Comment: The good news and bad news for Nats

IS LIFE getting better? And does it matter if it is? You might think such existential questions were far from the minds of those at the SNP conference this weekend.

Bill Jamieson

But they could hold the key to the outcome of the independence referendum next year.

If the economy is on the up, and seen to be improving further through next year, this may work to blunt the SNP critique of a Scotland held back by the constraints of the Union. Hasn’t our economy underperformed for years? And have we not scored highly on those baleful measures of unemployment and deprivation? Clear evidence of improvement on these fronts would surely dent the SNP case for independence and persuade voters that they are actually doing rather well as they are, and that the case for change is a little less compelling.

But there is the counter-argument – that such improvement may bolster a feeling of self-confidence among Scots and encourage us to take the independence plunge. The case borrows from the classic theory of rising expectations: a period of sharp economic downturn when followed by evidence of recovery provides fertile conditions for radical political change. Such upsurges do not occur at the nadir of national fortunes when people are filled with fear but later, when the worst has passed and hope of something better provides the rocket fuel for radical change. On this perspective, the SNP may see itself as well situated.

There’s little doubt that the economy is getting better – or at least statistically better.

If the news flow for most of this year has not been heartening enough, last week’s figures on Scottish employment and our GDP performance should have convinced the most sceptical that an upturn in our economic fortunes is now well under way.

They showed Scotland performing better, with both the economy and employment growing whilst unemployment fell. On the key GDP measure, Scotland’s economy in the second quarter showed growth of 1.8 per cent compared with a year ago – and better than the 1.5 per cent seen for the UK.

And Scotland’s employment rate rose by 1.6 per cent over the year to June-August to the highest for five years while unemployment fell by 0.8 per cent over the same period. In both cases the figures were considerably better than the UK rise (0.4 per cent) and fall (0.2 per cent).

Business confidence data – from the Bank of Scotland PMI surveys to the latest quarterly assessment from the Scottish Chambers of Commerce – point to this upturn continuing into the final quarter of the year. And a Business Trends report due out tomorrow from accountants and business advisers BDO LLP in Scotland is likely to show business confidence has continued to improve for the eighth consecutive month to reach the highest level since early 2010.

Arguably more encouraging for the confidence and wellbeing of Scots are the latest figures from the Office of National Statistics showing that, contrary to widespread perception, “deprived” Scotland has fewer children living in jobless households than any other part of the UK. Just 12 per cent of youngsters are in homes reliant on benefits compared with 13.6 per cent in England, 14.4 per cent in Wales and 16.7 per cent in Northern Ireland.

Scotland also produced 
8 per cent of the UK’s economic output in 2011 – bang in line with our population share – while our productivity was also equal to the UK average. Such figures do not detract from the severe problems of deprivation and joblessness suffered in parts of Glasgow. But they go some way to countering the depiction of Scotland as a subsidy nation, lagging on economic measures and dependent on a constant drip feed of benefits.

However, a bunch of encouraging statistics is one thing. Real improvement in our wellbeing is quite another. The major political divide in Westminster today is on precisely this gap between improvements in key economic measures and the stark fact that few households across the UK are experiencing much by way of uplift at all. Indeed, household incomes are continuing to fall. Average weekly earnings including bonus payments rose by just 0.7 per cent comparing June with August 2013, while average weekly earnings for the public sector fell by 0.5 per cent, the first time a negative growth rate has been recorded since comparable records began in 2001. Inflation, meanwhile, has risen by 2.7 per cent on the CPI measure and by 3.2 per cent on the “headline” RPI calculation.

This is what has made the latest round of inflation-busting household energy bills such an explosive political issue. It adds to the sense of a new generation facing a fall in living standards compared with their parents and why some politicians have suggested that the relatively rich baby boomer retirees should do more to help the upcoming generation. There is little prospect of this gaining traction considering this cohort of retirees is having to contend with ultra-low levels of interest on their savings and falling annuity rates – all this while inflation has reduced the spending power of their savings by 38 per cent over the past ten years. Little wonder the number of those still in work after age 65 has risen to a record level of more than one million this year.

Meanwhile, it is among the ranks of the young that perceptions of falling living standards and expectations compared with their parents’ generation are most acute. The American sociologist James Chowning Davies set out a “J curve” theory of political revolutions, seeking to explain the rise of revolutionary movements in terms of rising individual expectations and falling levels of perceived well-being.

Back in the early 19th century Alexis de Tocqueville suggested that rising expectations explained why the strongholds of the French Revolution were in regions where standards of living had been improving. And throughout the latter part of the 20th century the concept was associated with explanations of revolutions, insurgencies, and civil unrest throughout the world and the urban riots of the 1960s in the United States.

So perhaps the “good news” is less bad for the SNP’s case than assumed. But its central task remains: convincing voters that independence really will deliver on those higher household income and wellbeing aspirations.

Twitter: @Bill_Jamieson