A new blueprint for an independent Scotland
Herald Scotland, by Tom Gordon
A group of economists and academics has stepped into the independence debate with their own vision of how Holyrood could transform Scottish society after a Yes vote in the referendum.
They argue Scotland can become a new Nordic-style country by cherry-picking the best bits from Denmark, Norway, Sweden, Finland and Germany and implementing them under independence.
Instead of continuing the UK’s decline into a low-wage, low-skill economy in which markets rule, public services dwindle and the gulf between rich and poor widens, they say Scotland can choose a new direction of travel.
It wouldn’t be utopia, but it would, in theory, include expanded cradle-to-grave public services, better jobs, better wages, a more diverse economy with more shared ownership of industry, more local democracy, less social division and more gender equality. Instead of state intervention being seen as a humiliating act of last resort, it would be embraced as contributing to the common good.
The sting would be higher taxation – but not necessarily higher taxes for all – and the impact would be offset by those higher wages.
Its proponents call it the "Common Weal" model, after a favourite concept of the late Clydeside trades union leader Jimmy Reid, based around collective endeavour.
The blueprint runs counter to 30 years of free-market neo-liberalism in the UK, and many will dismiss it as the usual failed lefty pipedreams.
But its advocates point out the ideas are already part of the furniture in the Nordic countries – they’re just not being tried here, and perhaps our economy and society wouldn’t be in such a mess if they had been.
While the UK is one of the most indebted countries in the world, the Nordic countries are among the most solvent. Independence, they argue, offers the chance to swap our old, broken, brutal economic model for a more enlightened one and change our fundamental outlook as a society.
The intervention is more than academic fancy. In recent weeks, a private discussion paper about the Common Weal has been circulated by the left-wing Jimmy Reid Foundation within the highest echelons of the SNP, the Yes movement, trades unions and business people.
The reception from non-politicians appears to have been a mix of gratitude and relief there is finally some joined-up thinking on offer.
Officially, the Yes Scotland campaign says it’s "an interesting contribution to the debate", but privately its key players are far more positive and keen to push the concept. MSPs are interested too.
The paper is doubled-edged. On one level, it’s an indictment: its very existence implies that the SNP have failed to make a vivid, engaging, day-to-day case for independence.
But it is also aimed at catapulting the debate forward, away from the straight Yes/No arguments on separation and the distractions lobbed around by Better Together, to discussing various models of independence.
It puts forward a "spine" of six interlocking strands aimed at a "fundamentally new approach to the economy and public governance."
The changes are:
* Tax reforms designed to reduce inequality;
* A better welfare state;
* Reform of the finance sector;
* More diverse ownership of industry;
* More variety in business types;
* Greater democracy at work and in communities.
Intended to attract cross-party support, the paper is not prescriptive, but suggests how an independent Scotland could become more like her Nordic neighbours.
According to Mike Danson, professor of enterprise policy at Heriot-Watt University, one of the paper’s authors, Nordic countries have higher standards of living because their economies are based on "smart specialisation".
He said: "These are the most innovative and competitive nations in the EU, with a much better balance between manufacturing and financial services. Their highly productive enterprises pay some of the highest wages in the world by making much more effective use of workers’ skills and giving them the autonomy to participate in developing their companies.
"Sustainable and fair economic growth can be pursued in an industrial policy based on a virtuous cycle of investment in people, enterprises and research actively co-ordinated and promoted by the government."
Another feature of a Nordic Scotland would be an expanded welfare state funded through a higher overall tax take, some of it derived from more publicly owned industry. Instead of dwindling benefits being used as a political football, as in the strivers versus shirkers debate, the Nordic Folkhemmet or People’s Home concept would be imported, which characterises welfare as mutual support delivered via the state not merely handouts.
"A Scottish welfare system should be framed around notions of security, justice and equality," said Ailsa McKay, professor of economics at Glasgow Caledonian University.
The finance sector would also be overhauled, with a move away from the profit-mania of the RBS days, and a shift to lending by state banks to Scottish companies to foster local small and medium-sized enterprises (SMEs) focused on exports and research. Germany’s SME base, the Mittelstand, accounts for 70% of the workforce and 50% of GDP.
The ownership of industry would change under the Common Weal as well as its form, with greater public and community involvement.
One of the things Norway did that the UK didn’t during the North Sea oil boom was to keep a publicly owned oil company, Statoil, which now earns a fortune for the country.
Andy Cumbers, professor in geographical political economy at Glasgow University, said an independent Scotland shouldn’t repeat the UK’s mistake with wind energy, and should have a direct stake in renewable companies. "Denmark’s emergence as a global leader in wind energy has been built around co-operative and localised forms of public ownership that have stimulated broader participation and spread the benefits across the nation," he said.
The report comes as a volley of reports from the Unionist camp about defence, the currency and international affairs, as well as a very awkward paper on pension problems from Scotland’s top accountants, have led to navel-gazing in the Yes camp.
David Cameron’s intervention on defence, when he thumbed his nose at Alex Salmond by swaggering along the deck of a Trident submarine, led to a debate about the SNP’s position of wanting to shelter under the Nato nuclear umbrella while ousting nuclear weapons from Scotland. It is not a stance backed by the SNP’s Green or Scottish Socialist allies in Yes Scotland.
Likewise, George Osborne’s recent visit to Glasgow to warn Salmond’s goal of an independent Scotland keeping the pound in a currency union with sterling was "unlikely" to work, has generated internal bickering. Not because the Yes camp think Osborne is right – they’re sure he’s bluffing. But because the Chancellor inflamed the nationalist old guard, who came out and demanded a separate Scotland have its own currency.
Dennis Canavan, Yes Scotland chair, took to the airwaves to advocate a Scottish currency, joining former SNP leader Gordon Wilson, ex-SNP deputy Jim Fairlie and Scottish Socialist co-convener Colin Fox in rejecting Salmond’s approach.
More worrying for the Yes side, the split over the pound exposed deeper fears that Salmond’s cautious ‘don’t spook the voters’ pitch on independence, with its emphasis on continuity, is holding back the cause by failing to make an inspiring case for change.
The gripe has been made before: Green MSP Patrick Harvie has warned against offering voters a slightly more Scottish version of the status quo. But, in recent weeks, the feeling has been growing stronger and louder in the Yes camp. "It’s like the floodgates are about to open," says one exasperated campaigner.
The new blueprint – and its mentions of nationalised industries, government running banks by design not in bailouts, a bigger welfare state, higher taxes, workers’ rights – may sound alien to voters after years of Thatcher, Blair, Brown and Cameron. But the point and potential attraction of the Common Weal lies precisely in being different. If its supporters can persuade people theirs is a vision for the future, not just an idealised past, the independence debate might start to get interesting.
SIX KEY STEPS
How to switch to ‘Common Weal’ model:
Tax Reform and Inequality
Critical change is tax reform – a gradual shift in the balance of taxes, with the rich paying more, combined with a healthier economy in which more skilled workers earn higher salaries, moving away from low-skill, low-pay work. A higher minimum wage raises pay. More nationalised industries (Norway has a state oil company) contribute to taxes.
A bigger and better welfare state akin to the Nordic Folkhemmet or People’s Home concept, with universal cradle-to-grave benefits, and greater emphasis on childcare, social housing and local amenities. Instead of being seen as the state doling out cash, it is seen as people supporting each other via the state.
Less reliance on finance sector. A national investment bank offers long-term loans to grow Scottish firms, possibly drawing on the billions in council pension funds. This is linked to national strategy for industrial development. Also national lending to community enterprises and individuals, with less speculation. Mortgage lending designed to avoid housing booms.
Fewer low-pay, part-time jobs from large multinationals and more secure, higher paid work with small and medium-sized business along the lines of the family firms focused on exports and research contributing half of Germany’s GDP. State support for more mutual and co-operative enterprises to help buffer economy against downturns, as they will not pull out of areas during a recession.
Economy made more stable by moving away from over-reliance on finance sector, low-pay jobs and housing booms, and fostering small and medium-sized businesses and skills. State buys more goods and services from Scottish firms by invoking R&D opt-outs in EU rules. Example: publicly owned wind farms. Councils and government buy these from Scottish firms, helping them invest more in R&D and improve their export ability.
Democracy and Governance