"Scotland's most distinguished political commentator" - Roy Greenslade.
Friday, September 06, 2013
On yer bike Chancellor.
Talk about an open goal. The most unpopular Chancellor since Nigel Lawson, George Osborne, came north again this week, bearing Treasury propaganda disguised as objective analysis - and he seemed to get away with it. Where's the anger?
The independence campaign has not just stalled, it is in danger of going into reverse. People who were minded to vote Yes are flummoxed by the relentless stream of negativity from Westminster which the Nationalists seem unable to counter. Neither the SNP government, nor the Yes Scotland campaign seem able to mount a coherent, imaginative case for independence in a language Scottish voters can understand. I'm not surprised support for independence is back at its bedrock 25%.
The best Alex Salmond could come up with this week was abolishing early release for sex offenders – the kind of populist policy that Labour's Jack McConnell used to reach for when he was in a hole. Month after month the Nationalists repeat the same tired slogans about “completing the powers of the Scottish parliament” whatever that means; grasping the “ economic levers”. Maintaining the “social union”, the “defence union” – hey, why not the Union union?
There is a strategic problem with the independence case, which is that it has essentially framed the debate in its opponents terms. This is the classic mistake identified by George Lakoff in “Don't Think of an Elephant”. If you keep talking about unions then the message that will get across is is that union is rather a good idea. Better Together are much better unionists than the SNP so perhaps leave it to them.
The Yes campaign need to have aspiration, a shining city, a vision. Politics is about moral choices and this is what effective campaigns are based upon, not the dull and desiccated language of economics. Which doesn't mean that you duck economic arguments – in fact the SNP had an opportunity to do both this week, secure the moral high ground while rebutting the politics of fear.
The Chancellor, George Osborne, is responsible for policies that have left tens of thousands of Scots in insecure jobs and plunged many Scottish families into crisis through the bedroom tax, while he cut taxes on multi-millionaires. He has also sparked a mini-property boom in the South East of England by using tax-payer's money to subsidise £600,000 mortgages.
But worse he tried to argue that an independent Scotland would be worse off it received revenues from North Sea Oil. He even put a figure on it: £2,000 per Scottish family. He said that setting up an oil fund, like Norway's, would lead to tax increases of 27%, or £8bn, or spending cuts of the equivalent. This was underpinned by a Treasury report of breathtaking sophistry, which brought to mind the 1975 McCrone Report that cynically sought to disguise the true value of North Sea oil. It should have been kicked the length of Scotland, by unionists as well as nationalists, for the contempt it showed for the intelligence the Scottish public.
An independent Scotland would have a budget deficit of around £8bn, according to George Osborne, but it is rather less than the budget deficit being run by the UK right now which, in case you had forgotten is around £120bn. The Osborne argument is that Scotland with oil revenues of would be in a worse predicament than the UK without it. How could a numerically literate Chancellor manage to arrive at that ludicrous conclusion?
George Osborne said that if the Scottish government put its oil revenue into an oil fund, similar to Norway's state pension scheme, this would so denude the nation's finances that welfare spending would have to be slashed, free personal care abolished, tuition fees hiked. In other words that, unlike the UK, the Scottish government would have to balance its budget in year one in order to set up an oil fund.
In fact, the existence of oil assets estimated by the industry body, Oil and Gas UK, at £1.5 trillion would, even if it were left under the North Sea, substantially reduce Scotland's deficit by reducing borrowing costs. It is silly to base the case for or against independence on one expendable resource, but this is a legacy most countries cannot dream of, even if the value fluctuates with the oil price. Currently it is up and production is rising.
It is reasonable to expect that Scotland would experience an 'independence boom' which is what often happens when small countries take charge of their own affairs. But even if Scotland carried on exactly as it is, with GDP per head at approximately the UK level, it would still be in a better fiscal condition than the UK, and not just because of hydrocarbons. Stormy Scotland has an abundance of green energy, and the continuing disaster at Fukushima confirms that nuclear power is not going to ride to the rescue of a warming planet.
The worst error the Chancellor and his predecessor, Alistair Darling, made this week was to bring Norway centre stage in the independence debate. This is a successful small country, with a very similar demographic profile to Scotland, and fewer economic advantages. It has become something of a beacon for all those who believe that there is an alternative to the devil-take-the-hindmost banker capitalism that is currently the British way.
Not only does Norway have one of the highest standards of living on the planet, it has one of the lowest levels of income inequality, the highest levels of social security and – Conservative chancellors please note – one of the most dynamic private sectors in the world. Small countries like Norway, Denmark and Finland have discovered that impoverishing the working population while allowing the rich to get even richer, is not the way to encourage business to invest. What works is stability: progressive taxation, full employment, social investment.
Even without oil, countries like Denmark - which the World Bank recently cited as the best country in Europe to start a business – have kept calm and carried on throughout the Great Recession. Workers there are more willing to change jobs, which makes it is easier to start new enterprises. Wages are relatively high ensuring that there is demand in the high streets.
In Britain, by contrast, 4.8 million workers earn less than the living wage of £7.20. The top 1% have seen their share of income triple thanks to low taxation. The UK government seems to think that zero hours working creates enterprise and that house price inflation is the same as economic growth. Not so much voodoo economics as vampire economics; sucking the blood out of the real economy.
Scotland is already more like Norway than England, in its social outlook and political culture. A social democracy with communitarian values borne of struggle against a harsh climate and an implacable global economy. The UK squandered North Sea oil revenues, hundreds of billions of it, to finance Margaret Thatcher's industrial recessions and enrich a financial kleptocracy based in the City of London.
Norway has one of the largest sovereign wealth funds in the world, worth $700bn. Britain has one of the biggest debt problems of nearly £2tr. And he has the nerve to say that Scotland would be worse off? On yer bike, Chancellor: Scots have been fooled once too often.
Iain Macwhirter is the award-winning political columnist for the Herald and Sunday Herald. He has been a political broadcaster for over 20 years, in Westminster and Holyrood, and is former Rector of Edinburgh University.