The Growth Commission, published in May 2018, has been a source of much contention within the SNP and the wider independence movement. In the days following its publication, I was among those in the pro-independence camp who came out to oppose many of the proposals that it put forward.
These criticisms were covered in The Scotsman, the Financial Times and The Herald. I appeared on Scotland Tonight to debate the issues with a member of the Growth Commission steering group. I a wrote column aimed at SNP members in the Daily Record on the eve of their conference where there would be a major debate on currency. Lastly, I worked with many others on a Common Weal campaign to encourage SNP members to oppose the Growth Commission, alongside educating the wider movement on the dangers of such an plan.
I stress these points to show that this has been quite a long running battle, and in my opinion, the most important one since the referendum itself. In the process, many conversations were had with SNP members.
Over the years I have developed relationships with various parts of the organisation, from branch members, to NEC representatives, MPs and MSPs. While you could find opponents of the Growth Commission very easily, it was rare to encounter someone who was actively, positively or energetically behind the project.
Why should they be? The Growth Commission, as we will explore, would result in austerity and privatisation while leaving Scots with less sovereignty than we have at the present moment. Scotland would, in effect, become a vassal state for corporate interests, the City and foreign capital.
In short, the polar opposite to the kind of orientation that captured the imagination of large parts of working class Scotland in the last referendum.
The contention, then, is quite simple. The independence mobilisation of 2014, spooked not only the British establishment, but the Scottish one too. Since then, there has been a deliberate strategy to defang the radical and popular momentum of the independence movement at large. At the same time, the design for a new independence prospectus was to be undertaken by Scotland’s premier corporate lobbyists, Charlotte Street Partners.
Engineering support for the Growth Commission
When the Growth Commission first appeared, it became clear that opposition to it was not a fringe matter. In the days that followed the publication of the report, the First Minister was forced to deny the idea that the proposals would involve austerity. Ian Blackford had to defend it in the face of criticisms, even to the extent that speculation mounted about shelving the plans.
The author of the Growth Commission, Andrew Wilson, would also resort to labelling his opponents as “Marxist revolutionaries,” as if the demand for monetary sovereignty was outlandish, undesirable or perhaps utopian.
As the SNP’s Spring conference of 2019 approached, it was clear the Growth Commission would be a source of controversy, and not just on the question of currency. The Annual Solidarity Payment was an issue of real consternation too. The report also argued that an independent Scotland should copy existing UK financial regulations and, furthermore, continue to copy any changes the UK might make to these for years after “independence.”
The commitment to, and prioritisation of, “deficit reduction” also raised concerns, including among noted pro-independence economists, Jim and Margaret Cuthbert. Meanwhile the STUC criticised the lack of trade union input, which was obvious given the content of the proposals.
Certainly, the Growth Commission was not being held aloft by the grassroots of the party, never mind the movement. Yet in the week running up to the conference, The National, who had been taking a neutral position on the debate, publicly declared their editorial support for Sterlingisation, the Growth Commission’s divisive currency plan.
Meanwhile, the SNP hierarchy came up with a bureaucratic means to scatter opposition to the Growth Commission by presenting every proposal in one single motion, rather than in parts.
This forced critics to focus on one issue. The most fundamental question was to oppose Sterlingisation, given the need for a central bank and economic independence to pursue initiatives like a Green New Deal, or to move away from the model of financialisation favoured by the UK government.
In the debate, opponents of the Growth Commission’s currency plan deconstructed the proposals well, and in particular repudiated the idea that “tests” should have to be met before setting up a Scottish currency. Such an approach is not simply an obstacle to the realisation of an independent national bank, it is in effect a blockade, since the UK financial institutions would oversee the process. Ronald MacDonald, an esteemed Professor of Economics, points out that this “transition period” would take at least ten years.
In the end the conference did amend the currency plan to include the following:
However, the main takeaway for the SNP leadership was to reinforce the application of the economic tests, which were not removed from the motion. As the First Minister tweeted:
“Great debate at #SNP19 on economy and currency. Amendment urges progress as quickly as practicable, and six tests to ensure solid foundation for decision are endorsed. We can move forward now with confidence to make the case for Scotland’s future in Scotland's hands.”
This formulation effectively resigns Scotland to Sterlinigsation for an indefinite period, potentially much longer than a decade. In reality, the “tests” are in effect designed not to be met. As Dr Craig Dalzell says:
“The six tests have been presented as a measure which must be met before Scotland launches its own currency but these “lists of tests” are more often set up as barriers than as targets.”
Sterlingisation: A proposal made for the City
Since the 2019 conference, much has changed. Not least as a result of the Covid-19 pandemic. But even before that, there was speculation that the Growth Commission was on the rocks.
It did seem as if the whole report had been quietly ditched after the initial fanfare had died down, as is common with SNP policy. Momentum around it had not just stalled, but had become almost absent. Of course, this could be said for the independence campaign as a whole, despite Brexit.
This wide ranging critique of the Growth Commission’s monetary policy recommendations provides a detailed analysis of the problems inherent to Sterlinigsation. But you don’t have to be an expert to fully grasp why it is such a misguided policy:
1. Scotland would not have economic independence. This means total reliance on UK financial institutions and, indeed, transnational bodies like the IMF. This would mean that wealth would be extracted from the Scottish people and from the country’s natural resources only to be funnelled into foreign banks and the corporate sector. As economist George Kerevan warns:
“It comes as no surprise…that there is a direct link between the new influence of foreign banking interests in Scotland and the reluctance of the SNP leadership to support the creation of a separate Scottish currency after independence. Indeed, this writer (Kerevan) was told privately by Andrew Wilson, author of the SNP’s infamous Growth Commission, that his decision to change tack and recommend the retention of sterling followed close consultations with the banking sector.”
2. The Scottish Government would have no control over the levers of the Scottish economy. This means borrowing would be set at a premium, and would come with conditions. As economist Laurie McFarlane explains:
“The absence of a lender of last resort would mean paying higher rates of interest on Scottish sterling bonds, and tailoring public policy to look ‘credible’ to financial markets. It would also leave Scotland vulnerable to predatory investors looking for vulnerable prey to exploit during a crisis.”
3. Without a national, independently run, central bank, Scotland cannot become a member of the European Union. I take a different view to many in the independence movement, in that I oppose EU membership for Scotland. But given the reliance the SNP have put on arguments around Brexit in relation to the case for independence, this is a truly glaring contradiction.
As the Aquis Communinitaire - the accumulated legislation, legal acts and court decisions that constitute the body of European Union law - states:
“Economic and monetary policy contains specific rules requiring the independence of central banks in Member States”.
4. Scots would have less sovereignty than they do at present. Richard Murphy, Professor of Accounting at Sheffield University Management School, puts this point well:
“…for all practical purposes, the Scottish Government would have no effective control of any of the measures used to control its economy. In fact, it would be worse off than it is now. It would have, post independence without its own currency, about as much power over the economy of Scotland as a local council has over that in its district, which as any councillor will tell you is minimal. It’s fair to say that such a Scottish Government would be in office but virtually powerless.”
If you want to see how these kinds of issues go down in a debate, take half an hour to watch this interview with the author of the Growth Commission conducted by Andrew Neil. Trust me, it is worth your time:
Just imagine this on full display, but under much greater scrutiny, in a live referendum. The argument would fall apart not just because it provides a platter of easy pickings for Unionist opponents, but because large parts of the independence movement itself couldn’t disagree with them, far less argue for such a prospectus.
The Growth Commission today
If we were being told that the Growth Commission was being left on the shelf before Covid, it was to be well and truly buried by the pandemic. Why? Well, just imagine Scotland had been “independent” under Sterlinigsation during the last few years. Furloughing workers would have been impossible. Instead the Scottish Government would had to have asked the UK, or even the IMF, for loans to cover such an intervention. Note that these might come with all kinds of punitive strings attached.
Recovering from the pandemic? There you would require the mobilisation of state-led investment to aid the reconstruction, or in my view, to radically reorientate the economic system. Again, this just isn’t possible if the Scottish Government doesn’t have control of the Scottish economy, as outlined above.
So surely, after the grilling by Andrew Neil, after the obvious lack of support within the independence movement for the proposals, and after a global pandemic, Andrew Wilson might have something different to say today.
Some critical reflections perhaps, or even some new ideas and modelling for a world gripped by an international public health crisis and impending economic catastrophe in a period of record inflation.
Alas, no. Just last week The National promoted a new article on the on-going relevance of the Growth Commission. Nothing, it appears, has changed. The Growth Commission read in 2018 as if the 2008 financial crisis hadn’t happened. Now, in 2022, its adherents write as if a global pandemic hadn’t happened.
Indeed, this article was followed up with comments from Ian Blackford which served to underline the intransigence of the SNP leadership on this issue:
This confusion and intellectual morass should reinforce the view that the SNP prefer to keep independence as an ongoing democratic question. This allows the party to defer criticism of their domestic failings, while keeping the challenges around issues like currency, EU membership, borders, NATO and Trident at bay.
But be under no illusions. The official case remains based around the principles of the Growth Commission. We are promised new policy briefings in the coming weeks and months, to in the words of the First Minster, start a “discussion” around the merits of independence.
Nothing new, on currency at any rate, is in evidence. This despite the overwhelming arguments against Sterlingisation.
Does “independence” give us the power to choose?
One of the most common responses to this analysis is the following: “ok, this is terrible, but we can choose another direction once we are independent.” Here I think there are some major complacencies, which are worth touching on by way of a conclusion.
Firstly, we need to understand how corporate lobbying works. The idea is to stitch up the interests of the status quo behind the scenes, and to remove democratic input into the policy making process. Thus, the Growth Commission is not just another branch of the independence “wish tree,” alongside a dozen other equally valid “visions.” Instead this is to form the negotiating platform in the event of a vote in favour of independence.
In other words, this prospectus will be hardwired into the process from the very beginning, well outside the remit of any election. That doesn't mean there can’t be or shouldn’t be popular mobilisation to resist such a carve up, and all of the negative consequences which flow from it. But this is not a simple or easy proposition.
Secondly, the official case in any referendum will be construed to be the democratic mandate to take the country and the negotiations forward. Think about Brexit. After the referendum in 2016 all kinds of competing theories about what the vote actually meant emerged. In a future Scottish referendum, the retort is simple: “the people of Scotland voted for independence on the basis we argued for it during the referendum.” That case, will be constructed around Sterlingisation.
Thirdly, I don’t think the SNP will devolve into its various ideological factions after an independence vote, for a few reasons. The SNP has already changed to become a more homogenous party. For example, there isn’t really an organised, sizeable or distinguishable left within it. Bear in mind too, that the SNP will be looked towards as the custodians of the independence negotiations, bringing about huge pressures to continue to vote for the party during that process. So even if changing government during the negotiations might in theory bring about a possible change in direction towards meaningful sovereignty, it is a vanishingly unlikely outcome.
This is precisely why both the SNP leadership, and the organisations who oppose the Growth Commission, recognise it as the most important question to face the movement since 2014. It is why so much effort has gone into securing the tenets of the Growth Commission as policy, even in the face of broad opposition.
The best chance to prevent Sterlingisation, and the attendant austerity and privatisation it will bring, is to defeat it as an idea before we get anywhere near a referendum, itself a distant prospect.
The strategies deployed thus far in this regard have failed. My own view is that it won’t be enough to say “here is my, better, vision of independence,” either. Not when we are dealing with real questions of power, policy, capital and state craft.
New, and honest, thinking is therefore needed.
I couldn't agree more with the points in the article. The Growth Commission needs to be countered with everything we have. It is a disastrous idea going into a referendum campaign for the Independence movement.
Again, everything I have been shouting about since I saw his articles swiftly followed by Blackford’s. We are doing our best in the Scottish Currency Group to push what conference actually voted for which was Tim Rideout’s amendment making clear the 6 tests were irrelevant or unnecessary. It is clear they are designed as obstacles to setting up our own currency. They lied when they said that they thought the SCG needed to be updated, they simply meant to change the date at the top of the document. I cannot sell Sterlingisation going into a campaign and I won’t, it is dishonest to pretend it would be anything but disastrous for ordinary people and would deliver Scotland to be carved up by the usual suspects. Without our own currency we are powerless to protect our resources, our land and our direction.