20 Fraser of Allander Institute
3.7 Wider Benefits of College Learning
In addition to the economic benefits outlined above there are a number of wider social benefits. A number
of studies have shown a link between improved education and learning outcomes and wider social
objectives like reduced crime. (See, for example, McMahon, 2009). There is also some research indicating
that education contributes to changes in attitudes and behaviour that enhance social cohesion. For
example, Feinstein et al. (2002) found evidence of education increasing political awareness and voting.
Scottish Parliament's New Fiscal Powers
The importance of economic growth is all the more vital given the new fiscal powers of the Scottish
Parliament. As Table 11 highlights, the Scottish Parliament is going through a major process of financial
reform. Soon, around half of Holyrood's annual resource budget will depend upon the revenues that are
raised in Scotland.
Table 11: Devolved, shared and assigned tax revenues in Scotland
Tax
Date of transfer/
devolution
Revenues
raised
2016/17 (£m)
Degree of control by
Scottish Parliament
Responsibility for
collection
Land and Business
Transactions Tax
(LBTT)
2015 £466
Fully devolved; complete
autonomy.
Revenue Scotland
Landfill Tax 2015 £149
Fully devolved; complete
autonomy.
Revenue Scotland
NSND income tax 2017 £11,313
The Scottish Government can
set the rates and bands. But the
UK Government defines the tax
base and sets allowances.
HMRC
Air Passenger Duty 2018 £264
Fully devolved; complete
autonomy
Revenue Scotland
VAT 2019 £5,097
Assigned revenues; no
autonomy
HMRC
Aggregates Levy tbc £59
Fully devolved; complete
autonomy
Revenue Scotland
Source: Government Expenditure and Revenue Scotland (GERS)
This means that faster growth is now fundamental to the amount of money that the country has to spend on
public services.
It also means that interventions that improve employment outcomes - and growth - bring added 'fiscal'
benefits to Scotland. If someone can secure long-term work that is valued, then they will pay taxes -
income tax and VAT - which will now directly feed into the Scottish budget.
Moreover, the public finances in Scotland (and the UK) are likely to continue to be under enormous
pressure over both the short and long-term - including from increased demands for many public services
from an ageing population.
This means that the importance of preventative spend - including investments in the economic potential of
Scotland's workforce - is crucial.
3.8 Conclusion
In summary, colleges play a vital role at various stages of the process of improving human capital and
therefore the objectives of the Scottish Government's Economic Strategy.
In the chapter that follows, we model what this actually amounts to in value terms.