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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The private renting sector enables racist landlords like Fergus Wilson

A Kent landlord tried to ban "coloured people" from his properties. 

Fergus Wilson, a landlord in Kent, has made headlines after The Sun published his email to a letting agent which included the line: "No coloured people because of the curry smell at the end of the tenancy."

When confronted, the 70-year-old property owner only responded with the claim "we're getting overloaded with coloured people". The letting agents said they would not carry out his orders, which were illegal. 

The combination of blatant racism, a tired stereotype and the outdated language may make Wilson seem suspiciously like a Time Landlord who has somehow slipped in from 1974. But unfortunately he is more modern than he seems.

Back in 2013, a BBC undercover investigation found 10 letting agent firms willing to discriminate against black tenants at the landlord's request. One manager was filmed saying: "99% of my landlords don't want Afro-Caribbeans."

Under the Equality Act 2010, this is illegal. But the conditions of the private renting sector allow discrimination to flourish like mould on a damp wall. 

First, discrimination is common in flat shares. While housemates or live-in landlords cannot turn away a prospective tenant because of their race, they can express preferences of gender and ethnicity. There can be logical reasons for this - but it also provides useful cover for bigots. When one flat hunter in London protested about being asked "where do your parents come from?", the landlord claimed he just wanted to know whether she was Christian.

Second, the private rental sector is about as transparent as a landlord's tax arrangements. A friend of mine, a young professional Indian immigrant, enthusiastically replied to house share ads in the hope of meeting people from other cultures. After a month of responding to three or four room ads a day, he'd had just six responses. He ended up sharing with other Indian immigrants.

My friend suspected he'd been discriminated against, but he had no way of proving it. There is no centrally held data on who flatshares with who (the closest proxy is SpareRoom, but its data is limited to room ads). 

Third, the current private renting trends suggest discrimination will increase, rather than decrease. Landlords hiked rents by 2.1 per cent in the 12 months to February 2017, according to the Office for National Statistics, an indication of high demand. SpareRoom has recorded as many as 22 flat hunters chasing a single room. In this frenzy, it only becomes harder for prospective tenants to question the assertion "it's already taken". 

Alongside this demand, the government has introduced legislation which requires landlords to check that tenants can legitimately stay in the UK. A report this year by the Joint Council for the Welfare of Immigrants found that half of landlords were less likely to rent to foreign nationals as a result of the scheme. This also provides handy cover for the BTL bigot - when a black British tenant without a passport asked about a room, 58 per cent of landlords ignored the request or turned it down

Of course, plenty of landlords are open-minded, unbiased and unlikely to make a tabloid headline anytime soon. They most likely outnumber the Fergus Wilsons of this world. But without any way of monitoring discrimination in the private rental sector, it's impossible to know for sure. 

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