LET’S set aside fairytales about SNP austerity, and examine how a nation we can get out of this mess, writes Ewan Crawford
In Scotland we have some familiar stories that, regardless of their basis in reality, have nevertheless been told so often that it seems they must be true.
Before major sporting tournaments we are always, without fail, going to qualify, win or, at the very least, turn the corner.
Once the tournament is under way and, of course, none of those things come to pass, we can tell another story: we are making progress and it was only bad luck, the referee, or careless errors which stood in the way of victory.
Who knows, tomorrow in Cardiff against Wales in the RBS Six Nations rugby championship, one of those stories may at last prove correct.
If we move from a sporting field to another type of field, there’s another old tale: the discovery and exploitation of massive oil reserves 40 years ago was somehow a blow for supporters of independence, and we should be grateful that successive Westminster governments chose to spend, rather than save, this windfall on our behalf.
In Scottish politics I suspect we are also going to hear another story, over and over again, in the run-up to the Holyrood elections in May.
It goes like this: until now the only real job of MSPs was the easy one of deciding how to distribute money. But now for the first time the parties must decide how much to spend and how much to tax. And this changes everything.
But like the countless false sporting dawns or the apparent disaster of finding oil, this story doesn’t stand too much scrutiny either.
Firstly, it underestimates the importance of decisions, aside from allocating cash, that the Scottish Parliament has taken even with its current, limited powers.
The marketisation of the NHS has been resisted, free university tuition has been re-instated, a presumption against short prison sentences (hopefully to be extended) has been introduced as well as public health measures such as the smoking ban (and perhaps soon minimum pricing for alcohol).
Secondly, the provision contained in the Scotland Act (2012), which Labour says it will use to increase every income taxpayer’s bill, is only slightly less of a blunt instrument than the old “tartan tax” power.
Besides, everyone knows this is not a practical policy proposal. It is a piece of political positioning by a party desperate to make a renewed appeal to a particular part of the electorate.
Although the wisdom of this positioning seems doubtful, it is in itself a fair enough tactic for a party fighting for its life and, crucially, with no expectation of forming a government and therefore of implementing the policy.
This, then, isn’t a sea change in Scottish political debate. In fact the way the argument has been prosecuted shows a mindset more in thrall to, and dependent on, Westminster than ever.
The political starting- and end-point is the Conservative Westminster government: the Tories have imposed spending cuts, the SNP refuses to increase tax to reverse them, so the Nats are just like the Tories.
But curiously what goes unchallenged is Westminster’s control over social security, which means some of the tax gains here can be clawed back. More significant, however, is the implicit acceptance that Scotland’s place is at the wrong end of an increasingly unbalanced UK economy, which means investment and talent will continue to be drawn to London.
Perversely, the Treasury is now arguing that money will be removed from Scotland’s budget because UK economic policy favours faster population growth south of the Border. In addition, even if Scotland’s economic performance matches that of the rest of the UK, the Scottish budget is still to be cut.
This is the effect of the position being adopted by the UK government in its negotiations with Scottish ministers over the financial deal that will accompany further devolution of tax powers agreed by the Smith Commission.
If these powers come to pass, and an acceptable financial deal can be found, they will indeed offer more flexibility than the existing tax-raising options.
But this tax debate shouldn’t deflect from another discussion we need to revisit and which really would change the nature of political decision-making in Scotland: the role, if any, of government in reversing relative population decline, expanding the tax base and boosting growth.
Working for the Scottish Government before the independence referendum, I became, I think, unhealthily obsessed with the Finnish Tekes innovation agency, and Finland’s generously funded approach to local research and development (R&D) in general.
It seemed wrong, and still does, that with Scotland’s world-class university base our overall R&D spending is so low, when we know that successful innovation is key to higher productivity and, therefore, living standards.
Turning westwards, rather than to Scandinavia, the Irish academic, Aidan Regan, has contrasted the Finnish model with the Irish development strategy.
In a rebuke to those who believe Ireland’s recovery is due to austerity he argues convincingly the turnaround is due to a deliberate, consistent state enterprise policy pursued over decades to attract high-wage, high-tech and high skilled foreign direct investment.
Although these countries have pursued different approaches both recognise the importance of the public sector in successful enterprise development policy-making.
Crucially, they’ve used and adapted the full range of powers available only to independent countries.
None of this means – as those two countries have demonstrated – that any country is immune from recession, external pressures or costly mistakes. But it shows the power of government to shape economic success (or failure). This surely is the debate we should be having, rather than being forced to haggle with Westminster ministers over the price they want us to pay for control of income tax.