Our report today that the SNP's long-awaited Growth Commission is looking at New Zealand, rather than Norway, as an economic model for an independent Scotland will cause consternation among many left-wing independence supporters.
Over the last 30 years, New Zealand has become one of the most free market economies in the world. It is placed third after Singapore and Hong Kong on the right-wing Heritage Foundation's ranking of “economic freedom”. New Zealand has the second lowest income taxes in the developed world, coming just above Chile. It has no general capital gains tax and flexible labour markets have long been a feature of the deregulated New Zealand economy.
It is also a nuclear free zone, a constitutional monarchy, has its own currency and is not part of the EU. New Zealand has just elected a Labour Prime Minister, Jacinda Ardern, but many in the SNP will be puzzled that the party has started to look to an essentially neo-liberal economy on the other side of the world rather than the Nordic states of Europe.
If this model makes it to the long-delayed final report, it could open a latent division between those in the wider movement who regard independence as a socialist project, like the Common Weal think tank, and those like the conservative writer and commentator, Michael Fry, who think it has nothing to do with abolishing capitalism, and indeed should liberate enterprise.
The former SNP leader, Alex Salmond, managed to straddle both sides of this contradiction. He celebrated the “social wage” in Scotland of free tuition fees, elderly care etc., while still arguing for Scotland to become a low-corporation tax “tiger”, like Ireland or Iceland before the financial crash. But he was a politician with perhaps unique gifts. Nicola Sturgeon has never gone along with a low tax/low regulation model of independence. She has also presided, this weekend, over an increase in taxation for many Scottish voters, at least relative to rates south of the border. She is likely to be intensely wary about adopting any low tax model, like New Zealand which could be hailed by the Scottish Tory leader, Ruth Davidson, as a vindication of her party's opposition to higher taxes. Any low-regulation model could also alienate large numbers of SNP members who abandoned Labour because they were sick of Blairism.
Paul Hutcheon: Yes movement is heading for a rift on the economics of independence
This potential division comes at a particularly difficult moment for the SNP leader. For, it would overlap with another controversy raging within the independence movement: whether and when to call the next independence referendum. The whole point of the Growth Commission report was to provide a firmer basis on which to campaign for independence. It was intended to resolve issues like currency and relations with the EU. However, it could create divisions that would make it more difficult to reconstruct the broad coalition that drove the Yes Scotland campaign in 2014.
Independence supporters have had a difficult year since the Scottish Parliament voted for that Section 30 order on a second independence referendum. Yes groups were geared up for the fray last April, only to be stood down, abruptly, in June when the First Minister “reset” the timetable for indyref2. When the Brexit negotiations ran into difficulties before Christmas, some independence supporters thought their time might have come again. Scots after all had voted by a large majority to remain in the EU, and now there were warnings that hard Brexit could cost the Scots economy £16bn a year. But recently, the First Minister has been focussing, not on promoting independence, but on defending devolution. She aligned with the Labour First Minister of Wales, Carwyn Jones, to fight against the “Westminster power grab” of responsibilities repatriated from Brussels.
Yet, the fact remains that the SNP campaigned explicitly in the June 2017 general election for a mandate to call indyref2, and even though it lost a third of its seats it still won that election by a substantial margin. The more radical elements in the independence movement believe that this mandate – the “triple lock” as it was called in the SNP manifesto - remains a once-in-a-generation opportunity that should not be missed. SNP blogger, James Kelly, argues that Nicola Sturgeon is “honour bound” to call a referendum before 2021, because she made a solemn pledge to the voters in 2017 so to do. The mandate is time limited and the SNP may not be able to win another Section 30 vote in parliament after 2021. She should “use it or lose it”.
WATCH: Scottish independence supporters take over M8 bridges
Others fear that if she uses it, independence might lose it. The senior SNP MP for Perth, Pete Wishart, devoted a lengthy article in the iScot magazine recently to an appeal to his leader to stay her hand. He blames indyref2 for the collapse of his general election majority from 10,000 to 21. His own canvassing convinced him that voters were turning their backs on the SNP because they were fed up with referendums. It would be, he says, a “national tragedy” if Nicola Sturgeon called another referendum before the voters were ready for one, and in his view, they aren’t.
The problem for the First Minister is that Kelly and Wishart are both right. Anecdotally, there seems little demand for an early referendum, but support for it remains stable at around 46% in the most recent Ipsos Mori poll. That is tantalisingly close to a Yes vote, even though independence has been largely off the agenda for months. However, if the First Minister gets the mood wrong again, and calls another premature referendum, the consequences would be catastrophic.
The SNP is a grass-roots movement, and if Nicola Sturgeon fails to give a firm referendum timetable when she returns to the issue, as promised, in the autumn then there will be dismay in the SNP. Moreover, it can no longer claim to be the main party of the left in Scotland. Richard Leonard has moved the Scottish Labour Party decisively away from the essentially Blairite programme of his predecessors. The Labour leader has been attacking the SNP firmly from the left on issues like taxation, nationalisation and local government spending. If the left of the SNP become disillusioned, there could be a significant drift back to Labour. That is why Nicola Sturgeon is almost certain to reject any low-tax, low regulation model of independence.
It is also why she's likely to stand her troops down again in September. Nicola Sturgeon may be a committed social democrat but she is an intensely cautious leader. She demonstrated this by refusing to intervene to block the extradition of the Catalan education minister, Clara Ponsati. She is not a risk-taker. We can be pretty sure that the Growth Commission will not be offering any radical departures from the SNP's current soft-left posture, and that there will be no announcement of an imminent referendum. The risk of a repeat of the Quebec experience, where a second failed referendum killed the independence movement in the 1990s, is just too great. Unless there is a dramatic shift in Scottish public opinion over the summer, I think we can rule out any promise of indyref2 before 2021.
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