The cost of living crisis will hit hard. Scotland shouldn't have to pay the cost of nationalism too
More joint UK-Scottish Government cooperation is needed to halt the coming damage to our standard of living.
THERE is no getting away from it: seeing a British Prime Minister fly cap in hand today to visit Crown Prince Mohammed Bin Salman in Saudi Arabia – whose odious regime executed 81 men at the weekend – in order to ask nicely that the oil taps are turned to full blast will not have had many of us feeling a great sense of patriotic pride.
War, and the brute realities of hard economics, force unpleasant choices on us all however. The Ukraine crisis has only exacerbated the size of the coming inflationary shock that it about to hit every gas-guzzling household on the planet. When you’re starving hungry, you don’t tend to check whether your next meal has been sourced from ethical and organic-only farms before tucking in.
Mr Johnson is therefore right to take his cap to Saudi. Because, along with the small matter of the Ukraine war effort, the Prime Minister needs to put survival at the top of his agenda. I don’t mean his - how quaint the row over No10 parties now feels. Instead I mean the survival of families across the UK – and the rest of the world - who are now facing penury over the surging cost of energy and the wider cost of living too.
Those eye-watering April gas bills we have all received in recent weeks are just the start of it. For the Ukraine crisis has worsened what was already coming with the end of the pandemic. We can expect a 15% increase in food bills. Wage increases are going to fall well short of the rise in inflation. The impact, according to the Resolution Foundation, is that real household incomes for the average family are expected to be £1000 lower than last year. Middle income families will be hit hard: only the asset-rich will escape this. But, as usual, it is the poorer households which will suffer the most, increasing inequalities as a result. Behind the bland statistics are stories emerging already across Scotland of parents relying on charities to supply extra bedding for their children so they can turn the meter off. Come October, it may get worse, when gas bills are set to increase still further. With 40% of Scottish households existing without any savings, next winter will see families – including working families – having to make far harder and heart-breaking choices than whether it’s ethically right to speak to an executioner in the Middle East.
The potential impact of this standards of living squeeze has yet to really hit home. That’s not just here but across Europe. Just as the Arab spring 12 years ago was sparked in part by a growing mood of economic resentment in those nations, so analysts are predicting food riots in eastern Europe in the coming months. It is more than thirty years since the poll tax riots smashed through central London in 1990. Might this be the summer when the British public revolt once more? No wonder the government is therefore prepared to shake hands with executioners in Saudi Arabia as they seek to keep fuel bills down. This crisis has the potential to shake governments to their foundations.
Next week we will discover whether Chancellor Rishi Sunak is alert to the danger. The Government appears determined to press ahead with a rise in national insurance at the same time as energy bills go through the roof. This is despite suggestions by experts such as the former deputy governor of the Bank of England Sir Charlie Bean that it could easily be deferred. Mr Sunak will surely have to act here. Postponing the national insurance rise and re-introducing the uplift in Universal Credit would be the fairest way to do so. Any thought of that old political wheeze – of tax rises mid-term, and tax cuts before an election – should be torn up immediately.
Mr Sunak is a serious man and I expect he will show his awareness for the scale of the crisis next week. What about the Scottish Government? On the plus side, the Scottish Government will increase the Child Payment in April, giving low-income families with children under the age of six from next month at extra £20 per child a month. On the negative, is the sight of a political movement that seeks to use even this crisis for its own narrow political aims. On Friday last week, as bombs rained down on Ukraine, Nicola Sturgeon’s team signed off a new online attack ad on the cost of living crisis. In a low mark even for the Nationalists, they dug back through claims from the 2014 referendum, when the No side had rightly campaigned on the economic strength of the UK, to assert that the cost of living crisis showed Scots had therefore been “lied” to. In other words, Mrs Sturgeon’s team decided that a crisis affecting families and households across the country should be used to inflame nationalist resentment against the UK. This is the deeply negative and small-minded place that Nicola Sturgeon’s SNP has landed in these days. The next time holier-than-thou SNP leaders distance themselves from the haters, remember it.
The problem for us all is that this obsessively political approach will now come with a price tag attached. Over the longer-term, it is only by increasing our low rates of growth that households here be lifted out of poverty. Yet the SNP’s theological aversion to being seen to work with the rest of the United Kingdom remains in place. In the recent 10-year economic transformation plan, the Scottish Government mentioned the UK Government just once – and then only to complain. The need to join up more is urgent: the Scottish Government spends more on economic development than anywhere else in Great Britain, yet our growth rates have been among the lowest in the country.
It could – and should – work differently. For example, the think-tank I work for, Our Scottish Future, will today publish a new report on how cooperation between the two governments can secure long-term growth for Scotland. We propose that the Scottish Government’s currently leaderless National Investment bank is turned into a joint venture, with cash from both the UK and Scottish kitty being pooled together. Currently the bank is too small to make a real impact. A bigger bank, made up of funding from London and Edinburgh might help it to power the new industries upon which our country will soon rely.
It would be nice to think Ministers in Edinburgh would give it a shot. More likely, they won’t. A leaderless Scottish bank is preferable to a UK bank that might work.
Devolution has given the Scottish Government the chance to act differently if it chooses. The welcome increase in the child payment next month shows us just that. What we lack is a government that chooses to act together with others even when it’s in Scotland’s interests to do so. The cost of living crisis is going to come with a heavy price for us all this coming year. The cost of nationalism is only adding to it.
ENDS
This article appeared in the Scottish Daily Mail, 16th March 2021