Scotland’s Economy: Wealth, Health, Challenges and Opportunities

The Economist has shown before that the editorial team seems to have a chip on their shoulder when it comes to Scotland.  This month they have an article looking at the upcoming referendum in which they run the line that ‘an independent Scotland would be a rich country with terrible prospects’. Make no mistake, this is written by someone keen to see a No vote but that makes the whole thing more interesting – even articles designed to scare people off independence acknowledge that Scotland will start off with a very healthy economy.  The starting premise is that Scotland in fact has a stronger economy than the UK average – it is now well accepted that Scotland’s economic strength is second only to the SE of England (as the Financial Times have also reported on this year).  However there are two important points to consider alongside that: firstly there is the fact that the SE of England receives significantly more funding or ‘investment’ from the UK government (Boris tells us why here); the second point relates back to the Economist article and that is that Scotland has a myriad of social issues and demographic challenges.  It is on this point that logic seems to fail the Economist as the issues that they highlight are in fact a demonstration of how the current UK political system is fundamentally failing Scotland.

How to Overcome Demographic Challenges: With or Without Control?

The Economist article takes the current situation (a Scotland with limited powers, bound within the UK) and then extrapolates the demographics, 50 years ahead, within that scenario.  The main hurdles presented are an increase in the number of forecasted pensioners (assuming that life expectancy doesn’t drop further from its current shocking levels), a reduction in the number of those in working age and also health related issues.

The article only proves what will happen if Scotland stays on its current course; it does not represent the demographics that would be projected in an independent Scotland – and that situation would be entirely different.  By staying in a union under Westminster’s control, Scotland’s specific needs will continue to be neglected. The best way to avoid the pension crisis scenario depicted in this article is to take control now and steer the country in a better direction that realises Scotland’s true potential.

The situation of demographics is closely connected to immigration policy – the fact that the largest centre of population (SE England) has such a vastly different circumstance on the number of those in the working age group is a demonstrable point on the failing of Scotland having our immigration policy tied to the UK! Within the UK we will see it become harder for employing immigrants who have the right skillsets to help grow the economy moving forward. I hasten to add that there should always be a focus on growing the talent through our education sector to feed the employment sector. This brings me to another flaw of the current system – education is fully devolved but the employment sector is run centrally from Westminster (notably taxation and the jobseekers process with associated welfare). However, there’s an obvious need to create an effective link from education to employment but the disconnect in governance simply leads to duplication, inefficiencies and worst of all missed opportunities.

Among its many pages, the white paper ‘Scotland’s Future’ recognises the challenges we face ahead and has marked out a clear strategy that aims to tackle these issues head-on.  For example, a new childcare policy designed to encourage birth rates and also to enable more women in the workplace (which in turn provides even more contributions to the pension pot).

Ultimately though, the fundamental principle of independence is that the Scottish electorate will be able to set the priorities to create a better future – we will be the ones who decide.

Industry Analysis

There are many industries that contribute to Scotland’s, nicely illustrated in the Finance and Economy section of the white paper:

Scots_Economy

However, the Economist only offer a passing comment on the wide range of sectors and instead focus their attention on the sector which I work – Oil & Gas.  On oil estimates, the article follows the No campaign strategy of linking every positive statement to Alex Salmond – attempting to play the nation’s future on the popularity of an individual.  They could easily have referenced the Sir Ian Wood report, commissioned by the UK government, which went into significant detail on the healthy future of the industry and estimated that it could add “at least” £200bn to the economy over the next 20 years.

The Economist article then goes down the classic No campaign line of ‘the cost of the decommissioning’ but completely fails to mention that the onus for this is exclusively on the private sector in the UK (a point that I made in my blog post specifically on the Oil and Gas sector (links provided in there)).

With respect to the industry, it is worth reflecting on the recent Financial Time investor’s magazine which reported that ‘Westminster has been deliberately downplaying the potential of the UK Continental Shelf (UKCS) ahead of September’s referendum on Scottish independence’.  Why would Scotland stick with a system that continually attempts to undermine the existing wealth and future potential of our economy? This same tactic from Westminster has been going on for 40 years now – it is time for Scotland to take full control and recognise our own potential. That can only happen with a Yes vote.

Infrastructure Investment

This gets to the heart of the need for independence – if the Scottish people are in control then the Scottish people can determine the priorities for setting our future economic growth. I’m certain that redirecting our tax cash from nuclear weapons to renewable energies will be a gain for us. Redirecting our infrastructure investment from the continued growth of the London network to projects within Scotland will also have a net gain.

The Westminster government are constantly selecting infrastructure projects deemed to be of ‘national importance’ which come from the central budget pot.  These are instances where Scotland pays ‘our share’ but there is no consequential allocation to the Scottish budget. For the HS2 rail project the Scottish taxpayer will spend at least £5bn on this but will get no benefit from it at all. There are plenty of other examples but the HS2 costs alone amounts to more than the major projects that have been performed in Scotland since devolution came in during 1999 (EGIP £740m, Edinburgh Trams £776m, New Forth Road Bridge £1.45bn, M74 completion £692m. Total: £3.66bn) – each of which has a tangible benefit to the Scottish infrastructure and economy (which I can acknowledge despite the fact that I personally thought we had higher priorities than the trams and the new bridge…). The A9 dualling is projected to cost £3bn but again this is from the Scottish Government’s budget.

Another distinction between the accountability of the Scottish government and the Westminster government is the public scrutiny on these projects.  Incredibly, the UK Chancellor is capable of announcing that £3bn will be allocated to infrastructure investment projects, and yet not one project is named.  What on earth happened to that £3bn!?  I suspect we’ll never know and yet I’ve never once met someone outraged by this, despite the total being 15 times greater than the cost overrun on the Edinburgh Tram project.  This type of gross waste of the taxes that we pay is commonplace at Westminster, but with it being such a centralised system unfortunately it seems to pass by the national consciousness.

With the powers of independence the Scottish government will have full control over the nation’s infrastructure.  We will be able to have a comprehensive debate about nationalising bus and / or rail services.  The first government of an independent Scotland could ring fence the £5bn that we would have lost to the HS2 project for infrastructure projects (high speed rail links between Aberdeen, Glasgow, Inverness and Edinburgh would get my vote – creating these links doesn’t only help boost the industrial sector, but when delivered our business and social mobility will be significantly improved too).

Conclusion

There should be no doubt for anyone in Scotland, or indeed anywhere else, that Scotland’s economy is in a very healthy state.  We have a diverse economy with all of the natural resources that are so important to support our nation – from fresh water to salt water and a wealth of fertile land which all serves to bring great food and drink to our table, we have a wealth of energy resources to the point where the WWF are reporting on how it is credible for Scotland to set the target of 100% of our energy needs to come from renewable resources.  The fact that the current system continues to fail too many in Scotland (and around the UK) is also beyond doubt.  However if we use our current wealth wisely we will be able to grow a sustainable economy for the future.

There are social challenges to be faced in all nations, the optimal solution is always for the nation to democratically set the priorities for moving society forward.  Scotland will only be able to address our distinct challenges if we have the power to do so – only a Yes vote on the 18th of September will give us this power.

About stuartmdarling

I live in Motherwell & work in Edinburgh in the Oil & Gas sector, which has been taking me around the world for 15 years now. My passion for politics and music go with me every step of the journey...
This entry was posted in Economy, Indyref context, Politics, UK problems and tagged , , , , . Bookmark the permalink.

2 Responses to Scotland’s Economy: Wealth, Health, Challenges and Opportunities

  1. Pingback: Mortgages, the Economy & the Referendum | Darling Blogs

  2. Pingback: Why I’m voting Yes | Darling Blogs

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s