Ewan Crawford: Trying times as ‘No’ camp drop ball

WESTMINSTER cannot improve the economic situation, writes Ewan Crawford, because of the inherent blame culture there.

When the Chancellor, George Osborne, delivered his emergency budget in 2010 and spoke about transforming the “ruins of an economy built on debt” he gave a series of upbeat forecasts of the variety favoured by the Scottish Rugby Union.

We were told to look forward to six years of impressive continuous growth, debt falling as a proportion of national income and a budget surplus by 2016.

The rich would pay the most, the vulnerable would be protected and “prosperity for all” was the tantalising prospect once the foundations had been laid.

Sadly, the SRU’s target of victory for Scotland in the World Cup is starting to seem more credible than the Chancellor’s predictions.

Still, as he prepares to deliver his Autumn Statement tomorrow Mr Osborne is keen to tell us that things could be even worse.

If Labour and the shadow chancellor, Ed Balls, had their way we would be heading for “complete disaster”.

For his part Mr Balls characterises the Coalition’s economic policy as a shambles. In fact, he says, we are in a hole with no growth and borrowing rising.

This then, is the basis of the No campaign in the forthcoming independence referendum. Reject independence and your reward will be disaster or life in a hole. It is worth repeating: this is not the rhetoric of the Yes campaign, this is what the main backers of those urging a No vote really think of each other.

In fact despite the ritual political abuse there is often more that unites these enemies than their joint campaign against the evil nationalist plan to transfer political and economic power to Scotland.

In particular both seem less than keen to point to the huge and damaging cuts to capital investment, which has been blamed for so much of the recent double-dip recession.

This is because these cuts were actually a Labour plan which Mr Osborne inherited and carried through with such catastrophic consequences.

It is the embarrassing little secret that the Westminster parties try not to talk about. Indeed whenever the Tories say the deficit has been cut by a quarter they can only do so because so many of the cuts have been targeted at investment: something Labour seems strangely reluctant to point out.

The SNP has in turn, not unreasonably, been urging the Chancellor to change course and start investing in “shovel-ready” building projects.

This is both economically sensible and also typifies the approach of the SNP in its dealings with Westminster, in effect demonstrating it is fighting Scotland’s corner which has been such an important factor in its electoral success. The big difference now, of course, is the independence referendum in two years time.

To convince people to vote Yes, it will be essential to demonstrate the sense of possibility that will come with independence.

In this respect, it is useful to recognise that the financial crisis and its aftermath have prompted a wave of academic studies and thinking on the way forward for western economies.

This includes the work of the American economic development specialist, Richard Florida, who talks about the creative class and the need to “creatify” (academics love to make up new words) low-wage service jobs.

The idea of the “entrepreneurial state”, a term championed by economist, Professor Mariana Mazzucato, which sets out the vital role of government in innovation is also attracting interest.

What many of these ideas have in common is a concern with what has been called the “hourglass effect” where there are poorly paid jobs at the bottom, highly-paid jobs at the top and not much in between.

In practical terms this can be seen in the scandalous inequality figures for the UK and Scotland, poor social mobility and the increasing struggle (because wages have not kept pace with the cost of living) of many to make ends meet.

The prospect of getting on and, crucially, of our children getting on, is becoming more remote for far too many people.

This means if the Yes campaign can show how aspiration can be realised through independence, and why it is being blocked by our current political arrangements, then it really is in business.

Scotland already enjoys many of the advantages (massive oil revenues, unparalleled renewables potential and a brilliant university sector to name just three) that should mean greater prosperity and much greater opportunity.

Why then is this not happening? Partly because we are currently locked into an unequal geographical political and economic system which has privileged London as the engine of private sector growth.

Now the inequality lock is being strengthened with Westminster deciding to cut public sector employment here but perversely refusing to devolve the powers needed to create private sector jobs to compensate.

In addition, as will be confirmed tomorrow, it is cutting the social protection for those it has in effect thrown out of work.

With normal economic powers we could seek to break the lock by considering imaginative measures suggested by economists and others seeking to chart a better way since the financial crash.

These include targeted cuts in corporate tax for manufacturing firms which increase output, targeted national insurance relief and changing capital gains tax arrangements to encourage value creators.

Not all of these will be appropriate for Scotland. But given our economic circumstances it is madness not even to have the power to consider them.

If we did, we could wave good-bye to days like tomorrow when Scotland’s economy will be forgotten while Mr Osborne and Mr Balls seek to convince us how dreadful the other man is.