Why independence will disappoint the tartan libertarians

Scotland will not be forced to adopt a scorched earth approach to public spending if it leaves the UK.

The publication earlier this month of the first report by the Scottish government’s Fiscal Commission Working Group, into the macro-economics of independence, was met with a surprising degree of approval from an unlikely source. Writing for the conservative website Think Scotland, right-leaning journalist Alex Massie praised the report's apparent endorsement of austerity as the most effective economic strategy for Scotland should it leave the United Kingdom in the next few years: "[These findings] add weight to the notion that Scotland's future lies as a low-tax, flexible, nimble, enterprise…it seems quite probable that cutting public spending - for one reason or another - will be one of the first tasks facing an independent Scotland."

The idea that independence will provoke a shift to the right in Scotland, rather than to the left, as is commonly assumed, has been touted by a number of Scottish commentators for a while without having gained any real traction in mainstream debate. It tends to be composed of three parts. The first is that SNP leader Alex Salmond and his finance secretary John Swinney are closet Thatcherites who, despite their soft-left posturing on welfare and social issues, advance an aggressively neo-liberal economic agenda, as illustrated by their support for lower corporation taxes. The second is that an independent Scotland, carrying an inherited share of UK debt amounting to between 70 to 80 per cent of its GDP, will be under heavy pressure from the international financial markets (credit rating agencies, essentially) to demonstrate a commitment to ‘fiscal credibility’ in order to maintain low borrowing costs. And the third is that SNP plans for a currency union with the rest of the UK will tie Scotland to a fiscal stability pact which imposes severe restrictions on Edinburgh’s capacity to borrow, precipitating a reduction in debt-fuelled Scottish public expenditure.

Under these conditions, nationalist visions of an independent Scotland replicating the social achievements of high-spending Nordic welfare states would have to be abandoned. Instead, as Massie contends, the first independent Scottish government would need to observe strict budgetary constraints and take steps to liberate enterprise in an effort to soak up necessary public sector job losses. In this sense, independence would act as a disciplinary force against the prolifigate Scots, prying them away from their longstanding addiction to big government. (Something, ironically, successive Westminster administrations have failed to do.)

But the assumptions on which this libertarian fantasy rests are grossly exaggerated. To begin with, although there is a strong neo-liberal streak in SNP economic policy (hence the party’s position on corporation tax), Salmond and Swinney are not the Friedmanite ideologues some make them out to be. Indeed, in his repeated calls for increased capital expenditure as a means of growing the Scottish economy out of recession, the First Minister’s response to the financial crisis has followed a clear Keynesian logic. Likewise, Swinney’s decision to levy a charge on large supermarket retailers suggests a willingness to challenge commercial interests not commonly associated with free-market enthusiasts. The SNP’s aim of cutting Scottish defence spending and redirecting the savings towards more socially productive industries provides another indication of the nationalists' underlying loyalty to traditional centre-left principles.

The right’s insistence that, with independence, ‘market realities’ will amplify Scottish austerity is similarly unconvincing. According to the commission's report, between 2006 and 2011, including a geographical share of North Sea oil and gas output, Scotland’s average deficit was 5.1 per cent of its GDP. This compares favourably to the UK’s deficit of 6.4 per cent over the same period (p.158). What’s more, the report points out that by 2017, Scotland's population share of UK public sector net debt will be equivalent to 72 per cent of its GDP, five per cent lower than the UK’s anticipated share (p.170). By the standards of equivalent European countries, this represents a substantial debt burden. But it certainly isn’t unmanageable, nor does it make additional, radical cuts to public expenditure inevitable. At any rate, any future Scottish government, having witnessed the failure of the current coalition government’s deficit reduction strategy, will be acutely conscious of the effects austerity has on economic recovery.

The report also questions right-wing claims about the likely consequences of monetary union. While it concedes that any fiscal stability pact agreed between Edinburgh and London would have to enforce "discipline and sustainability" in the management of Scottish public finances, it simultaneously acknowledges the need to provide space for "national discretion to target instruments of fiscal policy to address key local challenges and take advantage of new opportunities" (p.132). In line with the lower debt and deficit levels Scotland is likely to enjoy outside the UK, this could allow for a limited programme of deficit-financed capital expenditure, with any subsequent increase in borrowing costs covered by the new sources of revenue independence would make available. These might include the aforementioned defence savings, a permanent tax on bankers’ bonuses (something Salmond has indicated he is sympathetic to) or a clamp down on tax evasion and avoidance, among other options.

Of course, the fact that Scotland’s overall fiscal position may improve slightly with independence doesn't mean an independent Scotland would escape ongoing economic difficulties. A heavy reliance on diminishing natural resources, massive inequalities of wealth and income and a burgeoning demographic crisis ensure Scotland, like the rest of the UK and most of the developed world, will be subject to severe financial pressures in the years ahead. There is, however, little to suggest those pressures are best alleviated by a scorched earth approach to public spending, and less still to back up the assertion that such an approach is necessary or unavoidable. The chances of independence transforming Scotland into some sort of socialist nirvana are slim; the chances of it turning Scotland into a libertarian paradise slimmer yet.

Scotland's First Minister Alex Salmond holds up the signed agreement for a referendum on Scottish independence during a press conference in St Andrews House in Edinburgh. Photograph: Getty Images.

James Maxwell is a Scottish political journalist. He is based between Scotland and London.

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Manchester attack: Theresa May condemns "warped and twisted" terrorist

The Prime Minister said the police were treating the explosion at the Manchester Arena as "an appalling terrorist attack".

At least 22 people are dead and around 59 have been injured, including children, after an explosion at a concert arena in Manchester that is being treated as a terrorist attack.

Police believe the attack was carried out by a single suicide bomber, who also died. However, the police have also announced the arrest of a 23-year-old man in South Manchester in connection with the attack.

Speaking before the announcement, chief constable Ian Hopkins said: "We have been treating this as a terrorist attack." The attacker was named by papers late on Tuesday as Salman Abedi, a British man of Libyan heritage. The source for this is US, rather than British, intelligence.

The victims were young concertgoers and their parents. Victims include the 18 year old Georgina Callander and the eight year old Saffie Rose Roussos.

The Prime Minister Theresa May earlier said that the country's "thoughts and prayers" were with those affected by the attack. 

She said: "It is now beyond doubt that the people of Manchester and of this country have fallen victim to a callous terrorist attack, an attack that targeted some of the youngest people in our society with cold calculation.

"This was among the worst terrorist incidents we have ever experienced in the United Kingdom, and although it is not the first time Manchester has suffered in this way, it is the worst attack the city has experienced and the worst ever to hit the north of England."

The blast occurred as an Ariana Grande concert was finishing at Manchester Arena on Monday night. According to May, the terrorist deliberately detonated his device as fans were leaving "to cause maximum carnage". 

May said the country will struggle to understand the "warped and twisted mind" that saw "a room packed with young children" as "an opportunity for carnage". 

"This attack stands out for its appalling, sickening cowardice deliberately targeting innocent and defenceless children," she said. "Young people who should have been enjoying one of the most memorable nights of their lives."

She thanked the emergency services "on behalf of the country" for their "utmost professionalism" and urged anyone with information about the attack to contact the police. 

"The general election campaign has been suspended. I will chair another meeting of Cobra later today."

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Ending her statement, she said: 

"At terrible moments like these it is customary for leaders politicians and others to condemn the perpetrators and declare that the terrorists will not win. But the fact we have been here before and we need to say this again does not make it any less true. For as so often while we experienced the worst of humanity in Manchester last night, we also saw the best.

"The cowardice of the attacker met the bravery of the emergency services and the people of Manchester. The attempt to divide us met countless acts of kindness that brought people together and in the days ahead those must be the things we remember. The images we hold in our minds should not be those of senseless slaughter, but the ordinary men and women who put their own concerns for safety aside and rushed to help."

Emergency services, including hundreds of police, worked overnight to recover the victims and secure the area, while families desperately searched for their children. The dead included children and teenagers. The injured are being treated at eight hospitals in Greater Manchester, and some are in critical condition. 

The so-called Islamic State has claimed responsibility for the attack, although this has not been independently verified, and the organisation has been slow to respond. 

Theresa May chaired a Cobra meeting on Tuesday morning and another in the afternoon. She said police believed they knew the identity of the perpretator, and were working "at speed" to establish whether he was part of a larger network. She met Manchester's chief constable, the Manchester Mayor Andy Burnham, and members of the emergency services. A flat in a Manchester suburb has been raided. 

There were reports overnight of strangers offering their homes to concertgoers, and taxis taking people away from the scene of the explosion for free.

As the news broke, Grande, who had left the stage moments before the attack, tweeted that she felt "broken". 

Manchester's newly elected metro mayor, Andy Burnham, called the explosion "an evil act" and said: "After our darkest of nights Manchester is waking up to the most difficult of dawns."

He thanked the emergency services and the people of Manchester, and said "it will be business as usual as far as possible in our great city". 

Extra police, including armed officers, have been deployed on the streets of the city, and the area around the Manchester Arena remains cordoned off. Victoria Station is closed. 

The main political parties suspended campaigning for the general election for at least 24 hours after the news broke. Labour leader Jeremy Corbyn said: “I am horrified by the horrendous events in Manchester last night. My thoughts are with families and friends of those who have died and been injured.

“Today the whole country will grieve for the people who have lost their lives."

Scotland’s First Minister Nicola Sturgeon said: “My thoughts are with the victims, their families and all those who have been affected by this barbaric attack in Manchester."

Sadiq Khan, the Mayor of London, a city which suffered a terrorist attack two months ago, tweeted that: "London stands with Manchester."

The attack happened while many Brits were sleeping, but international leaders have already been offering their condolences. Justin Trudeau, the Prime Minister of Canada, tweeted that: "Canadians are shocked by the news of the horrific attack in Manchester." The Parliament of Australia paused for a minute's silence in remembrance of the dead. 

 

 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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