Crafting a Just and Sustainable Future for Scotland
Miriam Brett and Lauria Macfarlane have just published a significant report for Common Wealth (a ‘think-tank for the future’) outlining that, although we face an economic crisis and climate breakdown, a new economic model can build a sustainable, resilient and equitable future.
Scotland’s economy, like so many others, is at a critical juncture, battling a multitude of crises. The public health crisis has exposed longstanding fractures in our economy and while the virus itself may not discriminate, our economy does, and those who were already marginalised are disproportionately shouldering its cost, with working class and Black, Asian and Minority Ethnic people hit acutely hard. And, while government intervention remains crucial amid this level of uncertainty, much of it has flowed to rentiers – those who do not profit from productive work but instead profit from ownership of resources –insulating their wealth.
The public health crisis has triggered an extraordinary economic fallout, plunging the UK economy into what is predicted to be its deepest recession in three centuries, as renters struggle, and unemployment is set to soar. As the latest recession takes hold, the impacts will again be felt hardest by those already struggling unless action is taken to protect them.
A decade of UK austerity saw stagnating living standards, low rates of investment, soaring levels of hunger, a decade of lost wages for workers, and rising child poverty. As we cautiously ease out of economic hibernation, it is imperative that public policy is geared to ensure that the distributional impacts of this crisis alleviate inequities in wealth and power.
The climate crisis changes everything and remains the single biggest danger facing our future. Linked to the inequality crisis, the causes and distributional impacts of the climate crisis are unevenly felt, with the wealthiest tenth of people consuming around 20 times more energy overall than the bottom tenth globally. This is amplified when we look at the role of companies, with 100 firms having been the source of more than 70 percent of the world’s greenhouse gas emissions since 1988.
Amid these crises, the Scottish Government is preparing to set out its Programme for Government. Ahead of this, myself and Laurie Macfarlane co-authored a Common Wealth report, identifying key policies to build a new economic consensus. In the absence of a large fiscal stimulus package at Westminster, which we recommend, and without greater borrowing powers, there are limitations to introducing these policies at once. While our aim is to set out proposals for a bold recovery strategy, transforming Scotland’s economy will need to be phased over time.
A green and just recovery
A central pillar of our recovery must be job creation, but equally important is the quality of those jobs. To secure a sustainable future, Scotland needs a raft of well-paid, secure, green employment opportunities. While the recent focus of a Scottish Jobs Guarantee is welcome, a business-led approach could prevent it from reaching its potential. If revenue margins remain weak and demand repressed, for instance, businesses will be reluctant to take on new staff, even if subsidised. Instead, we recommend that the Job Guarantee is designed instead to provide well paid employment opportunities in the public sector to anyone who needs it, to create good quality, safe, secure, Living Wage jobs that ensure that workers get the skills they need to move into permanent work.
An economy geared around accelerating growth, extraction and profit maximisation for a few, is incompatible with a Green New Deal. The Scottish Government has taken important steps to acknowledge this, not least by joining the network of Wellbeing Economy Governments. To build on this, a Green New Deal needs to stretch to every aspect of our economy, from supporting a managed phase out of oil and gas as part of a jobs-led just transition, scaling Scotland’s renewable energy potential, and investing in the caring economy, to reforming our tax system to support a just transition and the redistribution of wealth – like, for example, introducing a Frequent Flyer Levy – and the building and retrofitting sustainable, affordable homes for all.
Expanding Community Wealth Building
The concentrated ownership of wealth and power designed into our economy strips workers and communities of the wealth they create in common. In place of this, Community Wealth Building can set out a bottom-up approach; one that builds collaborative, inclusive, and locally controlled economies. Such a strategy will become even more important as local economic activity feels the strain of the economic downturn.
Rooted in CLES’s key pillars – Pluralist models of business ownership, making financial power work for local places, fair employment and just labour markets, progressive procurement of goods and services, and socially just use of land and property – Community Wealth Building transfers financial and physical assets and redirects wealth, control and benefits away from corporations to local economies. A Community Wealth Building Act could help facilitate a rollout of this local-led economic strategy.
Banking for the Public Good: The Scottish National Investment Bank
The establishment of the Scottish National Investment Bank (SNIB) is a considerable achievement. To meet its potential, it must be structured and governed effectively. While current governance structure is common in private financial institutions, it is relatively unusual for a public investment bank. We believe the Board composition should include at least one Minister, one trade union representative, one local authority representative and two representatives from civil society – and that the number of Board members from the private sector is capped at one-third. We also recommend that the proposed Advisory Group is replaced with three ‘Mission Boards’ corresponding to each of the SNIB’s missions. Investing in the development of in-house capacity to invest directly in the economy, rather than relying on consultants or private sector intermediaries, will be key.
Further, a new holding company arm of the SNIB could be established and tasked with purchasing equity stakes in distressed but otherwise viable Scottish businesses that meet defined criteria, helping them to stay solvent throughout the Covid-19 crisis.
Tenant Protection and Social Housing
In recent years the Scottish Parliament has made significant progress towards enhancing security of tenure in the private rented sector. However, rents in Scotland remain high and continue to increase faster than many households can afford, constraining living standards. To tackle this, the Scottish Government can introduce an rent freeze to ensure tenants will not face rent increases during this time of hardship, followed by a system of rent controls; support an increase in social house building to secure homes for all and create jobs; and encourage local authorities to explore opportunities to purchase properties made vacant by Covid-19 to repurpose them as part of the social housing stock.
Securing Democratic Public Ownership
Over the last four decades, privatisation has been a prominent component of the UK’s unequal and extractive economic model. Between 1980 and 1996, Britain was responsible for 40 per cent of the total value of all assets privatised across the OECD. Scotland has taken important steps to break with privatisation, like abolishing the Right to Buy, which privatised nearly half a million Scottish council homes, but there remains a need to harness this by shifting our understanding of this approach, from a patchwork of decent individual policies and towards a strategy to integrate democratic public ownership at the heart of a comprehensive, planned transition to a new economy with wellbeing at its core, particularly in areas such as transport and care.
More broadly, while steps to increase the public’s stake in the economy are positive, democratising companies should be core to a democratic public ownership strategy. While corporate governance is largely a reserved power, Scotland could take steps to integrate best practices into publicly owned and managed companies and services, by, for example, ensuring that 45% of a company board is elected by the workforce and bringing in fair pay ratios.
Land reform has been one of the crowning achievements of the Scottish Parliament and should be viewed as an ongoing process, as Scotland still has extremely unequal land ownership despite legislative action and a sizeable area of Scotland’s land will need to change use to meet climate commitments.
A new, democratically accountable ‘Scottish Land Development Agency’ could be created to purchase, develop and sell land and ensure that this key resource is being managed strategically in the public interest. Furthermore, while Community Right to Buy continues to be an important mechanism for diversifying landownership in Scotland, high land prices remain a barrier. Introducing upper limits on the total amount of land in Scotland that can be held by a private landowner or beneficial interest could help tackle this, while strengthening Community Right to Buy powers and granting local authorities the legal power to issue Compulsory Sale Orders can enable communities to acquire land at below market values. We also recommend that a new Common Good (Scotland) Act to provide a new statutory framework to modernise Scotland’s unique system of Common Good property.
We face an acute crisis on multiple levels. Driving both climate breakdown and economic injustice is an economic model rooted in extraction and financialisation. As we battle with the upheaval of the current environment, now is a time for bold thinking and action, to fundamentally shift how our economy operates and in whose interests, and lay the foundations for a more equitable, sustainable, and democratic system based on a pluralistic landscape of common and democratic ownership.