Ruth Davidson on the difficult job of balancing Scotland's books

The leader of the Scottish Conservatives speaks to Spotlight about the economic and social policies that mark her out as perhaps her party's most promising centrist.

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Ruth Davidson is not going to be the next Tory leader. “I’m sitting in a different parliament that’s not the House of Commons, I’m about to go on maternity leave, and I don’t want it,” she explains, “so for these three reasons, I will not be the next leader of the Conservative Party.” These obstacles do not prevent people from speculating when she will try, however - and many in her party would like her to. A recent YouGov poll of Conservative members ranked Davidson as the senior Tory most likely to be able to win a general election; she also ranked in the poll as being perceived as both the strongest leader in the party, and the most competent. Our survey of local government in Scotland, conducted for this week's Spotlight, found that Davidson was also the leader most likely to gain approval from councillors outside her party; Labour councillors in Scotland told Spotlight they thought Davidson is doing a better job of leading her party than Richard Leonard or Jeremy Corbyn are of running their own.

Voters respond to authenticity, and while Davidson is an unconventional choice for her party – “I’m about to be an unmarried lesbian mother,” she chuckles, “so I really fit the Tory mould”, she makes no excuses for who she is and what she thinks. It is easy to see why many find the fast-talking, fiercely competent Davidson a more convincing representative of modern Britain than the pound-shop Churchill or the vicar’s daughter in the wheatfield.

This admiration stems mainly from Davidson’s formidable turnaround of the fortunes of the Scottish Conservatives. In the 2016 Scottish parliament election the party more than doubled its seats, robbing the SNP of its majority and pushing Labour to third place in Scotland for the first time in 98 years. Like Sadiq Khan and Andy Burnham, Davidson now enjoys the benefits of a strong political position outside Westminster: a defined social and economic area upon which to focus her efforts, local support, and freedom from the obligations and machinations of central government. And while the Scottish economy has its challenges, Davidson says economic success can be built here. “I think people forget that Glasgow is the third city of the UK. It’s bigger than Manchester, it’s bigger than Leeds, it’s bigger than Bradford, Sheffield, Liverpool.” Scotland is not, she says, “all shipyards and textile factories. We’ve seen a huge change in the Scottish economy. We’ve got to understand that we’re a small country, so we can’t do everything, but we have some areas of genuine, world-beating expertise, which I think a focus on would help hugely. I’ve mentioned before about deep-sea and ‘hard to get’ oil and gas; we’ve got opportunities in decommissioning; we’re ahead of the pack in terms of great swathes of biotech, fintech and financial services, and we’ve got fantastic provenance when it comes to food and drink.”

Developing these areas of expertise is, for Davidson, the key to tackling Scotland’s huge deficit. Last year, Scotland’s public spending bill was over £13bn more than the country received in tax. “In terms of growth, we have the lowest projected growth of any EU nation. We are projected to grow at less than one per cent for the next five years, which is the longest period of low growth since the Second World War. We’re growing at about a third of the rate of the UK economy,” she says, but insists that “we would absolutely be able to balance the books if we could get growth right, if we could get productivity right.”

Fewer than 100 businesses, Davidson points out, provide more than half of all the international exports going out of Scotland. “Most of our economy is made up by a few really big firms, and then lots of very, very small firms; we don’t have what the Germans would call a Mittelschaft. R&D spending is the lowest of any part of the UK.” This isn’t due to a lack of ambition, she says, but a regulatory environment that makes other parts of the UK more attractive to business. “Our businesses are spanked here,” she says. “The large business supplement in Scotland is double that of the rest of the UK, property taxes are higher, income taxes are higher. Scotland is getting a reputation as the highest-taxed part of the UK, that is also furthest from main markets – so it also has the extra ‘taxation’, if you like, of getting goods to market. And funnily enough, we have an economic growth rate that is a fraction of that of the rest of the UK. I would suggest that these things are linked.”

Aside from the Scottish government’s tax policy, which Davidson says fails to take into account behavioural shifts caused by tax changes, her sternest criticism of the SNP is on the education that will train people to work for Scottish businesses in the future. While she has not gone so far as to say that universities in Scotland should be allowed to charge the same fees as the rest of the country, she says free university education has cost Scotland’s higher and further education colleges dearly. “The Scottish government cut college places in order to help fund places without fees in universities. There are now 38 per cent fewer college places than there were when they came to power; 150,000 college places have gone across Scotland since 2007. We have fewer kids from poorer backgrounds going to university now. We have fewer Scottish kids going to university than we did before they introduced this policy – but it’s a cultural shibboleth for them.”

There are demographic factors, too, that will affect the ability of Scottish businesses to grow in the years to come. Scotland’s population is ageing more quickly than the rest of the UK. The National Records of Scotland predict that the number of people in Scotland aged over 75 will increase by almost a third within a decade. To support this much higher proportion of older people, Scotland will either need to suddenly have a much higher birth rate (it sank this year to a 17-year low), or it will need to attract workers from abroad. Scotland, however, has about half the level of immigration of the rest of the UK.

For this reason - and with immigration a significantly less divisive topic in Scotland than England - Davidson has been a vocal opponent of “the whole 100,000 target, because we’ve never hit it. It was designed for when unemployment was running at twice the level it is now,” she says. Davidson also recommends taking students out of immigration figures. Nicola Sturgeon called last month for immigration powers to be fully devolved to Scotland, but Davidson says this would be unpracticable. More importantly, she says, such a policy misses the key question of “why it is that people are only half as likely to choose Scotland when they come to the UK, as to choose another part of Britain?” As with the deficit, Davidson sees economic growth as the answer. “If we make Scotland as attractive as the rest of the UK, suddenly we’ve got thousands of extra workers every year. Let’s concentrate on that, let’s make people understand that Scotland is one of the best places to get the whole package - to live, and to raise a family.”

The truth about Scotland today, however, is that Scotland is only a great place to live and to raise a family for some people. The day before this interview, a study by the University of Liverpool published research showing that all ten of the most deprived areas in Britain were in Glasgow, where Davidson first won a seat in the Scottish parliament. “The statistic that I recall from being a journalist in Glasgow is that the average age of a first-time mother in Bearsden was the same as the average age of a first-time grandmother in Shettleston, which was 40, for each,” remembers Davidson. The Calton area of inner-city Glasgow was found, in 2006, to have a lower average life expectancy for men than Iraq or the Gaza Strip. “There are huge disparities in terms of health inequality and worklessness,” Davidson acknowledges. “Health outcomes are low, and Scotland, despite having rewritten its drugs strategy nine years ago, still has the highest proportion of drug deaths of any EU nation. We have significant social problems here.”

In her current constituency of Edinburgh Central, Davidson says inequality takes a different shape, that it is “masked. Unlike any other part of Scotland, around a fifth of kids in Edinburgh go to a fee-paying or independent school. That’s really unusual. We also have areas of huge deprivation within the city that are very close, because Edinburgh’s quite a small, contained city, to areas where you have houses that cost over £1m.” A housing crisis is growing in Scotland, and particularly Edinburgh, just as it did in England. “As an example, I’m the leader of a political party, I’m not badly paid; I only bought my first house last year,” Davidson says, because even first-time buyers with good jobs have to raise large deposits to buy in a market where demand gravely outstrips supply. In Edinburgh, a city bounded by geography, “some of the most expensive streets in the UK are within a mile of some of the most deprived areas. That disparity is a particular challenge for the city.”

Where more free-market Tories might see the wealth gap as incidental to the problem of deprivation, Davidson says the gap itself “is a problem,” not just for individuals but for “the social fabric. It’s fine for people to say that the Gini coefficient shows that inequality has fallen to its lowest level since 1978, but it doesn’t feel fair. It doesn’t feel fair for people who are growing up in a pit town without a pit, or a factory town without a factory, and seeing people go past in Bentleys when they’re struggling to make ends meet.”

Writing in the Guardian and Unherd last year, Davidson argued that “nationally and internationally, capitalism needs a reboot,” a line that wouldn't look out of place in a John McDonnell speech. While she is in her policies and her allegiances a business-championing, tax-averse Tory, Davidson appears to be one of relatively few politicians in a polarised climate who can look calmly at the economic policy of their opposition and see not only its weaknesses, but also the reasons that it wins votes. Ruth Davidson will not be the next leader of the Conservative party. But at 39, though she leads a political party, she is still very much in the early stages of her career. If she can deliver more of the success she promises for Scotland, she could well prove to be a decisive figure in elections to come.

Will Dunn edits the New Statesman's regular policy supplement, Spotlight.