Independent Scotland is an economic opportunity for the north of England

Last week, Common Weal Director Robin McAlpine gave a lecture a the Sheffield Political Economy Research Institute (SPERI) on how Scottish independence could benefit the economy of the north of England. We re-publish the blog post which the lecture was based on here.

THERE is a widely taken-for-granted assumption that independence for Scotland would be broadly bad for the economic interests of the north of England. In fact, it is an assumption made so readily and which is so rarely challenged that it seems often to be taken as a matter of fact.

And yet it is an assumption which it seems to me is rooted deeply in a kind of thinking about the UK economy which is precisely the kind of thinking which many pro-independence campaigners in Scotland are trying to leave behind. In fact, there is a credible case to make that Scottish independence could be a good thing for the economy of the north of England.

So why is the negative assumption so prevalent? UK economics has become rather obsessed with a mindset which I might call ‘predator capitalism’. There is a tendency to see ‘economic success’ as a limited resource which, if you get it, someone else doesn’t. It’s like a hunter-gatherer notion of economics.

It is perhaps unsurprising that this tendency exists when the UK’s economic model is so overwhelmingly dominated by the financial interests of London. The twin giants of London’s wealth generation – property speculation and the capturing of international financial markets, really does have an element of zero-sum about it. But this speculative economic model has not been a positive development for the economy of much of the rest of the UK.

Many independence supporters in Scotland are motivated by the desire to develop a different kind of economic model based on sustainable production and enhanced productivity, finance as an enabling industry and not the primary focus of economic policy, more effective exploitation of resources such as land and the potential for renewable energy, on ‘smart specialisation’ in knowledge economies and more – all driven by an integrated national, regional and local industrial strategy.

And this version of a future Scottish economy could be very positive for the north of England.

“Many independence supporters in Scotland are motivated by the desire to develop a different kind of economic model based on sustainable production and enhanced productivity, finance as an enabling industry and not the primary focus of economic policy, more effective exploitation of resources such as land and the potential for renewable energy, on ‘smart specialisation’ in knowledge economies and more – all driven by an integrated national, regional and local industrial strategy.”

The massive boom in craft brewing in Scotland offers an example for a new model of domestic production. We now regularly consume high quality products from small and medium-sized domestic producers at a price easily competitive with large corporate players. Why could the same not be achieved in, say, breakfast cereals or toiletries or furniture?

And why would Scotland not want to extend its market for local quality produce further south, in turn seeking to substitute low-quality imports from multinational corporations with high-quality imports from quality producers in the north of England? Pursuing a ‘northern quality trade zone’ in which devolved economic policy in the north of England was aligned to that kind of productive model could establish a non-zero-sum mutually beneficial strategy.

Or take finance. It is perfectly possible that an independent Scotland could have a powerful National Investment Bank (and indeed a publicly supported local development bank network) well before any such moves take place in the north of England. The policy work on this has been done and capitalising a bank would not be difficult so long as there were sufficient quality investment opportunities. Why would a Scottish investment bank not also be ready to invest in the north of England?

It is likely that over time Scotland should be able to develop a powerful and very cost-competitive renewable energy industry based around localised smart grids. Why would Scotland not want to form partnerships with the north of England to extend smart grid technology and sell base load electricity to northern England at a competitive price which helped to stabilise local energy markets (and reduce the north’s reliance on the southern finance industry-focussed obsession with Chinese-backed new nuclear power stations)?

High-tech industries rely on specialist supply chains, both of goods and expertise. There is substantial potential for structured partnership between universities and publicly-supported tech development on either side of the border. Co-investment in major development projects between north England and Scotland make perfect sense – subject to finding key mutual areas of specialisation.

“High-tech industries rely on specialist supply chains, both of goods and expertise. There is substantial potential for structured partnership between universities and publicly-supported tech development on either side of the border.”

I’ve been thinking about the relationship between Scotland the north of England a lot of late having regularly joined discussions in the north of England about the issue of the devolution of power. I must admit to having greatly enjoyed my time in a part of the world I previously wasn’t often in – the UK is almost designed to encourage Scots to fly straight over the top of the north of England to get to London. A well-considered and coordinated strategy of transport and marketing could substantially increase the flow of tourism across the border and in both directions.

On borders, the idea that there would be armed border posts or anything of the sort is just silly. A modern system of ‘smart borders’ would allow goods, services and people to cross the border with the freedom they do now, as a recent Common Weal report shows.

Indeed, I have a strong feeling that if the process of devolution of power to the north of England is ever taken seriously (which I’m afraid at the moment I don’t really think it is), the potential to develop strong relationships between an independent Scotland and either a northern devolved government or a forum of devolved administrations in the north is substantial.

If Scotland achieves independence and the north of England achieves sufficient devolution to pursue its own economic policies then I would expect that economic approaches in northern England would be much closer to those in Scotland than those in London. I find it fairly easy to conceive of a future in which Scotland could have much more deeply rooted economic interests in the north of England than it does in London – and potentially vice versa.

“If there was willingness from people in the north of England then I’d argue for a shared industrial strategy spanning the border. There are a world of things this might include such as much better transport links, joint public infrastructure projects, shared investment plans, strategies for integrating supply chains and much more.”

In the end it comes down to where the shared economic interests lie. Only two UK regions – London and the South East have achieved above average UK growth rates in the last decade (and in the case of the South East only by a whisker). The UK economy has been shaped to suit the financial and property speculation (and population expansion) which has created so much wealth in London.

If there was willingness from people in the north of England then I’d argue for a shared industrial strategy spanning the border. There are a world of things this might include such as much better transport links, joint public infrastructure projects, shared investment plans, strategies for integrating supply chains and much more.

Yet there are clearly fears and concerns in England – and the north – about Scottish independence, and not without some undue cause. The SNP’s pitch at the last independence referendum did hint at a ‘price war’ with England with a proposal to cut corporation tax which wrongly viewed competing for footloose corporate headquarters (at somewhere else in England’s expense) as a wise foundation for a new economy. It was deeply unpopular among independence supporters and the SNP has since accepted that it was a mistake and has reversed the policy.

“At the very least, in the debates that will take place over the next few years about  Scottish independence, we would do well to consider and explore further the possibility that Scottish independence is not a threat to the economy of the north of England but an opportunity.”

So independence supporters do share a part of the blame if people in the north of England think that Scottish independence is a threat – and it is our job to now reassure them. I am among many who want to see a different relationship with our closest neighbours in the north of England. (Indeed, having seen the economic neglect with which London has treated much of the north, I am genuinely angry and would like an independent Scotland to help in ways London hasn’t).

Now I accept that there are a lot of ‘ifs’ in the above. If Scotland becomes independent, if the north gets proper devolution, if we can identify shared interests… I don’t want to predict with certainty that this would be our shared future – but I do want to argue that it is an absolutely reasonable and viable version of the future.

At the very least, in the debates that will take place over the next few years about  Scottish independence, we would do well to consider and explore further the possibility that Scottish independence is not a threat to the economy of the north of England but an opportunity.

Comments

MauriceBishop

Tue, 06/06/2017 - 16:19

If Scotland were independent and "in Europe", via either the EFTA or the EU itself, then it would have to have a genuine border with England. Not because the UK wants it or because iScotland wants it but because the European partners demand it as the price of admission. Otherwise, any goods that are imported into or produced in England and Wales can be driven into Scotland unnoticed, and then shipped onto the larger European market.

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