What, if anything, can the Conservatives do to redeem their reputation as the hammer of the Scots? Tony Mackay
Managing director of economists Mackay Consultants
Eighteen years of Tory rule were a long time in the economic and social history of Scotland, and of course the period included good and poor patches, as has 13 years of Labour governments.
From 1979-97 the Scottish economy grew at an annual average of just under 2%, a little below the UK average, but no better or worse than the post-Second World War Scottish average.
But the Conservatives made radical changes to both the UK and Scottish economies, particularly in the 10 years Mrs Thatcher was leader. She dramatically reduced the power of the trade unions, with the defeat of the miners’ strike as the catalyst, and embarked on a widespread programme of privatisation of public sector services such as bus and rail services, electricity and gas.
With 13 years of hindsight, objective economic historians must conclude the legacy of these policies is mixed. The same historians might also be surprised that neither Tony Blair nor Gordon Brown did more to reverse the more radical of the privatisation policies and, indeed, added some more -- to the NHS and the education sector.
I used to believe that most of the Conservatives’ privatisation policies had been largely successful. But there is increasing evidence that the railway privatisation has failed. Unfortunately, I see little or no chance of a new Tory government reversing such policies.
Electricity privatisation seems to have worked much better. Scottish and Southern Energy and Scottish Power are now two of the most important energy companies in the UK, although the latter is now Spanish-owned.
Our manufacturing sector contracted massively under the last Conservative government, with the 1993 closure of the iconic Ravenscraig steel mill regarded as a nadir. However, I suspect much the same would have happened under a Labour government, as illustrated by the virtual demise of the Scottish electronics industry and the oil rig fabrication yards on their watch.
Ravenscraig and other closures led to a massive rise in unemployment. The enduringly valid criticism of the last Conservative government is that they showed little ability or interest in reducing that. What next? I firmly believe that public sector over-dependent Scotland will fare badly over the next few years, regardless of who sits in Downing Street.
Dick Winchester
Commentator and consultant on energy business and technology issues
Those with long memories will recall that the last Tory government’s energy strategy was based mainly on utility privatisation, the so-called “level playing field” approach to the offshore oil and gas marketplace, the near death of coal and the “dash for gas”.
Central to Tory policy was that energy provision was the domain of the private sector. As a consequence, as soon as Thatcher entered Downing Street plans were initiated for the government-owned Scotland-based British National Oil Corporation. BNOC was set up by Anthony Wedgwood Benn in 1975 to ensure the government could manage the exploitation of North Sea oil and gas resources and be a participant in some offshore field developments.
Thatcher privatised it in 1982 and it became Britoil. It was eventually acquired by BP in 1987. With BNOC/Britoil gone we lost control over the rate of North Sea exploitation and the support of an “Industry Champion” similar to Statoil, which has helped Norway develop their oil and gas supply sector into the world leader it is today. Not the brightest of moves, then.
The Tory government then set out to remove another anomaly on its free market landscape by killing off British Underwater Engineering. BUE was a group of companies comprising subsea engineering, subsea vehicle operations, diving and shipping businesses.
In addition, the Tories withdrew funds from wave and wind energy programmes and from the fast-breeder reactor programme at Dounreay. Again, not the smartest of strategic decisions given the situation today.
The result of all this was that oil and gas production happened without us developing an indigenous major energy industrial base, and it caused us to miss out on the boom in the wind turbine industry. Not that Labour has improved the situation. It’s used oil and gas revenues as a cash cow and used tax, not technology, to combat climate change.
The Tories could redeem themselves firstly by repealing Labour’s CRC Energy Efficiency Scheme, which is a tax stick with no carrot, and secondly by looking at how the renewable energy industry is taxed and funded.
To compete we need to ensure start-ups and early-stage clean technology companies are properly capitalised and can gain momentum. A good use for the proposed tax on banks, perhaps?
David Torrance
Broadcaster and author of We In Scotland -- Thatcherism in a Cold Climate
Scotland, more than anywhere else in the United Kingdom, is where past, present and future will collide for any new Conservative-led government. Its past, symbolised by Mrs Thatcher’s apparent disdain for Scotland, still hangs over the party; its present is sure to become dominated by cuts; while its future, as a result, will not be easy.
On one level, the reputation of previous Conservative governments in Scotland is unfair. By the end of the 1980s Scotland’s economy had moved into line with the rest of the UK for the first time in decades. Scots even adapted, generally speaking, to the realities of a more market-based society.
The negative aspects of the legacy are well known. A feeling, however ill defined, that the Conservatives “didn’t care” about Scotland, and an unshakeable belief, however absurd, that they used Scots as “guinea pigs” for certain policies. Add to that the altogether more real experience of de-industrialisation and it doesn’t exactly produce fertile territory.
Historians love dwelling on “what ifs”, but in this case it is instructive to look into the past in order to find pointers for the future. Presentation is key.
Although privatisation is widely considered to have been a Tory success, it could have been structured in a way that promoted a distinctly Scottish element, for example a privately-run Scottish Steel Corporation, and likewise with the railways, telecoms and so on.
In the 1950s Conservatives campaigned against Labour nationalisations on the basis that they robbed Scotland of control over key industries; the denationalisations of the 1980s should have been presented as returning that control to Scots businessmen and shareholders.
Economic policy, therefore, would need to be handled sensitively, seeking to avoid inevitable SNP charges of “Cameron cuts”, while constitutional reform has to be pursued more rigorously than ever before. A broad consensus exists in favour of strengthening devolution along the lines suggested by the Calman Commission.
“Is Scotland a lost cause?” shouted a reporter as David Cameron boarded his battle bus in East Renfrewshire. “Certainly not!” he barked back.
David Bell
Professor in the School of Management at the University of Stirling
It has been more than 12 years since the last Conservative administration was in power in Westminster. Their last period of government rarely strayed from controversy. On the economic front, there were public sector cuts, the poll tax, the miners’ strike and Black Wednesday. With these as the landmarks of their last period in office, it is perhaps not surprising that the received wisdom is that the Scottish economy performed very badly when the Tories were last in power. The reality is not so black and white.
Last month, Martin Weale, director of the National Institute of Economic and Social Research, argued that average UK economic growth under the Conservatives from 1979 to 1997 was more rapid than under Labour from 1997 to 2010. His analysis showed that under Labour, the UK economy grew at 2% per annum compared with 2.2% from 1979-1997 under the Conservatives.
However, for the advanced economies, the economic climate of the last decade was not so benign as in the 1990s. Thus, relative to other countries, the UK’s growth performance improved under Labour, rising to second place in the G7 table of growth rates after being third from 1979-1997
The most recent GDP data show similar trends in Scotland. Over the period 1979 to 1997, Scotland’s economic growth averaged 1.8% per annum. But between 1997 and 2009, the average fell to only 1.5% per annum.
There were significant changes in the structure of the Scots economy while the Tories were in power. Its policies accelerated the move from an economy based on production and extraction to one where services dominate.
But the economic model that began under the Tories and flourished under Labour became unsustainable. Savings were too low, consumption too high and individuals became increasingly convinced the easy way to become rich was to manipulate assets such as housing rather than to develop new products and services. The next few years may usefully be directed to the search for a new and more sustainable model.
Tom Miers
Independent public policy analyst
The Conservative Party were badly wrong footed by the credit crunch, and this clearly hobbled their performance at the General Election. It robbed them of their main storyline without providing them with a clear substitute.
Looking back to the last Tory Government in Scotland, it is hard not to shudder at the memory of those bitter battles over industrial economic restructuring. Arguably these were necessary, but they destroyed the Tory mandate in Scotland, perhaps forever.
Yet none of these battles needs to be refought. Privatisation, trade union reform, the withdrawal of industrial support -- all were left intact by New Labour. Big decisions still need to be made at UK level on financial sector regulation and the overall framework of tax and spend. Both will affect Scotland deeply. The Scottish banking sector could benefit from much more competition, making it easier for businesses to access finance as well as reducing the threat from future banking collapses.
Yet one of the many ironies of the credit crunch is that to encourage new market entrants we need less regulation. The alternative is splitting banks up, preventing mergers and separating retail from wholesale banking. What are the odds of such an approach standing up to market sentiment?
So the main economic battleground in Scotland will be over public finances. The Tories plan to increase the tax yield by simplifying and flattening taxes. This means getting rid of reliefs and lowering headline rates. At the same time, they hope that public sector reform in England will lead to productivity gains, allowing tax and spending cuts without harming frontline services.
Lower taxes and a sharply reduced deficit may benefit Scotland in the medium term. Yet this medicine will not go down well with Scotland’s political establishment, where there is no consensus on the need for public sector reform. Cuts will be portrayed by the SNP as a malign assault on Scotland.
How the debate pans out will be down to Labour. The traditional line of damning an illegitimate Tory government would play into the hands of Alex Salmond. A more far-sighted critique would be of the Scottish Government’s response to difficult times. What price the Second World War-era solution of a Labour Secretary of State for Scotland in a Tory-led Cabinet?
