fabian tract 392 Scotland : the third choice contents 1 2 the wrong debate the economic balance sheet 1 5 3 4 5 devolution in practice a variety of choices the institutional framework 14 19 22 6 let the Scots decide 24 I I I I this pamphlet, like all publications of the Fabian Society, represents not the collective view of the Society but only the . view of the individual who prepared it. The responsibility of the Society is limited to approving the publications which it issues as worthy of consideration within the Labour movement. Fabian Society, 11 Dartmouth Street, London SW1. March 1969 SBN 7163 0392 2 1. the wrong debate The Government, most Scottish and Welsh Labour MP's and the majority of Labour Party activists seem completely baffled ·by the rise of nationaJ.ism on the Celtic fringes. They have been variously interpreting it as a protestagainst unpopular po'licies, a Tartan or Cymr'ic version of the Tory electoral upsurge in England, a parochial, emotional, chip-on-the-shoulder reaction to "foreign" (English, American, and so on) habits, ideas, firms and managers, a romantic withdrawal into the past. On the Government side, only Mrs. J udith Hart, the Paymaster-General, has attempted a half-way serious, below the surface analysis of the phenomenon. She ascribed it partly to disillusionment about the s'lowness of economic progress, and partly to a _feeJ,ing of remoteness from the centres .of decision. "In Scotland," she said , "awareness of national identity goes along with awareness of non-involvement; the two reinforce each other and create a momentum which is peculiar to Scotland-and to Wales." Mrs. Hart described the Government task as "finding a method of fulfilling nationallity within a more vigorousdemocracy." Unfortunately she-and the Government-are leaving the solution to the Constitutional Commission: in my view, a hold·ing operation while minor forms of devolution, such as the Scottish Transport Group, the Scottish and Welsh Tour.ist Boards, and the proposed Select Committee on Scottish Affairs are supposed to hold the home rulers at bay. the work of commissions For what is ahead of us : a long, leisurely process of framing terms of reference; of selecting and appointingmernbers for the Commission and for its five sub-panels for Scotland, Wales, the Isle of Man, the Channei Islands and Northern Ireland; of hearings and written evidence; of the compilation and publ'icat.ion (su'itably delayed by "printing difficulties") of a massive White Paper? Then, somewhere in the late 1970s (if we are aHowed that time which I doubt), the legislative process wiH begin after the Commission's recommendations have been chewed over, digested and emasculated by both government and opposition, not to speak of the Civil Service. And if this sounds a bit cynical, let us reflect that t'he last such Commission, a Royal one but on Scotland alone, took five years from its inception in 1951 to implement the only significant, though m'inor recommendation for devolution : the transfer of responsibil'ity for highways from the Ministry of Transport in London to the Scottish Office in Edinburgh. Today, we have not only five parts of the UK to probe, of different histories, backgrounds and complexities, but the work of two other Commissions, Royal ones, to take into account, on the reform of local government in England and Wales as wel'l as in Scotland. It must be clearly the Government's, and the Labour Party's, hope that in the next decade or so (the time needed to put into practice whatever recommendations all these Commissions produce) passions wi'Jil cool and action may be kept to the minimum interference with the status- quo. In some ways, one can appreciate the Government's attitude. Beset by economic difficulties, buffeted by oppos'ition(partly by its own supporters) to devaluation, budgets and min'i-'budgets. the prices and incomes policy, industrial relations, East of Suez, Rhodesia and the rest, it certainly has problems besides the upsurge of nationalism. But, as Mrs. Hart rightly pointed out, it is not a new problem. beginning of the tide In Scotland, in recent times, it may be said to have begun with a by-election in the Bridgeton division of Glas·gow, in Novem!ber 1961 . In a Labour stronghold like Hamilton, where six yearslater the NationaHsts achieved their major triumph to date by capturing the seat, the Nationalist candidate, Mr. lain Macdonaltl, came a close third . Then, in July 1962, Mr. William Wolife created a minor sensation by coming second in a by-election in another Labour stronghold, West Lothian, caus·ing the Tory candidate to lose his deposit. In the 1964 general election, he repeated this feat wh'ile in 1966, the Nationalists amassed a respectable 128,000 votes, double rhe 1964 vote and 5 per cent of the total Scot'lish poH. Since then the progression has been geometrical rather than arithmetical : but there can be no doubt tha1 Scott,ish Nationalist upsurge in terms of both electoral and mass upport covers at least three Toryyears, a process which was accentuated by a simil·ar failure by Labour to quell Nationalist sentimen1 . Tt is instructive to note the measure of this upsurge : in the municipal elections of May 1968. the Nationalists emerged as the largest single party in terms of votes. With less than 20 per cent of the total Scottish electorate involved theyimproved by about 50 per cent on their 1966 general election performance in the absolute number of votes. In the following month, they won 18 seats out of a total of 21 on the newly-created council at Cumtbernauld new town. Their success pattern has been uneven. with Glasgow, Edinburgh and some maller towns in the .industrial belt as the peaks. As the La,bour vote is by far the most susceptible to capture by the SNP, s·trong loca'l La:bour organisations, such a'S e~st at Dahlceith or Rutherglen, have saved seats which might otherwise have fallen. Nevertheless even where the SNP failed to win seats, the vote has been respectable compared with the derisory performances of the 1950s. The rise of the SNP .is against a background of tremendous enthusiasm, steeply increas'ing membership (it is said to be over 120,000 compared with only about 2,000 at the beginning of the decade which would make it the largest single party membership in Scotland) and hard work on the doorstep. on the platforms and in the correspondence columns of the press. Against this, the majority of candidates -and counciJilors--are inexperienced; the performance of Mrs. Winn:ie Ewing, ' the " Victor of Hamilton". has been undistinguished in purely House of Commons terms; and there has been a lack of coherent policies, principles and programmes. The tatter may in time be remedied by the policy committees now at work: the fact is that, apart from independence and "put Scotland first". the appeal of the SNP has so far rested more on disenchantment with the major parties and Westminster pol'itics in general than on positive proposals for economic. social and cultural advance. Moreover, there are strong grounds for believing that a large proportion of SNP supporters want no independent Scotland. An investigat'ion carried out by a Strathclyde University team in Glasgow (where in the May 1968 elections SNP candidates won 13 out of the 37 seats and pol'led 36 per cent of the total vote) showed that even of SNP supporters only 56 per cent chose independence. (Compared with 21 per cent for all voters). On the other hand. there was massive support for limited home rule, within the United Kingdom framework. AI· most half the Labour supporters, about a third of both Tory and SNP voters and two out of five of the uncommitted opted for such a soiution. If one adds that just over a quarter who preferred"greater local and regional freedom" and notes that only one in seven of the , total sample, a fifth of the Tory voters and less than a fifth of the Labour voters chose the status-quo, on the basis of this and other sample polls, the case for devolution seems overwhelming. The curious aspect of this surge towards greater local autonomy is that it bap· pens at a time when, despite a slowing down 'in the rate of economic progress, the Government has been makinggenuine efforts towards reducing ~he ' prosperity gap between the ~wo nations; when public investment is maintained at a high leve1 in spite of severe cuts in other sectors; when unemployment, though unpleasantly high by post-war standards, is nevertheless being kept in check 'in Scotland, at any rate; when, as subsequent facts and figures will prove, the maintenance of standard of living and work in progress depends on con· tinuing aid from central funds; when, as events have shown only too clearly even big, influential and rich countries like Britain and France can be "blown off course" by international events; when aH econom'ic trends point to inter· dependence, the advantages of mass markets and "economies of scale" in production, research and pFanning. a national identity Why then one may ask should so manyScotsmen-and WeJshmen-choose to ignore these facts and turn instead to nationalism and the National'ists? More· over whY' should local resentment, which is just as strong in places like Tyneside and Cornwall, be reflected in growing public support for a Nationalist party rather than the Tor.ies, the official opposition and the only other party in Britain capab1e of forming an alternative Government? The first reason could well be what Mrs. Hart described as the "national identity." In Scotland, pre-Act of Union history is stiH strongly emphasised in most schools; differences in the educa· tional system, in law or local govern· ment are jealously guarded. In Wales where such differences are less evident or non-existent, the language plays an important part in retaining "national identity." In both countries, there is a cultural heritage carefully fostered bypoets and poFiticians. Secondly, voting Tory is still ana· thema to the traditionally radical electors of Scotland and Wales. The reason why Mr. Edward Heath's proposal for a Scottish Assembly has cut so J.ittle ice in Scotland, even amongScottish Tories, is due partly to the bitter hostility of the big majority of voters recaNing arrogant landlords, cruel bosses and snobbish "lad1ies of the manor" and partly to the resistance of grassroots Tories to anything smacking of "appeasing the Nationalists." Thirdly, the Scottish voter may feel that he can indulge in voting Nationalist without the latter being ever called upon to convert the propaganda for indepen· dence in•to actual moves to prepare for it. It may seem to him the most effective way of forcing the major parties into abandoning the status-quo posture on devolution. For the moment, the main debate is still on the stark alternatives of virtual status-quo or independence. Apart from a few individuals, The Scotsman news· paper and the Scot•tish rue (which has a top-level committee working on a blueprint for devolution) as well as the Scottish Nationalist, Liberal and Communist parties, no serious attempt has been made to present a balance sheet of political and economic facts of life. The individual Scat has l'ittle chance of deciding on the form of local autonomy best serving his interests, free from red herrings, emotional prejudice or irrational fear. one-sided picture The upholders of the status-quo, Labour or Tory, have been vying with the Nationalists in presenting a one-sided picture. The wrong questions are being asked simply because facts, figures and staJtistics are bandied about in the wrong context, in a highly charged emotional atmosphere. After years of discussiOn and d·ebate, there is stil'l no coherent programme which would enable the people to participate in a meaningful way in the democratic processes of decision making. The fourth and perhaps most important reason tor voting Nationalist is that only so can the voter express his impatience and disgust at the lack of choice. For there is a third choice: this is my reason for writing this pamphlet. If the case is presented against a largelyeconomic background, it is because jobs, scope and opportunities-or their absence-have been the central theme of Scottish politics for half a century. Whatever administrative changes are suggested, these must be justified by the promise of long-term economic and social progress. If this pamphlet deals with the question from the narrow Scottish point of view, it is simply because of convenience and experience. Having lived and worked in Scotl'and for nearly 17 years as an observer as well as a political participant, I feel qual'ified to comment as I would not in regard to Wales and the other su'bjects of Mr. CaHaghan's Constitutional Commission. Not that those other pl'aces are unimportant or that their specific problems are not relevant to the argument; on the contrary, the solution of Scotland's prob'lems must . be related· to needs, aspirations and ideas of each of the other places. For this reason, too, I believe that a Scottish model of political, administrative and economic devolution would serve as a useful guide to devolution elsewhere. It is the country where the movement for autonomy has gained most ground, which already has a measure of devolution as well as national identity; and where the challenge and opportunity of creating better institutions would have the most profound effect on improving the quality of life and work, of democratic participation and co-operation not only in Scotland but in the United Kingdom as a whole. 2. the economic balance sheet One source of Scottish Nationalist- and until recently, Labour-strength in Scotland has been persistent above- average unemployment. Between the wars, Scottish unemployment never fell below 10 per cent and stayed well over 20 per cent for the first half of the 1930s. This was recognised even in the first feeble attempts at regiona•l development, starting with the Distressed Areas Act of 1934 and subsequently the setting up of the first industrial estates, one of which was at Hillington, Glasgow. The Distribution of Industry Act of 1945 enacted by the war-time Coalition Government was the first deliberate measure in Britain to try to correct the imbalance between the have and have- not areas. Scotl'and benefited from the availability of cheap Government factories and of labour .in the first post~war years when both were scarce. But in the barren 1950s regional policy faded. Year by year, Scotland, with just under 10 •per cent of Great Britain's population, was with three exceptions getting less than its share of new factorybuil(lings. (Even in those three years, 1952, 1953 and 1959, it was only slightly above average). Its share in manufacturing investment was also well ·below UK leve'l. The result, as Gavin McCrone pointed out in· Scotland's economic progress 1954-60, the gap further widened between Scotland and some other development areas, notablyTyneside, on the one hand and the "prosperity belt" in the South on the other. In Mr. McCrone's estimate Scotland's gross domestic product grew by a mere nine per cent between 1954 and 1960, half the UK rate which itself was slow compared with other Western European countries and Japan. The 1958-59 economic crisis found Scotland ill-prepared to a:bsoflb an undiscrim'inating squeeze and unemployment soared to well over 100,000, over five per cent of the working population. Before the country could fully recover, it was hit by the Selwyn Uoyd blockbuster which led to a peak unemployment figure of 136,000 in February, 1963. It fotlowed the publication of the Toothill Report, the first thoroughgoing analysis of Scotland's economic structure, and of its vulnerability owing to the preponderance of contracring traditional industries. The Maudling Budget of 1963, with its strengthening of the 1960 Local Employment Act, including fixed building gralllts and free tax depreciation, came too late to stop the crumbling of Tory support in Scotland. Between 1959 and 1966, the party lost 16 seats, four to the Libera:ls, the rest to L~bour. (It has since regained one Glasgow seat, Pollok, though polling less than 40 per cent of the total vote). Nevertheless, the Maudling Budgetcoming as a forerunner of yet another shortlived boom in the post-war stop-go story, did get things moving. Akeady 1962 had created a post-war record in completed industrial building, of 5.2 million square feet of factory space, again surpassed in 1966 (6.4 million square feet) and 1967 (5.8 million square feet). Approvals for new space exceeded 10 million square feet in both 1965 and also, encouragingly, in 1967 which indicates that new industry is still coming in and the expansion of existing growth industries is progressing at a reasona!ble rate. The signs are that 1968 wili turn out to be a satisfactory year, though not on the 1966 scale when a new firm was setting up in Scotland almost every week. narrowing wage gap New industrial growth, including the expansion in the vital engineering and electrical industries, has led to a significant narrowing of the wage gap between Scottish workers and those in the more prosperous areas. In 1963, average earnings of manual •workers 1n manufacturing and· certain other industries in Scotland were 92.1 per cent of the UK level and 87.3 per cent of the workers' in South-East Engliand. They were last in the "prosperity league" for Great Britain. By 1967, Scottish earnings had risen to 97.2 per cent of the UK average and 92.4 per cent of those in South-East Engl·and. In the "league" Scotland overtook three English regions-East Anglia, Yorkshire and Humberside and the South- West. In a couple of industries, including engineering, Scottish earnings actually rose above the UK average. Hourly earnings increased at a slightly slower rate because of the greater amount of overtime worked in Scotland. The increase relative to the UK was from 92.7 per cent to 96.3 per cent between 1963 and 1967. As unemployment grew in Britain to its highest post-war levels following Mr. Wilson's July 1966 measures, devaluation and the economy cuts, Scottish unemployment -unlike in previous "squeezes"-managed to stay under the dreaded 100,000 mark. It rose to 95,300 in January, 1968, and has been, seasonaNy adjusted, on the decline last summer. In January of this year it was just under 90,000, or 5,700 fewer than in the same month in the previous year. Relative to Great Britain as a whole, the proportion of Scottish unemployed fell from twice the average common in the 1950s and most of the 1960s, to just one and a half t'imes the average. It must be noted, however, that one reason for the relatively modest unemployment figures has been the steep rise in emigration. In the 1950s the average was 25,400 per year net. The table below shows the figures for the 1960s. NET BMIGRA TION FROM SCOTLAND OOOs 1960-61 34.6 1961-62 29.5 1962-63 34.0 1963-64 40.6 ' 1964-65 43.0 1965-66 47.0 1966-67 45.0 1967-68 33.0 The pat·tern of emigration has reverted to that familiar in the 1920s, with the majority going overseas--young, enterprising, trained people wirh their families. It is believed that the decline in 1967-68 was due more to restriction of emigration to Canada and• the United States and to the growing scarcity of jobs in the South than to the progress of the Scottish economy and a growing faith in its future. " imported " growth For it is also a fact that much of Scottish economic growth has been "imported." A few years ago the Scottish Council (Development and Industry) claimed that four-fifths of the new investment originated in Scotland. This certainly does not seem to be true today. The Council's own survey into outside investment in Scotland during the years 1963 to 1966 revealed that while companies of North American (all but one us), European or UK origin ac-· counted for about one-seventh of the total manufacturing labour force, they ~ increased both output and investment by about one-,third in that period. The North American companies, employing just over 60,000 people (about 8! per cent of the manufacturing labour force) increased employment by 30 per cent, investment by 113 per cent, output by 89 per cent and exports by 73 per cent. In 1966, these companies were responsible for almost a quarter of all Swttish exports and contributed materially to Scotland's above-average export performance. (£575 per manu- facturing employee compared with £505 UK average, according to the Council). Between 1963 and 1966, while manu- facturing employment in Scotland stag- nated, the "foreign firms," American, Engl!ish and others, increased their l~bour forces by ten per cent. While these companies increased their output by a th'ird, the total Scottish manufacturing output rose by only 13 per cent: and their estimated output of £473 million for 1966 should be seen in the light of The Scotsman's estimate of £1,010 million for .the whole of Scottish manufacturing industry, for the same year. Both estimates must be approxi- mate: even so they give an idea of the sigrrificant role these firms play in the Scottish economy. , The foreigno~based firms occupy key positions in the important growthindustries such as electronics, office machinery, eal'th-moving equipment, motor vehicles, chemicals and oil re- I fining. Moreover, apart from the influx of such firms, control of industry is progressively passing out of Scottish hands through mergers, take-overs, 1 closures and nationalisation-as empha- sised recently by the council's executive vice-president, Mr. W. S. Robertson, and its president Lord Polwarth who, as governor of the Bank of Scotland and • chairman of General Accident, is in a particul~rly sensitive position to judge. Such statistics as are available confirm 1 this view. The Scotsman has identified 618 privately-owned firms emptoying 7 200 people or over of which only 292 (47 per cent) had their headquarters in Scotland compared with 253 (41 percent) from Englh 10 per cent of Customs and Excise revenue-slightlyhigher than Its population share. This was because of its hlgher per capita expenditure on spirits and tobacco and exports which should more than offset the lower proportion of purchase tax contribution on other goods. I made up the difference bet>ween the taxes collected in Scotland and the assumed total by taking as the basis for the latter the average gross earnings of person·s in civil employment for 1966-67 as published in the ~bstract of RegionalStatistics, 1968: this gave the Scottish ratio as 9.29 per cent of the Great Britain total. (Although it takes only personal earnings into a'ccount, this seems the least unsatisfactory way of coming to an assessment). The d~ifference between 6.18 per cent of Great Britain revenue (taxes collected in Scotlatforms is the housing target of 70,000 a year, which is 20,000 more than the Labour Party's, itself unlikely to be achieved in the foreseeable future. The memorandum mentions the possibility of an independent Scotland joining international organisations such as the United Nations or the European Economic Community. There is a hint of a UK "Common Market": "With intelligent co-operation from our ne'ighbouring countries (presumably including England), there would be no need for passport and customs reguliations." transfer of power The SNP conference also adopted a resdlution on the "transfer of power" from Westminster to a Scottish Parliament. Accordingly, if SNP candidates won a majority of the 71 Scottish seats in the next general election, they and MPS from other parties would form the first Scottish Parliament and negotiate for sovereignty. It seems unlikely, though not impossrble, that the SNP would in fact win the majority of Scottish seats in the next election; and even less likely ID' the case of the " FederaHst" parties. Nevertheless, the policies they advocate in regard to changes in the constitutional arrangements within the United Kingdom are legitimate grounds on which to be judged by the electorate. Apart from such intrinsic merits as they may have, these pol'icies are worth careful examination from the political point of view. For the electorate is also entitled to draw its own conclusions if a party or parties fail to deal with the problem of devolution, constitutional reform and efficient and democratic administration. Even within a UK Com'mon Market, with no customs barriers or passports, an independent Scottish Government wou1d soon have to think of imposing them. For it might immed:iately be faced with a flight of both population and money, plaCing severe strains on the economy. The tentative Scottish Budget presented earlier made no provision for losses in the Scottish segments of nationalised industries. For example, the Scottish coalfield, apart from small operating profits in the years 1963-64 and 1964-65, has been a ioser all along. More recently, these losses were r~latively small, only £2.1 mil1ion in 1967-68, but only because of the large-scale closure of uneconomic pits, improvements in productivity and consequent fast rundown in the mining labour force. The SNP were among the most vocal objectors to this policy: would they as the governing party, keep uneconom'ic pits open and incur bigger losses? And if so, at whose expense? The argument has been advanced-and not on1y by the Nationalists -that Scottish coal is not being given a chance : with better marketing, research and outl~s (including chemicals-fromcoal), its profita'bil'ity could be dramatically improved, even at a higher level of production. (There has been a roughly 50 per cent faH in output in the past · ten years). In the context of the anticipated fuel pattern of the next 15 to 20 years, this seems a questionable proposition : but even if it were not, it would entarl resource devel'opment on a very large scale in terms of both money and brain power, not likely to be found from a small country's own resources. Or, to give another example, in November 1968, the Government announced a £10 million subsidy of Scottish rail services as part of an overall £62 mill'ion subsidy. It covers most of the intema'l services, including commuter services. Of course, the losses suffered by these services fade into insignificance compared with those incurred in the London commuter belt. It is but a fraction of the price Britain has to pay for crowding most of her human and material assets into the small South- Eastern corner, and there is every reason to question the wisdom of subsidising over-centralisation. All the same, an independent S c o t t i s h Government would have to bear the social cost of its railway system, just as it would have have to pay for uneconomic Highland air services and steamers if these were to be maintained to support remote communities. And, speaking of the Highlands, funds would have to be found to finance the activities of the Highlands and ls'll(lnds Development Board. These are now running at a rate of about £1! mHlion a year in grants, subsidies and loans, relatively small amounts in terms of the benefits reaped -new industries, the revival of fishing fleets and dying communities, modem hotels and, not least, the plann'ing of a long-term, overall strategy for the regeneration of the Highlands. But the realrisation of that strategy, inducting the creation of a major industrial growth area in the Moray Firth, with new towns, harbours, roads and so on, must depend on major financial help from outside Scotland, •such as rhe £29 million Government loan for British Alum'inium helping to finance the Invergordon smelter. It is true that the smelter fits in with UK plans for reducing aluminium imports: but would the choice have been lovergordon if it were located in an independent Scotland? major projects Then there are the other major projects awaiting decision, including the £28 million plan to reclaim 5,600 acres of Clyde foreshore, the £300 million integrated iron and steel works and ore terminccl planned by Colvilles. The rehabilitation of cities, particularly Glasgow, the creation of city regions also depend largely on Government finance. One may fairly complain about a lack of urgency, an inadequacy of funds, of limited vision in implementing these and other projects. But an independentScottish Government would have to rethink its priorit'.ies drastically: if it were to raise financial incentives to outside industries and investors, if it were to speed up the improvement of "infrastructure" and transport, if it were to offer better housing to executives, other objectives might suffer, such as increased pensions and the improvement of social services. Nso, if land use in terms of more extensive and intensive farming, a larger acreage of forestry, and so on, were made a top priority, funds would have to be diverted from other sources such as better and more schools, hospitals, and so on. Then, even if England were to agree to a customs union with an independentScotland, there would be an almost irresistible urge for a Scottish Government to protect native industry. This might fit in with new economic priorities such as speciallisation in certain fields. Alternatively, to ensure the sale of Scottish goods "abroad," including England, there would be a strong pressure to devaiue the currency rather than risk the prolonged deflation and stunted economic growth t1le United Kingdom had had to suffer before the devaluation in November 1967 -and is still suffering. This does not mean that an independent Scottish Government, composed of men of vision, outward looking, selfless, generous, riding on the crest of national resurgence and vitality, concentrating on a few major priorities at the expense of "jam today" -in other worcLs, real blood, sweat, toil and tears rather than the niggling variety in small doses we have been subjected to in the UK in the past 20 years-could not achieve a transformation in Scotland to an extent and at a speed unlikely under the present arrangement. For Scotland has considerable financial resources. For example, rhe 62 Scottish investment trusts. run by 27 management groups, have combined assets of about £1,500 million, one-third of the total UK funds in that category. Of the total investment of £1.180 million held by UK investment trusts in the United States, the Scottish ones hold £500 million, or 43 per cen1. Scottish unit ~rusts h~old fund's almost 10 per cent of the UK totat Scottish banks, strengthened by the merger of the Nationa~ Commercial and Royal Bank, are also involved in considerable transactions outside Scotland. Their combined liabilities or assets were £1,450 million in 1967, the'ir investmen1s £234 million and rheir advances £503 million (near-ly 11 per cent of the UK total), the bigger part of which, it is assumed, was in respect of enterprise outside Scotlland. Finally the outstanding balance of National Savings in Scotland 'has been close on £200 million over the past five years, again well over 10 per cent of the total UK Savings. The questions are: would the industrialists and financiers use their consider able resources to step up their investment in an independent Scotland? Would the "foreign" investors, English, American and others, continue to look at Scotland as a favourable spot for profitable manu:fu.cturing? Albove all, would the Sc~ish people be preparedto face years of what may amount to a "siege economy" until the investors, both Scottish and others, are satisfied that the conditions are favourable to growth? On present evidence, no convincing"yes" can be given to any of these questions. a variety of choices If one recoils from complete independence and rejects the status-quo for reasons, I hope amply demonstrated in this pamphlet, what of a ilii.rd choice? In fact, there are a variety of choices within these two extremes, from Mr. John P. Mackintosh's Regional Council to the Federal solutions advocated by Liberals and Communists. Mr. Mackintosh. Labour MP for Ber- wick and East Lotlhian and a former Professor of Pol!itics at StrathclydeUniversity, had been an advocate for devolufion long before the rise of the SNP. He is not in the direct line of socialist home rulers who, like Liberals of yesterday an'd today, kept presentingBills to Parliament only to have them talked out, shelved and forgotten. (The last of these Bills was in fact promoted in 1927 by Tom Johnstone and the Rev. James Barr). What Mr. Mackintosh wants essentially is an elected council for the whole of Scotland, taking over in part functions of top-tier local authorities and llrom an elected counterpart to the numerous statutory bodies such as the Economic Planning Council, the Highlands Board, the tourist and transport boards, and so on. Mr. Mackintosh's ideas, recently amplified in his Penguin Special The devolution of power, command little support in the predominantly "hard-line" Scottish parliamentary Labour group. Theyhave the merit of providing an elected legislature to match the administrative set-up at St. Andrew's House, but it would be little more than a glorifiedcounty council; its powers would barely exceed those of Mr. Heath's Scottish Assembly. It is true, Mr. Mackintosh's council would differ from Mr. Heath's in that it would be elected on a fully democratic franchise and that a.H its members would be directly elected. I would nevertheless suggest that Mr. Mackintosh's council -which would have been a revolutionary move when he first put it forward in 1957-has been overtaken by events. The complexities of Government, its financi'al and admin1strative ramifications, have grown considerably in these last 12 years : and for this reason, Mr. Mackintosh's council might only be acceptable as an interim measure, a useful first step towards a Scottish legislative body with clearly defined functions and powers. For one thing, Mr. Mackintosh's ideas shed little light on the proposed financial relationship between his reg'ionai council- and other regional councils into which. he suggests, the UK Should be divided~-and the central Government. The Liberal solution, as spelt out in all too little detail in Scottish Self Government and in Mr. Russell Johnston's albortive Home Rule Bill of 1966, provides for a Scottish Exchequer respon~ sible for levelilmg and collecting all taxes except Customs and Excise. A Scottish Government would acceptliability for a share of the National ~t and also for federal expenditure on defence, foreign and commonwealth affairs. The financial arrangementswithin the UK and the sharing out of Customs and Excise revenue would be t>he responsibility of a Joint ExchequerBoard. The level of tariffs would be fixed centrally. lop-sided solution The Stormont in Northern Ireland dliffers in the sense that aM taxes are being fixed, levelled and collected by the UK Government, but with a share going to the provincial administration. Northern Ireland MPS are allowed to take full part in Westminster proceedings: the Liberal solution would limit them to federal matters. In view of the 1968 Liberal Assembly's rejection of Jo Grimond's motion for a federal structure making England as well as Scotland and Wales a UK "province," this particular solution seems rather lop-sided. It is also questionable whether the Liberal proposal for separate company and personal taxation wou'ld a.Mow for effective and realistic economic planning on a UK basis. (Perhaps rhe idea is not to have such plann'ing). On the other hand, Stormont's virtual inability to vary tax and interest rates would seem a serious inhibiting factor in formulating policies which would, without interfering with overall UK fiscal and economic planning, aHow for local needs and local aims. The objective must therefore be a com- b'ination of uniform taxation policies with domestic variations within flexible limits to take account, for instance, of different levels of inflation, needs of industry or infrastructure, or the promotion of certain objectives to support econom'ic and social progress such as eX'port promotion, university research, Highland development or land use. Variations could be achieved by, firstly, tax rebates or differentials (such as the one introduced by Mr. Maudling in 1963); a sa·les tax on certain goods; and if rhe rating system were to give way to some more equitable form of taX'ation such as a locaJt income tax, a small portion of this to cover such common services as roads, ports or airports. Secondly, there might be below-bank rate variations on interest rate'S, such as already obtainable on local authority housing, export credits or loans on projects such as the Fort William pulp mill, ColtVilles' steel strip m:il!l at Ravenscra'ig or export credit on ships. For example, Scotland might have its own Public Works Loans Board able to provide low-interest loans to finance certain specified projects up to a fixed limit; or an Investment Board allowed to lower interest rates for sociallydesirable or commercial projects with long-term viability. One might ask : where would the money come from to finance these low interest loans especially if a Scottish Treasury were to borrow from the open market? Would Scotland not suffer furthermore from contributing less than its population share to the UK tax revenue and therefore receiving less in return once the taxes are allbcated? whose interest ? At the risk of being accused of "wanting one's cake and eating it," I would maintain that as long as Scotland is an integral part of the UK-and I have never questioned this basic fact-its socia·l and economic progress is in the interest of the people of London and Birmingham as much as of the Scots. Federal aid is common in manycountries with federa:l structures, including the Umted States, Canada and West Germany. I would envisage therefore Scotland's conrinued membership of regional development funds, agricultural and fishery support grants, aid to maintain social services at the UK level, and so on. At the same time, I would argue that devolution would advance the day when Scotland ceases to be a backward region, a pensioner on the back of more prosperous areas. I wou1d go even further to say~and this might warm the heart of members of the Hunt Committee and the CBI-that a substantial extension of domestic autonomy might in itself cause an upsurge of resentment against uK "subsidies" and a desire to finance Scotland's need for local resources. On the technical question of collection, taxes could continue to be collected centrally and allocated according to UK or domestic functions (including companies and persons functioning in Scotland whose taxes are collected centrally) on the basis of a population Irevenue formula; or collected locally and supplemented bytaxes paid outside Scotland in respectof companies and persons operating in Scotland. To this would be added the local taxes outlined above. I am not equipped to provide a blueprint in the devolution of finance and, in any case, this is not the purpose of this pamphlet. ~11 I have tried to do is to show that variations on the taxation theme need not upset the financial harmony of a still united, thoughdevolved United Kingdom. Now for the change in the institutional structure. If one accepted as fact that Westminster is overloaded with d·omestic legislat'ion and the Scottish Grand Committee, by its very nature, composition and lack of powers, is incapable of meeting the need for a domestic legislature, the setting up of such a legislature meeting in Scotland follows logically. Once such a legislature is established, it must have an executive to carry out its wishes-in other words, a Scottish 1dministration or Government. What follows is, once again, no attempt lt a blueprint : this is up to the con; titutional lawyers and legislative ~xperts. It is merely a thumbnail sketch, f you like, of the sort of legislature lnd executive t'hat would logica:lly arise 'rom the fiscal and other changes sug~ ested in this pamphlet. In other words, a loose institutional framework for a Third Choice. 5. the institutional framework If the UK Central Government were responsible for Foreign, Commonwealth and Defence matters, overall economic and financial pl'anning (including com- munications, power, scientific and tech- nological research and• development), the departmental functions to be delegated to a Scottish administration could change as set out in the tables below. THE SCOTTISH ADMINISTRA- TION : PRESENT STRUCTURE Agriculture, fisheries, forestry Health, housing, local government, Highl1and devel'opment Physical planning, water supplies, etc. Roads, ferries, bridges, road transport, Highland transport and shipping Electricity generation and distribution Paltice, prisons, fire, civil defence, etc. Education, child care, etc. Under the proposed new structure the Scottish Economic Planning Coun- ci:l would be converted into an advisory body to the Scottish administration, in dose liaison with the Nat'ional Econ- omic Development Council. The Scottish administration would be headed by a Chief Minister and respon- stble to a single-chamber House of around 100 deputies elected on a new basis of representation, partly d•irectly for ind'ividual constituencies and partly by proportional representation to reflect the total popular vote. ScoHish deputies, but not the Chief Minister or his Min.isters, would be aUowed to sit, if they so wish, in the UK Parliament : sittings in both Houses Ti could be doveta:iled so a:s to al1'ow for Tl such dual representation a1though it PI would be preferable that MPS in a much ~ smaller UK Parliament would devote• ad their attention to central matters. There pwou'la stHl be a Scottish Minister sitting 1 in the UK Cabinet taking part in its col-,an lective decisions and also acting as a1 • liaison between Parliament and the H Scottish House. It might be said that such wide-reaching changes in the UK's E constitutional, political, economic and a administrative structure would come at 11'1 a time when the country should concen- trate all its efforts on economic survival. Ph It might be said that major measures o~ go devolution along the lines outlined in this pamphlet would interfere with the r1orderly advance of regional regenera- tion, set one part of the UK against one another, trying to outbid one another p0in attempts to attract new industry and 'clc investment. au It might be said that it would lead to H conflicts between central and domestic n Government, especiaHy if these were o£ different political parties. E It might be said that Scotland in par-~: ticul'ar would suffer a decline in its living standards, have an accelerated in rate of emigration and the level ol ' prosperity wouid graduaJ.ly sink to those in countries such as Eire, Greece or southern Italy; that it would, though perhaps to a lesser degree, suffer the kind of fate flowing from completeseparation. change wanted None of these things need happen. Fo1• the available evidence indicates quit( clearly that the Scottish people wan change. They want it, not least becauS( of the apparent inability of any m Government, Labour or Tory, to effec 5. the institutional framework If the UK Central Government were responsible for Foreign, Commonwealth and Defence matters, overall economic and financial pl'anning (including com- munications, power, scientific and tech- nological research and• development), the departmental functions to be delegated to a Scottish administration could change as set out in the tables below. THE SCOTTISH ADMINISTRA- TION : PRESENT STRUCTURE Agriculture, fisheries, forestry Health, housing, local government, Highl1and devel'opment Physical planning, water supplies, etc. Roads, ferries, bridges, road transport, Highland transport and shipping Electricity generation and distribution Paltice, prisons, fire, civil defence, etc. Education, child care, etc. Under the proposed new structure the Scottish Economic Planning Coun- ci:l would be converted into an advisory body to the Scottish administration, in dose liaison with the Nat'ional Econ- omic Development Council. The Scottish administration would be headed by a Chief Minister and respon- stble to a single-chamber House of around 100 deputies elected on a new basis of representation, partly d•irectly for ind'ividual constituencies and partly by proportional representation to reflect the total popular vote. ScoHish deputies, but not the Chief Minister or his Min.isters, would be aUowed to sit, if they so wish, in the UK Parliament : sittings in both Houses Ti could be doveta:iled so a:s to al1'ow for Tl such dual representation a1though it PI would be preferable that MPS in a much ~ smaller UK Parliament would devote• ad their attention to central matters. There pwou'la stHl be a Scottish Minister sitting 1 in the UK Cabinet taking part in its col-,an lective decisions and also acting as a1 • liaison between Parliament and the H Scottish House. It might be said that such wide-reaching changes in the UK's E constitutional, political, economic and a administrative structure would come at 11'1 a time when the country should concen- trate all its efforts on economic survival. Ph It might be said that major measures o~ go devolution along the lines outlined in this pamphlet would interfere with the r1orderly advance of regional regenera- tion, set one part of the UK against one another, trying to outbid one another p0in attempts to attract new industry and 'clc investment. au It might be said that it would lead to H conflicts between central and domestic n Government, especiaHy if these were o£ different political parties. E It might be said that Scotland in par-~: ticul'ar would suffer a decline in its living standards, have an accelerated in rate of emigration and the level ol ' prosperity wouid graduaJ.ly sink to those in countries such as Eire, Greece or southern Italy; that it would, though perhaps to a lesser degree, suffer the kind of fate flowing from completeseparation. change wanted None of these things need happen. Fo1• the available evidence indicates quit( clearly that the Scottish people wan change. They want it, not least becauS( of the apparent inability of any m Government, Labour or Tory, to effec fHE SCOTTISH ADMINISTRAriON: . ROPOSED NEW STRUCTURE J\gricu'lt'ure, fishing, forestry (with the tdd·ition of agricultural services not at <>resent included in Scottish brief: also !he power to vary agricultural support md fishing aid); tlealth and social services; ::.mployment (including apprentice and tdult trainmg and re-training, adminisration of employment exchanges, etc.); •hysical planning, housing, local overnment, water, etc. (as now) ; ~ransport, including roads, ports, air- JOrts; 'ower (aU forms, but generation in ose co-operation with central planning uthorities); Affairs (the law, police, etc .. as :ducation and Science (including the evelopment of research institutes, inependent and based on universities nd geared to the needs of Scottish ~dustry and techno·logy) ; 'rade and Commerce (a new function , ) include domestic economic planning, 1e fixing and disbursing of industrial tcentives at levels domestically decided, )Cation of industry, foreign trade which rould inc1ude the right to appointcottish commercial representatives at K embassies and elsewhere, etc.); 'inance (the domestic aspects of Treasry functions in respect of taxation , ;onomic management, etc.) >evelopment ~ Highland, Borders, olway Firth and other special areas. basic change in attitudes, foster participation by the people, dispel apathy and non-involvement, reduce the flight of youVh and talent, ]1iberate enterprise and new thinking as wel!l as co-oper·ation in industry and experiment in new forms of political institutions, economic and social management. It makes it clear that regions, counties and even towns, development associations and local pressure groups are a·lready competing fiercely for new industry and investment, with the Board of Trade's own regional controllers, though unofficia'lly, joining the fray. It makes it clear that devolution of a major, fundamental and far-reachingcharacter is not only essential as part of the necessary reshaping of the UK parliamentary machine but as a safety valve to check the flood of nationalistic fervour which feeds on bitterness and frustration. The risk of conflicts between UK and domestic executives arising from differing political colour should not be exaggerated. The Australian example of rows OOtween Federal and St·ate governments of the same political persuasion should be contrasted with Mr. Terence O'Neill, the Unionist Premier of Northern Ire1and, fighting his extremists with the support of the Briti-sh Labour Prime Minister. In any case, there might be "constructive conflicts" thrashed out in the open compared with the present Dutch auctions around the Cabinet table or under-the-counter haggHng in the Treasury. In any case, if the functions of the respective administrations were clearly defined, most conflicts should be resolved without a major crisis about interpret,ation. As a last resort, the proposed revised upper chamlber might act as the final forum for disputes. let the Scots decide For many years yet Scotland would require help from both the UK and from overseas to exploit its natural resources. The Clyde and Moray Firth projects, the Solway Barrage, the stepped-upexploitation of forests and fisheries, of the land and of minerals aH need outside assistance : so do the further diversification of industry and economic growth. But surely the tapping of these assets are needed for the economic health of the entire United Kingdom, not to speak of the relief of congestion and over- concentration of resources of which the South is suffering. For the Labour Government, with 44 seats held in Scotland (and a further 30 in Wales) the need for a political answer to this ups·urge of demand for greater local autonomy is vital to survival. Mr. Anthony Crosland, the President of the Board of Trade did not exaggerate when he warned during the 1968 Blackpool conference that "our top priority is to decide how to react to the tide of Scottish and Welsh Nationalism which would cost us the next election." Mr. Crosland's call to "react" was however typical of the Government's barren attitude towards the major problem of devolution coupled with parliamentary and administrative reform. Surely, even from an electoral point of view, it would have been more appropriate to take the initiative in all these things rather than appear to be delaying decisions by means of a Commission. Moreover, if any vestiges of a reforming, crusading spir-it are left in the Government, here is a chance of experimenting : in socia'l reform and Socia'list forms of economic management, in training and retraining, in education and in specific fields of science and technology. Even a limited form of self-government such as out lined in this pamphlet might open up new vistas and tap vast unused resources of enthusiasm and enterprise. Of course Scots, if given a free choice in their d'Omestic affairs, may prefer the grouse moors to intensive cultivation of the land, unsuJ.lied pleasure beaches to , hives of industry, housing and transport . on the che:ap to investment in future economic growth, old-fashioned working practices to modern ones, narrow- minded, parochial nationa'lism to cooperation within and without the UK. And while those links with the· rest of the UK exist, they may continue to blame others for their own misfortunes instead of helping themselves. Or they may lose their nerve and prefer the "begging bowl" to devolution and decision-making. Or, alternatively, they may wish to go the whole SNP hog and cut their ties with the UK altogether. But what they are entitled to know, no matter what the decision may be, are the facts and options. Given these, I for one am optimistic enough to believe, they would by and large make the right choice. fabian society The Fabian Society exists to further socialist education and research. It is affiliated to the Labour Party, both na- tionally and locally, and embraces all shades of Socialist opinion within its ranks-left, right and centre. Since 1884 the Fabian Society has en- roBed thoughtful socialists who are pre- pared to discuss the essential questions of democratic socialism and relate them to praotical plans for building socia1ism in a changing world. Beyond this the Society has no collective policy. It puts forward no resolutions of a political character, but it is not an organisation of armchair socialists. Its members are active in their Labour Parties, Trade Unions and Co-opera- 1 tives. They are representative of the labour movement, practical people con- . cemed to study and discuss problems that matter. The Society is organised nationally and locally. The nat,ional Society, directed by an elected Executive Committee, 'publishes pamphlets, and holds schools and conferences of many kinds. Local Societies-there are some 80 of them- ne self governing and are livcly centres >f discussion and also undertake re- earch. :<:nquiries about membership should be >ell't to the General Secretary, Fabian ;ociety, 11 Dartmouth Street, London, 9W1; telephone 01-930 3077. the author Andrew Hargrave is Scottish Corres- 'pondent of the Financial Times. He has worked in Scotland for the past 17 years as a political and industrial journalist and lecturer; is a member of the Fabian Society and author of the GlasgowFabian Society pamphlet A Nation of Labourers (1964). At present he is an assessor to the Scottish Tuc's sub-com- mittee preparing a policy statement on devolution. Cover design and typography byGeoffrey Cannon. Printed by Civic Press Limited (ru), Civic Street, Glasgow, C4. SBN 7163 0392 2 fabian society The Fabian Society exists to further socialist education and research. It is affiliated to the Labour Party, both na- tionally and locally, and embraces all shades of Socialist opinion within its ranks-left, right and centre. Since 1884 the Fabian Society has en- roBed thoughtful socialists who are pre- pared to discuss the essential questions of democratic socialism and relate them to praotical plans for building socia1ism in a changing world. Beyond this the Society has no collective policy. It puts forward no resolutions of a political character, but it is not an organisation of armchair socialists. Its members are active in their Labour Parties, Trade Unions and Co-opera- 1 tives. They are representative of the labour movement, practical people con- . cemed to study and discuss problems that matter. The Society is organised nationally and locally. The nat,ional Society, directed by an elected Executive Committee, 'publishes pamphlets, and holds schools and conferences of many kinds. Local Societies-there are some 80 of them- ne self governing and are livcly centres >f discussion and also undertake re- earch. :<:nquiries about membership should be >ell't to the General Secretary, Fabian ;ociety, 11 Dartmouth Street, London, 9W1; telephone 01-930 3077. the author Andrew Hargrave is Scottish Corres- 'pondent of the Financial Times. He has worked in Scotland for the past 17 years as a political and industrial journalist and lecturer; is a member of the Fabian Society and author of the GlasgowFabian Society pamphlet A Nation of Labourers (1964). At present he is an assessor to the Scottish Tuc's sub-com- mittee preparing a policy statement on devolution. Cover design and typography byGeoffrey Cannon. Printed by Civic Press Limited (ru), Civic Street, Glasgow, C4. SBN 7163 0392 2 recent fabian pamphlets research series 252 Peter Mittler 257 K. J ones, J. Golding 265 Arthur Blenkinsop 267 a Fabian group 268 M. Rendel and others 269 Andrew Boyd 270 J. Edmonds, G. Radice 271 J onathan Boswell 272 Ben Whitaker 273 Society of Labour Lawyers report 274 Peter Archer The mental health services Productivity bargaining Enjoying the countryside Britain and the developing world Equality for women The two Irelands Low pay Can Labour master the private sector? Participation and poverty Justice for all Human rights 3s 4s 6d 2s 6d 3s 6d Ss 3s 6d 2s 6d 4s 2s 6d 8s 3s tracts 321 Audrey Harvey Casualties of the welfare state 3s 6d 323 Richard M. Titmuss The irresponsible society 2s 6d 353 Brian Abel-Smith Freedom in the Welfare State 1s 6d 361 L. J. Sharpe Why local democracy 3s 6d 364 D. Downes, F. 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