Pegging electoral success to the economy is a risky business - as Alex Salmond is finding out

The emotive, victory-clutching style of the Yes campaign is at risk of floundering before the cool, hard realities presented by the UK Treasury.

The last time I had dinner with Alistair Darling was in 1997. Sitting next to him, I suggested that tying your electoral fortunes to the economic cycle was foolish: better to make the Bank of England independent and set targets to deliver the revenue to be spent on ideological grounds. “Oh no”, Darling replied, “We’ve been out of power for thirteen years – we aren’t going to give that up so easily”. Four weeks later, and for the only reason they had planned it all along, the New Labour administration under Tony Blair made the Bank of England independent and inflation targeting followed.

So it was with some trepidation that I approached the “Better Together” dinner with the same Alistair Darling in London last week. Darling has been through the wringer since 1997, having been handed the poison chalice: sorting out the mess left by Gordon Brown in the wake of 2008, while simultaneously having to fend off attacks from his own side, who favoured Ed Balls for Chancellor at the time. Amazingly, Darling, to his credit, has come through the experience without becoming bitter. It is an object lesson in self-preservation – don’t let others in and you will be the stronger for it.

So taking on the task of putting the case against Scottish Independence comes as a sign of energy, and a desire to remain relevant. At the dinner, Darling said little that he hadn’t already said in public – no Chatham House rules need breaking here. But it was good to hear it from his own lips:

  • The polls show an almost constant 30 per cent of Scotland in favour of independence, but 25 per cent of the population remain undecided.
  • The SNP has a war chest of £7m to fight their campaign, while “Better Together” has managed to scrape together £2.5m.
  • The SNP under Alex Salmond has a vice-like grip on the media in Scotland, where no opposition is tolerated and all “victories” are hyperbolically spun.

The “Better Together” campaign has had to confine itself to largely technical issues based on economic factors many of which fly over the heads of all but the most dedicated economics geeks. This makes it difficult to connect territory that Salmond, who refuses to debate with Darling, and the SNP have monopolised: the emotional level. It almost characterises the two men: Salmond the firebrand ideologist, all rhetorical claymore and political intelligence, versus Darling, the cool-headed technician who appeals to the mind. In a world where the phrase “The personal is political” has been raised to the level of a mantra, the emotional will always win.

But there are a number of tricks being missed here. The dinner coincided with Alex Salmond’s triumphal declaration of victory over the UK Treasury – they “blinked first” as he put it – when it announced that a devolved UK would stand by its existing debts. It is Salmond’s aggression and quickness to claim even the most minor victory that is his Achilles' heel. The gap between the evidence and reality increasingly makes Scotland look like a Celtic dictatorship, because, arguably, Chief Secretary to the Treasury Danny Alexander laid an economic trap that Salmond happily walked into.

When it comes to assuming part of the UK’s interest payments the only thing that a devolved Scotland can now do if negotiations about what “fair and proportional” means break down, is walk away. They already have form in being unable to reach any amicable compromise with Westminster - so it is not inconceivable. In that case, nobody will lend Scotland a penny to fund its commitments, except at a punitive rate and with the status of an Emerging Market.

Equally, Salmond’s flip-flopping on the newly independent Scotland’s currency is a red herring. Whether Scotland adopts the UK pound or not it should be made clear it matters nothing to the UK. In the same way that Hong Kong, Singapore and a swathe of Latin American nations peg themselves to the fortunes of the United States and follow their interest rate cycle, the Federal Open Market Committee sets interest rates with reference to its domestic economy. A devolved UK would be no different. “No change there then”, some might say. But in a broken Union it is conceivable the Bank of England will pursue an interest rate policy which is exactly contrary to the economic needs of a new Scotland.

Finally, neither the “Better Together” campaign, nor for that matter, the SNP have ever really answered the question of why Independence needs to happen. There are a series of “wants” on display, mainly those who want a place in history or increased political power for themselves, but need? That is yet to be demonstrated. The Scottish Assembly already has control of health, education, law and order and child care. Scottish independence will change nothing in those areas. It also has its own tax-raising powers – taxes that can be spent exclusively on Scottish priorities – but it has never used them. Scotland already has democracy in abundance – local, national, UK and European representation. How much more democracy and say in its own matters can Scotland conceivably need or tolerate? What is the need that Scottish Independence satisfies?

There is both hope and despair for Darling and the “Better Together” campaign: hope that the polls will hold and despair, like in the Canadian experience when there was a never-explained last minute 10 per cent surge in support for Québécois independence, that things could swing disastrously the other way. One thing is for sure: if there isn’t a decisive rejection of independence this time, the SNP will be back again in five years' time.

Johann Lamont, Alistair Darling, Ruth Davidson and Willie Rennie at the launch of the "Better Together" campaign in 2012. Photograph: Getty Images.

Head of Fixed Income and Macro, Old Mutual Global Investors

Photo: Getty
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If the left leaves it to David Cameron, we'll have Brexit for sure

Only an upbeat, leftwing case can keep Britain in the European Union.

After months flapping and hesitation, and with much of the reporting and detail so dull that it has barely penetrated the consciousness of even those who speak the language of ‘directives’ and treaty provisions, the EU referendum is upon us. With David Cameron signalling concrete outcomes for negotiations, we seem to be set for June, whatever the protests from opposition parties about the date being too close to local and national elections.  

Cameron’s deal, whose most substantive element consists of denying in-work benefits to European citizens, exemplifies the kind of debate that Conservative strategists want to create: a tedious, labyrinthine parochialism, blending the EU’s procedural dullness with an unquestioned mythology of the little Englander. Try actually reading the various letters, let alone the draft decisions, that Cameron extracted from Donald Tusk, and the agreement turns to putty in your head. But in summary, what Cameron is negotiating is designed to keep the EU debate as an in-house affair within the right, to continue and formalise the framing of the debate as between two strains of anti-migrant sentiment, both of them backed by big business.

The deal may be reactionary, but it is also mediocre in its scope and impact. The worries that many of us had in the leftwing pro-In camp, that Cameron’s deal would push back freedom of movement and working and environmental protections so far that we would be unable to mobilise for continued membership of the EU, can now be put to bed. Quite the opposite of allowing Cameron's narrative to demoralise us, the left must now seize an opportunity to put imagination and ideas back at the heart of the referendum debate.

The British political landscape in which that debate will play out is a deceptively volatile environment. Party allegiance is at a nearly all time low. Inequality is growing, and so is the gap between attitudes. The backbone of the UKIP vote – and much of the Out vote – will come from a demographic that, sometimes impoverished by the legacy of Thatcherite economic policy, sees itself as left behind by migration and change. On top of the class war, there is a kind of culture war underway in today’s Britain: on one side those who see LGBT rights, open borders and internationalism as the future; on the other side, those who are scared of the future. About the only thing these groups have in common with one another is their anti-establishment instincts, their total disdain and mistrust of politics as usual.

The only political movement to have broken through the fog of cynicism and disillusionment in British politics has come from the left. Jeremy Corbyn’s rise to the leadership of the Labour has unleashed something new - and while large parts of the press, and some Labour backbenchers, have portrayed this rise as a crusade of the “croissant eating” metropolitan elite, the reality is very different. The rise of the new Labour left has given voice to a renewed socialist and working class politics; its explicitly radical, outsider approach has given it traction across the social divides – among the young looking for a future, and among Labour’s old base. 

A politics of hope – however vague that term might sound – is the only real answer to the populist Euroscepticism that the Out campaign will seek to embody. Radical politics, that proposes an alternative narrative to the scapegoating of migrants, has to find voice in the course of this referendum campaign: put simply, we need to persuade a minimum wage worker that they have more in common with a fellow Polish migrant worker than they do with their employer; we need to persuade someone on a social housing waiting list should blame the privatisation of the housing market, not other homeless families. Fundamentally, the real debate to be had is about who the public blames for social injustice: that is a question which only the left can satisfactorily answer.

The outsider-led volatility of British politics gives the EU referendum a special kind of unpredictability. For voters who have lost faith in the political establishment – and who often have little materially to lose from Brexit – the opportunity to deliver a blow to David Cameron this summer will be tempting. The almost consciously boring, business-dominated Britain Stronger In Europe campaign makes a perfect target for disenfranchised public sentiment, its campaigning style less informed by a metropolitan elite than by the landed gentry. Its main weapons – fear, danger and uncertainty – will work on some parts of the electorate, but will backfire on others, much as the Better Together campaign did in the Scottish referendum.

Last night, Another Europe is Possible held a launch meeting of about a hundred people in central London - with the backing of dozens of MPs, campaigners and academics across the country. It will aim to provide a radical, left wing voice to keep Britain in the EU.

If Britain votes to leave the EU in June, it will give the Right a mandate for a renewed set of attacks on workers’ rights, environmental protections, migrants and freedom of movement. But without an injection of idealism and radicalism,  an In vote will be a mandate for the status quo - at home and in Brussels. In order to seize the real potential of the referendum, the left has to approach the campaign with big ideas and demands. And we have to mobilise.