Get ready for another 12 months of disappointment, Scotland

This time next year we’ll know which campaign Scots disliked the least.

With a year to go until the referendum, it’s safe to say most Scots remain disengaged from the debate about their constitutional future. And who could blame them? Neither the nationalists nor the unionists have produced a campaign capable of capturing the public’s attention.

The SNP, given the opportunity to permanently alter the terms and conditions of Scottish politics, has chosen instead to try and triangulate its way to victory. Its manoeuvres on NATO, the currency, the monarchy, the regulation of financial services and corporation tax reveal a party (or rather a party leadership) lacking in ideological ambition. How much of the UK’s dysfunctional political model do Alex Salmond and Nicola Sturgeon want to impose on an independent Scotland?

When it launched last summer, Yes Scotland had the chance to build a grassroots movement based on the idea that far-reaching constitutional change was a necessary first step towards far-reaching social change. So far, however, it has simply followed the SNP’s lead. At its most radical, Yes Scotland sells independence as a way of mitigating the worst effects of the Westminster consensus, not of actually breaking with it.

The task of building an alternative vision of independence has fallen to smaller, left-leaning organisations such as the Jimmy Reid Foundation – with its hugely successful Common Weal initiative – the Radical Independence Convention and National Collective. Without these groups, the Yes campaign would lack vitality. Their contributions will be pivotal over the coming months.

Better Together, meanwhile, has done exactly what it set out to do - and with great efficiency. Furiously exaggerating the economic pitfalls of independence, undermining trust in the Scottish government, flooding the debate with distracting and trivial arguments – the No camp has adopted a scorched earth approach to the referendum, laying waste to everything in its path, including its own intellectual credibility.

Three scare stories in particular stand out. The first is the late Lord Carmyllie’s suggestion, back in March 2012, that England would be forced to bomb the airports of an independent Scotland if it ever came under attack. The second is the claim that an independent Scotland wouldn’t be guaranteed a triple-A credit rating – something Britain itself was stripped of in January. And the third (a hands-down winner) is the MoD’s warning that Faslane nuclear base might remain “sovereign UK territory” after independence.  

During the early stages of the campaign, the relentless questioning of the SNP by Alistair Darling and others worked to expose the weakness of the nationalists’ case. Now it serves only to remind people of how empty the unionist one is. Better Together’s rampant, unsophisticated unionism needs to be balanced by a compelling account of how Scotland will benefit, socially and economically, from continued membership of the UK. It remains to be seen whether any such account exists.

The polls have been pretty consistent. According to the latest survey, the Yes campaign is trailing by 17 points and support for independence is struggling to edge above the 35 per cent mark. However, nationalists can take comfort from the fact that a large number of voters – as much as 45 per cent of the electorate, in fact – remain undecided. What’s more, the desire for a more powerful Scottish Parliament could translate into support for secession if the unionists fail to produce a coherent blueprint for the next phase of devolution.

We should, at any rate, expect the polls to narrow as the referendum approaches. The SNP is a formidable, well-resourced campaigning machine, while the energy and enthusiasm of the activists on the Yes side far outstrips that of their unionist counterparts. Moreover, it has happened before. Contrary to Nate Silver’s recent assertion, it was the Canadian federalists, not the Quebecois separatists, who squandered a double-digit advantage during the closing weeks of the 1995 referendum on Quebec’s independence from Canada. It’s not hard to imagine a similar scenario emerging in Scotland next year.

On the other hand, things could go badly wrong for the SNP if its White Paper, due out in November, doesn’t live up to the hype. Salmond has said he wants it to “resonate down through the ages”, so the pressure is on. Better Together is gearing up for a massive assault on the document, which it hopes will fatally undermine the nationalist campaign as it heads into 2014. The media’s response will be important. If journalists feel the White Paper has succeeded in answering some of the more problematic questions surrounding independence, people will think it has passed the test. If not, the SNP will find it difficult to recover.

The last 12 months have not been very edifying. The SNP and Yes Scotland have pursued their continuity narrative promising that a future independent Scotland will replicate the current unionist one in almost every way. Better Together and the pro-UK parties have pursued their wrecking ball strategy aimed at demolishing the idea that independence will be seamless and pain free. This time next year we’ll know which of the two campaigns Scots disliked the least.

Scottish First Minister and SNP leader Alex Salmond with Deputy First Minister Nicola Sturgeon during a visit to the North Edinburgh Childcare Centre to mark one year to go until the Scottish independence referendum. Photograph: Getty Images.

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

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The 2017 Budget will force Philip Hammond to confront the Brexit effect

Rising prices and lost markets are hard to ignore. 

With the Brexit process, Donald Trump and parliamentary by-election aftermath dominating the headlines, you’d be forgiven for missing the speculation we’d normally expect ahead of a Budget next week. Philip Hammond’s demeanour suggests it will be a very low-key affair, living up to his billing as the government’s chief accounting officer. Yet we desperately need a thorough analysis of this government’s economic strategy – and some focused work from those whose job it is to supposedly keep track of government policy.

It seems to me there are four key dynamics the Budget must address:

1. British spending power

The spending power of British consumers is about to be squeezed further. Consumers have propped up the economy since 2015, but higher taxes, suppressed earnings and price inflation are all likely to weigh heavily on this driver for growth from now on. Relatively higher commodity prices and the sterling effect is starting to filter into the high street – which means that the pound in the pocket doesn’t go as far as it used to. The dwindling level of household savings is a casualty of this situation. Real incomes are softer, with poorer returns on assets, and households are substituting with loans and overdrafts. The switch away from consumer-driven growth feels well and truly underway. How will the Chancellor counteract to this?

2. Lagging productivity

Productivity remains a stubborn challenge that government policy is failing to address. Since the 2008 financial crisis, the UK’s productivity performance has lagged Germany, France and the USA, whose employees now produce in an average four days as much as British workers take to produce in five. Perhaps years of uncertainty have seen companies choose to sit on cash rather than invest in new production process technology. Perhaps the dominance of services in our economy, a sector notorious hard in which to drive new efficiencies, explains the productivity lag. But ministers have singularly failed to assess and prioritise investment in those aspects of public services which can boost productivity. These could include easing congestion and aiding commuters; boosting mobile connectivity; targeting high skills; blasting away administrative bureaucracy; helping workers back to work if they’re ill.

3. Lost markets

The Prime Minister’s decision to give up trying to salvage single market membership means we enter the "Great Unknown" trade era unsure how long (if any) our transition will be. We must also remain uncertain whether new Free Trade Agreements (FTAs) are going to go anyway to make up for those lost markets.

New FTAs may get rid of tariffs. But historically they’ve never been much good at knocking down the other barriers for services exports – which explains why the analysis by the National Institute for Economic and Social Research recently projected a 61 per cent fall in services trade with the EU. Brexit will radically transform the likely composition of economic growth in the medium term. It’s true that in the near term, sterling depreciation is likely to bring trade back into balance as exports enjoy an adrenal currency competitive stimulus. But over the medium term, "balance" is likely to come not from new export market volume, but from a withering away of consumer spending power to buy imported goods. Beyond that, the structural imbalance will probably set in again.

4. Empty public wallets

There is a looming disaster facing Britain’s public finances. It’s bad enough that the financial crisis is now pushing the level of public sector debt beyond 90 per cent of our gross domestic product (GDP).  But a quick glance at the Office for Budget Responsibility’s January Fiscal Sustainability Report is enough to make your jaw drop. The debt mountain is projected to grow for the next 50 years. All else being equal, we could end up with an incredible 234 per cent of debt/GDP by 2066 – chiefly because of the ageing population and rising healthcare costs. This isn’t a viable or serviceable level of debt and we shouldn’t take any comfort from the fact that many other economies (Japan, USA) are facing a similar fate. The interest payable on that debt mountain would severely crowd out resources for vital public services. So while some many dream of splashing public spending around on nationalising this or that, of a "universal basic income" or social security giveaways, the cold truth is that we are going to be forced to make more hard decisions on spending now, find new revenues if we want to maintain service standards, and prioritise growth-inducing policies wherever possible.

We do need to foster a new economic model that promotes social mobility, environmental and fiscal sustainability, with long-termism at its heart. But we should be wary of those on the fringes of politics pretending they have either a magic money tree, or a have-cake-and-eat-it trading model once we leap into the tariff-infested waters of WTO rules.

We shouldn’t have to smash up a common sense, balanced approach in order for our country to succeed. A credible, centre-left economic model should combine sound stewardship of taxpayer resources with a fairness agenda that ensures the wealthiest contribute most and the polluter pays. A realistic stimulus should be prioritised in productivity-oriented infrastructure investment. And Britain should reach out and gather new trading alliances in Europe and beyond as a matter of urgency.

In short, the March Budget ought to provide an economic strategy for the long-term. Instead it feels like it will be a staging-post Budget from a distracted Government, going through the motions with an accountancy exercise to get through the 12 months ahead.

Chris Leslie MP was Shadow Chancellor in 2015 and chairs Labour’s PLP Treasury Committee

 

 

 

Chris Leslie is chair of Labour’s backbench Treasury Committee and was shadow Chancellor in 2015.