The Labour party in Scotland has now embarked on a journey of realistic policymaking - a process the party in Westminster should pay attention to.
By Cameron Smith
During the 2011 Scottish elections, Labour and the SNP committed themselves to economic policies that went far beyond existent funding conditions. Learning from its mistakes, the Labour party in Scotland has now embarked on a journey of realistic policymaking by reconsidering the fundamentals of growth – a process the Labour party in Westminster should pay attention to.
One that stands out in particular is the suggestion of creating a government-owned Infrastructure Bank in order to move infrastructure projects forward and provide Scotland with the necessary foundations for growth.
Such a bank would unlock vast sums of private capital through an implicit government guarantee and support long-term energy, broadband and transport projects. The Scottish Labour party is thereby stepping in the footsteps of countries ranging from Germany and Japan to France that already have state investment banks, which have become major players in the capital markets.
With over 80 per cent of firms reporting that “the quality of energy and transport has a significant impact on their future investment decisions”, the party is beginning to take great strides towards addressing the shortcomings of the economy. But this should only be the beginning.
Other policies, such as the formation of a Scottish equivalent of the OBR, a more advanced version of the Green Investment Bank or better directed measures on payroll tax reduction are worth considering once the leadership question has been resolved.
Down south, with the worsening situation of the economy, the Labour party in Westminster should begin following the example of their MSP colleagues. Instead of growing complacent and enjoying the crumbling of the government’s Plan A without beginning to give an inkling of its own Plan B, the painful issues of cuts and alternative growth measures (apart from a VAT reduction) needs to be gradually addressed.
Although it is currently pre-occupied with shaking off the image of perceived economic incompetence, the solution to resolving the issues of the past is to address those of the future.
Especially following the Scottish 2011 elections and the ongoing serious debate on the transfer of more fiscal power to Holyrood, it is important for Labour to reflect the debate in Westminster and work with its Scottish partners on credible economic alternatives.
Labour has a proud tradition of Scottish chancellors such as Alistair Darling, Gordon Brown and in opposition, John Smith, which stretched from 1987 right up uninterrupted to the general election in 2010. As it stands, lessons would be more easily learned and new ideas transferred were there to be a greater Scottish presence in the economic teams in Westminster.
With the economy in a worse state than that of the UK overall, it has become far overdue to take more heed of Scotland that is being hit hard by the public spending cuts. The Scottish Labour party is showing strong signs of listening to what the people have to say and is gradually proposing economic alternatives as a result. This needs to manifest itself in Westminster too.
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• SNP boost capital spending, but at what cost? – Ed Jacobs, September 22nd 2011
• The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now – Matthew Pitt, September 20th 2011
• The euro lurches towards the abyss – but does the Left have a Plan B? – Ann Pettifor, September 14th 2011
• Super-confident Salmond has the air of a man who seems untouchable – Ed Jacobs, September 8th 2011
• Corporation tax – devolution too far? – Ed Jacobs, August 24th 2011