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Post referendum Scotland: an STUC perspective
Stephen Boyd, Assistant Secretary, STUC
Nevin Economic Research Institute, 18 November 2014
Content
• The Scottish economy – some background • Political economy of the referendum
campaign • Referendum aftermath – Smith Commission,
themes driving new political economy
GVA per head (£), 2012
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Wales NorthEast
NorthernIreland
WestMidlands
EastMidlands
Yorkshireand TheHumber
NorthWest
SouthWest
East ofEngland
Scotland UK England SouthEast
London
Employment rate (%), July-Sept, 2014
64.0
66.0
68.0
70.0
72.0
74.0
76.0
78.0
NorthernIreland
North East Wales WestMidlands
NorthWest
Yorkshireand TheHumber
London UnitedKingdom
England Scotland EastMidlands
SouthWest
South East East ofEngland
Unemployment rate (%), July-Sept 2014
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
South East SouthWest
East ofEngland
EastMidlands
Scotland England UnitedKingdom
NorthernIreland
London NorthWest
Wales Yorkshireand TheHumber
WestMidlands
North East
Current Revenue (total £47.56bn) 2012-2013
22.8%
6.0%
17.9%
19.7%
4.7%
4.2%
4.2%
20.5% Income tax
Corp tax (excl North Sea)
NI
VAT
Fuel duties
Non-domestic rates
Council tax
Other taxes
Total revenue (£m)
Total current revenue (excluding North Sea revenue) 47,566
North Sea revenue Per capita share 552 Geographical share 5,581
Total current revenue (including North Sea revenue)
Per capita share 48,118 Geographical share 53,147
Spending on services, Scotland total as
% of UK
0
50
100
150
200
250
Total services Health Education Enterprise& Econ Dev Transport Public order and safety
The economy was the key issue
"I firmly believe who wins the economic argument will win the referendum” Nicola Sturgeon, January 2014
Independence referendum
• Economic issues at forefront of debate • Huge, diverse (in origin and quality!)
associated literature: HMT, SG, NIESR, IFS etc • Macroeconomic issues dominated: especially
currency & fiscal sustainability • Micro/economic development issues largely
ignored (although Scot Govt did try!) • Debate reflected lack of capacity at Scottish
level: political, media, academic, civic
Yes/No key themes
• NO: emphasised macro framework and fiscal sustainability; pooling and risk sharing; integration of UK market; transition and set up costs; PROJECT FEAR!
• Yes: aspirational; emphasised social policy; independence as austerity avoidance mechanism; animal spirits/productivity dividend; reindustrialisation; Nordicism (childcare); social partnership
STUC ‘A Just Scotland’
• Launched summer 2012; aimed at 1) informing trade union members and wider society 2) shifting debate firmly onto grounds of social justice
• Three reports: December 2012, February 2014, September 2014
• Seminars & policy conferences across Scotland • Didn’t take a Yes/No position but not neutral!
Key STUC views
• Heavily critical of Scot Govt/Yes on macroeconomics (currency, fiscal sustainability, oil fund) and of UK Govt/No on Project Fear approach
• Sceptical of sector specific analysis: financial sector; energy; defence
• Positive about Scot Govt’s economic development plans (e.g. reindustrialisation) & aspirational social policies
• Emphasis that No didn’t necessarily mean endorsement of constitutional status quo
Current devolution settlement
Devolved to Westminster • agriculture, forestry and fisheries • education and training • environment • health and social services • housing • law and order (including the
licensing of air weapons) • local government • sport and the arts • tourism and economic
development • many aspects of transport
Reserved to UK • benefits and social security • immigration • defence • foreign policy • employment • broadcasting • trade and industry • nuclear energy, oil, coal, gas and
electricity • consumer rights • data protection • the Constitution
Scotland Act 2012
• The ability to raise or lower income tax by 10p in the pound. Any change is applied equally across all tax bands
• Other minor tax powers: control of stamp duty and landfill tax.
• The ability to borrow money, up to £2.2 billion a year. • Guaranteed Scottish representation in the BBC
and Crown Estate. • Legislative control over several more issues including
limited powers relating to drugs, driving, and guns.
Smith Commission
“To convene cross-party talks and facilitate an inclusive engagement process across Scotland to produce, by 30 November 2014, Heads of Agreement with recommendations for further devolution of powers to the Scottish Parliament. This process will be informed by a Command Paper, to be published by 31 October and will result in the publication of draft clauses by 25 January. The recommendations will deliver more financial, welfare and taxation powers, strengthening the Scottish Parliament within the United Kingdom”
STUC Smith Submission – key features
• Very critical of process: timing and lack of civic engagement
• No to Devo-max! But support devolution of… – …and assignment of taxation amounting to at least
two thirds of Scottish public spending – employment law, health and safety, trade union law,
NMW – Housing Benefit, Attendance Allowance, Carer’s
Allowance – the Work Programme
Themes driving post indyref political economy
• Astonishing level of political engagement (growing Left influence?)
• Austerity and welfare reform • Inequality – new ‘purpose aim’ of the Scot Govt? • Labour market reform – new Scottish institutions
e.g. the Fair Work Convention • Economic development – reindustrialisation; the
Foundational Economy • Newly invigorated English cities/regions?