The Scottish government’s latest policy paper in the ‘Building a New Scotland’ series was unveiled in October. Titled A Stronger Economy with Independence, the policy paper was signed off by the Scottish National Party (SNP) leadership but also the Scottish Green Party ministers.
In truth, it is a reheated reprise of the 2018 report published by the Sustainable Growth Commission, set up by SNP leader Nicola Sturgeon to make recommendations on economic policy for an independent Scotland. Socialist Party Scotland described that document as “nothing more than a tired old case for capitalism, which also marks a shift rightwards compared even to the 2014 independence blueprint. As such it offers nothing for the working class and young people facing austerity, falling incomes and deteriorating public services”.
Against the backdrop of a rapidly deteriorating economic crisis this updated manifesto for capitalist independence – and that’s exactly what it wants to be – is utterly deficient. It cannot possibly resolve the multi-faceted crises facing capitalism, including in Scotland. Not least because it is predicated on maintaining the same profit-driven system untouched.
There is not a single commitment to public ownership or nationalisation – not even of the profiteering energy industry. The furthest it goes is to say that “public sector involvement or ownership” would be considered. And that the energy market would be “redesigned” to ensure low cost energy. But how can this be done unless the sector is under public ownership?
There can be little surprise for anyone who has followed the SNP-Green government that there are no commitments to nationalise the economy. After all, the Scottish government earlier this year sold off vast areas of the North Sea to the energy giants for wind farm production. If there was the slightest determination to pursue public ownership then it would have created a public sector company to run the renewable energy sector.
As Socialist Party Scotland wrote at the time, “the corporations bidding for the licences to operate wind farms include some of the most profitable in the world. Major capitalist investment funds in green energy have pitched in… the major privatised utility companies – currently driving up gas and electricity prices, including SSE and Scottish Power – have also bid. Big oil have poured into these projects to greenwash their reputations and increase profit margins”.
Marxists argue that, broadly-speaking, ‘you can’t control what you don’t own’. If the energy industry is left in the hands of the multinational corporations then it will be run for profit and only for profit. And that means the urgent priority of dealing with the environmental catastrophe, itself a product of the capitalist mode of production, will fall by the wayside.
Socialist Party Scotland fights for democratic nationalisation of the entire energy sector and a socialist plan of production to end climate chaos and ensure jobs and a future for workers in the energy industry. Public ownership must also be under workers’ control and management, not administered by unaccountable mangers transferred in from private companies.
One of the major criticisms inside the independence movement of the 2018 growth commission report was its commitment to baked-in austerity for at least a decade after independence, in an effort to reduce the fiscal deficit to what was deemed to be ‘acceptable levels’. The new report is careful not to pose things in quite the same way. However, it is clear that that is exactly what would take place.
The policy document says: “We would set fiscal rules designed to put public finances on a sustainable path. The rules would ensure that day-to-day spending was kept within fiscally sustainable limits”. It goes on: “The Scottish government would, as a first step, set a transitional rule for the size of the current deficit for the early years of an independent Scotland. This would require that current borrowing be kept within certain limits over the economic cycle”.
This language is quite deliberate, and could easily have come from a Tory or Starmer-led Labour Party budget document. In other words, public services, wages and benefits will continue to suffer.
The Scottish government’s desire to join the European Union (EU) post-independence is a central part of the economic strategy document. Indeed, it states quite bluntly that: “For the period before Scotland joins the EU its fiscal rules should be, as far as possible, aligned with the principles and the approach of any future EU Stability and Growth Pact”.
The Stability and Growth Pact was adopted by the EU to force member states to cut public spending and to stay within a 3% of GDP deficit limit and for total national debt to be no more than 60% of GDP. It was a brutal neoliberal measure that placed a straight-jacket around nation states, with harsh penalties threatened for those – most often the weaker southern European economies – who could not comply.
Indeed the throttling of the left Syriza government in Greece in 2015 by the EU, the European Central Bank and the IMF – the infamous ‘Troika’ – was predicated on using these neo-liberal restraints. On coming to power in January 2015 the Syriza leadership promised to end the savage austerity being inflicted on the working class of the country but six months later in July capitulated when faced down by the Troika. The alternative would have been to introduce the essential socialist measures to break with the capitalist market, of nationalising the banks and big business and introducing capital controls and a state monopoly of foreign trade, to provide the basis for democratic socialist planning of the economy.
The overwhelmingly pro-capitalist character of the EU treaties and the institutions that they established is one of the key reasons why Socialist Party Scotland campaigned to leave in the 2016 referendum. We stand instead for a socialist federation of the states of Europe based on workers’ unity and socialist cooperation and planning.
The stability pact was suspended in 2020, a result of the Covid pandemic as EU member states turned to deficit financing to deal with the fallout of the economic collapse. There is currently a discussion within the EU about a new agreement. The determination of the SNP and the Greens to stick to whatever the new pact turns out to be speaks volumes about their turn to the right and their embracing of the ‘rules of the market’.
This is further underlined by the clean bill of health given to other global capitalist institutions by the SNP and Scottish Greens when they say: “Economic thinking has shifted profoundly in recent years. Organisations like the Organisation for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF), which had prioritised market-driven approaches to economic development, are now significantly more interested in researching and promoting policies to reduce inequality and boost workers’ bargaining power. This new economic thinking informs both the Scottish government’s commitment to a Wellbeing Economy and the proposals in this publication”.
Given the role the IMF has played in the exploitation of the neo-colonial world, the idea that it works to “reduce inequality” and “boost workers’ bargaining power” is completely absurd. That is not to argue that IMF propaganda doesn’t insist the opposite, that it plays a benign role to assist the poorest nations in times of crisis and so on. However, in 2022 the IMF have led the drawing up of budgets in both Sri Lanka and Pakistan that have placed an enormous burden on the poorest.
Following the anti-government protests in Sri Lanka in July and August, the new budget increases VAT from 12% to 15%. The government are also trying to carry out the privatisation of higher education, electricity, and other energy sectors. In Pakistan, in early 2022, the IMF loan programme was conditioned on austerity measures and removing electricity and fuel subsidies, as well as imposing higher energy tariffs.
The currency question
“We consider issues of transition; financial institution-building; and the need to be fiscally credible and maintain market confidence, not least in the process of establishing a Scottish pound”, A Stronger Economy says.
As was envisaged in the run-up to the 2014 referendum, an independent Scotland would continue to use sterling, with interest rates set by the Bank of England – so-called ‘sterlingisation’. The proposal is for a Scottish currency to be introduced at some point in the future.
To be, in the Scottish government’s words, “fiscally credible” to the markets, would mean that public spending and deficits would be strictly controlled in the run-up to the creation of a Scottish currency. Prior to that, the effective control of monetary policy would lie with the Bank of England which acts in the overall interests of the UK capitalist economy.
As Richard Murphy, a Keynesian economist and supporter of independence, has commented: “This paper is actually written for the benefit of the small number of people who make up Edinburgh’s financial elite, in whose interests it is clear that the paper thinks an independent Scotland should be run”.
Murphy has also argued, with some validity, that the SNP’s desire to continue to use sterling and not create a Scottish currency for a number of years carries the real risk that the Bank of England and the UK government would simply refuse to allow Scotland any role in the operation of such an arrangement. (As, for example, Ecuador has no say over the US dollar, which replaced the Ecuadorean Sucre as legal tender in 2000).
He makes the point that “the Scottish central bank after independence could not create new English pounds because it would not have the permission of the Bank of England to do so, and that process is at the heart of a central bank’s operations. There can only be one sterling central bank. It will not be possible to have a second in Edinburgh”.
He goes on to argue that Scottish commercial banks would still want to create sterling in order to make loans after independence. And to do that would require them to be regulated by the Bank of England. “I see no reason why the Bank of England will let Scottish banks into the sterling bank account clearing system run through the Bank of England’s central bank reserve account system” otherwise.
At the very least, all of these weapons will be used to make the case against the SNP’s pro-capitalist plans in any future referendum. Whether and how the bourgeois carry them through would depend on the class balance of forces at the time.
The British capitalist class in its majority is overwhelmingly opposed to the breakup of the UK. Scottish independence would be a catastrophe for them – even more profound for the overall interests of British capitalism than its withdrawal from the treaties and institutions of the EU. While Scotland makes up around a tenth or so of the overall UK economy, the blow to the prestige of British imperialism would be immense.
It would lead to a major weakening in its international standing, raising the question of whether any of the ‘successor states’ should have the UK’s ‘big five’ permanent seat on the United Nations’ security council for example. And it would have profound consequences for the whole of the UK. Not least in Northern Ireland where an increase in sectarian conflict, including demands by nationalists for an ‘Irish Unity’ border poll and counter-demands by unionists to oppose it, exacerbated by the capitalist Brexit from the EU and the resulting Northern Ireland ‘Protocol’, are already a major destabilising factor.
Scottish independence would also inflame the national question in Wales, and be combined with a rise in English nationalism and increased national tensions generally. This nightmare scenario for the capitalist class must be avoided at all costs.
A socialist approach
For these reasons the bourgeois would do all it can to try and destabilise and undermine a transition to Scottish independence. For sure, their over-riding concern would be the continuation of capitalism and preventing a revolutionary challenge to their system. Fears that the struggle for Scottish independence could become a mass movement risking the overthrow of capitalism in these islands could well lead them at a certain point to a ‘pragmatic’ policy of acceding to an independent capitalist Scotland.
But as we saw in 2014, threats to disinvest and the moving of major corporations, banks and business out of Scotland in the event of independence was a significant weapon used by the pro-union side. As was the point blank insistence by then Tory chancellor George Osborne that an independent Scotland would not be able to use sterling in a formal currency union.
What is certain is that an independent Scotland that attempted to carry out socialist policies would undoubtedly face economic sabotage from the capitalist class internationally. The only way to respond and overcome the onslaught would be by introducing decisive socialist measures.
A socialist Scottish government would nationalise the banks under democratic working class control, create a state banking system and immediately introduce capital controls to ensure that a flight of capital out of the economy was prevented.
The introduction of a form of domestic Scottish currency could be done very quickly as a means of paying wages, pensions, benefits and for facilitating payment for goods and services. There is no technical reason why such a currency could not be created immediately. The modern technology, software and computer systems already exists. Providing that the finance system was under the democratic control of a workers’ government through nationalisation, these other measures around currency would be relatively simple to implement.
Bearing in mind that a currency is a means through which commodities of value are exchanged, the creation of a new currency as a transitional form of payment would be more than possible. Moreover, by breaking from the straightjacket of a central banking system under the control of hostile class forces – either the Bank of England or the European Central Bank – it would actually neutralise from the arsenal of international capitalism an important weapon to be used against a workers’ government.
However, from day one an independent socialist Scotland would need to build the closest links with the workers’ movement, especially in England, Wales, and Ireland. The long-term fate of an independent socialist Scotland would be tied to the success of the socialist revolution in the rest of the UK and internationally.
That’s why the struggle for a democratic and voluntary socialist confederation of Scotland with England, Wales and Ireland as a step to a socialist Europe has to be a central aspect of the policy of a future mass socialist and workers’ movement.
Poverty of ambition
The SNP’s poverty of ambition is evident when looking at their plans for investment under capitalist independence. The level of investment required for council housing, schools, hospitals, roads and transport and infrastructure generally could not be met under these proposals. The £20 billion fund for investment over the first ten years of an independent Scotland proposed in A Stronger Economy is a tiny fraction of what would be required.
Any government that sought to stay within the limits of a diseased and crisis-ridden capitalist economy, including in an independent Scotland, would be forced to carry out attacks on the working class and public spending. That’s why the fight for the right to self-determination is linked to the struggle to overthrow capitalism.
The pledge in the Scottish government paper to abolish the 2016 anti-union legislation is significant. Significant in that it says nothing about all the anti-union legislation introduced and maintained by capitalist governments over the last 50 years. Laws on postal balloting, secondary picketing, state interference in how unions carry out elections etc, would, it seems, remain in an independent capitalist Scotland.
The SNP have long insisted on ‘partnership’ working between unions, employers and the government. The so-called ‘Team Scotland’ policy is designed to tie the workers’ organisations into accepting cuts, below inflation wage rises, and attacks on terms and conditions. A policy that the trade unions must reject as well as building a new party of the working class to fight for socialism.
It is also worth noting that there is no commitment for higher minimum standards for statutory sick pay and parental leave or full employment rights for all from day one of employment. This points to the reality of the record of a Scottish government which has held down pay way below inflation. Only when facing sustained strike action, as with the recent council workers’ strikes and ballots for action among NHS staff and teachers, have they have been forced to make concessions.
In reality, the SNP and Scottish Green policy is to seek to administer capitalism in an independent Scotland. They want to “end the Westminster system” of rule but not the economic dictatorship of the market over the working class majority and the environment. The fact that they continually reference the Republic of Ireland as an example of what a ‘small independent nation’ can achieve is instructive. Working-class people in Ireland face a massive cost of living crisis, a housing catastrophe, no free healthcare and hundreds of thousands living in poverty.
The Building a New Scotland papers offer nothing for the working class and large sections of the middle class facing an economic and cost-of-living disaster. Their plans to ‘build a nation of entrepreneurs’ as a solution to the endemic levels of inequality and rising poverty in Scotland are a pipe dream. They are a prospectus for a continuation of the rule of big business and a mission statement to reassure the markets and capital that under independence it will be business as usual. Sturgeon and company are making a case not for change but for the status quo. As such, their alternative represents an obstacle in the struggle for self-determination.
No strategy for independence
Not only Rishi Sunak and the Tories but Sir Keir Starmer and his revived New Labour party are refusing to countenance a second independence referendum. The ‘strategy’ of the SNP to seek a favourable ruling from the UK Supreme Court on whether the Scottish government has the legislative right to call indyref2 has now been derailed. Although the details will be decided in the new year, Sturgeon’s alternative has been that the next Westminster general election will see SNP candidates stand on a single policy – the right to have a referendum. A 50% plus one vote for pro-independence parties in the election would be a (yet another) mandate, so her plan goes.
But this is fraught with difficulties. Only once has the SNP won 50% in a Westminster election and that was in 2015. When the Scottish Greens and Scottish TUSC vote was added in it meant there was 51.4% for pro-independence parties. In 2017, with Jeremy Corbyn leading the Labour Party, the SNP vote fell to 38%, recovering to 45% in 2019. Against the backdrop of the cost of living crisis, a dysfunctional Tory Party and Labour well ahead, current polling shows the SNP on only 45% and the Scottish Greens on 3%.
Even if the 50% plus target is reached, what then? Neither the Tories nor, more likely, a Labour government under Starmer will recognise that outcome as a mandate for independence or a referendum. Sturgeon herself has explicitly ruled out anything other than an agreement between Westminster and Holyrood for a “referendum [that] must be lawful and constitutional as a matter of principle or it would not be recognised by the international community otherwise”. Yet the major capitalist parties and the system they represent will only concede a referendum if they are faced with a mass movement. And that is something the pro-capitalist SNP leadership are mortally afraid of mobilising.
The only way to win democratic rights and self-determination is to build a campaign rooted in the working class and the trade unions that confronts the opposition to independence and the capitalist interests that lie behind them. To be able to mobilise such a movement requires anti-austerity and socialist policies at its core. Policies that the leadership of the SNP and the Scottish Greens are completely opposed to.
For that reason a huge movement for indyref2 must be built by the trade unions and the working class that is independent of the pro-capitalist SNP leadership. Socialist Party Scotland advocates mobilising the power of the workers’ movements, mass demonstrations, generalised strike action, occupations etc to demand pay rises that cover inflation, an end to the cost of living crisis, and the right to a referendum. But this can only be done while offering a vision of an independent Scotland that ends all cuts, poverty and wealth inequality. In other words a socialist society.
Socialist Party Scotland fights for:
* End the capitalist crisis. Renationalise all the privatised utilities under workers’ control. Bring into public ownership the banks, the profiteering energy companies and the major monopolies that dominate the economy under workers’ control and management.
* Unite the strikes for pay rises that fully match inflation and the rising cost of living. For a £15 an hour minimum wages with no age exemptions.
* No trust in the SNP leaders to lead the fight for indyref2. Build mass working-class struggle for self-determination and the right to a second independence referendum
* For an independent socialist Scotland and a voluntary, democratic socialist confederation with England, Wales and Ireland as part of the struggle for socialism internationally
* Fight for a socialist plan of production to replace capitalism and the profiteering billionaires that are destroying the lives of the working class globally.
* Build a new mass working-class party led by the trade unions to fight for self-determination and for socialist change.
The biggest-ever cuts package
The SNP-led Scottish government – with the support of their Scottish Green ministers – have announced the biggest cuts package in the history of Scottish devolution. Following the more than £500 million sliced from the current year’s budget in September, on November 2, stand-in finance secretary John Swinney wielded the axe to slice off another £615 million.
The £1.2 billion in cuts in just eight weeks will devastate NHS spending, including mental health as well as social care. For workers fighting for pay rises that at least match soaring inflation, they are being told there will be no more money on top of the current offers. Indeed, while the Scottish government has been forced by strike action and threatened strikes to give more to workers, no group has had anywhere near the cost of living. On average, pay rises forced from the Scottish government have been around 7.5%. With current RPI inflation at 12.6% that equates to a 5% cut in pay.
Swinney took aim at the likes of NHS staff, teachers and firefighters who are currently balloting for strike action, telling them there would be no more money. A wave of anti-union propaganda from the right-wing media and politicians is preparing to blame workers’ pay rises for the budget cuts. In reality, it is the devastating capitalist economic crisis coupled with Tory, SNP and New Labour underfunding of public services for 15 years that has created this catastrophe. Trade unions fighting for pay rises must reject the bogus argument that there is no money. The very least workers need are pay rises that are inflation-proofed.
Soaring inflation has meant the Scottish budget of around £56 billion set at the beginning of 2022 is now worth £1.7 billion less in real terms than it was in March. Rather than fight for the money from Westminster to fully fund public services and pay rises, the SNP leaders have capitulated yet again to the argument that the working class must pay for the crisis.
“I must balance the books”, Swinney announced to the parliament. Every single political party agreed with him. The Scottish Labour response was pitiful, assuring Swinney that they understood he was in a difficult position. While Scottish Labour, the Scottish Greens, the Lib Dems and the Tories may disagree on detail, they all accept the need to make cuts.
What socialists would do
A socialist majority in the Scottish parliament would take the opposite approach. Never has the Tory-led government at Westminster been so weak and divided. They can be forced back when faced with mass struggle by the working class. Socialist Party Scotland calls for the building of such a mass campaign involving the trade unions, working-class communities, anti-poverty campaigns and those elected politicians prepared to fight. Why should we pay for the crisis of capitalism?
We demand a fully funded needs budget that would resolve the NHS crisis, fund proper pay rises, ensure a reversal of the cuts to local government and introduce a massive programme of council house building. With the energy giants, food multinationals and big business raking it in, it is clear the money is there. Nationalisation of the major monopolies under democratic workers’ control would release billions to fund a socialist recovery for the working class.
As it is, a mass movement in Scotland that linked up with similar struggles of the working class in the devolved areas and councils across England, Wales and Northern Ireland would have a huge impact. However, that also requires the building of a new workers’ party to fight for such policies.
Workers and the trade unions have shown to be the real opposition power in society to the Tories and cuts politicians over the last few months. Imagine if the unions launched a new party that refused to implement cuts and stood for public ownership and planning of the economy. It would electrify society and recruit tens and hundreds of thousands of fighters to its ranks. In the meantime, we are helping to build the Scottish Trade Unionist and Socialist Coalition (Scottish TUSC) as a vehicle for workers to stand in elections.
Moreover, the cuts are going to continue. The new Scottish draft budget for 2023 is due to be announced in December. It will do nothing to resolve the underfunding crisis in the NHS. Waiting lists for operations are soaring. Waits at A&E departments are off the scale. NHS staff are reporting ambulances queuing for up to five hours to get patients into hospitals such is the lack of staff.
It’s the same in local government. Glasgow city council are claiming a £120 million shortfall for 2023-2024. This will be replicated across local councils in Scotland as costs continue to rocket. The only solution is to refuse to make cuts and build a mass movement to demand the money to fund the essential services that working-class communities need. We say councillors should take the Liverpool road and adopt the policy of the socialist-led council between 1983-1987 that won tens of millions of pounds for the working class in the city.
What is clear is that a political alternative to cuts and capitalism needs to be built. Join with Socialist Party Scotland and help build that alternative.