David Mundell, the somewhat improbable Secretary of State for Scotland, had at least one good line yesterday: “The SNP are asking for something they don’t really want, but of course they will complain if they don’t get it.”
It being our old chum Full Fiscal Autonomy (or Responsibility) for Scotland. Now if the ordinary rules of politics still applied you might think a party might pay some price for bitterly complaining about a £100m cut to the Scottish block grant while also advocating measures that would require some £7 billion in additional tax increases or spending cuts would be laughed at. But the ordinary rules of politics no longer apply and no-one finds anything very funny in Scotland any more.
Nevertheless, that is the SNP’s actual policy at present. It is true that Labour, in particular, have been banging this drum for some time and true that it’s had no impact whatsoever. So much so, in fact, that John Swinney, deputising for Nicola Sturgeon at First Minister’s Questions yesterday, mocked Kezia Dugdale for her apparent obsession with the costs of FFA. He did not, of course, deign to even try and pretend to answer her questions but that’s only to be expected.
Because it is notable that even the SNP no longer pretend their preferred policy would actually leave Scotland better-off in either the short or medium term. This seems telling since it suggests the party has accepted the findings of every independent observer – notably the Institute of Fiscal Studies – that FFA would, as matters stand and are likely to stand for some time, be an expensive business. To put it another way: if a case could be made that FFA would leave Scotland better-off in a financial – as opposed to a political – sense, we would expect the SNP to make it. That they do not make any such argument tells us all we need to know.
Similarly, there is no longer even much of a pretence that Scotland would be able to establish a Norwegian-style oil fund. To the extent such a fund could be established, doing so would require either higher taxes or spending cuts elsewhere to account for the money deposited in any oil fund. (Just as the argument that the UK should have established an oil fund forty years ago is, at least in part, an argument for higher taxes and/or lower public spending these past forty years.) That’s fine and a perfectly respectable argument. Just not the one the SNP chooses to make.
Now there are nationalists who dispute all this and who believe that the figures are cooked or in some other fashion irrelevant. That’s fine too, though the figures they argue with – the famous GERS numbers – are produced by the Scottish government itself, an organisation with, shall we say, no obvious incentive to take a particularly gloomy view of Scotland’s fiscal position.
And of course it is true that most countries run deficits most of the time. There is all the difference in the world, however, between a modest deficit of, say, 3 percent of GDP and annual deficits of more than ten percent. Indeed, it’s the very unsustainability of recent UK deficits that’s caused the “austerity” policies to which the SNP so vehemently objects.
But even the SNP accepted, during the recent election campaign, that deficit reduction would have to happen eventually. Just a little more slowly than proposed by the Conservatives (or Labour). In other words, they agreed with the diagnosis, just not the pace or strength of the cure.
Of course the figures for a Scottish deficit of £7.6bn – and rising over the course of this parliament – are in addition to the Scottish share of the overall UK budget deficit. Relatively-speaking, Scotland would be significantly worse off than under present arrangements. Nor, as matters stand, and despite what SNP MPs such as Tommy Sheppard blithely insist is this awkward “gap” just the kind of thing that happens in any one year”. On the contrary, it is, as matters stand, the gap that would exist in each and every year.
So, naturally, this proves the need for FFA. Because how else can the Scottish parliament improve the country’s economic performance? On the other hand, perhaps it doesn’t need to. As John Swinney said at Holyrood yesterday, Scotland’s economic performance has improved from a position in which its GDP per capita was sixth in the UK to being third, behind only London and the south-east of England. Miraculously, it has managed this improvement without control of the sainted levers deemed essential to economic advancement. Which makes one wonder if, say, control of the minimum wage is really all that important. (Hint: it isn’t, though there’s no very good reason for not devolving it either. If the Scottish government wishes to increase unemployment it should probably have the right to do so.)
It is possible I misunderstand SNP policy. I think, if I understand George Kerevan, the new MP for East Lothian, SNP policy is to move towards FFA while also maintaining fiscal transfers. That, I think, is what he means here:
The constitutional ball is well and truly in David Cameron’s end of the field. Cameron’s opening gambit may well be to offer Scotland fiscal autonomy, in return for termination of the Barnett Formula (a mechanism that matches per capita spending changes across the UK constituent nations). We all know that in present UK economic circumstances a fiscally autonomous Scotland would face a significant budget deficit.
For Scotland to accept fiscal autonomy without inbuilt UK-wide fiscal balancing would be tantamount to economic suicide. However, all federal systems have mechanisms for cross subsidising regions in economic need by regions in surplus.
This is an admirable pro-cake policy for the SNP, of course, but there seems little in it for other parts of the United Kingdom.
Perhaps it’s just number-soup. Perhaps it doesn’t really matter. Because what we see, in embryonic form, is once again the old charge that the SNP’s opponents are talking Scotland down. After all, who could possibly think it a bad idea for Scotland to enjoy greater responsibility for her own affairs? What a sorry lack of faith in your countrymen!
And, of course, this makes some sense if you don’t really think of the United Kingdom as being a proper country in and of itself too. (Though it also, of course, takes some chutzpah to insist upon the maintenance of what you might deem a UK-wide safety net…)
As I say, in ordinary politics, this kind of stuff would be reckoned a problem. But these are no ordinary times and the SNP is no ordinary party. It is a sensibility much more than anything else and a sensibility, a cause, a declaration of identity is a fiercely powerful thing. It means the party enjoys, at least for now, some kind of immunity against the usual laws of politics.
Which is why the SNP can win votes on the back of its anti-austerity agenda even though its policies would guarantee a kind of Tartan Austerity vastly greater than anything proposed by any of the SNP’s opponents. Funny old world.
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