Inequality Costs £1,600 Per Head

3 March 2015, 07:11 | Updated: 3 March 2015, 07:12

Rising inequality is holding back economic growth, with the cost within the UK estimated at £1,600 per person, according to Scotland's First Minister.

Nicola Sturgeon said the true cost of inequality and austerity can no longer be disputed nor ignored.

She was speaking as she and Deputy First Minister John Swinney prepared to launch an economic strategy for Scotland later today.

The Scottish Government pointed to research published by the Organisation of Economic Cooperation and Development (OECD) in December, which found that increased inequality had reduced the UK's growth potential.

In the UK, rising inequality cost the economy almost nine percentage points of GDP growth between 1990 and 2010, the body found.

The Scottish Government said its own analysis using these and other figures suggests that UK GDP could have been nearly £100 billion higher in 2010 had the UK economy grown at this potential rate.

That equates to approximately £1,600 per person, ministers claimed.

The First Minister said: "Our economic strategy will set out a long term vision based on one fundamental principle: by becoming a fairer society, we will also become a more productive and more prosperous society.

"We want to see economic growth that is inclusive, innovative and fairly distributed. For too long, our economy has been held back by rising inequality as a result of successive generations of Westminster economic policy.

"I have been clear that a key priority for this Government is to tackle the blight of inequality, which serves as a destructive social and economic spiral.

"These figures suggest that had equality and economic growth been confronted with equal importance, then UK GDP would now be approximately £100 billion higher. That is a proposition that simply cannot be ignored.

"That failure of Westminster's economic policy to properly address inequality - and the resultant loss to economic growth - has merely been compounded by the more recent austerity policies pursued by the UK Government and which the Scottish Government is deeply opposed to.

"We are using every lever and platform at our disposal to mitigate the effects of austerity.''

Scottish Labour's finance spokeswoman Jackie Baillie MSP said: "Nicola Sturgeon is right to point out the appalling inequality in Scotland after five years of the Tories and eight years of the SNP in power.

"Scottish Labour has a plan to make Scotland the fairest nation on earth. We will make work pay for all Scots by calling time on zero hours contracts, using the mansion tax to invest in our NHS and raising the minimum wage for those in work.

"We have also set out how we would close the attainment gap by investing £125 million to support working class kids who have been left behind by the SNP Government in Edinburgh.

"That's a powerful vision for making Scotland a better and fairer country.''