The United Kingdom may be a lot less united than it has been in the past, now that a nationalist government has been installed in the Scottish Parliament. It will take some time before we can be sure of just how great the constitutional impact of a minority SNP administration in Holyrood will be. However, we can be sure that the divergence of public sector philosophy between Scotland and England will continue.
The Labour-led coalitions that have run Scotland since devolution in 1999 resisted the market-based reforms to the NHS and the education system, often to the intense irritation of UK ministers. There is no internal market for health, no competition between hospitals and the traditional “collaboration” between GP and consultant in Scotland has been retained.
Scotland’s answer to modernisation has been to abolish student fees and introduce free personal care for the elderly, as recommended by the Sutherland Report but rejected by Tony Blair. The Scottish Executive has also introduced free eye and dental checks, free universal bus travel for pensioners and free central heating. In Scotland, it is good to be old, and it’s not bad to be young, since there is a more generous nursery provision than in England.
There are no foundation schools in Scotland. Nor are there specialist schools, beacon schools, city academies or any of the 57 varieties of state education that Tony Blair tried to introduce in England. Scotland stuck with what he called the “bog standard comprehensive”, and seems reasonably happy with it. On the OECD PISA tables – the international benchmark for educational excellence – Scotland scores well in maths, science and reading, higher certainly than England.
There are a number of reasons for this relatively high performance: a tradition of egalitarian education that goes back to the Presbyterian kirk schools; the very small numbers of parents (half the proportion of England) who opt for private education; higher education spending per head and the absence of race divisions in urban schools. The non-white minority ethnic population in Scotland is tiny, consequently there are not the same ethnic tensions that arise in inner London boroughs.
The Scottish system remains far from perfect. There are problems with the first two years of secondary, when too many boys lose academic focus. And the Scottish Executive intends to raise the school leaving age to 18 to reduce the numbers of so-called ‘NEETs’ - the 14% of school leavers who are not in education, employment or training. However, the solution to these problems is not being sought through creating diversity of provision. The ‘schools of ambition’ programme introduced by the recently defeated Labour-Liberal Democrat coalition, sought only to bring some underachieving schools up to standard. There was no attempt to use academic specialisation as a way of ending one size- fits-all provision.
Nor has the modernisation agenda been more successful in the Scottish NHS. In the early years of the century, the Scottish press campaigned vigorously for the introduction of private health clinics to reduce waiting times. But the Scottish Executive avoided wholesale privatisation or the introduction of market-based provision. Indeed, its main action was to buy out the biggest private hospital in Scotland, HCI Clydebank, in 2002 to develop as a centre for elective surgery.
The Health Minister, Andy Kerr, allowed only minimal involvement by the private sector – £70 million over three years – in the Scottish Executive’s waiting list initiative, justifying this on the grounds that there simply wasn’t the capacity in the primordial Scottish private health service to make any significant difference to the size of waiting lists.
Top down health initiatives
Initially, the Scottish Executive was heavily criticised for not adopting the English reform agenda, especially in 2003/4 when it appeared that waiting times were not falling as fast in Scotland as in England. The Scottish Executive concentrated on reducing waiting times in key areas like heart disease, cancer, strokes, rather than pursuing a reduction in waiting lists.
Instead, the Scottish executive promoted top-down health initiatives like healthy eating in schools and most notably the smoking ban, which came into effect in April 2006. This was a decisive moment for the Scottish Executive and the Scottish Parliament. Here was a truly radical initiative, which would really affect the lives of the Scottish voters – and something which the medical profession had been demanding for many years.
Looking back, it may seem as if banning smoking in public places was a simple task. But at the time it seemed anything but. There was huge opposition from the popular press and the licensed trade, and many politicians seriously believed that the ban would be reversed after nationwide civil disobedience by smokers. The idea that a country with a drinking culture like Scotland’s would meekly allow the elimination of cigarettes from the pubs seemed wildly optimistic.
There were objections that the ‘nanny state’ shouldn’t be telling people how to live their lives. Many of these criticisms came from UK Labour ministers, like the former Health Secretary, John Reid, who argued that smoking was “one of the few pleasures left to the working class”. It was felt that this was precisely the kind of ‘top down’, ‘do-as-we-say’ health provision that the Blairite reforms were opposed to.
In the event, Scotland accepted the ban almost universally and there were only a handful of arrests. The spectre of smoking police having to go round the country stubbing out drinkers’ butts never materialised. It was an astonishing achievement. Even publicans began to accept the reforms as evidence emerged that women and non-smokers were now prepared to look in at their local.
The smoking ban was immensely significant because it gave the Scottish Executive the confidence to believe that it had been right to tailor health policy to Scottish needs. After 2005,when English hospital trusts started to announce deficits and job reductions, this sense of self confidence increased even further. When English Labour MPs, like the party chairman, Hazel Blears, began campaigning against local hospital closures in 2006, the Scottish Executive began to feel vindicated.
Future focus
However, it was not permitted to enjoy this for very long because, no sooner had it begun to congratulate itself, for pursuing “Scottish solutions to Scottish problems” (eg not the Blairite reforms) than the Labour Liberal coalition was defeated at the 2007 Holyrood election. The Liberal Democrats elected not to support the Scottish National Party in forming a new government, and has gone into opposition. This leaves a minority nationalist administration in charge of the £30bn Scottish Executive budget, most of which goes on health and education.
Lacking a stable majority in Holyrood, the SNP will not be able to pursue any radical reforms, and is likely to concentrate on reducing class sizes, introducing free school meals, opening local hospitals, abolishing prescription charges and reducing student debt. But that is probably enough to be going on with.
There will be problems with the Scottish universities, who claim they will lose out financially after the introduction of top-up fees in England and may not be able to compete for staff. The SNP is committed to scrapping the graduate endowment – the post-dated fees that former students pay out of future earnings – which could make things even worse. Scotland prides itself on its world-class universities, which are a key element in the knowledge economy that Scotland is bidding to lead. The fiscal crisis of higher education is something the SNP will have to address early in its government, but it is inconceivable that it will reintroduce student fees, whatever happens south of the border.
Bold policy
The SNP are determined to roll back one more established market-based reform to public sector provision. The nationalists intend to abolish the Private Finance Initiative (or ‘Public Private Partnership’ as Labour prefer to call it). Instead of raising money in the private finance markets, the Scottish Executive will oblige public bodies to raise money by public bond issues from a not-for-profit Scottish Futures Trust. This will pit Alex Salmond directly against the Chancellor, Gordon Brown, who is an enthusiast for PFI. Indeed, it is not clear yet that the Scottish Executive will have the power to abolish PPP.
However, it is increasingly responding to the arguments that only through promoting enterprise and efficiency can the Scottish economy overcome its historic low growth. To this end it is committed to make pretty spectacular “efficiency savings” in the Scottish state, amounting to some 2.7 bn over three years – equivalent to 1.5% of the executive budget. This will imply a pretty massive reduction in the share of GDP going into the state, currently running at 51%.
Whether or not this is possible remains to be seen. It is a bold policy that seeks to release significant streams of revenue from efficiency savings, and no government, not even Margaret Thatcher’s, has succeeded in doing so. One suspects that there will be a confrontation between the SNP’s low tax/high growth approach and its spending commitments which, at the last count, amounted to some £5bn over three years.
Fiscal authorities, like Professor Arthur Midwinter of Edinburgh University, have said that the SNP is “not fit to govern” because of its cavalier attitude to the public accounts. But other economists insist that the SNP is proposing cuts in expenditure, which are lower than those envisaged by Brown in his current Comprehensive Spending Review.
However, the fiscal crisis of the Scottish state may come very much sooner from another source: the Barnett Formula. This is the means whereby increases in spending north of the border are calculated on the basis of population share rather than relative need. The Barnett Formula has been squeezing Scottish public spending in recent years, but it is still between 15% and 19% higher per head than south of the border. During the recent election campaign, Labour insisted that this “union dividend” as it called it, would be lost if the voters elected an SNP government. They claimed it was worth some £11bn a year to the Scottish exchequer.
Intense debate
There is intense debate about the true size of the UK subsidy to the Scottish executive. An analysis by the Financial Times during the recent election campaign suggested that the Scottish deficit – if oil revenues are taken into account – is much less than the Labour estimates, and may be considerably less than that being run by Brown for the UK.
The Barnett Formula is likely to become highly contentious under an SNP administration. There is a widespread belief in England that Scotland is treated over-generously, at least by comparison with regions like the North of England, and that this will have to end. If the Barnett Formula is reviewed once Brown leaves the Treasury, then there could be a furious row about financial transfers over the border.
The SNP is already promising to raise the question of Scotland’s historic share of oil revenues, and insisting that there should be an oil fund established, on the Norwegian model, to promote Scotland’s economy in future. Salmond is also demanding the repatriation of £40m in attendance allowances, which were withheld from Scotland after 2001 when Scotland introduced free personal care. The Department for Work and Pensions (DWP) argued that since attendance allowances had been abolished, it was not obliged to continue the payments. This small sum of money has caused considerable annoyance in Scotland, especially since the policy of free care has been popular but short of funds. The SNP is also proposing to abolish council tax, and expecting some £380m in council tax benefits to continue.
These issues could all explode in the next couple of years and, badly handled, could push Scotland further down the road to independence. There is evidence that this is happening incrementally anyway, and that Scotland is now much closer to the kind of political culture of the Scandinavian countries.
There is a greater sense of social solidarity in Scotland than in England. The virtual absence of private healthcare and the very limited number of private schools – largely confined to the wealthy ghettos of Edinburgh – means that public sector culture is much less on the defensive than it is in England. Public sector managers are not always looking over their shoulders at the private sector. Selection is not an issue in schools and there is no longer any significant demand for privatisation in health.
Private involvement in financing the public sector in Scotland is also likely to be greatly reduced under the incoming nationalist-led government. PFI has been used extensively – and controversially – in Scotland to fund school and hospital building, but the SNP is pledged to replace PFI with public bond issues, which it claims will be cheaper than raising finance on the private money markets.
Impact of wealth
Scotland is also a much poorer country than England. This is such an obvious point that it is often ignored in debates about the public sector. The huge disparities in wealth and income, which are so much a part of English society, do not exist in Scotland. Scots are relatively well off historically, but house prices have not reached the stratospheric levels seen in London and the global super-rich do not figure. According to Scottish Economic Statistics, 2006, only around 100,000 people in Scotland are living in households earning more than £50,000 a year.
Consequently, the rich do not exercise the great influence they have in the metropolis, and politicians are expected to live on the same planet as the voters. The social democratic consensus still exists in Scotland. In a BBC poll on the issues that were important to Scots in the recent election, the number one demand of the voters was that the state should continue to finance and provide education and health. After a decade of New Labour, Scotland has remained largely immune to the ‘Third Way’ agenda of diversity and choice in public sector provision. And under the SNP, that certainly isn’t going to change.
Iain Mcwhirter is political commentator for The Sunday Herald