Alex Salmond. Photo: Getty
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Alex Salmond: Why should Scotland let itself be ruled by the Tories?

People in Scotland – often the most vulnerable – are suffering from the impact of a government they didn’t elect and which cares little or nothing for their lives, says the SNP leader.

When the inconclusive result of the last UK general election became clear, there was considerable anger among some commentators – particularly from the right – that Gordon Brown was seeking to form a new administration. For our part, although we were not prepared to enter a formal coalition, I made it clear that I was open to exploring the possible involvement of the SNP in an attempt to construct an alternative scenario to what we believed would be the disaster of a Conservative-led government.

But the sense, from many both within and outside the Labour Party, was that although there had been no obvious winner, Mr Brown and Labour had been the clear losers – in England, at any rate. Although Labour had won 258 seats, many people believed that it would have been wrong to seek to form a government on that basis.

Imagine then how laughable and absurd it would have been if a party had won just a single seat in England but had not only sought to lead a government but succeeded in doing so. Such a democratic outrage is so far-fetched that it would not cross anyone’s mind as a reasonable outcome for even a second.

I assume readers in England would, rightly, refuse even to contemplate such a ludicrous possibility. And yet in Scotland today we are subject to a Westminster coalition government led by the Tories, who do indeed have the grand total of one MP north of the border. This affront to democracy gets to the heart of the independence debate. It cannot be right for a party that is overwhelmingly rejected in election after election (in the four most recent UK elections the Tories have returned zero, one, one and one MP from Scotland) to form a government pursuing policies that very few people support. In fact, for half the time since the end of the Second World War, Scotland has been governed from Westminster by parties with no majority here.

So when the Prime Minister agreed with his No campaign ally Ian Davidson, a Labour MP, that he shouldn’t come to Scotland to campaign against independence because he was “a Tory toff from the Home Counties, even one with a fine haircut”, both of them spectacularly missed the point.

I suspect both Mr Davidson and Mr Cameron know fine well that the Prime Minister’s choice of barber, background and nationality are utterly irrelevant. What is important is that people in Scotland – often the most vulnerable – are suffering from the impact of a government they didn’t elect and which cares little or nothing for their lives.

Scottish MPs have voted decisively against the bedroom tax, the welfare benefits uprating bill, means-testing for child benefit, cuts in capital spending, Royal Mail privatisation and many more coalition policies but all of them are being imposed on Scotland anyway.

Within the constraints of the Scottish Parliament, on many of these issues, there is nothing we can do. On others the Scottish government is working hard to soften the blow and to seek ways of mitigating the impact. But it makes a mockery of devolution for the Scottish Parliament to be told to divert money from other services to mitigate the impact of policies that had virtually no support in Scotland in the first place.

Because of the way public services are funded in the “devolved nations”, even policies under the control of the Scottish Parliament are under pressure from the marketising fixation at Westminster.

In 2011 I appeared on the BBC’s Question Time in Liverpool where I sympathised with people in England because of the destruction of their National Health Service that appeared to be taking place. I remarked that in Scotland we had gone down a very different route and had decided to keep the NHS in public hands. Now the shadow health secretary at Westminster is warning that the NHS is under attack and that the Tories are taking the first steps towards an American-style system. It was, of course, Labour that enthusiastically embraced the idea of competition and markets in the NHS and ripped off taxpayers by hugely expanding the ruinous Private Finance Initiative.

Labour supporters must now be watching in horror, as the journey started by their leaders could soon be completed by the Tories, with the result that universal public health provision free at the point of use could become a thing of the past in England.

It saddens me greatly to see what is being done to this great institution, but it is no longer just a case of expressing sympathy. Within the Westminster funding system, the privatisation of the NHS in England could be deeply damaging for the funding of public services in Scotland.

That is because, under the (frequently misunderstood) Barnett formula, if privatisation leads to cuts in public funding for the NHS in England this will lead to cuts to funding in Scotland. So decisions taken in Westminster by governments we didn’t elect have damaging long-term consequences for people in Scotland.

In this respect, it is important to recognise the myth that an independent Scotland will make it impossible for Labour to form a government in the rest of the UK. In fact, in only two of the 18 general elections since 1945 (October 1964 and February 1974) would the largest party at Westminster have been different if Scotland had been independent, and even then, those two governments lasted for less than 26 months in total. So Scotland’s votes within the Union have little or no influence on the make-up of the Westminster government.

But Scotland’s values as an independent country could have a much more profound impact. We could be a progressive beacon for those across these islands who yearn for a fairer society. Even before the Tories entered office in 2010, Danny Dorling, then a professor at the University of Sheffield, calculated that the UK was the fourth most unequal country in the developed world.

In Scotland we do not have such extremes of wealth but the gap between rich and poor is still far too wide. The anti-poverty campaigner Bob Holman, one who was famously sought out by Iain Duncan-Smith, recently announced that he was supporting independence. He wrote: “I was born in England, though I have lived in Glasgow for 30 years. I am a member of the Labour Party, which is against Scottish independence, but I will be voting Yes in September. My decision is not because I have strong nationalistic feelings, but because I believe in democracy and equality.”

And he went on: “An SNP government in an independent Scotland would be committed to abolishing the punishment that is right-wing welfare.”

On this he was right. But I don’t believe such a commitment is confined to the SNP. I don’t believe any government in an independent Scotland would engage in the dismantling of the welfare state we see under way in Westminster today. I would never pretend that governments of an independent Scotland – of whatever colour – will never make mistakes. I don’t believe we have higher values than anyone else. As in all democracies, there will be differences of opinion and a lively policy debate.

But since 1999, the Scottish Parliament has shown above all that taking decisions in Scotland works for the people who live here. When free personal care for the elderly was brought in, the policy was supported by every party in the parliament.

Since 2007 the SNP has resisted the marketisation of the NHS, abolished university tuition fees and removed the means test from prescriptions. We have championed the universal ideal and recently we have worked with Labour to find a way to help the disabled and other people suffering from the cruel and inhumane bedroom tax.

In an independent Scotland with control of social security, I firmly believe there would be no place for the divisive language of “scrounger v striver” which is designed to undermine the welfare state.

Last year, I was honoured to be asked to give the Jimmy Reid Memorial Lecture. In that lecture, I recalled Jimmy’s celebrated Glasgow University rectorial address in 1972, in which he spoke of alienation as “the cry of men who feel themselves the victims of blind economic forces beyond their control. It is the frustration of ordinary people excluded from the processes of decision-making. The feeling of despair and hopelessness that pervades people who feel with justification that they have no real say in shaping or determining their own destinies.”

When I recited those words I could not have imagined even then the scale of the rise in food bank use and the despair of those forced to turn to them because of the coalition government’s destructive attitude towards social security.

When David Cameron came into office, his big idea was the so-called big society. But what we see today is a shrinking society – one in which the third sector and private companies are being asked to become the public sector’s replacement, not its partner.

So Scotland could indeed be a champion of a progressive society – demonstrating a different and, I believe, a better way.

This does not mean an unreformed state. We have focused on prevention and early intervention. We have made some major reforms, such as the reduction in the number of police forces, and we have cut public bodies from 199 to 113. But we believe in a collaborative model of public services – not one based on competition.

The UK, then, is an unbalanced and unequal society in many ways. It concentrates an extraordinary amount of economic activity in London and the south-east of England. Shortly after he came to office the Prime Minister warned of the consequences. “This really matters,” he said. “An economy with such a narrow foundation for growth is fundamentally unstable and wasteful – because we are not making use of the talent out there in all parts of our United Kingdom.”

However, since then the imbalances have got worse. A recent report said 80 per cent of private-sector job creation was taking place in London. Before Christmas, Vince Cable spoke of London as “a giant suction machine”, draining life from the rest of the country. In Scotland, we have seen an improvement in economic performance since devolution. In fact, even without any revenue from North Sea oil, GDP per head is almost the same as for the UK. With oil and gas revenues our economy, per head, is substantially larger.

Far from being the oil-dependent economy depicted by those opposed to independence, Scotland has diverse strengths and our public finances are healthier than the UK’s.

We have more top universities, per head, than any other country and a food and drink industry aiming to turn over more than £16bn a year. We are major players in the life sciences, financial services, creative industries and other growth sectors. Despite the UK’s neglect of manufacturing, we still have significant manufacturers of international standing and we have enormous potential in renewable technology.

So, the issue for people in Scotland is not if we can afford to be an independent country – after all, we are one of the wealthiest nations on the planet. The issue is how best we can build economic security and create opportunities in the future. The choice is whether to continue as an economic region of the unbalanced, unequal Westminster model, or take on the powers of a national economy in an independent Scotland.

 As with all countries, we will have challenges to overcome. The proximity of a world city such as London can be a great advantage but we need the powers to give Scottish business a competitive tax edge to counter the suction effect identified by Mr Cable. Expanding the working population is an important goal. But we are suffering from an immigration policy driven by a Westminster establishment in fear of the UK Independence Party.

Both the rhetoric and the policy are deeply damaging. The decision to abolish the post-study work visa is already having an effect. In the Scottish government’s white paper on independence – Scotland’s Future – we set out how an immigration policy can be designed for Scotland’s needs within the Common Travel Area.

In Scotland’s Future we also set out phased transformational plans for childcare, which will open up much greater opportunities for women in particular and boost the workforce. This, in turn, will boost tax revenues. Crucially, with independence, that tax revenue will stay in Scotland, rather than being sent to the London Treasury, which will allow us to reinvest to fund the policy. If the SNP was to form the first government of an independent Scotland, it will be this expansion of childcare that will be our priority, so we will not go ahead with the married couple’s allowance planned for next year.

We also propose a collaborative social partnership model to boost productivity. Our Fair Work Commission will have a remit to increase the minimum wage at least in line with inflation, and we will bring together employers and employees in a convention on employment and labour relations to look at a range of issues such as a living wage. By taking these and other measures, Scotland will become a more resilient economy. Other, comparable European countries have achieved higher growth rates and more equal societies, so we know what is possible.

And for the rest of the UK, a strong Scotland will act as a counterweight to rebalance the activity so concentrated at present in the south-east of England. These, of course, are SNP proposals. But the first government of an independent Scotland will be the government that wins the first election in an independent Scotland in May 2016.

Before that government takes office, a Yes vote this September will trigger the start of negotiations with the UK government to ensure the transition to independence. Both the Scottish and the UK governments have signed the 2012 Edinburgh Agreement, which commits us to respecting the outcome of the referendum and to working together constructively in the best interests of the people of Scotland and the rest of the UK.

On the issue of currency, the Scottish government has accepted the advice of the Fiscal Commission Working Group that a sterling-zone currency union is in the best interests of an independent Scotland and the rest of the UK. The pound is not the property of George Osborne or Ed Balls, nor even Danny Alexander. It is as much Scotland’s pound as the rest of the UK’s.

When Mr Osborne flew in to Scotland to pronounce that he would not accept such an arrangement and would refuse even to discuss the matter with us, the Chancellor chose to misrepresent the fiscal commission’s proposals. He chose also to misrep­resent the size of the Scottish financial sector and the impact of oil-price fluctuations, and offered misleading comparisons with the eurozone.

The Treasury further argued that the UK is the continuing state in international law, and so Scotland is not entitled to a share of the Bank of England, among other things. As a campaign tactic, it seems as if the UK government is insisting on the sole right
to determine what the assets are and which are the liabilities.

Despite the UK Treasury’s position, the Scottish government is continuing to be constructive. Even though the Treasury has accepted that it has the legal obligation to pay back the UK debt in the event of a Yes vote, we are willing to finance a fair share. This is dependent, of course, on receiving a fair share of the assets. It is the UK government that curiously seems to be insisting, through its line of argument, that the rest of the UK must shoulder the whole debt burden.

As Christine Bell, professor of constitutional law at Edinburgh, has pointed out, “Legally under international law the position is clear: if the remainder of the UK keeps the name and status of the UK under international law, it keeps its liabilities for the debt. The UK took out the debt, and legally it owes the money. Scotland cannot therefore ‘default’.”

This is just one reason why I believe that, despite the destructive rhetoric of the No campaign, common sense will prevail and a fair share of assets and liabilities will indeed be agreed. Besides Mr Osborne’s announcement, the No campaign has seized on comments by the president of the European Commission, José Manuel Barroso, about Scotland’s EU membership, including a preposterous comparison between Scotland and Kosovo. We have always accepted that it is for the member states to decide the route for Scotland to continue its membership of the EU as an independent country. We have also always accepted that negotiations will have to take place.

But there is nothing in any European treaty that allows for the removal of five million EU citizens against their will because they have taken part in a legal, democratic vote about how they should be governed. Mr Barroso’s comments were followed by a range of experts setting out why he was wrong.

Sir David Edward, a former British judge at the European Court of Justice who describes himself as a moderate unionist, has said there is an obligation to negotiate Scotland’s membership between the event of a Yes vote and Scotland becoming independent.

Yet even more than the legal position, we need to be clear about the EU’s very purpose. It is founded on the principles of democracy, freedom and solidarity. It is in the business of enlargement. To remove Scotland would involve turning its back on these founding values and it is entirely unclear why any EU state would contemplate such a step.

Our vision of an independent Scotland is one of a country engaging fully with the EU and the broader international community, co-operating closely with our friends and neighbours in the UK.

The close cultural and social ties across these islands will continue and, I believe, will be strengthened. We can learn from each other in a partnership of equals based on mutual respect. I passionately believe that an independent Scotland will be a more democratic, fairer and more prosperous country and that is why I believe the momentum is so strongly with the Yes campaign and why on 18 September the people of Scotland will vote Yes. 

Alex Salmond is the leader of the Scottish National Party and the First Minister of Scotland

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.