous ‘Laffer curve’ is simply a graphical demonstration of this point.)
We’re so heavily taxed in the UK that with the resultant boost in confidence, lower rates and higher thresholds of taxation would actually yield the government more money.
Otto Inglis, Fife.
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Letters: Russia's contempt provides further evidence of the decline of the UK
Economic amateur hour
NOT being a high finance expert, I’m perplexed by a recent article (“Pre-Budget blow for Reeves as government borrowing higher than forecast”, The Herald, November 22).
Who, if not Rachel Reeves our Chancellor, determines the amount of government borrowing? And if it is her, how did she not know it was going to be higher than forecast?
Does anyone have a grip on the nation’s finances?
Or is government finance policy based along the lines of “We don’t really know what’s happening. So let’s just wait and see before deciding at the eleventh hour what on earth to try to do, in the hope of maybe fixing it.”
Has it always been thus?
Alan Fitzpatrick, Dunlop, Ayrshire.
Productive Net Zero alternative
In asking if Scotland’s wind power is being wasted, Charlie McCarthy puts his finger on a major shortcoming of current net zero energy policy (“Scotland’s wind power is being wasted – can battery storage fix it?”, The Herald, November 22).
The answer is a resounding yes; a big waste that adds to our energy prices.
The estimated £1.8 billion paid annually to wind turbine operators to switch off generation when there’s too much wind could surely be better spent.
Mr McCarthy suggests batteries.
There is, however, a more productive and cash-generating alternative already being developed and exploited elsewhere.
The Canadian and German governments have clinched a deal to export clean hydrogen.
The hydrogen is created in large quantities by using wind turbine generated electricity in Newfoundland to crack water into its components of hydrogen and oxygen by electrolysis.
And the stronger the wind, the better.
The hydrogen thus substitutes for natural gas and can be used in a variety of productive ways, not least as a zero-carbon fuel, the emissions being clean water vapour.
To advance the scheme, Ottawa is investing up to $300 million to support hydrogen exports by tanker ships to Germany, while the German government is matching the contribution, in total about the cost of Glen Sannox.
These funds will contribute to the development of electrolysers and port facilities at a fraction of the UK’s current cost of stopping generation in strong winds.
In addition it will generate substantial revenues.
So, if it is profitable to ship hydrogen 3,000 plus nautical miles across the Atlantic to Europe, surely it would be even more attractive to ship it the mere 400 nautical miles from Scotland.
I would have thought the obvious shipment port and electrolyzing centre would be a repurposed Mossmorran.
Surely it’s time for the UK and Scottish Governments to follow Canada’s example and go hydrogen.
The costs saved, enormous revenue generated and jobs created would be the start of the much vaunted, but so far elusive, just transition.
Roy Pedersen, Inverness.
Covid reaction understandable
Letters from Alastair Majury and W. Macintyre bring out an interesting contrast (Letters, November 22).
Mr. Majury is critical of the approach taken by the Scottish government to Covid, and expands this into a wider criticism of its manner of governance (without any convincing link between the specific and the general).
Mr. Macintyre argues for a more sympathetic attitude to those who were in command as the pandemic spread its damage.
Surely Mr. Macintyre has the more reasoned approach.
Covid was a new phenomenon; a "previously unexperienced pandemic" as he neatly puts it.
The truth may be that politicians and others were, to a large and excusable extent, having to devise plans ‘on the hoof’.
In general I’m no supporter of Nicola Sturgeon, but acknowledge the effort she put into communication during those difficult days.
So, it seems, does Baroness Hallett.
The real test will be the effectiveness of planning for any similar event, though let's not forget Mr. Macintyre's recognition of things unexpected.
Brian Chrystal, Edinburgh.
Don’t blame Holyrood
It seems incredible that many of the regular contributors to these pages, who are staunch supporters of the anachronistic and failing Union, don’t actually understand how devolution within the UK functions.
Day after day we read letters blaming the SNP for matters related to energy provision and Scotland’s economy in general, when most of the key decisions are made in London.
It was not surprising that before the last General Election Anas Sarwar attempted to blame the Scottish Government for the cost of living woes experienced by Scots.
Also for strained public services and every other manifestation of broken Britain.
But seventeen months of Labour in power at Westminster has starkly revealed where most of the blame lies, and it is not Holyrood.
Herald letters correspondents should stop providing simplistic sound-bites attacking the SNP, or those supporting the right of Scotland to determine its own future.
It would increase the prospect of sustaining the Union, at least in some form (perhaps as a federation, or more preferable in my view, as a confederation), if these writers openly recognized the UK’s current perilous state and contributed positive ideas on democratically building a sound constitutional basis on which to create a bright future for each of the nations inhabiting these islands.
Stan Grodynski, Longniddry, East Lothian.
Defence not shipshape
It was reported that the Russian spy ship was north of Scotland (“Locals fear power cut caused by Russian ship, The Herald, November 22).
Later, that it was east of Aberdeen.
Meanwhile the Defence Minister asserted that “we would be ready” if it came south, presumably to England.
If the UK wasn’t ready to confront an intruder when it was adjacent to Scotland, then why are Scots paying taxes for defence?
Has Labour decided to only allocate defence budget spending to Scotland proportional to their Fishing and Coastal Growth Fund, which gives Scotland (with 70% of the catch and 58% of UK revenue) a measly 7% share of the total?
Time for a competent Secretary of State for Scotland... or perhaps Douglas Alexander is doing exactly what he was picked to do.
GR Weir, Ochiltree.
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