Scotland doesn’t benefit from British economic 'strength'

But the SNP’s lack of radicalism makes it difficult for the Yes campaign to capitalise.

Against expectations, the Chancellor’s visit to Glasgow last week was a success. Speaking to a gathering of Scottish business leaders, and armed with a hefty new Treasury report, George Osborne set-out a detailed critique of SNP plans for Scotland to retain the pound after independence, a key feature of the nationalists’ 2014 prospectus. But framing his specific warnings about the pitfalls of a "Eurozone-style" monetary union was a broader attack on the economics of separation: the size and scale of the UK’s economy shields Scots from the "rapids of globalisation" – leave it and Scotland could be exposed to ameltdown of Irish, Greek or Cypriot proportions. This is a powerful line, repeated with brutal efficiency by unionist campaigners. The problem, however, is that it simply doesn’t stack up. In fact, Scotland’s vulnerability to global economic shocks is amplified by its continued membership of the UK.

Two recent reports – The Mismanagement of Britain by the Jimmy Reid Foundation and The British Growth Crisis by the Sheffield Political Economy Research Institute (SPERI) - shatter the notion of British economic strength. The former, written by Scottish economist Jim Cuthbert, out-lines the long-term decline in the competitiveness of the UK economy. Cuthbert argues that the growing deficit in the UK’s trade in general goods and services from the 1970s onwards was disguised first, in the ‘80s, by high North Sea oil tax receipts and then, during the ‘90s, by revenues from an increasingly dominant financial services sector. The underlying deficit became more pronounced as successive Westminster governments, Conservative and Labour, allowed Britain’s manufacturing base to erode. Ultimately, this made the British economy over-reliant on a handful of large financial institutions operating at the heart of the international financial system.

In The British Growth Crisis, Professor Colin Hay explains how Britain, as one of a group of deregulated economies including the United States and Ireland, felt the effects of the 2008 crash earlier and more powerfully than other Western states with smaller and less globally integrated banking sectors. As the crisis developed, spreading out from its Anglo-American epicentre, international trade went into free-fall. This tightened the squeeze on British manufacturing, which by now was in no condition to prop-up the UK’s public finances as they grappled with recession. The subsequent loss of taxable economic activity, as well as the huge cost of the bank bail-outs, sent the economy into a prolonged slump and precipitated an explosion of British debt.

Coupled with Osborne’s austerity strategy, the structural imbalances in the British economic model described by Cuthbert and Hay account for the severity of Britain’s downturn (the worst since the 1930s) and the weakness of its recovery (the slowest on record). While growth is beginning to return to France, Germany and even the US, the UK remains more or less stagnant. None of this happened by accident. It was the result of decisions taken by two or three generations of British political leaders which viewed state intervention in the market as a barrier to prosperity. The consequences for Scotland, which has one of the worst social records in the developed world, have been profound. Scots might be entitled to feel doubly aggrieved given the origins of the current crisis lie, to some extent at least, in the liberalising policies of the Thatcher governments they repeatedly rejected. That Scotland’s oil wealth was used to fund the implementation of a number of those policies only adds insult to Scottish injury.

Yet, despite the efforts of the pro-independence left, the threat to Scotland’s economic security posed by British financial instability does not feature as heavily in the constitutional debate as it might. This is because the SNP, for both political and ideological reasons, accepts much of the neo-liberal settlement which has dominated British public life for more than three decades. The clearest illustration of this can be found in the party’s support for the current UK-wide system of financial regulation (described by SNP finance secretary John Swinney as a "solid framework") to remain untouched following the break-up of the Union – a position which reflects the closeness of Alex Salmond to Scottish finance capitalism over recent years. The SNP’s controversial commitment to cut corporation tax provides further evidence of its free-market tendencies.

The political significance of the nationalists’ economic conservatism was laid bare last week, widely (and correctly) perceived as a particularly bad one for the Yes campaign. The economic case for independence should be among the SNP’s strongest cards: the British laissez-faire experiment has proved a spectacular failure, leaving ordinary Scots facinga futureof falling living standards and deteriorating working conditions. Moreover, what remains of the Scottish welfare state - protected from the most radical of New Labour’s reforms by devolution – has come under sustained assault by an unpopular Tory-led government determined to turn a crisis of neo-liberalism into one of social democracy. But, in its current state, the SNP can’t make any of this work to its advantage.It may require some awkward policy U-turns and a degree of ideological repositioning, but Salmond has to start explaining just how serious a hazard the UK represents to Scotland’s economic health.

Scotland's First Minister Alex Salmond gestures 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.

A protest in 2016. Getty
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Fewer teachers, more pupils and no more money. Schools are struggling

With grammars and universal school meals, both main parties have decided to answer policy questions no one is asking.

If you ask people in Britain what the ­biggest political issues are, schools don’t make the top five. Yet last week Labour set its first party political broadcast in a fictional classroom where a teacher described Jeremy Corbyn’s plans for schools’ future. Without a Labour government, the teacher opines, there will be no more libraries, or teachers, or school trips. Though the scenario is a flagrant breach of the law – teachers must remain politically impartial – education isn’t a bad place for Labour to start its campaign. Schools really are quite screwed.

Three things are hitting hard. Schools have less money, fewer people want to be teachers, and an avalanche of under-sevens is hitting the playgrounds and won’t stop for several more years.

How did we get here? In 2015 the Conservatives pledged to keep school funding at the same rate per pupil over the lifetime of the parliament. Yet while the money coming in has remained flat, schools have faced huge hikes in costs, particularly staffing. Big increases in mandatory pension contributions and National Insurance have taken their toll; so has the apprenticeship levy. The
Institute for Fiscal Studies estimates that all told, schools will have lost about 8 per cent of their budget by 2020. That’s £3bn of savings that must be found. Or, more bluntly, the starting salaries of 100,000 teachers.

It is worth remembering at this point how huge the schools sector is and how many people are affected. About half a million teachers work in the 20,000-plus state schools. A further 300,000 people work in allied professions. There are eight million children and an estimated 12 million parents. Lump in their grandparents, and it’s fair to say that about 20 million voters are affected by schools in one way or another.

The budget squeeze is leading many of these schools to drastic measures: firing teachers, increasing class sizes, cutting music from the curriculum, charging parents for their child’s place on a sports team, dropping transport provision, and so on. Begging letters to parents for donations have become commonplace; some have asked for contributions of up to £60 a month.

On top of money worries, teachers are abandoning the profession. In 2015, an additional 18,000 went to work in international schools – more than were trained at universities over the same year. They joined the 80,000 teachers already working in British schools abroad, attracted by higher pay and better working conditions.

Graduates are also snubbing teaching. With starting salaries increasing at less than 1 per cent a year since 2010, new teachers are now paid about 20 per cent less than the average graduate trainee. Changes to higher education are also such that trainees must now pay £9,000 in order to gain their teaching qualification through a university. The government has missed its target for teacher trainees for five years now, and there is no coherent plan for hitting it.

No money and no teachers is less of a problem if you are in a demographic dip. We had a bizarrely low birth rate at the turn of the century, so we currently have a historically small proportion of teens. Unfortunately, the generation just behind them, of seven-year-olds and under, is enormous. Why? Because the “baby echoers”, born in the 1970s to the baby boomers, had children a bit later than their parents. Add to that the children recently born to immigrants who arrived in their twenties when the European Union expanded in the early 2000s, and Britain is facing an El Niño of toddlers. By 2025 a million extra children will be in the school system than in 2010.

To keep on top of the boom the government has been creating schools like a Tasmanian devil playing Minecraft. But 175,000 more places will be needed in the next three years. That’s the equivalent of one new secondary school per week from now until 2020.

In fairness, the government and councils have put aside money for additional buildings, and roughly the same number of parents are getting their first-choice school as before. The free schools policy, which delivers new schools, has not always been well managed, but it is now more efficient and targeted. However, many more children combined with squeezed budgets and fewer teachers typically leads to bigger class sizes. Most classrooms were built to house 30 pupils. Exam results may not get worse, but no parent wants their child working on a makeshift desk improvised out of a windowsill.

Instead of addressing these challenges, both main parties have decided to answer policy questions no one is asking. Theresa May wants more grammar schools, ostensibly because they will give more choice to parents – though these are the only schools that pick pupils, as opposed to the other way around. And she says they will aid social mobility, though all the evidence (and I really do mean all) suggests the opposite.

Jeremy Corbyn, meanwhile, is offering free lunches to all seven-to-11-year-olds, which sounds worthy until you realise that children from low-income families already get free lunch, and that feeding every child a hot sit-down meal is virtually impossible, given the limited space and kitchen facilities in most schools. Plus, the evidence this £1bn policy would make any significant difference
to health or attainment is pretty sketchy. Labour has also sensibly talked about cash and promised to “fully fund” schools, but it isn’t clear what that means.

What’s missing so far from the Conservatives and Labour alike is a set of policies about teacher recruitment or place planning. The sector needs to know how schools will be built, and where the teachers will come from for the extra kids. In other words, the message to both sides is – must try harder.

Laura McInerney is the editor of Schools Week and a former teacher

Laura McInerney taught in East London for six years and is now studying on a Fulbright scholarship at the University of Missouri. She also works as Policy Partner at LKMCo.

This article first appeared in the 27 April 2017 issue of the New Statesman, Cool Britannia 20 Years On

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