Solving Scotland’s policy sclerosis and spendthrift ways

Solving Scotland’s policy sclerosis and spendthrift ways

by Eben Wilson
article from Tuesday 14, April, 2020

COMMENTARY on our present viral predicament is turning towards what happens when lockdown measures are released.  The left, predictably, is calling for the end of global capitalism as we know it, suggesting its replacement with a melange of ill-specified vagaries based on their usual prejudices, fetishes and negatory world view.  

For Scotland, administered by a large majority party that has not introduced a policy bill of any substance through its present term, the notion of policy debate having any real meaning is moot at any time, as is any notion that past policies might be reviewed. A controlling leadership intent on retaining power at all costs inevitably succumbs to the tyranny of the status quo and avoids any creative debate. 

I was reminded of this when I read an evaluation of the short term impact of minimum pricing for alcohol in Scotland. It appears that any additional reduction in alcohol related deaths has not happened, but there has been a slight rise in alcohol related hospital admissions. Spending by households in Scotland on alcohol has increased faster than in England. 

That last factor tells the real story; while there is mixed evidence that the consumption of alcohol may or may not have reduced slightly, this legislation is disproportionally hurting the less well-off. One detail is telling; the consumption of strong cider has dropped by 13 per cent, while fortified wine sales have increased by 9.6 per cent and ready-mixed drinks are up by 22.5 per cent. 

I can report, anecdotally, that this would square with my knowledge of the vulnerable “down-and-out” community in Glasgow. Until recently I was involved commercially in telematic reporting systems for a company that operates public toilet facilities there; the delight in supping Buckfast does not appear to have diminished at all. The cash box vandalism, drug exchanges, begging and theft that supports such habits is also as rife as ever. 

The question to be asked is; would the Scottish Government ever be likely to review its minimum pricing policy and question its effectiveness? I am sure not, they are the tyrants of the status quo – despite the fact that this policy works against its aims of producing more income equality and improving the welfare of the vulnerable. 

The loss of face to SNP politicians, their supportive patrons in the welfare and medical profession and other do-good charitable rent-seeking entities would be far too great.  

This tells us a lot about the institutional format of devolution. By setting up “powers” that are allocated to public service functions Scotland has inevitably seen its institutions become staffed by rent-seekers who live (and most often have always lived) on the taxpayer purse. A skewed responsibility has been created; the incentive for those seeking to use power is to further their own belief that they can do good through legislation and regulation that supports and funds their world view. 

There is a strong parallel here with how F A Hayek described his Road to Serfdom. We are in the period where “yes” women and men surrounding our leadership are preventing change for the better.  Scotland’s power institutions have surrounded themselves with like minds who have built up their own interest in a perpetuation of that power because it pays their wages.  

In this process they are loathe to criticise and call their administrators to account; sadly this lassitude appears to extend across the Scottish “establishment”. The CBI, IOD, COSLA, our charities, and even the Scottish Conservatives are very subdued in their criticism despite it being clear that Scotland’s ill-health and deficit in its state finances are salved only by the beneficence of the UK state. 

Is it possible that this deep fault line across Scotland’s potential for legislative and financial probity can be fixed? My answer is “not in Scotland by the Scottish state”; this a British constitutional issue; devolution was not intended to be a method of creating one-party spendthrift socialist entities.  Its resolution has to be at the UK level, we need institutional reform for Scotland and the other home nations.

The reform itself is relatively straightforward in my view. The UK needs to require fiscal and legislative review and recall at home nation level should locally legislated measures prove unsuccessful and detrimental to local taxpayers. 

What this means in practice is legislating full independence for the Scottish Fiscal Commission and Audit Scotland; requiring them by statute to act as protectors of Scottish taxpayers (note, NOT the interests of the UK state). Such protection would be mandated by the UK on behalf of all UK taxpayers; Scotland’s economic performance affects English lives too; increasing our subsidies that fund our failures. 

What this means in statutory terms is that three constraints are set in law. The first is that all devolved nations (and this would include England) have a statutorily declared level of state spending and borrowing declared prior to all elections by each political party. This would be binding when in power. I would leave the detail of spending as broad as possible initially (it could be democratically agreed in due course to become more detailed); essentially, a figure for the percentage of the economy taken by the state that includes projected borrowing. 

The second is that any departure from the stated goal of more than three percent in any one parliament would lead to a recall of all members for a general election. (Provision for a Temporary Emergency Powers Act would cover, as now, wars and pestilence). This is essentially a slight re-working of the present EU rule on deficits, but given teeth through recall and re-election of our parliamentary representatives. 

The third is that there would be no bail-outs in instances of failure. Again, taxpayers need to show their teeth to tax-spending politicians and incentivise them to the probity needed. 

Under this regime, if Scotland wishes to vote for spendthrift socialism so be it. If that socialism works, fine, if it doesn’t people get a chance to think again. If they want to go for threadbare spending and rampant capitalism and that goes wrong, again so be it. We try and try again. 

What is created is an envelope for state action with power held by the demos through repeated votes. We destroy the power creep we are witnessing in Scotland as the SNP deludes itself with its belief that its nationalism is successful; largely by it being allowed by the UK to tilt the debate away from financial realities towards aspirational nationalist Utopianism that is self-evidently not working. 

Where does this leave the independence debate? Clearly, the above measures would be seen as limiting the power of the devolved nations by those nations; but in fact, should they stabilise the present financial imbalances, which I think they would, they open up the possibility of a proper debate about what the UK Union (upper case is deliberate) is for and how and where its public services are paid for. 

That in turn opens up a debate as to how it can best be successful as a union (lower case is deliberate) of supportive parts.  That success, by definition, means the UK’s and the devolved nations’ policy focus would be on the future, tearing Scottish Nationalists away from their small-minded focus on past grievance and present disrespect, the tools they use to preserve their presently empty analysis of policy.  

An honours graduate in economics from the University of St Andrews, Eben Wilson has had three careers; initially in journalism and broadcasting (including Milton Friedman’s TV series “Free to Choose”), economics (as an associate Scholar of the ASI) and now business (founding various companies).

 

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