Tuesday, 23 August 2011

Scotland's New Deal

I've just finished my annual Edinburgh Festival and Fringe holiday. This year I haven't managed to see as many shows as previously because my university dissertation is also coming to a conclusion and so I've been spending part of the holiday working on that. However, the festival and two fascinating conversations during the week have sparked some thoughts on independence.

So first, the conversations. They were with two non-aligned individuals representing different aspects of Scottish society, business and academia. Both are political, but neither is party political. In the first I was asked the very simple question - what difference would independence make. And in the second, came the very powerful message that people will vote 'yes' when, and if, they have a clear and positive expectation of what independence can deliver. Although phrased differently, they are effectively the same point. Why independence?

And second, the festival. With a multiplicity of choices why do I decide to go to any one particular show? Each year I choose my festival shows on a number of criteria, each however linked to my expectation of the show. For some, I base my decision on the company or the writer. I always try to catch Scottish Dance Theatre and have been fortunate to see the various National Theatre of Scotland shows. I try to catch David Greig's work, although his Citizens Theatre show this year has been a sell out. I know their previous work, liked it, and so have an expectation that this year's offering will also be to the same high standard. For others, I base my choice on the venue. I'm a fan of dance and from trial and error in previous years have got to know that dance shows at Dancebase or Zoo Southside are likely to be good. And this year they haven't disappointed. My expectation is that these venues offer the sort of dance I like and to a quality that I can rely on. And finally, I look for other people's recommendations. Not only the 4 or 5 star reviews in the Scotsman or online, but also the reviews on the Edinburgh Fringe website. If other people enjoy the show, ordinary folk and expert reviewers, then there is a good chance I will enjoy it too.

This process brings me back to independence. I want independence for Scotland, and the conscious decision to become an independence supporter was based on my expectations of the sort of country Scotland would become. It was never for the sake of it, but always independence for a purpose.

So, what are my expectations for independence? Why will it make a difference? What is the 'New Deal' that is on offer?

First, I believe that taking on additional responsibilities here in Scotland will allow us to achieve more. It will enable us to grow the economy more quickly, strengthen Scottish society and make our nation fairer. That must always be the test, from a Scottish point of view, for any extension of responsibilities. Do we get the tools we need to make Scotland more successful? At its most basic, therefore, it is about quality of life. And my clear expectation is that independence will improve the quality of life of people living in Scotland.

But why, or perhaps more appropriately, how? Ultimately, no one cares more about Scottish success, no one is more aware of the challenges and opportunities we face, than people living here. As residents of Scotland we have the greatest stake in making our nation the place we want it to be. With the best will in the world a government in London cannot and will not put the Scottish interest first. We have seen that, over decades, regardless of the colour of the Westminster administration. So a government here in Scotland with all the tools it needs to make Scotland better is going to have more motivation than any Westminster government and ultimately, will do a better job.

Just as with the festival, I can see the reviews - have you ever heard of a Norwegian, Dane, New Zealander or Austrian who has said no to their nation's independence. For them, independence is the best show in town.

And like favourite companies, writers or venues, I can look at the track record of independent countries. Former Plaid Cymru MP, Adam Price, has just completed a year long study of the economics of small independent states at Harvard University. The research is well worth a read, but here is just one section:

"We are fortunate in having at the heart of Europe a historical field trial in the economics of independence. Independent Luxembourg (population 500,000) and the neighboring Saarland region of Germany (population approximately 1 million) both have economies with roots in coal and steel. While Luxembourg was to become one of the founding members of the European Coal and Steel Community (ECSC), the EU’s forerunner, the Saarlanders rejected the option of independent statehood and membership of the ECSC by two-to-one in a referendum in 1955. Both regions had to grapple with the painful restructuring of their steel industries, but while Luxembourg is now home to the global giant ArcelorMittal, the Saar steel industry is a pale shadow of its former self. The difference in growth rates for the independent nation of Luxembourg and the neighboring region that rejected independence is striking (see Figure 3).  

Figure 3 — Real GDP Growth, Luxembourg and the Saarland (Sources: World Bank, Kim 2003, Eurostat.)
During the last thirty years, Luxembourg has pulled progressively ahead, outstripping economic growth in the Saarland by 2.5 to 3.5 percentage points a year on average. The cumulative effect has made Luxembourg one of the richest countries in the world and left Saarland the poorest German Land in the former West. If anyone still doubts the potential economic value of independence, they should take the short drive from the Grand Duchy to Saarbrücken: it pays to be a (small) country in your own right rather than just a region of some other state."

And whether it is Norway or Denmark, and yes Ireland, nations of a similar size to Scotland, the difference is clear to see. From observation, and statistics, these nations have all used their independence to create opportunity and improved quality of life. Even Ireland, in the aftermath of the global shock, remains wealthier per head than Scotland and the UK.

My expectations go beyond economics. In the EU, independence would mean our own voice and the ability to secure Scotland's national interest in key areas of life where what is good for Scotland is not a priority for, or in the interests of, the rest of the UK. CFP and CAP reform are just two examples. Does anyone doubt that Denmark, Slovenia or even the UK would trade their seat at the European top table?

On defence, I expect a different approach, which would see the obscenity that is Trident removed from our shores. Scotland would never, in my view, participate in illegal wars.

On welfare, we could bring together the reserved Job Centre network and our current devolved skills activities to help more people into work and could avoid the harsh approach adopted by the Tory government that is seeing vulnerable Scots lose essential support. We would have all the policy options at our disposal to deliver in Scotland the low levels of poverty and inequality seen in Scandinavia.

We would get the government we voted for, and I have no doubt that government would follow a better path for Scotland than the Tory government in London that is currently responsible for too much that is too important. Home Rule would mean no more Tory Rule.

I would expect us to do more to support families in Scotland. Today, if we as a nation decide our ambition is to deliver the sort of childcare and parental support that exists in gold-standard countries across Europe, we simply cannot do it. No matter how ingenious or dedicated we are to the task, too many of the levers are held by the government in London. I believe that not only should we have the ability to do it, but that we should do it. Childcare for all should be a driving and central ambition for a Scotland with independence.

And finally, I expect that we would do more to maximise the benefits from our renewable energy potential. Yes, we are able to do, and are doing, a great deal to push this industry forward, but we could achieve so much more if we didn't have to negotiate absurd Treasury rules or outdated UK transmission frameworks. Instead of a UK government withholding revenue raised in Scotland from the Fossil Fuel Levy, we could invest it now in the crucial infrastructure we need to maximise the benefit from our offshore energy resource. And rather than pushing for almost five years to get necessary changes in transmission charging to remove the discrimination against the most renewable-rich part of our nation, we should be able to just get on with it. With the right powers we could deliver a level playing field that would unleash a new wave of green energy investment and create even more jobs and opportunities.

I could write a book with other examples, but will restrict myself to one more. My expectation is that independence would mean greater self-confidence here in Scotland - we would stand that little bit taller - and, as a result, would deliver a new partnership and a better relationship between the nations on these Isles.

In the run up to the election, one of our nation's many great entrepreneurs, Jim McColl, used a phrase that I believe reflects both the emerging reality here in Scotland and also the aspirations of a clear majority of our citizens, including those who have not yet accepted the case for full independence. He said: "I sincerely hope that politicians from all political parties start working for a responsible Scotland - a Scotland which is a proud contributor to a Union of equals."

A few months ago John Major argued for Devo Max - a suggestion that is the closest, so far, from London politicians, to this union of equals. But it isn't quite there yet. And just as importantly, there is no indication that his view is shared by the UK government, who instead are re-trenching into a position of limited concessions, if any.

A true union of equals would mean a renegotiation of the relationship first agreed in the Treaty of Union of 1707. As I wrote previously, instead of an old incorporating Union based on the now irrelevant power politics and priorities of the 18th century, we could have a refreshed, more modern agreement fit for this 21st century.

From the evidence so far, with the Westminster government giving little or no positive response to the aspiration of Scots for an equal union, or indeed even to some of the key additions to the Scotland Bill proposed by the Scottish Government, the only option will be to secure this equality through independence. The UK, currently standing on a traditional all or nothing approach, is helping make the case for an overwhelming yes vote in the referendum.

Independence and more powers has never been about waving a magic wand and, in a flash, Scotland becomes better. The expectation that we will have a higher standard of living has always been based on the premise that improvement will require focus and determination. Independence is about equipping our nation with the tools it needs to enable our society and economy to flourish with the clear expectation that we use those tools to make Scottish society stronger and richer in every sense.

It is about hard work and a compelling vision, but that is what all government is about - the ability to harness all Scotland's talents and energies; the opportunity to take decisions without waiting for others to act or give us their permission. These are, with clear eyes and strong hearts, prizes worth seizing.

Thursday, 11 August 2011

Benefits boomerang

There's a great article by Joan McAlpine MSP in Tuesday's Scotsman about the appalling way UK government welfare reforms are impacting on Scottish families. The article was provoked by an attack made by one of the Tory government's representatives in Scotland, David Mundell. Earlier this week he had the gall to suggest Scotland couldn't afford the welfare state.

As Joan rightly says, this is yet another example of a Tory minister talking down Scotland. The approach of the last Tory government that earned them the prefix "anti-Scottish" is clearly alive and well in this new incarnation of Tory rule.

However, it is also worth examining the detail of Mr Mundell's claim. How do you judge whether or not a country can afford its welfare state?

To my mind there are two possible options. First, the size of the welfare bill as a share of government revenue (with revenue of course being the money we raise in tax for the very purpose of paying for public services). A quick calculation from the figures in Government Expenditure and Revenue in Scotland 2010 shows that in the most recent year social protection expenditure (which includes all the elements of welfare spending reserved and devolved, the vast majority of which is the reserved benefits system) was 42% of Scottish revenues, less than the 43% for the UK. So on the basis of taxes raised, once our welfare payments are made, we actually have more left to spend on other things than the UK.

The second, is welfare spending as share of GDP - as a proportion of the size of our economy. Again, the figures for 2009-10 are illustrative. In Scotland, we spend 15% of our GDP on welfare, while in the UK they spend 16%.  Quite clearly welfare payments in Scotland are more affordable on the basis of both government revenue and share of GDP.

This pattern is repeated from 2005-06 to 2008-09. For each of the last five years, Scotland has been in a stronger position than the UK on both counts, as we have been, also, in terms of overall budget position. That means Scots are better able to afford the current levels of social protection than the rest of the UK.

I love these boomerang attacks by opponents of independence. They will say anything to try to scare people away from the freedom and flexibility, the ability to determine our own destiny, that comes with independence. As Mr Mundell's clumsy attack demonstrates, Scotland can more than pay for her welfare state. However, on the basis of the actual figures and his own logic, the question for Mr Mundell becomes, can the UK?