Growth Commission reaction: Nicola Sturgeon, Richard Murphy, Craig Dalzell plus more

Politicians, experts and activists give their view on the SNP’s new Growth Commission report and what it means for the cause of independence

This morning, the SNP publishes its long awaited Growth Commission report, outlining a new prospectus for Scottish independence. CommonSpace received a copy of the report the night before its release, and approached a variety of figures from Scottish politics, academia and activism to see what they had to say.

First Minister Nicola Sturgeon

I thank Andrew Wilson and the other members of the Commission for their time and effort in producing this comprehensive report for Scotland’s future economic success.

What this report shows is that Scotland is a wealthy nation with huge resources, encompassing our traditional strengths in innovation, our hi-tech sectors, our energy reserves, our food, drink and tourism strengths – and perhaps above all our strength in human capital, with a highly educated population.

But despite those enormous strengths, similar sized nations have performed better over decades - all of them independent but most of them with fewer resources than us.

The task ahead is to match those other nations, creating more jobs and raising living standards, providing a better future for everyone who lives here.

The Growth Commission is right that in order to raise our performance we must target increases in our population, ensure that all in our society are able to participate fully in the economy and drive forward improvements in our productivity that will boost our growth rates.  The Scottish Government is working hard to achieve that with the powers of devolution, but as well as offering new ideas for what we can do now, this report sets out how much more could be achieved with independence.

This report rightly doesn’t shy away from the challenges we face but presents ways in which those challenges can be addressed – and sets out recommendations on currency - which as a country we should all debate and discuss.

Scotland is now in a very different political and economic situation to 2014.  There is no status quo and we know that being taken out of Europe and out of a market around eight times bigger than the UK market alone will hit our economy.  That is why it is time to begin a fresh debate and to replace the despair of Brexit with optimism about Scotland’s future. 

We look forward to debating the report’s recommendations – both within the SNP and with business, trade unions and communities across Scotland.

Maggie Chapman, Scottish Green Party co-convener

I welcome the publication today of the Sustainable Growth Commission’s report. It provides a very useful analysis of the current position of Scotland’s economy, and how it relates to the rest of the UK, Europe, and beyond. Whilst I do not agree with some of the assumptions made on which the analysis and recommendations sit, and it is perhaps not as bold as it might be, there is some valuable insight on what is needed in our country. One thing is clear: the status quo is not an option.

I am very pleased to see a focus on the need for, and strengths to be gained from, a more open immigration policy. Scotland has a history of looking out to the world, and our future must develop this further, valuing migration and immigrants for more than just their economic worth.

Similarly, the clear message that inequality is a drag on our economy is something that must be transformed into action, and quickly. The proposed Commission Gender Pay Equality is an important step in the right direction, and I hope could set out an agenda that would benefit all other forms of inequality too. And the repeated mentions of the need for increased participation and cross-partisan working will, I hope, lead to a real change in how we do politics in Scotland.

But there are several areas that clearly need further exploration and development. I had hoped to see the economy not positioned as the driver for society, but rather a servant to society. That would enable bolder thinking around strengthening economic democracy: we should strengthen local economies by giving more power to communities to buy and run facilities and assets, and workers to buy and run their businesses.

We desperately need a just transition away from the fossilising oil and gas industry and the current military-industrial complex. Greens have been working on this: to replace jobs in fossil fuels and the arms industry with jobs in sustainable sectors. And we need to ensure Scotland is at the forefront of meeting great challenges like climate change, the ageing population, how best to harness automation and data science for human wellbeing, and build a clean, zero-carbon energy system with renewables and reliable storage capacity.

I very much look forward to working, on a cross-party basis, in a cooperative and participatory way, with the Scottish Government, political parties, civil society and communities across Scotland to continue to develop the ideas and policies that can create a better Scotland in a better world.

Craig Dalzell, head of research at Common Weal

It’ll be on finance that most folk will focus most attention on the report. Common Weal’s influence appears to have been felt in this area. Existing documents such as GERS are taken, as we have, as a reasonable starting point but with the significant caveat that they do not project beyond the singularity that is independence. The economic impact of creating more than 4000 civil service jobs to cover the work that is currently done outside of but “on behalf of” Scotland would result in several hundred million pounds per year in additional tax revenue.

Back on 2014, the Yes campaign argued that both Scotland and rUK should take equal status as successor countries to the UK and should proportionately share both debts and assets. The UK disagreed and insisted that rUK alone would be the sole successor state. To the rUK’s advantage this would allow it to secure things like its permanent seat on the UN security council and the by-then signed post-Brexit withdrawal and trade deals. It does carry the consequence, accepted by the UK, that rUK would inherit all of the UK’s debt. Scotland would start life debt free.

Now, the Commission goes on to make the case for an Annual Solidarity Payment to pay for our “share” of debt that the UK would be taking on – there’s a certain morality to play here as taxpayers in rUK should not be penalised for our leaving, though I’d argue that a one-off payment paid for by Scotland borrowing on its own credit line would be politically more sensible.

Similarly, pensions liabilities are stated to remain with rUK albeit with the caveat that it is likely that a transfer of liabilities would be asked for in negotiations – again consistent with research published by Common Weal over the past couple of years. Scotland will have to have a discussion about pensions in an independent country. Whilst existing payments are secure no matter what happens, the plight of the WASPI women and the fact that the UK’s pensions are some of the worst in Western Europe highlight the fact that the UK is simply in no position to claim that pensioners will be better off by voting against independence.

Other policies like the position on tax policy are interesting but need to be built upon. The report states that the UK’s tax policy is significantly flawed and Scotland should look towards building one suited for Scotland and points out that the “tax gap” in the UK (the gap between what is owed in tax and what is collected) amounts to many tens of billions per year.

There may be a temptation to effectively “copy and paste” the UK tax code into an independent Scotland, possibly in the name of “stability” but this should be resisted. Many independent analysed have concluded that the UK tax code is fundamentally broken and essentially incapable of reform and the opportunity presented by independence for a “clean break” and a chance at writing a new code from the ground up should be clear.

Unfortunately, the Growth Commission report falters significantly when it comes to monetary policy.

The plan stated is for Scotland to keep the pound unofficially (in a process often called Sterlingisation) without the currency union that was the plan in 2014. Mark Carney of the Bank of England has stated as recently as this week that currency union would be economically possible but would come down to the politics of the decision. It will always be the case that Westminster could refuse a currency union, no matter how compelling, and the realities of Brexit mean that it’s difficult to see how Scotland could be a member of the EU whilst being a minority member of a currency union with a country which has just left the EU.

An independent Scotland would not have control over monetary policy and would not be able to significantly diverge its economy away from the failed UK economic model that the report rails against without ending up with interest rates and other macroeconomic policies that have been built for an entirely different economy.

The report states that there may be an “eventual” transition to a Scottish currency but that transition itself is based on a series of “six tests” similar to Gordon Brown’s approach to adopting the euro. One of these tests, which are entirely political in nature, is to adhere to the fiscal restraint policy. Scotland faces the problem of being locked into a policy of Sterlingisation and permanent austerity which it can’t get out of because the policy itself actively prevents it from meeting the tests set for it. In the case of Brown’s tests to enter the euro, these were set up more as a barrier to avoid having to join that currency union as they were targets to meet ahead of it.

If the same situation is being set up with regard to a Scottish currency then it cannot be fairly called a “transition” plan.

A far better idea would be the one laid out by Common Weal’s book “How to Start a New Country” which states that an independent Scottish currency would be built during the three year time period between a referendum and formal independence so that it is ready to use on day one of independence.

Professor Mike Danson, Professor of Enterprise Policy at Heriot-Watt University

The temptation with such a weighty tome is to dive in for detailed comment and critique, especially around our own personal areas of claimed expertise and interest. Already, before publication, some had boldly ventured down such paths; others have embarked on a claimed quick read to produce in-depth analysis of their chosen sections or of the whole. While journalists and some politicised commentators are driven by the need to say something within hours, I want to focus on the wider principles, approach and bases of the report. The debates and conversations can follow; it’s exam time so follow the sensible strategy: turn over the paper, read, think, plan and then start answering the questions.

First, and unlike constituencies which can be persuaded by slogans on a bus or by ignoring experts, the nation of the Enlightenment has a tendency of moving more slowly and dialectically to arriving at an opinion or consensus, and usually following a period of heated discourse and conflict. This Commission is grounded in analysis and sourced data, has engaged with organisations from across the economy and society and with some who do not support independence, has a strongly argued and constructed narrative established on setting out a vision towards achieving a better and more promising future.

It is far superior, therefore, to the offerings during the Brexit referendum campaigns, and so is to be welcomed as a critical element in carrying forward the national conversation on the sort of Scotland its citizens want.

But, like the contributions to whether there is a ‘Scottish Road to Socialism’ - and apparently there are many and they simultaneously intersect, run in parallel and diverge - in any particular section of the Report there are areas for debate, rejection and criticism. The authors admit that and encourage its application in generating further development of their analyses and proposals; indeed it is one of the strengths of their presentation that this is not a finalised and unique solution to a common goal.

Despite its length - though there are summaries and key recommendations – there are agencies and voices that might have been included to good effect: unions, communities, the excluded and rural Scotland for instance, and the national meetings envisioned for this summer must listen to their stories and concerns, rather than to the technocrats and leaders mansplaining what is good for us.

Processes and promises are stressed in this report, and how this ‘strategy for inter-generational economic renaissance’ informs those conversations and what new and different paths it generates must reflect similar principles of inclusion. Then it could well lead to realisation of its goals of achieving genuine and sustainable improvements in the well-being of the people and place.

Professor Richard Murphy, tax economist

The 354 page report of the Scottish Growth Commission was published this morning. But you don't need to read it all. I admit I had an advance copy and as I read it last night I remained vaguely optimistic until I reached page 47. Then I knew the SNP has a disaster on its hands and that if it was to become independent on the basis of this report the last thing that the people of Scotland would enjoy would be growth.

That’s because on page 47 the report says: “The Commission recommends that the currency of an independent Scotland should remain the pound sterling for a possibly extended transition period.”

Admittedly it then adds: “A future Scottish Government should put in place the arrangements and financial infrastructure that would support a move to an independent Scottish currency at such time as this was considered appropriate for the Scottish economy.”

Which is a sop, because most depressing is this comment, which comes next: “What happens with respect to currency the day before an independence vote would happen the day after and continue to happen until such time as the elected Scottish Government seeks to do something differently.”

In other words, this Commission recommends that Scotland use the currency created by another country. That will mean five things.

The first is that Scotland will have no control over its money supply after independence.

Second, it will have no control over its interest rate.

Third, if London decides to trash the rUK economy to support The City, or some other cause, Scotland will go down with it.

Fourth, all the negative impacts of Brexit will be imported directly into the Scottish economy.

Fifth, Scotland will effectively have to earn the currency of another state to service its debts.

All of these are devastating decisions by a Commission that is supposedly dedicated to independence. As that list shows, by choosing sterling as the Scottish currency Scotland would have no effective hope of achieving that status: it would remain enslaved by the pound and tied to the apron strings of London.

Depressingly, in support of their proposal the Commission says: “We note that this was the approach taken by Ireland for an extended period, albeit in a different period of history.”

I know enough about Irish economic history to describe the consequence of this policy succinctly: it was a disaster that oppressed Ireland economically for decades.

I thought my mood could not go lower, but then it did. I read the recommended objectives for macroeconomic management of the Scottish economy in paragraph B12, which says Scotland should:

  • Target a deficit value of below 3 per cent within 5 to 10 years.
  • National debt should not increase beyond 50% of GDP and should stabilise at that level.
  • Borrow only for public investment in net terms over the course of the cycle.
  • During the transition period real increases in public spending should be limited to sufficiently less than GDP growth over the business cycle to reduce the deficit to below 3% within 5 to 10 years. At trend growth and target inflation rates this would mean average annual cash spending increases of above inflation in contrast to the Scottish budget experience under the UK regime of recent years and that scheduled for the remainder of the current planning period.

In other words, the Scottish economy will, after independence, be run to keep the London money markets happy.

The ability of a country with its own currency to issue debt to finance growth will be foregone by Scotland not having its own currency. Forget full employment then. But worse, what the Commission is saying by adopting these objectives, which will cruise all others in the report, that Scotland should welcome austerity in its place. That’s what a deficit of 3% is guaranteed to deliver. This is literally importing George Osborne’s economics into Scotland.

Except its worse than that because spending will be cut to meet this target. This is what the fourth bullet point means. The new government of Scotland would, then, crush the economy for years to keep the money markets of London happy.

And Gordon Brown’s fiscal rule, that clearly worked so well before the crash of 2008, is exactly what the third bullet point describes. When the Commission stops importing Tory economic incompetence it supports Labour’s failed policies instead.

Finally, and for good measure, the goal of keeping debt to 50% of GDP means investment in anything in the new Scotland will just be a pipe dream.

I could have gone on to plough through the rest of this report, but why bother? Any quantity of graphs, and any number of comparisons with states broadly similar in size to Scotland are utterly irrelevant if this Commission that is supposed to be about growth has decided to remove any chance that Scotland could use monetary policy to control its economy, and has crushed any chance of a fiscal stimulus by committing Scotland to decades of austerity with the sole purpose of keeping the old oppressor in London happy.

The Scottish Growth Commission has proved to be a fantastic policy agent for the financial elite. But for those who hoped for a bright independent future it offers nothing but despair.

This Commission’s suggestions are a disaster for Scotland, the SNP and the cause of independence. The Commission has proved itself the slave of pre-crash economics and a proponent of everything that is oppressive about neoliberalism. It’s really hard to imagine how it could have been much worse or more out of kilter of what I sense the people of Scotland want.

This is a sorry day for Scotland.

Ivan McKee, SNP MSP

I first became convinced of the case for independence when I worked and lived in other small countries and saw how much more successful economies and societies they had built, with less natural and human resources than Scotland enjoys.

The Growth Commission report provides a robust evidence basis for what we already know, showing that small countries have average growth rates of 0.7% higher than equivalent larger countries – which leads to significantly higher levels of wealth over a period of time. Smaller countries also have more inclusive growth, with more people participating in the wealth generated in the economy.

And it explains in some detail the reasons why this is the case, why smaller countries enjoy these advantages in a modern globalised world.

The Growth Commission is a substantial piece of work. It gives us the tools to do the job of winning the economic case for independence.

It provides a solid base for the conversation that now needs to take place, within the SNP and across the wider Yes Movement on how we take this forward. A conversation I’m looking forward to participating in over the coming months.

It is an optimistic document, showing what Scotland can be if we chose to grab the opportunity. Very different to the negativity that is consuming the Brexit debate.

I’m particularly pleased to see the work on what we need to do to grow Scotland's population – making us an more open and inviting nation, as well as a more successful one.

There may be some different views within the Yes movement on some of the conclusions the report comes to, but what it does is gives us the opportunity to have an informed debate around these issues in an informed and mature way.

Meantime all we have seen from our Unionist opponents is anti-independence soundbites. I think they will struggle to respond to the weight of evidence and argument in this document. It gives us a great opportunity to move the debate forward in our favour.

Lorraine Cowan, lecturer in economics

It’s a thorough and comprehensive piece of work and it was all going well until it came to currency, and they bottled it.

Seriously, they are suggesting that we give that same veto to Westminster the scuppered us the last time. I firmly believe that the Scottish public and certainty Yes activists are expecting our own currency.  Apart from the fact that it takes away that “we won’t grant permission” nonsense from the UK Government, it would also give us much greater control over our economic future.

I think if you were trying to sell it you could say that it is not official SNP policy and that there is a lot of great work that has been done by groups such as Common Weal and Business for Scotland that will also form a significant part of the debate. In particular ‘How to Start a New Country: a practical guide for Scotland’ by Robin McAlpine, which brings together much of the expert opinion and analysis carried out as part of their White Paper Project.

I’d strongly suggest that before the SNP start making official policy on the offering they will present to the electorate for Indyref2 they listen to the mood music coming from the grassroots and the wider Yes movement on this one.

Okay, now that I’ve got that out of my system: in terms of the basic premise of looking at comparator small successful countries, this is an excellent idea and it is carried out well in this report.  I note however that that all of the comparator countries have their own currency with the exception of a few who have chosen to join the Euro.

It notes in 3.20: “Scotland has very significant economic assets and advantages, in terms of natural resources, the education and skills of the people who live in Scotland and sectors with existing and potential global competitiveness.”

Yet despite all these advantages the comparator countries have performed better than Scotland.

One of the significant differences between Scotland and comparator countries is the difference in income and wealth inequality.  There is a much greater level of inequality in Scotland under Westminster rule. International Monetary Fund and the World Economic Forum studies identify a direct relationship between improved inequality and growth. It has also been suggested that where the levels of inequality are lower you have a happier and healthier population (by the Gini Index).

This is a wide ranging and comprehensive analysis of Scotland position and potential.  It is perhaps in some areas a little too (small c) conservative.

Picture courtesy of Màrtainn MacDhòmhnaill