Differences in economic policy between Scotland and the UK are nothing new. Since the creation of the Scottish Parliament, Scotland has implemented different taxation regimes, taken a different approach to investment and implemented different regulations in devolved areas.
However, Scotland’s pursuit of a wellbeing economy marks the point at which the Scottish and UK governments will diverge on a more foundational economic question: what should the purpose of the economy be?
The answer to this question makes Scotland’s independence inevitable.
The purpose of the economy
Scotland is aiming to create a wellbeing economy. That is the official position of the Scottish Government under Humza Yousaf and he confirmed it when he spoke at the Business for Scotland Annual Dinner saying that his government would place the idea of a wellbeing economy at the “heart, front and centre” of the case for independence. In contrast, the UK still clings to the neoliberal ideals of economic growth at any cost.
Scotland has a history of diverging from the UK with regards to social and economic policy, however, recent years have marked a more significant divergence in what the purpose of the economy should be. In 2018, Scotland joined the Wellbeing Economy Governments (WEGo) an organisation comprised of six national governments: Scotland, New Zealand, Iceland, Wales, Finland and Canada with the aim of transforming their economies into ones where wellbeing is at the heart. This marked the first significant step in the divergence of how Scotland and the UK think about the economy.
Upon his election as leader of SNP and First Minister, Humza Yousaf appointed Neil Gray to the position of Cabinet Secretary for Wellbeing Economy, Fair Work and Energy. This move signalled that the Scottish Government is ready to wholeheartedly back the wellbeing economy, an economy that gives quality of life, equality, fairness, happiness and health the same weight in economic decision making as GDP growth.
In contrast, the UK remains stuck in an economic system which is outdated and not equipped to answer the big questions of our time. It remains obsessed with economic growth for its own sake and at whatever cost to our health and the environment.
Last week, former Prime Minister Liz Truss (who history will remember for creating an economic catastrophe then being removed from office in record time) called on the current Prime Minister to cut taxes, reduce the benefits increase, raise the retirement age and delay net-zero commitments. If you had to design a policy package antithetical to a wellbeing economy, this would be it.
The UK still sees the economy as a wealth creation tool rather than a wellbeing creation tool - where wealth is but one component that enhances the wellbeing of society. Scotland is rapidly moving towards creating that wellbeing economy which values more than just output - but what, as Robert F. Kennedy said “makes life worthwhile”.
Apart from differing on the very nature of the purpose of the economy, Scotland and the UK are chasms apart on the major economic issues of our time.
Brexit remains a scar on the UK economy and an example of the worst case of economic self harm in living memory. Brexit decimated UK exports, caused labour shortages, magnified the cost of living crisis and left the UK economy 5.5% worse off than if we had remained. Despite this, neither of the two main UK parties are willing to admit the mistake of Brexit and signal a change in policy that would lead the UK back into the EU.
On the other hand, it is the official policy of the Scottish Government that an independent Scotland would seek to rejoin the EU as soon as independence is gained. Scotland voted by a super majority to stay in the EU but was overruled by those in England and Wales. It is such that Scotland has suffered the economic catastrophe Brexit has wrought on the UK.
Scotland is committed to reaching net zero carbon emissions by 2045 and has a robust plan on how to get there. This includes investing significantly in renewable energy, such as offshore wind where Scotland plans to increase its capacity by 42GW by 2035, nearly 20% of the total capacity increase planned for the whole of the EU during the same timeframe. Scotland also plans to use its abundant natural resources to fund a green energy revolution in the North East. It is clear that Scotland’s commitment to net zero is solid and unwavering.
The fight against climate change is the most perilous public policy issue of our time, the necessity we face as a species to remove carbon emissions from the way we live our lives is critical to our survival on this planet and Scotland is at the forefront of this fight.
The same cannot be said of the UK. Earlier this week, Rishi Sunak weakened the UK’s commitment to net zero by watering down many of the policies aimed at achieving it, as set out in the Paris Agreement. The central policy change in his government’s U-turn is delaying the ban on the sale of new petrol and diesel cars from 2030 to 2035, a move that has not only angered climate activists but also carmakers who have already invested significant capital in preparation for the 2030 deadline.
A U-turn from the UK government on this policy also throws Scotland’s position into uncertainty. Scotland had originally planned to phase out petrol and diesel cars by 2030, however, due to the Internal Markets Act, Scotland is forced to follow the UK Government’s decision and be pulled away from its climate change goals due to the UK Government’s U-turn. And so, once again Scotland’s policy priorities are dictated by Westminster decisions.
The fight against poverty and inequality
Central to Humza Yousaf’s first ‘Programme for Government’ is the Scottish Government’s commitment to tackle inequality and poverty. The Scottish Government announced a plethora of policies aimed at helping low income families from increasing the Child Payment (which is expected to drastically decrease child poverty) to expanding the provision of free childcare to one and two-year-olds, and expanding free school meals. The aim of these policies is to pay money directly to struggling families (long proven to be the best way to tackle poverty) and to help parents, mostly mothers, get back into the workforce - which has the added benefit of boosting employment and economic growth. Further to this, Humza Yousaf has made numerous statements outlining his iron will when it comes to the fight against poverty.
During the pandemic, Scotland also instituted an eviction ban meaning that some evictions can be delayed by up to 6-months. In his ‘Programme for Government’, Humza Yousaf announced that the ban would remain until March 2024, alongside a rent increase cap. By the expiration of the cap and eviction ban the Scottish Government aims to have a plan to introduce rent controls across Scotland. This will help families struggling through the cost of living crisis who have seen their rent skyrocket over the past year.
Divergence makes independence inevitable
The consequences of economic divergence are noticeable throughout history, there is scarcely a country collapsed or empire toppled that cannot trace its root cause back to differing economic outcomes, aims and priorities. From the fall of the Roman Empire to the peaceful dissolution of Czechoslovakia, significant differences in outcomes and priorities are notable and the same will be true for Scotland and the UK.
As Scotland makes the creation of a wellbeing economy a priority, a chasm will develop between Scotland’s economic and societal outcomes and the rest of the UK. It will then become apparent to a vast majority of the population that the UK is a deadweight dragging Scotland down; its backward economic thinking will stand in stark contrast to the wellbeing economy we have worked to create, highlighting Scotland’s need to be an independent nation.