My Scottish Daily Mail column will no longer appear on Substack. Instead, you can now read it either by downloading the Mail + app and seeing it there instead, or by just clicking on www.mailplus.co.uk. My piece this week is on Nicola Sturgeon and how all political leaders go a bit potty after eight years in the job.
However, since a few of you have been kind enough to subscribe to read my weekly rant thoughtful take on Scottish and UK politics, I thought I’d plug onwards with a kind of column/diary. If by week two I’m down to 3 subscribers, I will take the hint.
I’ve gone for “The Baltic News” as a title. This pertains both to the name of the office block which Our Scottish Future (the think-tank I work for) is currently renting in Glasgow and also to the fact that, even in June and July, it is bloody freezing. But then that’s Glasgow, I guess.
So here goes:
REALITY BITES
In this special midweek first edition, I’d thought I’d kick off by going back a few days to Edinburgh last Wednesday evening when former Permanent Secretary to the Treasury Lord Macpherson was in town to give a speech organised by the Strand Group on the subject of Treasury orthodoxy. You can read a summary of his comments here: Sir Nicholas Macpherson on 'The Treasury and the Union' - The Strand Group (kcl.ac.uk).
Lord Macpherson is a Whitehall grandee. As was explained in his introduction, he worked for three Chancellors: Gordon Brown, Alastair Darling and George Osborne. He was there during the epic days of the financial crash. He was there during the austerity years. He was also there during the referendum on independence, when he played a key role in the Government’s position of the day. He only left the Treasury in the wake of Brexit. Among the audience in Edinburgh to hear him offer his words of wisdom was Simon Case, the current head of the Civil Service. Perhaps he was there to pick up some tips.
As is often the case, the Q+A afterwards, chaired by STV’s Bernard Ponsonby, provided most of the better news lines - on next week’s budget, for example, Lord Macpherson argued that Jeremy Hunt will “make the numbers add up rather more easily than they’re saying” thanks to the reduced cost of debt since Rishi Sunak took over. We will see next week. Meanwhile, on Scotland, he had a couple of interesting things to say.
The first was on the subject of currency. Three weeks ago, the SNP confirmed that if Scotland becomes independent, the plan would be to adopt a new Scottish currency following a period using the UK pound. What did the former Treasury man have to make of it. While politely agreeing that Scotland “could be a very successful independent country”, he set out some of his concerns.
“I think the idea of having an independent currency seems to me the logic of being independent. What would worry me a bit is the transition period when the Scottish pound is still linked to the pound sterling. If Scotland is still running a big deficit….it can work for a while, but if in the end you are running a much bigger deficit, people begin to wonder if that peg is sustainable and in the first instance what happens is the interest rates on your borrowing start going up. It’s quite possible that the transition period can go on for a long time – I would want to understand how the Scottish Government can handle that.”
Lord MacPherson was being careful with his words. But as with all experienced civil servants, it is always worth listening to their subtle content. As it stands, Scotland runs a very big deficit – both on the fiscal side (tax v spending) and on its current account (imports v exports). For more on this, read here. The clear warning from Lord MacPherson was that, given worries about the sustainability of that position, the markets would demand a premium on any money they lend to Scotland through much higher interest rates. Lord Macpherson said he felt this unstable situation would potentially go on for some time. Glasgow University’s Professor Ronnie MacDonald, the country’s leading currency expert, argues instead that a crisis would be brought forward: Scotland would not be able to afford that high interest rates on its borrowing and would therefore have no option but to adopt a new Scottish pound immediately. That would spell economic chaos.
It’s quite a big, if presently theoretical, debate. What strange is that on the official Nationalist side, there is presently the sound of silence. This week we learned that the Scottish Greens commissioned a report on currency options by Professor MacDonald a few years ago, but then buried it - presumably because they didn’t want to hear his position. Meanwhile, despite railing against the market chaos caused by Liz Truss’s short-lived antics in September, the SNP’s position appears to be that the same markets will look more benignly on Scotland because, well, because...look, I don’t write this stuff…
Anyway, back to matters in the here and now. On matters closer to reality, Ponsonby also asked Lord Macpherson about the Barnett Formula. Historically generous to Scotland, wouldn’t irate English MPs and ministers in Whitehall soon be demanding that this unfair system got unpicked, especially if austerity 2.0 hits? Lord MacPherson’s cultured response was straight from the dining tables of the Travellers’ Club.
“It (the Barnett Formula) reminds me of those temporary European institutions that were set up as a fudge for something and then end up staying there forever. Every government I worked for at one point or another said we really ought to do something about the Barnett Formula but the issue was that within about five minutes they backed off it because it is really hard to come up with an alternative”.
He went on:
“Possession is nine tenths of the law so I’m sure at some point in recent weeks there have been people have been looking at how to make savings, and that some bright and enthusiastic and rather inexperienced member of the government will have said we must do something about it, (before backing off)”.
It suggests that the Barnett Formula is here to say. Pressed on whether this really wans’t such a bad deal for Scotland, Lord MacPherson did not demure.
“If your traditional government department was funded on the basis of the Barnett formula they’d love it. I think it is a reflection of the strength of Scotland’s influence within the Union. Some might argue that it supports the case for staying in the union but I wouldn’t want to comment.”
Sir Humphry would be proud of him.
A NHS IN CRISIS
Also last week, we published a major new report on the state of the NHS in Scotland. Written by Andrew Mooney, a brilliant young data analyst who has started work for us, I don’t think I’ve ever read a better or clearer analysis of the problems facing our health service.
Andrew set out four great problems the NHS faces.
· A lack of hospital capacity
· A lack of staffing
· The inefficient use of the service
· Us (he didn’t put like that, but he makes the point that poor health and health inequalities in society are perhaps the biggest problem we face).
For a readable summary, you can read Andrews comments in a piece he wrote in the Times.
In our recommendations, we set out a series of ideas that both the UK and Scottish Governments can take forward over the winter months to help ease the pressure on hospital wards. I took away one big message from this, and it’s one we intend to return to.
There are some unpopular things that need to be said and done about healthcare in Britain: around the ability or otherwise of the NHS to do everything, around the poor health of the nation, and most of all how we fund this Leviathan of a service over the coming years.
As with pensions, the economy simply can’t keep up with the rising demand caused by our demographics. It is hard not to conclude that if we want to maintain the principles of the NHS, there will need to be much higher taxes to pay for it, perhaps through a specific health levy payable not just by those in work but by pensioners too.
Needless to say, this is politically toxic. Sticking plaster solutions will therefore be found. And all the while the NHS will be run into the ground.
But if there is one way to make this case for the reform, it’s by political parties moving together. Hard messages on healthcare would be a damn sight easier to implement politically if all four national administrations which run the NHS in their territories - in England, Wales, Scotland and Northern Ireland - made the case together. Reforming our national religion in the teeth of opposition would probably bring down most governments. Doing it together might just convince people across the UK of the need for change.
PISH
Finally, last week, the SNP held a debate on Scottish independence in the House of Commons. Everybody had a splendid time. Most notable was the first ever appearance of the word “pish” in Hansard. Even more notably, it was uttered by Scottish Secretary Alister Jack, not the kind of man who - I’d wager - often describes things as pish or otherwise.
Speaking as a former political speechwriter, I can only say that had I got this onto the parliamentary record, I would retire now happy in the knowledge of a career will spent.
You can watch this historic parliamentary moment here.
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ENDS