George Kerevan: Social democracy offers a real vision for the future

THE thing about Alex Salmond, like him or loath him, is that he thinks several moves ahead in the political chess game. His opening speech to the Scottish Parliament, yesterday, was ostensibly about the coming year's legislative programme. But for anyone with ears to hear, it was actually the opening salvo in the referendum campaign.

Salmond's message was a direct appeal to anyone wavering about how to vote on independence. North of the Border, the SNP is trying to build a different kind of society - one based on a collective social security net and a state-guaranteed social wage, funded by a dynamic market economy.

This "fair society" Salmond contrasts with the "harsher" approach of the Tory-Lib Dem coalition in England, which (under the rubric of the "Big Society") is imposing austerity; reducing collective provision in favour of voluntary agencies; and generally favouring American-style individualism over mutual solidarity.

A mistaken few will cry "racist", claiming Salmond is hinting that English society has become competitive, individualistic and uncaring in the years since Maggie Thatcher. Actually, the whole of western society has moved in that direction.

However, no one can deny the fact that Salmond's SNP has taken a very different road from Cameron and Clegg - scrapping prescription charges and student fees, freezing council tax, and tilting against privatisation. That has brought short-term gain in the shape of the SNP's massive win on 5 May.

But the gain could be long lasting. The latest Scottish Social Attitudes Survey found that 60 per cent of people want Holyrood to control Scotland's 18 billion pension and welfare budget (currently run by Westminster), while 59 per cent want taxation decided in Edinburgh. These views are not based on deep constitutional analysis. Folk think they will get a better deal from the Scottish Parliament. Outside of defence and foreign policy, Salmond is pushing at an open door with his referendum.

So a better critique of Salmond's "fair Scotland" versus "harsh England" line would be that he is buying support with financial giveaways that are unsustainable in the longer term. This year's Holyrood budget has been cut by 1.7bn, with more to come.

It is also possible to fault Salmond's critique of David Cameron's policies. It is too crude to paint Cameron as another Thatcher. If anything, he's a paternalistic Old Etonian. I don't doubt he believes his Big Society mantra, though the complexity of modern day social needs suggests that a voluntary approach is unfeasible.

However, when all's said, the Scottish voters are not dumb. It is impossible to reconcile the extent of the SNP's recent election victory with the notion the electorate were duped - especially given the fact that middle-class professionals voted en masse for the SNP while favouring the Tories and (at the 2010 election) Lib Dems in England. It is much more plausible that Salmond has struck a chord with his vision of what people in Scotland see as the society they want to live in. For instance, a recent study by Professor John Curtice, for the Scottish Centre for Social Research, found that many more people in Scotland than in England favour the idea of providing free personal care for the elderly: 57 per cent compared with 42 per cent.

By way of further evidence, it is worth noting that the latest Ipsos Mori UK poll has the Tories down five points to (35 per cent) and the Lib Dems at 10 per cent. Only 29 per cent of Britons expect the economy to improve this year, against 42 per cent who think it will get worse.

Verdict: people in England may be inclined to agree with Salmond's view that Cameron's policies are harsh.

One institution that does think the coalition is being extreme is the Organisation for Economic Co-operation and Development, the international economic watchdog. Yesterday it downgraded its forecast of UK growth to 1.4 per cent. It blamed this on the coalition cutting consumer income too fast.

Here we come to the real question mark over Salmond's plan for a Fair Society. Could an independent Scotland improve economic growth sufficiently - and quickly enough - to support his public spending plans? As it is, the Scottish economy contracted by 5 per cent following the recession of 2008. Though it has returned to modest growth, output is still 4 per cent below peak.

Salmond would argue that those small European countries that are unencumbered with heavy debt have proven very resilient following the credit crunch. Growth rates are: Sweden 4.5, Finland 3.8, and Austria 2.9. Verdict: independence could promote growth, assuming fiscal policy is geared to increasing investment and productivity.

But there's the rub. The social democracy Salmond is offering depends crucially on maintaining a balance between high social welfare benefits and a successful market economy to pay for them. Over the last 30 years, the Scottish economy (minus oil) has grown on average at 1.9 per cent per annum. We need get to 2.5 per cent plus to match Scandinavian levels of wealth.

Sweden is growing at three times the UK rate. How? Since 2006, the Swedish government has cut income taxes by 6.8 billion (2.1 per cent of GDP) to boost consumer spending. It has also reduced corporation tax. Last month, Sweden announced plans to reduce taxes further in 2012. Contrast that with the UK where VAT, income tax and North Sea oil levies have all be hiked. Yet by growing the economy, the Swedish government will run a budget surplus this year.

Salmond has one thing going for him. The essence of the modern social democratic contract is that in return for collective security, citizens must be willing to sacrifice to invest in economic growth.. On the evidence so far, Scotland's middle class seems happier with that bargain than those in England.