Reporting For Action
Posted on May 29th, 2018
by Rab Bruce’s Spider
Say what you like about the report by the Sustainable Growth Commission, it has shown two very important things.
The first is that the Yes movement is full of people who are prepared to criticise official recommendations and come up with ideas and suggestions of their own. The report has sparked discussion and that can only be a good thing.
The second is that the unionists are prepared to criticise but have no alternative ideas to put forward. Their comments have been largely confined to saying there should be no second IndyRef and that Nicola Sturgeon should get back to the day job. These are not exactly inspiring policy ideas.
The Unionists have, however, wheeled out their favourite economics pet food business owner to produce “evidence" that adopting the recommendations of the SGC would require 67 years before an independent Scotland could match the economic performance of the comparative countries mentioned in the report. Now, even if these figures are accurate – which seems unlikely given that economic experts in the OBR can’t forecast the UK’s actual economy three months ahead, let alone a potential economy of a state which doesn’t yet exist – they still don’t present a strong argument for not following the recommendations. It could be argued that 67 years is a relatively short time in which to undo the damage of 311 years of control by Westminster which has included, across the centuries such methods as depopulation, deportation, suppression of culture, exploitation of resources, de-industrialisation and Austerity. And just because the current generations will not see the benefit of progress is no excuse not to begin that process for the sake of our grandchildren.
Others are getting in on the act by claiming that the SGC report does not mention social justice. That’s true, but it was charged with producing a report on ways to grow the economy of an independent Scotland, not with producing a report on social justice.
But let’s put all that nonsense aside and look at areas where there has been some proper criticism of the report from within the Yes community.
The recommendation to use sterling has been the most highly criticised feature, and I was one of those who was disappointed by this particular aspect. However, having now read the report, it is not as hard and fast as some have suggested. There would always need to be a transition period for moving to a new Scottish currency, and the report sensibly suggests that steps be taken to establish the proper economic infrastructure for that to take place should it be decided it is in Scotland’s best interests to move to a new currency. I think the recommended transition of 5 to 10 years is a lot longer than many of us had hoped for, but the discussions which have already begun may yet shorten that period considerably.
However, even if these recommendations are followed, Scotland using sterling is not a complete disaster. It would place Scotland in a similar position to countries like Finland and Luxembourg who use the Euro, where decisions on interest rates are taken by a larger economic unit which may not be the decisions they would have taken if they had their own currency. I would prefer not to use sterling for the same reasons I would prefer not to use the Euro; because having our own currency gives us greater control over our own economy which I feel will be important in a newly independent country. While I understand the argument put forward by the SGC, I think they are being over-cautious. Other newly independent countries have introduced their own currencies very soon after becoming independent. I appreciate that Scotland’s use of sterling can be viewed as relatively unique because sterling is one of the major international currencies, but I would definitely prefer a much shorter transition period than the SGC has suggested.
Other than currency, there are a few things the SGC report glossed over or did not mention. The establishment of a social welfare programme was one, and the comment that the Scottish Government would need to work to ensure smooth trade with both the UK and the EU rather misses the point that those are, in the current circumstances, mutually exclusive. Again, though, this is an economic report, not a political one – at least ostensibly – and the decision as to whether to remain in the UK or remain in the EU will be decided on political grounds even if economic factors form a significant part of the debate.
I did like the idea of establishing an airport Hub, with Prestwick being an obvious location for this, but I was disappointed that there was barely a mention of ports. I mentioned some months ago on this blog site that developing our ports would be beneficial in terms of job creation and establishing international trade routes. This, I argued, would be especially important if England decides it will remain outside the Single Market and Customs Union while Scotland remains in the EU. To avoid routing goods via the hard borders England may or may not be capable of imposing, Scotland needs other ways of exporting directly to other European nations. Imagine my delight when I noticed that, quite independently, other people have mentioned this in the online discussions which the SGC report has already sparked.
I’d also like to take issue with the comments on Corporation Tax which suggest that Scotland would need to match the low rates of Ireland and the UK. This is something analysis of various rates of Corporation Tax across Europe has shown is not necessary. There is no problem with having progressive rates of Corporation Tax which might, on the face of it, seem enough to persuade larger businesses to locate their operations in your neighbouring country, especially if you provide alternative incentives like, for example, high rates of Capital Allowances to encourage larger businesses to constantly invest in updated equipment, plant and machinery. This not only reduces their tax bill, but also ensures their operations are at the forefront when it comes to having modern facilities.
These things, and many others will be debated for many weeks and months to come. That can only be a good thing as we try to decide what sort of country we wish to become. Economic arguments are not all that underpins the case for independence, but the SGC report is an impressive piece of research which allows us to discuss economic issues armed with some facts. It is telling that nobody on the unionist side of the argument has come up with anything approaching this level of analysis.
However, we have seen, to our cost, that referendums and elections are not won by facts. Our case must be based on more than economic forecasts because issues like the UK’s democratic deficit, social justice, healthcare, food standards, energy policy, tackling poverty and a whole host of other things are vitally important. But, this report, whether we agree with all of its recommendations or not, provides the evidence that, unlike our opponents in the Indy argument, we have some credible options to choose from on the economic front.
So, well done to the Sustainable Growth Commission. This document could mark the beginning of that positive case for independence we were looking for.