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YAS Report – Willie Rennie

Rennie - Jane Barlow Scotsman

Picture courtesy of Jane Barlow (The Scotsman)

Willie Rennie – In Britain. In Europe. In Work Speech Here

The fourth lecture in our series started off by Mr Rennie stating that we probably all agreed on the third part of his title. And that he would argue that the first two, although of course more controversial, were crucial to safeguard it.

At several points during his speech, Mr Rennie highlighted parallels between the “In Britain” and “In Europe” dialogues currently taking place, describing his own party as the “Party of In”. Not without pointing out though, that both the EU and the UK require reform “to be the best that they can be for Scotland”.

Mr Rennie reminded us of the current economic background, much more positive than many would have predicted and, given circumstances, “not something we were automatically entitled to expect”.  Future success, Mr Rennie argued, was underpinned by “a single market, making trading easy” and allowing Scottish businesses to expand across the continent. However, Scotland’s main trade, worth £85 billion, is with the rest of the UK and one should not underestimate the “border effect”, shown to damage cross-border trade, even without physical borders and no matter how “allied and benevolent” the neighbours (as recently published in the Scotland Analysis paper by the UK Government). In a first parallel, Mr Rennie made the case “to avoid imposing borders that hit trade inside the present UK as any nationalist might for trade with the EU”. No need for more red tape, not even red tape “written in the same language”.

In a second parallel, criticism to the “union” was highlighted, where leaving and hence having no influence is presented as the answer to complaints of “losing influence” by both EU critics and (Scottish) nationalists. Mr Rennie’s view is that it will be easier to make the changes to “help the future for Scottish jobs and prosperity” from within, with the “back-stop and insurance” provided by those unions. He reminded the audience of the RBS bailout by the UK and the insurance Greece got from the EU. He also illustrated that potential loss of influence with the example of an independent Scotland entering into a fiscal pact with the remainder of the UK in order to retain the pound. In this case, Scotland’s fiscal policy could be constrained by a UK chancellor in whose appointment Scotland had no say.

But as already mentioned before, reforms are needed in Mr Rennie’s opinion and he referred the audience to the work of the Lib Dem Home Rule and Community Rule Commission led by Sir Menzies Campbell.  The basic underlying principle is that power needs to be shared for countries to be successful. According to the OECD, decentralising fiscal powers has considerable advantages to economies, such as accountable and powerful (local/regional) government, with the ability to raise most of the money it spends, but with the back-stop and insurance from being part of the UK. However, the commission argued that welfare should remain at a UK-wide level to protect mobility of labour and that the single market needs to be preserved to protect the jobs that depend on it.

Although in favour of decentralising fiscal powers, Mr Rennie went on to explain why the commission had recommended that setting corporation tax rates should remain a central (UK) matter.  First though, he pointed out that the nationalists have a lot banking on “powers over corporation tax”, which really means “cutting corporation tax”.  A first flaw in the corporation tax policy, according to Mr Rennie, was that it was not cost-free; there is no guarantee on what term, if ever, the initial (immediate) loss of revenue can be recovered. The Scottish Government needs to tell us all how much it will cost in total and over how many years. A second flaw Mr Rennie highlighted was the assumption that “the neighbours” would stand by and idly watch their corporation tax being undercut.  More likely, a “race to the bottom” would follow and the losers would be people everywhere who rely on the spending power of the government(s). The back-stop of being part of the UK would prevent everyone becoming a loser. Mr Rennie advocated positive power sharing, letting all regions of the UK build on their strengths, strength coming from being the best, not (temporarily) the cheapest.

A latter part of the speech focused on “the three great challenges facing this generation: poverty, an ageing population and climate change”. Mr Rennie’s proposed solutions focused on increased participation through education, strong industry sectors and keeping a balance in the economy. Early-years education (child-care for two-year olds) and increasing the number of apprenticeships were highlighted as two possible routes to increase participation.  Mr Rennie quoted figures for universities, contributing £6 billion to the Scottish economy and supporting 140,000 jobs. “In Britain, in work at Scottish universities”. There was, unfortunately, no mention of how these universities and their research would be funded.

Mr Rennie concluded by telling us that “change is going to come”.  Although that is true regardless of the outcome of 18 September, Mr Rennie was referring to the growing consensus on decentralisation, “building such momentum that it will happen”. The second report Menzies Campbell has been commissioned to make (Campbell II) has been tasked with showing how widespread the consensus is and how quickly it could be turned into actual change.  I believe we can all look forward to more firm proposals on what ‘no’ would actually mean for Scotland in the UK.

To end, a quote from a pupil during a recent school visit recounted by Mr Rennie: “Can we trust what politicians are saying?” This, of course, will be the real challenge for the YAS members in a few weeks time, distilling the information we feel we can trust from this lecture series. We look forward to the fifth and final contribution by Ruth Davidson next week!

 

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