Five ways Westminster’s 'growth' plan says Scotland would be better off independent

UK Chancellor Rachel Reeves produced a “growth” plan last week which was disappointing to say the least for Scottish business.

There was nothing in it to address the major challenges the UK has laid on Scottish businesses such as the rise in National Insurance contributions she introduced, or the heavy weight of paperwork that has been loaded onto Scottish businesses by a Brexit that Scotland never voted for.

The plan focused on infrastructure spend in the south of England with barely a thought for Scotland. 

The Westminster government is selling Scotland short. Here are five ways in which Reeves’ growth plan underlines the fact that Scotland would be better off independent. 

 

1 - Under devolution, only Westminster has the levers to create big infrastructure 

The Scottish government has an operational budget for running services like health and education but it has very limited power in terms of borrowing to invest in infrastructure. Devolution doesn’t extend that far and so it is up to Westminster - but Reeves' latest growth plan offered Scotland only the crumbs off London’s table. 

Scottish political commentator Andy Maciver acknowledged the limits of devolution recently in a Herald column entitled “Why are we always in the slow lane when it comes to infrastructure”. Acknowledging that Scottish infrastructure is woefully lacking in investment and ambition compared to independent countries like Ireland or Scandinavia he wrote: 

“The primary issue is that major infrastructure build can no longer take place from within the public purse. The money the Scottish Government can find down the back of the sofa cannot pay for even one new road, tunnel, bridge or railway, let alone all of them. Instead, these must be paid for by private capital, and private capital must be borrowed. Peer countries borrow, build, and pay back through tolling. We can’t, because borrowing powers (and for that matter powers over road and vehicle tax) are not remotely adequate. It is frankly baffling that supporters of independence fail to deploy this argument more regularly.”

Compare the UK’s plan for Scotland to what is happening in similar-sized independent countries - eg Denmark has a multi-billion programme underway to upgrade infrastructure up to 2035. 

Any fair-minded observer would have to conclude that Scotland would be far better off as an independent country. 

 

2 - Reeves’ plan for a new runway at Heathrow should have been tied to investment in Grangemouth

A key plank of Westminster’s ‘growth’ plan is another runway for Heathrow - supposedly compatible with the UK’s carbon targets because of advances in sustainable aviation fuel. 

That plan could and should have been tied to investment in Grangemouth which could have a real future as a hub for sustainable aviation fuel.

But it was not. The UK’s failure to invest in Grangemouth is a real problem for the wider Scottish economy and the many smaller businesses which depend on the refinery. 

Scotland looks set to lose its only remaining refinery for lack of investment. England and Wales have five, all of which are profitable. 

Coalition group Rise says Scotland could become a world-leader in Sustainable Aviation Fuel (SAF) production which could boost the economy by £1.8bn by 2030 and create 60,000 jobs across the UK by transforming Grangemouth to meet growing demand. But they warned last year the UK Government would need to “act quickly” to secure vital investment.

When asked about this plan by Laura Kuenssberg, Reeves started talking about investment in carbon capture in Teeside (that touched another sore point for Scots - the oil capital of Europe Aberdeen has not been granted funding for its massive carbon capture plan, the Acorn project.)

 

3 - For a fraction of the Heathrow spend, Scotland could have its own ferry link to Europe

Reeves claimed that a new runway at Heathrow would be a benefit to the Scottish economy allowing Scots exports to go through London.  

Scots exports don’t need to go through London. If they go through Amsterdam they have immediate access to a network of road and rail links for swifter deliveries. In the aftermath of Brexit, paperwork has grown exponentially and made it much harder for Scottish businesses to export to Europe. 

Having their own Scottish direct route could make it easier, with shorter queues and bespoke help. And when Scotland becomes independent it will mean Scots exports can go directly back into the EU without the hassle and cost of going through England. 

MP Graeme Downie has been campaigning to restore a direct freight ferry from Rosyth to Europe which would give Scottish businesses. This could be secured with an investment of £3 million from the UK government - a fraction of the Heathrow spend -  but this has been refused by Labour government at Westminster.  

The UK government benefits politically from exports going through London, or potentially being bought by wholesalers based in London. They can use it to bolster claims that most Scottish exports are to England. 

And If they can claim that Scots exporters will use the runway, they will also be able to avoid paying any money for infrastructure to the Scottish government in Barnett Consequentials - as they did to Wales by claiming HS2 counted as infrastructure spend for Wales. 

 

4 - Reeves’ investment in “Silicon Fen” comes at the expense of Edinburgh University’s supercomputer

Another big ticket item in the plan was building a "growth corridor" between the university cities of Oxford and Cambridge, by working with industry and local government to speed up the building of homes, laboratories and transport networks, and a direct train line - a plan known as “Silicon Fen”.

There was once a similar idea to fund tech-related development in Scotland’s ‘Silicon Glen’. But nothing was heard of that last week. Ironically Reeves’ Oxbridge announcement came after the Westminster government called a halt to the building of a supercomputer at Edinburgh University. The computer had been greenlit to the tune of £800 million by the previous Westminster government and Edinburgh had already spent £30 million on developing a site for what would be one of a handful of supercomputers in the world. 

An Exascale computer is capable of performing at least one exaflop, which is a quintillion calculations per second, enabling it to solve extremely complex problems that would take regular computers years, or even centuries, to tackle. They are vital for making complex calculations such as for climate modelling. 

 

5 - Scottish businesses are being pushed to the wall by the highest energy bill in the world

Worst of all the Chancellor’s plan did nothing to address the fact that Scottish businesses' energy rates are the highest in the world and Scots face soaring levels of fuel poverty, almost three times higher than those than in England. Scottish businesses are going to the wall because of the cost of energy. 

In her speech, Reeves urged the country's regulators, including energy, to “tear down barriers to economic growth”. 

But thanks to the UK government’s decision back in the 90s to privatise Scotland’s energy infrastructure there is a lot of economic growth going on - in the profits of private energy firms.

Scotland is being left without mechanisms to build the infrastructure it needs - it was once a world leader in hydropower but is now way behind. There has been no major project for 40 years - since the infrastructure was privatised. The Scottish government can give planning permission - but it can’t unlock investment. Only the UK government can do that. 

The national grid is weak and private companies prefer to be paid highly to turn off renewable power than to distribute it locally at a lower tariff. 

Scotland needs stronger regulation, not less, when it comes to making energy affordable for people and businesses.

 

Conclusion

Any Scot looking at Rachel Reeves’ growth plan is bound to feel frustrated when they see what little is on offer for Scotland. It is a far cry from what similar-sized independent countries are managing to do in terms of transition to the green economy, investment in infrastructure and employment. 

This underwhelming programme should function as a wake-up call for all Scottish business people - we could do far better as an independent country. 

 

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