Business for Scotland didn’t comment when the Sustainable Growth Commission report was published. It was too conservative for us on spending, undersold Scotland’s economic potential – both for growth and in wellbeing terms – and the conditions for the introduction of a Scottish pound were overly restrictive.
We have no such reservations about today’s economic strategy announcement which demonstrates that the Scottish Government (SNP and Scottish Green Party) understand that everything has changed since 2014. The economic chaos of Brexit and Westminster’s incompetence has helped the Scottish people and Scottish business accept that we need to press reset and focus on Scotland’s economic, environmental and societal wellbeing, rather than the discredited growth at any cost approach of the Westminster parties. Today’s report, although in itself not revolutionary, confirms the Scottish Government’s direction of travel and opens up a clear path to a better nation with a stronger and more internationally focused economy than the Brexit-led UK.
Unionist politicians lied to Scotland. Brexit has been an unmitigated disaster which laid the foundations for the cost-of-living crisis and Westminster is currently mired in political, financial and economic instability. With Labour and the Conservatives committed to Brexit, Scotland becoming an independent nation, rejoining the EU and thriving through a Wellbeing economic approach is now the opportunity of our lifetimes. The Believe in Scotland poll published in the Sunday National proves that the people of Scotland are beginning to agree, with 61% stating they would vote Yes if the Wellbeing economic approach was put at the heart of The Scottish Government’s economic plans for independence. This morning the Scottish Government has done just that.
The Key points of the new Scottish Government Strategy are all ones for which Business for Scotland has been lobbying hard over the last few years.
- The Key message of the report is that Scotland can break with the low productivity, high inequality Brexit-based UK economy and use the full powers of independence to build an inclusive, fair, Wellbeing economy that works for everyone.
- You can read our Wellbeing Economy Manifesto here
- It sets out how we can build a new, sustainable economy based on our massive renewable energy resources.
- Our message has been that an independent Scotland can be a renewables powerhouse and that would allow us to slash energy bills. Scotland has the natural resources it needs to lead the world in producing renewable energy. We could do even better but staying within the UK is holding us back.
- The Scottish Government is clear that an independent Scotland will rejoin the EU and that Scotland’s economy and our people will benefit greatly from independence with EU membership.
- BfS has long held that there is not and should not be any ambiguity about Scotland rejoining the EU. All the Westminster political parties are committed to trying to make Brexit work but Brexit cannot work and it has been an unmitigated disaster for Scotland. Our businesses will be back inside the world’s biggest single market with freedom of movement for exports and people restored and we will regain full access to highly skilled and essential workers from Europe and around the world.
- The Scottish Government in an independent Scotland propose to invest the remaining oil revenues and use its borrowing powers, not to cut tax for the richest, but to set up an independent investment fund. They claim that the Building a New Scotland Fund will deliver up to £20 billion of investment in the first decade of independence, providing an important economic stimulus for our newly independent country. Earlier this year we pointed out that an independent Scotland would be wealthy enough to fund a just transition to renewables – and lower electricity bills for people and businesses.
- This has been a key call from Business for Scotland and in particular, we want to see massive investment in transitioning from oil and gas to renewables. We also believe however that a fund that would revolutionise close to market research and development would grow our economy exponentially across the board. As far back as seven years ago, we started calling for a doubling of R&D spending. According a NESTA report back then, doubling R&D spending to 3.4% of GDP over a five-year period would mean that Scotland’s economy would grow by around £12bn a year. We maintain, as we said before, that Scotland’s economy isn’t dependent on oil, it’s dependent on innovation and we aren’t doing enough. This fund is crucial to Scotland’s future prosperity.
The currency question – There will be a Scottish Pound. The Scottish Government now emphasise that their intention is to move to a Scottish pound as soon as is practical and we welcome that versus the more restrictive conditions of the SGC.
- Since 2018 Business for Scotland’s line on the currency of an independent Scotland has been out of sync with the Scottish Government. In 2017, before the publication of the SGC, we stated that: “We believe that an independent Scotland should have a sovereign currency at the time most in line with the economic and social wellbeing of the nation. That might be right away. It depends on the political realities of the day, but it’s probably after a transitional period where Scotland uses sterling until it suits Scotland not to do so”. Thus, maintaining maximum flexibility on the timing of its launch.
- A key thing to understand here is that independence will probably mean that Sterling will fall in value. Scottish exports, our seafood whisky and oil etc., will all be cheaper to purchase, causing our exports to grow significantly. England will also find that electricity, oil and gas as well as many other products it buys from Scotland will be cheaper than those from nations not using sterling. Therefore, keeping Sterling for a transition period will boost exports and create jobs, control inflation across the UK and increase trade with the rest of the UK after independence, not decrease it as suggested by UK government scaremongering. So, keeping Sterling initially and then launching a Scottish Pound when it suits Scotland is the optimum strategy and we welcome the fact that it has now become official Government policy.
We also welcome the First Minister’s message in her talk that, Now is the Time – The UK economy is holed below the waterline and whilst all the main Westminster political parties remain committed to Brexit, no UK Government of any party/colour can alter the downward path we are on as part of the UK.
The Fiscal Commission being boosted to effectively mirror the functionality of the OBR, offering forecasting and modelling to ensure rigour in the Scottish Government’s economic thinking is also a welcome commitment.
Where we do differ from The First Minister quite significantly is when she said that in her opinion “Scotland bears a moral, if not legal responsibility for a population share of the UK debt”. Scotland has been subsidising the UK for generations as we have proven in our report ‘The accounting trick that hides Scotland’s wealth’ which is updated every year has been shared on Facebook more than 81,000 times. Yes, the negotiation will include discussion on the UK debt but it is not incumbent upon Scotland to take a share of that debt because we have already overpaid.
Indeed the UK Government has made that point crystal clear when it stated:
“The Treasury has today set out detail on government debt in the event of Scottish independence. The technical note makes clear that the continuing UK Government would in all circumstances honour the contractual terms of the debt issued by the UK Government.”
In their opinion they claim that ‘An independent Scottish state would become responsible for a fair and proportionate share of the UK’s current liabilities’. However, they also accept that “An entirely separate contract between the continuing UK Government and an independent Scottish state’s Government would need to be established. The respective shares of debt and the terms of repayment would be subject to negotiation.”
Business for Scotland believes that the UK Government’s stance in the negotiations will be that Scotland should take on a population percentage share of the UK’s debt. We believe that it is an equally valid stance for the Scottish Government to say that we have overpaid for the UK’s debt which Scotland did not need nor benefit from and that we are owed compensation. Those would be opening negotiation stances and discussion would hopefully lead to a win-win agreement. Please also note that all fixed assets such as oil and gas within the boundaries of Scotland belong to Scotland without negotiation but that proportional ownership of all non fixed assets (naval ships etc) are up for negotiation and therefor any debt Scotland accepted would be matched by corresponding UK assets, Scotland would receive to the same value and so there would be no debt burden.