Austerity, inequality and the Scottish approach to economic growth

Sam-Sharp-150x150

On 11 February 2015, Nicola Sturgeon spoke at an event co-hosted by the Constitution Unit and the UCL Department of Political Science. Sam Sharp reports on the event.

Recent predictions suggest the Scottish National Party (SNP) could win as many as 54 seats in May. A poll surge of this kind is not what most would have expected to follow a lost referendum on the party’s cornerstone issue. It is in this context, however, that an emboldened Nicola Sturgeon addressed UCL and the Constitution Unit in her first London speech since becoming First Minister of Scotland. She delivered a robust rejection of austerity, setting out a vision of an alternative Scottish economic approach and an enhanced role for the (potentially many) SNP MPs.

It was evident from the off that speaking in London would not tone down Sturgeon’s anti-Westminster message. On austerity she was at pains to make her point especially clear: these are ‘Westminster proposals’ made by the ‘Westminster parties’ in a stale ‘Westminster debate’. The SNP, she argued, are not tainted by this brush. A contrast was drawn between the ‘wide-ranging, passionate and fundamental’ referendum debate and the ‘bizarrely and depressingly narrow’ Westminster discourse (although this supposed contrast in debate quality should probably be taken with some scepticism given the criticisms of scaremongering and intimidation that surrounded the referendum).

Nonetheless, Sturgeon’s critique of the ‘morally unjustifiable’ austerity agenda was forceful. In her eyes it has failed on two counts. Firstly, the human cost of austerity in itself is too high a price to pay. Economic policy should be a means to happy, fulfilling lives not an end in itself, and the disproportionate impact that austerity has had on women, disabled people and those on low incomes is indicative of how it has failed this test. Secondly, she argued that austerity has also failed on its own terms: the economy is no more structurally balanced, social inequality remains high and most damagingly, the government has failed to meet their own deficit reduction targets.

This narrative, to some degree, clashes with the UK recent outperformance of other European countries, especially with regards to unemployment. Alistair Carmichael, the Scottish Secretary, accused the First Minister of ‘trying to turn good news into bad’. When questioned on this point by an audience member, Sturgeon emphasised the need to look beyond just the headline stats: unemployment may be falling, but productivity is still lower than it was in 2008. She concluded that the evidence against the current ‘march to further austerity’ is overwhelming and it now persists as an ‘article of faith’ bought into by all the ‘Westminster parties’.

The ‘wider vision of society’ that Sturgeon laid out is one in which fairness and prosperity ‘must go hand in hand’. Deficit reduction is an important challenge, but just one amongst many, including ‘boosting productivity, ensuring skilled and well paid job opportunities, adapting to an ageing population, combatting inequality and moving to the low-carbon age.’ Sturgeon argued that the necessity of tackling inequality and growth together is actually part of a growing international consensus, with a claim to tacit endorsement from the positions of Mark Carney, Christine Lagarde and President Obama.

The speech was somewhat lighter on concrete policy proposals; the most significant a more gradual reduction of the deficit through limiting real terms growth in departmental spending to 0.5% a year. Sturgeon argued that this will still see the debt reduced as a percentage of GDP in every year from 2016-17, but also allow for a further £180 billion of investment above current government plans (a figure later clarified as not set in stone) across the UK over the next four years.

In a month where Labour have been accused of being ‘anti-business’, Sturgeon devoted significant time to discussing how the SNP plans involve working closely with business. She set out a wide range of employment practices which will form a part of the SNP’s ‘flourishing and fair society’ – from support for the living wage and greater workforce engagement to an encouragement of gender equality in boardrooms and a major expansion of childcare. The stated aim being to appeal to companies’ ‘enlightened self-interest’ that these policies are ‘good for their employees, good for their reputation, and good for their bottom line’. An optimistic view perhaps, although assisted by certain nudges towards this ‘enlightenment’, such as funding a scheme for accrediting living wage employees.

The most interesting elements of Sturgeon’s speech were on how the SNP plans to exert influence in Westminster. Upon questioning, she described the purpose of SNP MPs as twofold: firstly, to stand up for Scotland in Parliament but also to be part of an informal ‘progressive alliance’. In general, no effort was made to conceal her appeal to the left of the Labour party (both backbenchers and voters), stating that the SNP were making the case that ‘Labour Parties of old would have made more emphatically than they do now’. Recent comments from Caroline Lucas have indicated that this appeal to ‘progressive strands of opinion’ has also involved reaching out to the Green Party and Plaid Cymru.

In the case of a hung parliament, Sturgeon ruled out working with the Conservative Party and described a formal coalition with Labour as ‘highly unlikely’ although, noticeably, refusing to explicitly rule it out. More plausible, she suggested, is a confidence and supply agreement whereby the SNP props up a minority Labour government in return for policy concessions. Sturgeon wouldn’t be drawn on naming overt ‘red lines’ for an agreement, but the emphasis placed on Trident and welfare cuts suggested that this where the focus may lie. She argued that the approximately £100 billion that could be saved from not renewing Trident should instead be invested in health and education and that the SNP would use any influence they had to force a different view on cuts to welfare spending.

For now, the Labour response is to stick to a ‘vote SNP, get Tory’ line with the shadow Scottish secretary Margaret Curran claiming that ‘every vote for the SNP in May is another boost for David Cameron’. However, as a hung parliament becomes more and more likely, the SNP look set, for better or worse, to be an increasingly relevant force in Westminster.

About the author

Sam Sharp is a recent graduate in Philosophy, Politics and Economics from the University of Oxford. He is currently a Research Volunteer at the Constitution Unit, working on the Parliamentary Candidates UK project.

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