Pat Kane: Let's talk about the economic case for Scottish independence

But as it was surely intended to do, sparks and lines are flying from my head about the state of independence strategy.

One of them is certainly the key issue of economics – factually, narratively and emotionally.

There’s a startling sequence in To See Ourselves where Jane and her activist dad Fraser are running frantically from a campaign location. They’re late for the pick-up of a quietly disgruntled mum.

So chaotic are matters that Jane’s camera is left on and pointing to the ground; it captures their consternation, feet pounding the pavements. Beneath this runs a soundtrack of Gordon Brown, on the 2014 stump for No, banging out five “real risks” of independence.

The audience at the GFT, battle-weary from the last nine years, laughed heartily and ruefully at many of Brown’s projected indy downsides. “Prices rising in the shops”, “interest rates and mortgage rates going up”, “an economic minefield where problems could implode at any time”… Please, anent a decade or so of austerity and the Brexiteer ham-fistedness of Johnson/May/Truss/Sunak, save us from the ironies.

But the first three of Broon’s “real risks” are still, if not unaddressed, then certainly not coherently and authoritatively enough to be effectively refuted.

As the presbyter thumped them out, they were: “The uncertainty about the currency”, “the default from debt that it threatens” and “having to build £30 billion of reserves, at the cost of the NHS and the welfare state”.

I’m certainly no economist. But I try to be sensitive to how economic arguments for indy serve to make citizens feel they have agency – or that they are powerless to resist.

I received a paper this week from Professor Iain Docherty, one of the contributors to the original Sustainable Growth Commission proposals (led by Andrew Wilson). It’s titled On Surprises, Strategy, the Economy and What Comes Next for Scottish Independence.

Docherty here is valiantly attempting to shift the ground on the “economics of indy” argument. He feels the indy parties have been transfixed by Brown’s “real risks” of currency and debt, and are missing out on a much better line of argumentation. Which is the endemic weakness and failure of the UK economy.

As Iain puts it: “In 2014 as now, the ‘economic case for independence’ has been framed explicitly by the notion that an independent Scotland might be (substantially) poorer than the UK, but (just as importantly) implicitly by the narrative that the UK is a rich and prosperous country and therefore a safe bet. But this bet might be off if public perception decides that Britain isn’t quite so rich and secure after all.”

How might this perception land? Docherty harvests enough recent examples.

Keir Starmer himself believes that, in a decade or so, British living standards and “GVA” (gross value added, meaning what companies contribute to an economy) will be matched and surpassed by Poland, Hungary and Romania.

Productivity growth is the lowest in the UK since the 18th century. Even this week, major auto manufacturers like Ford are complaining that the UK Government’s weakened targets for electric vehicles and the end of fossil-fuelled cars are simply disruptive of their corporate plans.

They are actively discouraging green business, for the sake of electoral calculation.

Would a Starmer government be able to puncture this perception, via better economic policies? Not, offers Docherty, if StarmLab adhere to their pro-Brexit stance against economic harmonisation with Europe, And not if they maintain their low-tax offers to the City, alongside other vaunted continuities with current Tory policies.

WE are dealing with a long historical structure here: the British “core” (London and the South-East) extracting wealth from its “peripheries”. Docherty very much doubts that will be challenged by Labour; Brown’s most recent plan fell far short of the regional redistributions and reinvestment needed.

From his expertise as an economic geographer, Docherty points out that parts of the English North are probably poorer than their Eastern European, post-communist counterparts. Leeds is the largest city in Europe without a metro travel system – while almost £20bn alone was spent on the handful of stops making up London’s Elizabeth Line.

There’s a strategic opportunity here for Scots independence parties, proposes Docherty. They must be ready for the moment when “better economic performance does not manifest itself” under a Starmer government (assuming their Westminster majority).

But when that “perilous economic state” comes, we’ll be ready with what, exactly?

This is where the first three of Brown’s “real risks” are still banging on their podium. Docherty ruefully recalls Section A of the Sustainable Growth Commission (SGC), which had 30 of the 50 recommendations out of the whole, and was about “raising the performance of the Scottish economy ... around the growth-generating themes of population, participation and productivity”. It was almost “completely ignored”.

What got all the attention was, effectively, the SGC’s answer to Broon’s first three scary monsters.

Sterlingisation – Scotland’s use of sterling as an internationally tradeable currency – would immediately answer the “instability” question. The “debt default” wouldn’t be threatened, because the currency stability would assure global markets (and not give them the opportunity to speculate on a new Scottish currency).

There’s a strong 2021 paper from the Institute of Government (IoG) which confirms this point. The “informal adoption of sterling”, the authors write, may help to build Scotland’s “credibility with markets”, who would note the “absence of a track record of prudent fiscal and monetary policy”.

Brown’s “£30bn of reserves, at the cost of the NHS and the welfare state” would be accumulated more slowly. Yet (as the IoG report suggests) they would eventually still imply a “tighter fiscal policy” for an indy Scotland.

You and I have heard all this before. And I appreciate Iain’s desire to shift focus in the indy economic debate back towards Scotland’s “human and natural resources”. That is, our manifest capability to prosper in a smart, green economic future.

Docherty quotes Ronald Reagan: “If you’re explaining, you’re losing”.

It’s true that “It’s Scotland Oil” doesn’t need much explaining: you’re extracting from us, we’re losing out.But he’s suggesting we tell Scots citizens that the UK economic system is badly failing and dragging us down … while at the same time asking them to rely on this broken UK’s monetary system (to build credibility with global bankers and traders). It feels like – to coin a phrase – a tough sell.

Docherty asks indy campaigners to be “ready for surprises”.

But in correspondence with me this week, he admitted that he was “sceptical about the apocalyptic climate/migration/automation stuff, to be honest”.

And honestly? I’m not.

There might be other “surprises” we’ll need to consider. Like the failure of global food supply chains; a step-change in computation that replaces most human routines; some new viral threat – among many others.

These may provide us with extra reasons to assert Scottish democratic sovereignty, beyond having a long, slow dance with the capital markets.

I deeply agree with Iain that we don’t have the kind of think tanks that could attend to the tension between “independence is normal and achievable” and “everything is going exponentially crazy”.

So let’s have the discussion in these excellent pages.

And let the brilliant imagery from To See Ourselves – where we dash about like ragged enthusiasts, while the edicts of Gordon Brown blast away without much rebuttal – be a caution to us.

Iain Docherty’s paper is free to access in the current edition of Political Quarterly.