Post-devolution administrations have fed Scots a sugary diet of Nordic benefits without the hi-tax, hi-income roughage and fibre. Dr Malcolm Harvey asks how long this ‘all gain, no pain’ diet can last.
The frequently mentioned starting point for political economy discussions in Scotland is that of social democracy – that Scotland is an inherently centre-left polity. In the devolution period, this centre-left tendency has been manifest in political representation, with support for Labour, and latterly the SNP, increasing substantially at the expense of conservatism. However, political representation notwithstanding, the Scottish electorate is not substantially different to that of the rest of the UK. There is a slight tendency to be more left-wing than England on matters of welfare but, on the whole, those differences are not pronounced. What distinguishes Scotland from the rest of the UK is the tendency to vote more consistently for social democratic parties. Moves by both the Labour-Lib Dem coalition and subsequently the SNP governments to deliver public policy on a universal basis has furthered this trend.
Policies such as free personal care, free prescriptions, and the abolition of tuition fees were aimed at widening the availability of services in both healthcare and education to ensure that cost was not a determining factor in their uptake. Universality, while ensuring that low-income households are not excluded from services, has a by-product: it also provides services free of charge to the middle classes. In turn, this binds the middle class into the system and provides a clear feeling of reciprocity – benefits from the system (free services) are at least an equivalent to what their contributions are through (higher levels of) taxation. So, social democratic voting patterns in Scotland became less about delivering upon a more egalitarian sense of society but about entitlement – getting out of the system what was put in.
Why does this matter? An examination of the Nordic model of social democracy – a comparison which garnered much comment during the referendum campaign – shows a very different motivation. Equality was built in the Nordic nations through a social solidarity forged in the inter-war and post-war periods, and relationships between business, trade unions and governments were fostered to provide an institutional setting which would allow negotiations over wages, taxation and social spending. They continue to follow the social investment approach, funding high levels of social spending through high levels of personal taxation (which, in turn, is funded by high wage levels) and negotiated through frequent tripartite bargaining meetings, comprising government, business and unions.
The Scottish population is generally amenable to the idea of generous and universal public services. However, the lack of discussion about the revenue side of the ledger – the requirement for higher levels of individual taxation in order to fund more generous welfare spending, as well as higher wages and a structured wage bargaining system – means that public support for such a tax increase is limited. With further powers likely for the Scottish Parliament post-election (details of which remain uncertain, Scotland Bill draft clauses notwithstanding) Holyrood will find itself with control over some aspects of revenue raising.
However, there appears little demand in Scotland for an increase in taxation, or indeed any variation in taxation between what is paid in Scotland and what is paid in the rest of the UK. Scots are happy to see their taxes used to fund (universal) public services in the form of health and education – and, indeed, would be happy to see further funding in these areas if it improved the services available – but they are reluctant to see taxation increased in order to fund higher spending.
So, Scotland finds itself in a position where it actively supports social democratic parties and the principles underpinning this political philosophy, but without the institutional capacity to build the kinds of business-union-government relations required to deliver substantive policy change and a social investment model in the manner of the Nordic states. However, even with significant new powers in these areas, the likelihood of Scotland delivering upon a model of social democracy akin to the Nordics remains slim for two reasons: the financial and political costs.