SNP must rethink its business model for an independent Scotland

0


When a recent poll found support for Scottish independence to hit a record 58%, panic swept through Westminster. Senior Tories, worried that the UK would collapse under their watch, responded by ordering the creation of a new government unit to “turn the tide of Scottish nationalism”.

The fact that the poll was such a shock shows how far London has moved away from Scottish politics. Support for independence has been steadily increasing for some time, and for many, the COVID-19 pandemic has only reinforced their doubts about their attachment to the British state.

For those of us who live in Scotland, COVID-19 has been a contrast between two governments. While the Scottish government’s handling of the pandemic has been far from perfect, polls consistently show that a majority of Scots believe Nicola Sturgeon has handled the pandemic more effectively than Boris Johnson. According to a recent YouGov poll, the Prime Minister is not only more popular than the Prime Minister in Scotland, she is now also in England.

Amid a looming no-deal Brexit and Johnson’s awkward presidency – none of which garners public support in Scotland – the legitimacy gap between rulers in Edinburgh and London has widened. has never been so striking.

As Joyce McMillan says: “It is not so much that the cause of Scottish independence is won in Edinburgh, as that of the Union which is lost in London.

For the SNP, the bitter battle to convince a majority of the population that Scotland should become independent seems to have been won – at least for now. The main challenge now is practical: Can Nicola Sturgeon’s party come up with a credible plan to get out of the UK and start life as an independent country? Here, the picture is much less rosy.

The Sustainable Growth Commission

In 2014, the SNP presented the economic case for independence in the ‘Future of Scotland’ white paper. The document laid out the vision for a fairer, more progressive and democratic Scotland – a vision that inspired many to join the Yes campaign and champion the cause of independence. However, among its shortcomings were overly optimistic oil revenue forecasts and an assumption that the UK government would agree to a monetary union, which did not materialize. These weaknesses were widely recognized as a key factor in the defeat of the Yes campaign.

In order to remedy these shortcomings, Nicola Sturgeon created the Commission for Sustainable Growth in 2016. Chaired by Andrew Wilson, founding partner of influential PR firm Charlotte Street Partners and former SNP MSP, the Commission was tasked (among others) with making policy recommendations on ‘the range of costs and associated transition benefits to independence ”.

After long delays, the Commission published its final report in May 2018. At over 300 pages, it has been hailed by its authors as the most comprehensive and detailed plan for Scottish independence to date. . But for those who actually read the report, it quickly became clear that something had gone wrong.

A new country for whom?

The report begins by thanking the ‘wide range of interests’ the Commission asked for ideas on how Scotland’s economic performance could be improved. Of those consulted, 17 out of 23 were from business lobby groups, such as CBI Scotland, the Scottish Property Federation and the Institute of Directors. Unions, environmental groups or any other group representing workers or marginalized communities in Scotland were notably absent from the list.

Was this rejection of progressive voices a small procedural problem or did it reveal the kind of business model envisioned by the Commission? Proposals to put Scotland’s public finances on a “sustainable and credible” path quickly provided the answer.

Using the Scottish Government’s own figures as a starting point, the Commission recommended that Scotland aim to reduce its budget deficit from 8.2% forecast in 2021-2022 to less than 3% of GDP by “five at ten years ”. He also recommended that Scotland’s national debt be kept below 50% of GDP and that government borrowing only be used to finance public investment.

In order to reduce the deficit, the Commission chose not to increase taxes, but to cut public spending. He assumed that public expenditure growth would be limited to 1% less than GDP growth during the first ten years.

The retrospective application of these rules reveals why they are problematic. In 2019, GDP growth in Scotland was 0.7%. According to the rules of the Growth Commission, this would mean that public spending would have fallen by 0.3%. In reality, public spending increased by 3% – within a fiscal framework overseen by a conservative treasury.

Applying the same assumptions in the future would result in a decline in public spending as a share of GDP of around 4% over a decade. To put it another way: the Commission’s plan would see the size of the state in Scotland shrink at a faster rate than when George Osborne was Chancellor. At a time when the world is turning its back on austerity, the Growth Commission seemed determined to revive it.

Whether intentional or not, the underlying assumption of the Commission’s budget plan is clear: the costs of transitioning to becoming an independent country should be borne by those who depend most on public services.

Back to the future

The narrow emphasis on fiscal discipline is not the only part of the Growth Committee report that resembles a discredited International Monetary Fund (IMF) document from the 1990s. Throughout the report there is a slavish adherence to a kind of economic orthodoxy that even institutions like the OECD and the IMF have long since abandoned.

Rather than articulating a bold vision for the Scottish economy based on the latest economic thinking, the Commission attempts to identify ‘the broad themes that are observed consistently in the high performing small advanced economies’. These themes are then used to identify an uninspiring list of key characteristics that should underpin Scotland’s’ next generation growth model ‘, such as being’ innovation driven ‘,’ competitive ‘,’ export oriented ”and have“ flexible labor markets ”.

To the extent that other modes of capitalism are explored, the analysis is rudimentary and superficial. The Nordic model is described as “attractive but stimulating” because it “is based on a particular social model, a high and widely shared human capital stock and high levels of productivity”. It is ultimately ruled out as a viable option on the basis that “longer term improvements in Scotland’s productivity performance would be needed to move towards such a model”. However, many key features of the Nordic model, such as high tax levels, widespread public ownership and strong collective bargaining, are glossed over or ignored – as is the fact that Scotland’s productivity is today ‘ it is much higher than that of Sweden, Denmark, Finland and Norway when these countries first adopted the model.

Ireland’s tax haven model is also being considered and ultimately ruled out, but only because “Ireland has a strong first mover advantage and Scotland has a difficult tax situation which would make it difficult to implement tax cuts. ‘aggressive taxes’. It is not difficult to detect where the ideological sympathies of the authors lie.



Share.

Leave A Reply