It’s been less than four months since I stopped being a SpAd but I’ve surprised myself by already losing a fair bit of my interest in day to day politics.
This is all the more surprising because the daily obsession with politics - a necessary but not sufficient condition for a job in SpAdland - wasn’t a chore for me. I’ve always been a political tragic/geek/anorak/insert the noun of your choice.
But I really couldn’t care less who is, or who is not, in Andy Burnham’s Cabinet, although I can’t kick the SpAd habit of privileging loyalty so I have a sneeking admiration for the way the new Prime Minister dispatched the Starmerites so ruthlessly for his own supporters.
As for Anas Sarwar’s elevation to the House of Lords after he led his party to a crushing defeat in May it’s just too ludicrous to even have a measured opinion about. I don’t know the new Lord Sarwar but I remember vividly a focus group a few years ago concluding that they liked some of what he was saying but more importantly that he was only saying those things, not out of conviction, but because that was what he thought they wanted to hear. Voters are uncomfortably canny most of the time.
Admittedly I’m just back from my first trip to Mull and the truly gorgeous landscape has occupied more of my thoughts than the fate of Liz Kendall. But I am interested in the early policy announcements made by the new Prime Minister and what they revel about the UK: in particular that there really isn’t much money to spend. That is by far, it seems to me, the most important thing here.
The modest VAT cut on fuel bills is unfunded; the £2 bus fare cap in England is at the expense of the world’s poorest people struggling to cope with climate change and the small cut in business rates for English pubs seems as if it’s going to be financed through increases in rates for other businesses. A high street full of pubs is great for the community apparently. A street with cafes and gyms: not so good. Maybe gyms should chuck out some fitness equipment and apply for a licence? Who doesn’t want a pint on the treadmill?
I am not in any way a policy expert on any of these measures so who knows they may in fact be very sensible. But the bigger point is that they demonstrate once again what life is like in a low growth UK economy where a combination of poor long-term political choices, a hopelessly unbalanced economic structure and entrenched institutional short-comings means ministers have to scrabble around for announcements which may have a short-term political impact (which I’m not decrying) but will make zero difference to long-term growth, productivity and therefore living standards.
Longer-term issues such as defence funding; social care in England and welfare reform (aka cuts) raised by the Prime Minister have also highlighted the poor state of the economy and therefore tax revenue.
Mr Burnham also, apparently told the Scottish First Minister, John Swinney (my former boss) that an independence referendum was off the table because the focus needed to be on more important things such as growing the economy.
I am a very mild mannered person but whenever I see a sentence like that I really need to find a room with good sound-proofing because I want to scream as loud as I can.
To reiterate something I’ve said before I believe in Scottish independence because Scotland is a country and in a democratic country we are entitled to get the governments we vote for: not some of the time but all of the time. It’s that simple.
But it also happens to be the case that being in the UK is not good for the Scottish economy. In fact whenever I allow myself to think how our vast North Sea oil revenues were squandered by successive Westminster governments I am in serious need of that sound-proof room.
I’ve referenced before the work of Professor Kevin O’Rourke who argues persuasively that the combination of the policy flexibility that comes with independence, together with EU membership (particularly since the advent of the Single Market) was the key driver of Ireland’s economic take-off. In other words less reliance on a poorly performing UK meant a (much) stronger economy.
Professor Eoin McLaughlin has also highlighted interesting data showing both that UK “growth has been steadily declining over the past 80 years” (this long-term trend has been masked at times by factors such as the discovery of all that North Sea oil) and the dramatic improvement in Ireland’s growth rate as it detached itself from Britain.
“The irony”, Professor McLaughlin writes, “is that the smaller economy I originally studied partly escaped Britain’s orbit by changing its economic institutions and looking towards Europe. Irish policymakers increasingly recognised the limitations of the British growth model and looked to see what they could learn from more successful European economies. Britain, meanwhile, has spent much of the same period debating how to restore a growth model that was already in decline.”
Ireland is just one of the independent north-western European countries the Scottish Government has looked at which are comparable to Scotland: all of which have higher GDP per head than the UK, higher productivity, lower levels of poverty and higher rates of investment.
It’s also the case that with very limited devolved economic powers Scottish productivity seems to have risen faster than any other nation or region in the UK (albeit we are catching up with the relatively low level of productivity of the UK as a whole).
All of this is screaming out (apologies, that room again) that independence is not a distraction from economic growth: it is the means to that growth.
The debate on the economics of independence is often dominated by currency, border arrangements and the public finances. The Scottish Government has set out its position on currency for an independent Scotland, and on border arrangements (these are not really up for discussion. As an EU member our border arrangements will be determined by a combination of the the EU’s relationship with the UK at the time of independence and the Common Travel Area.) I’ve also discussed the public finances and how all they tell us at present is the remarkable geographical economic inequality across the UK rather than any guide as to debt and deficit in an independent Scotland.
I’m not diminishing these questions, but by some distance the most important point, and the biggest opportunity, is the change that can come with independence to the decision-making process. That change will be the most important factor in the success of a new Scottish nation state and it goes beyond just the necessary transfer of power from Westminster to Holyrood.
As a newly independent country engaged in nation building with a population of five and a half million people and crucially with a high degree of political and social consensus (around 70 per cent of votes cast in the recent Scottish election went to parties that can reasonably be considered progressive) Scotland is ripe for a decision-making structure that can learn lessons from the Irish social partnership model, introduced in response to the severe recession of the mid-1980s but which didn’t survive the 2008 financial crash, the Danish tri-partite system (which has its origins in a labour dispute in the 1899) as well as consensus seeking arrangements in other countries.
To be clear this isn’t a case of importing wholesale the arrangements that exist or existed in other countries (specific arrangements have to work with individual national political cultures) nor is it just about getting people from various interests and sectors around the table.
This is about a new set of institutions and arrangements appropriate for a nation state of our size and which could only happen and be effective through independence with for example control over employment policy, company law and social security (although I don’t particularly like talking about individual powers as it is clear that we need to start thinking about the powers of independence as a package because of policy inter-linkages and always to remember that EU membership must be at the core of thinking about an independent Scotland.) One of the key lessons when comparing Ireland with Denmark is the need for the new institutions to be firmly embedded in the foundation of the state with widespread political buy-in.
It’s a recognition also that Scotland would of course, like any other nation state, face trade-offs.
In short how we make decisions will be as important as what we decide - indeed if we get the decision-making mechanism right then we are more likely to get the actual decisions themselves right.
So in an independent Scotland, we will need employers’ organisations (or a large, powerful single organisation: independence offers the opportunity to mandate such an organisation) that do not just act, as at present, as lobbyists - often for lower taxation or unspecified cuts in regulation.
Instead we need an employers’ organisation that is representative, well-resourced, able to conduct its own economic analysis with extensive cross-economy policy knowledge and with aims that look beyond what are currently classed as business interests. Similarly, we need trade unions that are also well-resourced and able to offer clear information gathering and evidence-based thinking.
For the labour market this combination can help to bring about greater collective bargaining, now recognised by various independent bodies as having strong potential and actual benefits. But the more important point is this: within an institutional framework set down by government, these organisations will not just be making deals or coming to compromise agreements. This will be about deliberation with the various parties (including government itself of course) well-equipped to conduct their own analysis and information gathering as the basis for agreement on the best way forward for the country as a whole. If agreement can be reached on the aims and facts, with each participant being seen to have an equally valid starting position, then this can provide the basis for proper deliberation and policy development.
This is where the consensus point in Scotland (we are clearly, as I said earlier, through voting patterns, a broadly social democratic country) is so important. It should be possible for there to be a stable long-term policy development environment that is able to withstand changes of government: something that will be crucial for investment, while helping with voter buy-in.
With the important caveat that I am not in any way an expert on tax and welfare there are interesting examples of how the move to independence could open up more sensible debates based on agreed information at the outset.
For example under present circumstances with a dominant UK narrative, it would be very difficult for any political party to cut through the noise and misinformation about the “the ballooning benefits bill” and point out that unemployment benefit (particularly for single people) is low compared with more successful countries. Why is this? What is the impact? And is there a better way of helping people who find themselves unemployed back into productive work than subjecting them to such a harsh drop off in earnings?
More structural legacy issues from the UK, such as the situation with regards to the public finances, would also be best tackled through consensus building institutions.
In short we need to start thinking about Scotland as a new nation state with the ability to make decisions differently - taking account of our own circumstances, political culture and progressive outlook - or we will be forever at the mercy of the latest Butch Cassidy-style “this’ll work” plan to emerge from the various occupants of Downing Street.
Mr. Crawford, I’m sympathetic to your argument, but I’m not sure the economic record establishes the conclusion you draw from it.
Looking over the Scottish data since the late 1990s, the story seems considerably more mixed.
Based on my reading of the facts, GDP per head has performed relatively well over much of the devolution period, and Scottish productivity growth has outpaced the UK since the financial crisis. Equally, however, Scotland’s aggregate growth has generally been somewhat weaker than the UK’s, and from roughly 2014 onward, there appears to have been a meaningful period in which both total GDP and GDP per head underperformed the UK.
That leaves me with what I think is the central unanswered question in your argument.
You were involved in government for much of this period. Scotland already possessed substantial powers over areas that matter for long-run growth: education and skills, planning, housing, transport and infrastructure, economic development, health, and, increasingly, taxation.
Knowing this, could you help me better understand your point of view?
Which disappointing Scottish economic outcomes do you believe were principally caused by powers being reserved to Westminster? What successes resulted from policy choices made by the Scottish Government? Which areas do you think the SNP itself got wrong?
And, most importantly, what is the mechanism by which independence improves the quality of those decisions?
I understand why you believe levers are important. What seems less obvious to me is why possessing more levers should, in itself, produce better policy. If the case is that independence would permit Scotland to create better institutions, adopt a more coherent policy mix, and escape particular constraints imposed by the UK economic model, I would be interested to know specifically which constraints you think have been binding and what Scotland would have done differently without them.