Dave Toke on diminishing returns from fiscal autonomy in CHARTIST 274
Last summer I told an energy conference in Aberdeen that discussions about how much oil there is off Scottish waters are irrelevant if the oil price dips – as it inevitably will when electric cars make up a significant part of the motor vehicle market. In fact, only a few weeks later the oil price crashed as OPEC attempted to dissuade the oil companies from investing in higher cost oil wells, which happens to include oil off the Scottish coast. But this turn of events, which has sent Scottish politicians into a whirl of (successful) demands that oil taxes be cut by the Treasury, focuses on a paradox of Scottish policies. Scotland is keen on renewable energy, but also very keen on maintaining the black stuff – and here I refer not just oil income, but also some concern to keep their big coal fired power station at Longannet running.
Scottish support for ‘devomax’, meaning, at its heart, ‘fiscal autonomy’ is very strong, and the Westminster parties will ignore that at their peril. Labour is paying the price, perhaps not quite as savage as the polls have predicted, in terms of lost Labour MPs. Scotland wants, and should get (on the grounds of sheer fulfilment of democratic demands) control over its tax policy, including the oil income. That having been said, the saying ‘That which nourishes me destroys me’, attributed to Christopher Marlowe, could well be applied to SNP if/when they come to administer ‘fiscal autonomy’. The Scottish Government will get both the responsibility and the blame.
A green Scotland?
Jim Murphy, the Scottish Labour leader, has campaigned against the fiscal autonomy demand on the basis that the existing Barnett formula gives greater stability to Scottish public finances. He is probably right on the stability issue, but misses the point that the bedrock of support for fiscal autonomy is support for self-determination, and not so much financial advantage. If the SNP does obtain the most seats after May 7th it would be wise for Westminster to grant Scotland fiscal autonomy. This may require an SNP government to engage in painful budgetary decisions, but they would be decisions for which they could not avoid responsibility. It may be that eventually independence will result after all, but surely granting fiscal autonomy delays if not abolishes this day compared to the present position where Westminster cannot win. In Scotland anything good that happens is widely attributed to the wise government of the SNP, whilst anything bad that happens is hung on Westminster. Giving the Scottish Parliament fiscal autonomy would curb this, and make the Scots take responsibility for their own financial management.
Giving the Scots fiscal autonomy would also help them face up to their environmental contradictions. Can they really pin so much hope on a Scottish oil resource that will not survive in an increasingly depressed global oil market? It is only a matter of time before electric cars make a big impact on oil demand, and quite modest changes in oil demand can depress or increase oil prices (in this case, depress). The Scots may be encouraged to think more long term if they have fiscal autonomy. They may actually decide that the incentives that they receive for renewable energy based in Scotland from the rest of the UK are worth preserving the Union, albeit in a ‘devomax’ context.
It may sound odd to make such predictions now, but the early 2020s could see convergence between Scottish and Westminster policies. The UK Government is already finding that the always wistful promise of cheap nuclear power is proving ever more elusive. Alex Salmond, a former energy economist who has never believed the nuclear industry’s claims that their costs are declining (as opposed to the reality of the steady increase) knows that nuclear is a dead end already. If, as seems likely, little or no new nuclear power materialises in the UK, then the only route to decarbonisation is through renewable energy. Scotland has bountiful resources for this, onshore and offshore (wind, solar, wave, tidal, biomass). Scotland will be able to deliver more renewable if funded by UK-wide as opposed to just Scottish energy consumers.
Clothes-stealing is an ancient trade in politics, and Scottish Labour politicians could do well to consider its virtues more thoroughly than they are doing at the moment. Give the SNP their wishes over fiscal autonomy, and control over what will inevitably (sooner or later) be declining oil income. Let the SNP face the electoral consequences of the fiscal self-determination that will be the function of the Scottish Parliament. Then the Scots may appreciate more the support for renewable energy in Scotland that comes from the South.
Yes, Labour in the UK Parliament will have to deal with losing Scottish votes on many fiscal matters. But surely that is better than losing them on all votes if Scotland becomes independent.
This article appeared in the latest issue of CHARTIST. Dr David Toke is Reader in Politics at the University of Aberdeen