Eddie Barnes: Independence, inequality and the economy

ONE of the Yes campaign’s key themes over the last year has been to argue that Scottish independence will reduce the country’s growing inequality gap.

Picture: TSPL

The UK, note pro-independence campaigners, is the fourth most unequal nation in the developed world. So, vote Yes next autumn, they declare, and Scottish politicians will take over “the economic levers”, thus giving them the chance to reduce the gap between the rich and poor which Westminster has widened.

So what levers might actually help to do the job? One of the good knock-on consequences of the referendum campaign is that, thanks to generous funding grants, some serious research is now being done into all aspects of the subject.

A team at Stirling University, funded by the Economic and Social Research Council, has now taken its own view on how a Scottish Government might slash inequality.

As their starting point, the group took a series of tax and welfare levers which Scottish ministers might pull to help reduce the gap between rich and poor.

And rather embarrassingly for SNP ministers, it concluded that one of the single most effective “levers” which would reduce inequality is one they can already yank: a council tax revaluation where lower bands are reduced and higher bands increased. Why haven’t they, the authors ask?

“Perhaps losers would shout more loudly than winners,” they conclude wryly, noting how former first minister Jack McConnell had kicked the idea into the long grass.

That was after a report by former Bank of Scotland boss Sir Peter Burt, recommending a new progressive property tax, had been dumped. Centre-left MSPs looking less progressive than a banker? Imagine.

Of course, with independence, there would be a “more powerful set of levers” available, the group continue. And inequality could indeed be slashed by an independent Scottish government.

It’s just that, to do so, the researchers propose “substantial increases” to out-of-work benefits, a new universal basic income, and a flat tax of 56 per cent on everyone else. “Radical changes” like these ideas “are politically difficult”, the paper ends, dead-panning.

They’re all very well, those levers. The trouble is that when you pull them, somebody somewhere doesn’t like it. And while Labour, Liberal Democrats and SNP ministers have all had the chance to make politically difficult choices since devolution in the name of fairness, some levers have been deemed off-limits.

But there they still are: under either devolution or independence, the research suggests, the levers are ready for use to help reduce inequality. The real point is whether – under whichever constitutional set-up – there is any public appetite or enough political will at the Scottish Parliament to see them being pulled.