Bill Jamieson: SNP has a golden opportunity for a reset

Finance secretary Derek Mackay has an opportunity to return the focus to domestic issues when he delivers the Scottish Government's draft budget next week. Picture: John Devlin

With almost every week the SNP administration has been sailing deeper into dissatisfaction and trouble. On a range of domestic fronts criticism has grown – whether on policing, NHS administration, transport – and now education.

There is a growing sense of a government in Scotland that, if it has not lost the plot, has certainly lost focus on a range of domestic concerns.

Here, however, is an opportunity for re-set. A week today, Finance Secretary Derek Mackay will present Scotland’s draft budget. Few fireworks are expected. We are boxed in with a chronically high budget deficit and spending commitments in excess of the government’s capacity to deliver without further tax rises – on top of the commitment to forego the rise in higher rate tax thresholds.

But there is much the Finance Secretary could now do to restore a sense of driving mission for this administration, to re-focus on the domestic job in hand and rekindle an engagement with working families and the “just about managing”.

The SNP may protest that it is doing much on the home front that is just not being acknowledged by its critics and the media. But gaining recognition for the positive things it has done is constantly frustrated by the party’s own leadership.

For months that leadership has been obsessively preoccupied with its pursuit of constitutional change. First Minister Nicola Sturgeon has lost no opportunity to grandstand in Europe, to insist on separate EU single market arrangements for Scotland and to repeat her constant refrain for a second independence referendum – though she has dissembled on how soon she would like this to be.

Not to be outdone, former First Minister Alex Salmond has weighed in, declaring that a constitutional crisis over Brexit could be an “extremely good thing for Scotland”.

He opined that if the Supreme Court judges rejected the government’s appeal this week it would result in a constitutional crisis – “an extremely good thing for Scotland because it would put us in an extremely powerful position in terms of securing the interests of Scotland in the negotiations”.

When his party is trying to govern the country and secure the best for its people, high-blown talk of constitutional crisis being “an extremely good thing” suggests serious disengagement from reality.

Now no-one should deny that Brexit and its consequentials are not a problem or that the UK economy will not face setbacks in the period ahead. Major uncertainties abound.

But how is it that the performance of the UK and that of the economy in Scotland is now so divergent and shows every sign of widening?

Business confidence is already at a low ebb in Scotland without the former First Minister declaring that the worse it all gets, the better.

Take the latest forecasts out last week from the EY (Ernst & Young) Scottish Item Club. Output growth here, it predicted, will shrink to just 0.4 per cent next year - 1.6 percentage points lower than it expected in June.

Its prediction for this year has also been lowered from 1.2 per cent to 0.7 per cent, having forecast growth of 1.9 per cent in its report a year ago.

EY said growth would be “much slower” as existing headwinds were “compounded by political and economic uncertainty”. The report said the “bright spots” of economic growth from mid-2015 - consumer spending and investment - had “faded”. But now compare this to forecasts for the UK overall where “headwinds of political and economic uncertainty” blow no less strong. Here EY expects UK-wide growth of 1.9 per cent this year and 0.8 per cent in 2017.

For the record, the UK economy grew by y 2.3 per cent in the year to end September.

The forecasts from the Office for Budget Responsibility (OBR) – hardly the most exuberant feature of the Autumn Statement barely a week ago predicted UK GDP growth in 2017 at 1.4 per cent – way above that EY prediction of just 0.4 per cent growth for Scotland. It then predicted a modest UK recovery to 1.7 per cent in 2018 and 2.1 per cent in both 2019 and 2020.

So the question facing Scotland’s finance Secretary is this: why should Scotland be faring worse - other than the acute uncertainty and dislocation being welcomed by the SNP?

Purchasing Managers Index figures last week showed UK services activity at a 10-month high in November. Other elements of the November services were decent overall with new orders growth at the second highest level this year and outstanding business rising at the fastest rate since July 2015. Employment growth in the sector was at a seven-month high.

And the services PMI is not the only upbeat indicator for the UK to have emerged in the past week. The PMI report on construction activity showed expansion for the third month running in November and is at an eight month high. New orders are also at an eight-month high, employment up and business expectations improving.

Now, I repeat: difficult times certainly lie ahead. And the major uncertainties are not confined to Brexit: many of them relate to political upheaval in continental Europe and US trade and foreign policy when Donald Trump takes over as President in January.

In this context the idea that a constitutional crisis would be “an extremely good thing” borders on the deranged.

There is now a compelling case for the administration to focus on domestic policy – and in particular measures that would help prevent the performance gap between Scotland and the UK from widening - as if the gap was not wide enough already.

We surely need to move on from the tired mantras of constitutional politics. The administration said it would respect the outcome of the independence referendum which rejected separation – but it continues to argue the case for a second referendum, while opinion polls show little appetite for one.

It didn’t like the outcome of the UK-wide referendum to leave the EU – and constantly agitates for Scotland to be excluded – even though it accepted it was a UK-wide vote.

Here are three things that the Finance Secretary could do next Thursday:

Set up an urgent review as to why Scotland’s growth rate is so conspicuously lagging the UK and set a time limit for concrete, practical proposals to be drafted by the late spring;

Invite representations from business on how investment and expansion can be encouraged;

Ensure Audit Scotland recommendations on local authority savings are put into effect (the recent report on Falkirk Council being a good example).

It’s time to move on from grandstanding at foreign conferences, constant whining about anything and everything that Westminster does, and relentless complaints that Westminster economic policy is “doing Scotland down” – even though the UK is currently the fastest growing economy in the G-7.

Derek Mackay has an opportunity to refocus the administration and engage with the practical problems on our doorstep. They’re big enough.