“How London is Bleeding Scotland Dry”, screamed the front page headline in the Herald last Sunday. A report by the increasingly well regarded Jimmy Reid Foundation that analyses 30 years of economic data on Scotland’s economy was published last week, and comes to the conclusion that there has been a prolonged and systematic mismanagement of Scotland’s economy by Westminster.
This is a message that I have tried to get across for years, most recently in my article last month “How Scotland’s Economy went South”.
The report The UK Economy: A strong and secure UK? is co-written by highly regarded husband and wife economist team Margaret and Jim Cuthbert. Both are former government economists and the sort of experts which economic commentators such as myself (on both sides of the referendum debate) reference when citing sound research and evidence.
This is what makes the report so important and also why the findings are significant.
- Since 1963, UK GDP has on average grown by 2.5% a year, but only by 2% in Scotland
- If Scotland’s growth had kept pace with the UK, its economy would be 25% larger today
- Scotland has far more part-time and low-skill employment than London, suggesting a structural problem with the labour market
- Weakening of UK export performance, balance of payments, & reliance on borrowing, disproportionately affects everywhere outside London
- The UK has the largest wealth distribution gap of any European nation. For example France’s wealthiest region is almost double as wealthy as its poorest, but London is 470% wealthier than the UK’s poorest regions
- Deindustrialisation and a poor balance of payments means that the UK can no longer be seen as a successful economic entity
- Far from being Better Together the UK has a systematic weakness, in that the overblown population of London and the South East is sucking wealth, jobs and prosperity out of the rest of the country at an alarming and accelerating rate, and concludes that we would in fact be better off as an independent country
Economic Migration from Scotland
A No Campaign claim that the fact that 750,000 Scots live in England means we should vote No has been doing the rounds. This report puts that somewhat spurious reasoning to the sword, especially when it notes that Scotland has witnessed decades of population decline due to economic underperformance under Westminster policies. The fact that 750,000 Scots (including my own family) had to become economic migrants to find jobs and feed their families due to Westminster mismanagement is a key reason to vote Yes in my book.
People have to follow the jobs, and this has resulted in a massive population shift southwards which unbalanced the UK economically and democratically, and led to accelerating moves to devolution and ultimately independence. Roughly one in three UK voters lives in London and the South East and so in general terms any political party that wants to form a UK Government needs to offer a policy platform that suits London and the South East. This has meant that we always get right of centre, finance sector and especially City of London focussed governments, regardless of what party Scotland votes for.
City-led Westminster Policies
New Labour and the Liberals had to adopt City-led policies to win in London and the South East and Labour has become unrecognisable as a left of centre party to leading think tanks such as the Jimmy Reid Foundation. As a result of this required policy shift no change of government at Westminster can help Scotland, only a change in the political and economic model can do that.
A Statue for Jimmy Reid
Regular readers may know that I believe Scotland’s move for self-governance is part of a wider global epoch, a movement towards a new enlightenment, one where amongst other things the political definitions of left and right are seen as old fashioned and insignificant. The above may explain why despite being the leader of a business network, and business policy think tank, I can still claim Jimmy Reid (Scotland’s most impressive trade union leader of all time) as an inspiration and key thought leader in my own socio/political thought processes. It also explains why every time I reach the top of Buchanan Street in Glasgow I wonder why we have a statue of Donald Dewar and not of Jimmy Reid! I hope you are not still wondering who Jimmy Reid is? If so take a few minutes to read his rectorial address to Glasgow University, described by the New York times as “the greatest speech since President Lincoln’s Gettysburg address”.
The Currency Question
Having heaped praise both on Jim and Margaret Cuthbert and Jimmy Reid himself, let me now disagree on one of the report’s key perspectives. In this latest report it is stated that the unbalanced economy of London and the South east has become so alien to us that we must (as well as becoming politically independent) launch our own currency after independence.
The economic and political system of governance in the UK has failed. Scotland has been held back economically and socially for decades, and the requirement to create policies that gain votes in the overblown population centres of London and the South East means that all political solutions from the Westminster parties are focussed on repeating the same mistakes that created the global banking crises in the first place. Mistakes which will also prove to be against the interests of the South East of England in the long-term too, even if they serve short-term political gain for Westminster parties trying to win elections every few years.
The Jimmy Reid Foundation report is important and provides decades of data that proves conclusively that Westminster doesn’t work in Scotland’s interests, it can’t because of how our political system of Westminster rules all is structured. The Westminster political parties try to tell us that voting for them can change things, but the system means if they follow policies that would redistribute wealth from London and the South East they would lose, and it now looks like we could probably end up with a Tory / UKIP Government with possibly not one single elected member in Scotland.
There is no political solution to the failure of the Union and just as there is no business and economic case for voting No in 2014. If you want your politicians to make a difference to Scotland’s economy or to our social infrastructure, then first get rid of the failed system of Governance that restricts them from doing so, by voting Yes.
Reid Foundation The Dysfunctional UK Economy