Economics of Independence Scotland's Economy

The Goldfish Continuum – why talking down Scotland’s economy costs Labour votes

Scotland’s century of lost wealthPolitics used to be so simple, you were either left or right and there was even a little party in the middle for those that couldn’t make up their mind. The Greens and the SNP were of little consequence in a General Election, especially as the lack of proportional representation kept smaller parties in their place.

That all changed on September 18th last year when many who voted No did so with a heavy heart; they felt bullied and bludgeoned by negativity. They were not convinced of the case for Yes, but across the board they realised that the unionists had nothing to offer Scotland but negativity. The Liberals were already in decline, the Tories unable to reach beyond core supporters for a generation and so the backlash was always going to hurt Labour.

The end of left and right

A new schism in Scottish politics opened up that day; left versus right was replaced by those who believe in Scotland versus those who don’t believe in Scotland. A new question defined Scottish politics: “Why would anyone vote for a party that didn’t believe in Scotland to run Scotland, or even to champion our cause in Westminster?” The No campaign won, but it did so by trying to stop people believing in Scotland, it adopted a scorched earth strategy to deny the fuel of hope to the Yes campaign, Labour poisoned the very wells that they now need to drink from.

After the Vow, had Labour championed home rule and fought to deliver a federal Scotland they would have protected seats but they were weak. They put protecting votes on English issues ahead of Scotland’s needs and now they exist in a goldfish continuum. It may be an urban myth that goldfish have a three second memory, but Labour are acting like that proverbial goldfish. Santayana wrote: “Those who cannot remember the past are condemned to repeat it.” Almost every day Labour spokespeople take to the air, redoubling their efforts to put Scotland down rather than sharing a positive vision for Scotland. A classic example was Labour’s approach to this weeks GERS figures and, in particular, Jackie Baillie on Scotland Tonight. With a gleam in her eye you could clearly see Baillie thought that this time negativity was at last going to work – its a short term tactic at best but long term will lose them even more votes .

GERS shows Scotland’s economy is sound

Last week GERS reported that even in a bad year Scotland’s tax raised per head was £400.00 more than the average for the UK – ipso facto, Scotland can afford to be an independent nation and can clearly afford full fiscal autonomy. The only valid line of attack for Labour would have been to say that they would have done better and list the positive policies they would have implemented that would have increased revenues. However, they chose once again to scaremonger about Scotland’s future arguing against devolving more fiscal powers to Scotland, arguing against the general principles of the Vow itself. Facing Scottish electoral disaster in May they should now be thinking about Holyrood next year and the mathematical possibility that a majority SNP Government will have the Greens as the official opposition, with the Tories aiming for third place.

GERS had bad news on the deficit – being higher (for this year) than the UK – but that is no barrier to full fiscal autonomy as Labour has claimed.  If you have full fiscal responsibility and the people of Scotland don’t want to run a bigger deficit than the UK, then all they have to do is elect a Scottish Government that commits to cutting spending so the deficit matches the UK’s – we would still have £400.00 per person more to spend. But we don’t want austerity, we want balanced growth and social protection whilst lowering the deficit.

Arguing that GERS figures from 2013 demonstrate that the powers needed to stimulate growth shouldn’t be devolved now is a little bizarre, not least as full fiscal autonomy would take several years to negotiate, implement and transfer the necessary powers. It also contradicts the language used by Murphy last month when he declared he wanted to go further than the Smith Commission with the VOW Plus, and also ignores that the Scottish Oil Fund – which is now a point of agreement between Labour and the SNP – will take a few years to build value, so there seems even to be an agreed solution to Murphy’s worries around oil price volatility. Labour gives the impression that it is a party with a problem for every solution and every negative statement adds to a long list of political suicide notes.

imagesPowers for a purpose
Business for Scotland’s Smith Commission submission was called “Powers for a purpose versus retained for a reason”; the purpose of devolving full fiscal responsibility is to invest in bespoke policies that create jobs and grow the economy and grow tax revenues, so that any additional public spending can be afforded within the balanced budget of the Scottish Government no matter which party is in power. In other words, full fiscal responsibility will allow the Scottish Government to increase the revenues available for public services and also to invest in the Scottish oil fund dealing with oil price volatility.

If you devolve only welfare, as Labour suggests, and raise spending then you have to cut another budget or raise taxes. Raising taxes runs the risk of slowing growth and reducing revenues and so in the longer term reduces welfare spend. With full fiscal responsibility you have the additional option of investing in growth and raising the revenues available. Why then would anyone want welfare devolved, but not also fiscal autonomy?

Support for autonomy
Panelbase reported that 71% of Scots support control of all taxation raised in Scotland, 75% want control of the welfare and benefits system. There is clear evidence that Labour doesn’t naturally believe in devolution but is being forced to suggest it does by the will of the Scottish people.  Labour pretends to be opting out of Westminster control, but in a way that will leave Scotland forever at the mercy of Westminster. Under Labour’s plans Scotland’s economy would not be free to follow its own path, it would just be on a longer rope.

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About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland Gordon ran a business strategy and social media, sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and Believe in Scotland.


  • GERS contains a great deal of best guesswork because so much is deliberately concealed by Westminster.

    A cynic might say that the real reason why Westminster won’t devolve full fiscal autonomy is to prevent Scots from finding out just how strong the Scots economy really is.

  • Tax revenue is only half of the story, the other half is public expenditure. Yes, we raised £400 per head more than the rest of the UK but we spent £1200 per head more than rUK. The £800 p/h deficit has to be raised somewhere. Independence, in its self, will not solve the problem. And if the figure doesn’t seem that bad, am I wrong in thinking that it would equate to a 40% raise in income tax? Well we could grow the economy? Yes, but wouldn’t mean having to grow the economy by 10%? All just to be no worse off than we are at present. Off course this isn’t an argument against independence but shouldn’t it frame the debate more than you suggest?

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