NOT the greatest fortnight for the UK Government, I think we can all agree.

Rapidly rising interest rates, a falling currency and sufficient stress within pension funds to warrant intervention by the Bank of England are not what any Government or citizen wants.-The income tax elements of the mini-Budget (of which more later) have obscured what the Government is trying to do.

The proposed – but now rescinded – abolition of the 45p income tax rate is the measure which caused the greatest political difficulty but the market difficulties result from a series of tax-cutting measures which seem collectively too bold. Markets don’t like tax cuts funded by borrowings when borrowing levels are already alarmingly high.

The adverse reaction is partly due to the daft proposal to reduce tax most for the highest earners at a time of economic difficulty but a key issue is that we have heard about the wrong bit of the plan first. Unfunded tax cuts on their own don’t make sense. Tax cuts as part of a plan to raise the long-term growth rate of the UK economy do.

The problems the Truss Government has identified, slow economic growth, inadequate investment and low labour productivity, mean the growing disposable incomes we all want so that our children will be better off than we are as well as the good public services we need, won’t be achievable in the long run.

We are slowly sinking under the weight of our own spending.

The wrong way to address this is by constantly raising taxes and borrowing more. Slowly the dynamism is drained from the economy. Growth slows and then slows again and a vicious circle emerges.

What the UK Government is trying to do is break that cycle. The way to do that is to have an economy in which the state plays a smaller role, not an ever-larger one. Regulations, restrictions, rules all need to be looked at through the lens of whether they help growth.

A faster-growing economy raises living standards and enables better public services to be delivered. Far from being reckless, the UK Government’s focus on a low-tax, more dynamic economy which delivers faster growth may be deeply unfashionable, but it is right.

Which brings us to Scotland and tax.

Every change to income tax which the Scottish Government has made so far is useless tinkering. We now have five rates of income tax. Silly 1p variances enable the SNP Government to say more than half of income tax payers in Scotland are better off than those elsewhere in the UK. The “better-off” though is by pence per week whereas those who pay more pay a lot more, in particular those who earn between £44,000 and £50,000 who pay a combined income and National Insurance rate of 54 per cent.

Scotland should be a low-tax economy too.

The income tax changes in the rest of the UK result in more money flowing from the UK Treasury to Scotland. The SNP Government’s instinct, as always, will be to spend that money but it really should take the opportunity to re-shape Scotland’s income tax rates to create a different sort of low-tax economy.

Although there was some media reports to the contrary I believe there was virtually zero appetite in Scotland to lower the top rate of income tax to 40%.

Instead of tinkering with 1p changes, which unless they are a down payment in a staged move to a 5% reduction are just mucking about, they should do something like this.

First, make two principles clear. One, that it does not want any Scottish taxpayer to suffer tax (including National Insurance) as a result of actions by the Scottish Government of more than 50% on any of their income. Two, to say its aspiration is to have rates which result in decisively lower tax payable than in the rest of the UK for those on median earnings and that no rate will be more than 5% higher. This last signal is crucial because in order to attract and retain higher earners here and so benefit from their tax payments they need confidence they are not going to be slowly fleeced.

Using these principles then adjust the taxes rates as follows:

Reduce the rate on the roughly £7,500 of income between the personal allowance and £20,000 from 19% and 20% to a new starter rate of 10%.

Increase the basic rate from 21% to 25% and apply that to all taxable income between £20,000 and £50,000.

Merge the higher and additional rates of tax into a single rate of 45%, which applies to all income above £50,000, rather than the present 41% and 46% rates.

These changes would have a number of benefits. The simplification is a merit in itself as is the signal that we want to be low tax not high tax. There would be significant benefit for those on below median incomes – notably those earning under £20,000, the 54% combined rate is eliminated and we deal head on with the fallacy that higher public spending in Scotland can be funded just by taxing the highest paid much more.

Read more by Guy Stenhouse:

Politicians should pay attention to the royal masterclass to save Union

And another thing, Ms Sturgeon, where exactly is the money for public sector pay rises coming from?

From ferries to universities to public sector strikes, SNP is sowing seeds of decline