Enlisting Government to the Common Weal
This contribution to the set of articles on the Jimmy Reid Foundation theme of the Common Weal deals with the economy. In particular, with the importance of getting the Scottish government to use its economic powers fully for the Common Weal. In developing this theme, we touch on a number of specific issues which we hope to examine in greater detail in further contributions.
Our starting point is a question which one sometimes hears raised: “Why has the Scottish Parliament not brought greater benefits, particularly on the economic front?”
In fact, viewed more widely than on the purely economic front, the Scottish Parliament has done a great deal. Examples include land access, free personal care, poinding reform, the smoking ban, and the council tax freeze. But less specifically, and probably more importantly, the Scottish Parliament has very successfully established itself as the legitimate forum for expressing the collective will of the Scottish people: it is also developing an international presence and dignity – a process which Henry McLeish must be given a good deal of credit for starting.
Despite these achievements, however, progress on the economic front has been limited. When we look at the reasons, this is, in fact, not surprising. The reasons fall into three broad groups. First, and very importantly, there are a large number of economic powers which have been retained by Westminster and have not been devolved. These include monetary policy: direct economic powers on matters like much of tax, employment, competition and regulation: energy: key parts of transport like airport taxes: indirect economic powers like welfare: and foreign affairs – in particular the ability to negotiate directly with the EU for Scottish interests like fishing and agriculture.
Secondly, there are certain powers which Scotland may appear to have, but where there are actually hidden constraints. One example is the implementation of the EU Procurement Directive: Whitehall Departments like Defence strongly indicated their unwillingness to operate under different procurement regulations in different parts of the UK. Another example is the fact that, although Scotland has its own tourism promotion body, Scotland’s ability to promote itself abroad is limited because parts of the relevant budget are still held in UK hands. And finally, although Scotland nominally has control of higher education, much of the funding for research and development, (which is ultimately of vital importance for business development), is actually administered at UK level by the Research Councils and the Department for Business, Innovation and Skills.
Nevertheless, there are significant areas where the Scottish government does have the power, and there are no obvious hidden constraints, but it has still not acted to the maximum benefit of the Scottish economy and people. Let us look at some examples before we consider why.
One example is public procurement, which constitutes an £11 billion per annum spend by Scottish public authorities. A report we produced for the Jimmy Reid Foundation in 2012 gave ample instances where very large contracts were let, often not to Scottish businesses: and where purchasing agreements were set up in a way which reduced Scottish businesses’ chances of competing.
Or take the case of the Private Finance Initiative (PFI), where, although the Scottish government has introduced some welcome modifications through its non-profit distributing model, the upshot is that very large contracts are still being let into an uncompetitive market, and inevitably often go to businesses outside Scotland.
Another example is how the Scottish government has implemented its policy on renewable energy. The way it has promoted onshore wind, in particular, threatens to be a high cost energy source which at the same time involves massive transfer payments to landowners. Struan Stevenson, the Tory MEP estimates that the Duke of Roxburgh will benefit to the tune of around £1.5 million per annum from wind farms on his land in the Lammermuirs.
Of course, land ownership in itself is a vital area for economic development, where great strides were made at the beginning of the Scottish Parliament but progress now appears to have stalled.
These examples suggest that other factors are at work, over and above the fact that the Scottish government lacks some key economic powers. To understand what is going on, two quotations are relevant – one from Adam Smith and one from Karl Marx. Smith said that government is “in reality instituted for the defence of the rich against the poor”. Marx said something similar, namely that the “executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” (We are grateful to Ha-Joon Chang for highlighting these quotes in the Guardian.)
In fact, while these quotes are relevant, they do not quite encapsulate the position in Scotland. It would probably be a more accurate and up-to-date assessment of the Scottish position to say that the Scottish government has been unduly in thrall, not so much to the rich per se, but to certain power groups like the banks, big business, construction firms, and the big consultancy and accountancy firms. These groups, and their associates in academia and parts of the public sector, constitute an elite who have exercised undue influence over the Scottish government. This is partly for the reasons set out by Marx and Smith, but also partly because these groups have been peddling a neo-liberal doctrine and approach. This promises value for money in the short term, and that the free market will ultimately see us right: but ultimately it has proved destructive of longer term economic prospects, while enriching the groups who have promoted it.
A key requirement for the Scottish economy to achieve its economic potential is that the Scottish government breaks free from the influence of these groups, and starts to operate truly for the Common Weal of the Scottish people: in doing so, it will inevitably, and desirably, destroy the power base of these groups. This transformation is not going to be easy under any circumstances, but without independence it will be virtually impossible.