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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There are two sides to the Muslim segregation story

White families must also be prepared to have Muslim neighbours. 

Dame Louise Casey finally published her review on social integration in Britain. Although it mentions all communities, there is a clear focus on Muslim communities. However, the issues she raises - religious conservatism, segregation in some areas and Muslim women experiencing inequalities -  are not new. In this case, they have been placed in one report and discussed in the context of hindering integration. If we are truly committed to addressing these issues, though, we have a duty of care to discuss the findings with nuance, not take them out of context, as some tabloids have already done.

The review, for example, highlights that in some areas Muslims make up 85 per cent of the local population. This should not be interpreted to mean that Muslims are choosing to isolate themselves and not integrate. For a start, the review makes it clear that there are also certain areas in Britain that are predominantly Sikh, Hindu or Jewish.

Secondly, when migrants arrive in the UK, it is not unreasonable for them to gravitate towards people from similar cultural and faith backgrounds.  Later, they may choose to remain in these same areas due to convenience, such as being able to buy their own food, accessing their place of worship or being near elderly relatives.

However, very little, if any, attention is given to the role played by white families in creating segregated communities. These families moved out of such areas after the arrival of ethnic minorities. This isn't necessarily due to racism, but because such families are able to afford to move up the housing ladder. And when they do move, perhaps they feel more comfortable living with people of a similar background to themselves. Again, this is understandable, but it highlights that segregation is a two-way street. Such a phenomenon cannot be prevented or reversed unless white families are also willing to have Muslim neighbours. Is the government also prepared to have these difficult conversations?

Casey also mentions inequalities that are holding some Muslim women back, inequalities driven by misogyny, cultural abuses, not being able to speak English and the high numbers of Muslim women who are economically inactive. It’s true that the English language is a strong enabler of integration. It can help women engage better with their children, have access to services and the jobs market, and be better informed about their rights.

Nevertheless, we should remember that first-generation Pakistani and Bangladeshi women, who could not speak English, have proved perfectly able to bring up children now employed in a vast range of professions including politics, medicine, and the law. The cultural abuses mentioned in the review such as forced marriage, honour-based violence and female genital mutilation, are already being tackled by government. It would be more valuable to see the government challenge the hate crimes and discrimination regularly faced by Muslim women when trying to access public services and the jobs market. 

The review recommends an "Oath of Integration with British Values and Society" for immigrants on arrival. This raises the perennial question of what "British Values" are. The Casey review uses the list from the government’s counter-extremism strategy. In reality, the vast majority of individuals, regardless of faith or ethnic background, would agree to sign up to them.  The key challenge for any integration strategy is to persuade all groups to practice these values every day, rather than just getting immigrants to read them out once. 

Shaista Gohir is the chair of Muslim Women's Network UK, and Sophie Garner is the general secretary and a barrister.