Chasing the economy

Jim Phillips shows how demands for control of the Scottish economy drove the devolution campaign. What now?

On 30 November 2009 the First Minister, Alec Salmond, revived questions about Scotland’s constitution by outlining a variety of positions that might be tested in a future referendum, possibly before the next Holyrood election. Salmond related the apparent urgency of further constitutional changes to the current economic and financial crisis. With full fiscal and economic autonomy, he claimed, an independent Scotland would be better placed to minimise the dangers and maximise the possibilities of globalisation. There will be some who query whether ‘independence’ is philosophically, politically or economically feasible in a globalised capitalist environment, pointing, for example, to the government of a small north west European country that recently trumped planning regulations to evade localised objections and so accommodate the business ambitions of a powerful and super-wealthy, property-developing inward investor. Yet Salmond’s point, strictly speaking, is about the particular position within the United Kingdom, and how, essentially, economic management from Westminster and Whitehall privileges the interests of southern England, with the effect of damaging the quite different interests of Scotland. This is the central yet often ignored element of the longer history of devolutionary and nationalist pressures in Scotland, at least since the 1950s. This history is important, illuminating the current debate about our common constitutional future, showing the key role of industrialists and trade unionists who – from distinct material and ideological positions – argued for enhanced administrative and then political devolution.

The business case for devolution was generally made in post-Second World War Scotland by the Scottish Council for Development and Industry (SCDI), a body incorporating some trade unionists and local authority representatives, but dominated by manufacturers from the ‘traditional’ sectors of shipbuilding and steel and the ‘modernising’ assemblers of consumer goods. One of the latter, John Toothill of Ferranti electronics, authored the famous eponymous report on the Scottish economy in 1961. The SCDI’s main role was encouraging new business growth in Scotland, with a particular focus on inward investment. Toothill and the SCDI argued that economic growth in Scotland, including the development of new enterprises, was retarded in two ways by economic management from Westminster. First, the efforts to control inflation in the higher growth regions of southern and central England, involving periodic public spending cuts or increased indirect taxes or interest rates, choked off slower growth in Scotland. Second, regional policy, the range of measures geared to attracting a wider range of industries and firms to regions that were over-reliant – as Scotland certainly was – on a narrow range of mature, or ‘declining’ heavy industrial sectors, such as shipbuilding and steel, was allegedly failing. It focused on raising employment in particular localities rather than growth more broadly, with public investment therefore attracted to the declining sectors, chiefly in west central Scotland, rather than the potentially thriving and higher added value consumer goods sectors. Modernising businessmen like Toothill were unsuccessful in their attempts to transform regional policy and transfer its administration from the Board of Trade in Whitehall to the Scottish Office in Edinburgh, but they won other battles, notably when the Macmillan government compelled Colvilles to establish a rolling strip mill at Ravenscraig. The steel maker knew this would be a heavy loser financially, but the government wanted to provide in effect a subsidised supply of steel to the consumer goods industries, including car manufacturing, with the Midlands motor assembly firm Rootes directed to Linwood under regional policy terms, opening in 1963.

The Linwood plant was part of a wider programme of economic restructuring encouraged by UK government policy in the 1960s. There were losers in this process, which elicited a variety of political responses from those involved, including workers in declining industries. In coal mining the number of pits was radically reduced and the number of working miners roughly halved in the 1960s as the UK government cultivated alternative energy sources, notably oil and nuclear power. Those miners remaining had to travel greater distances to work. In central Fife, for instance, the old ‘Little Moscow’ village collieries all closed, and miners were compelled to travel east to the ‘cosmopolitan’ pits of Frances and Seafield, on either side of Kirkcaldy, or west to mines servicing the vast South of Scotland Electricity Board power station at Longannet. These miners were led by a new generation of activists and officials, less willing to tolerate the compromises of the nationalised industry than older men with direct experience of the conflict-riven pre-war privately owned industry. The new generation resented the closures, which accelerated under a Labour government, and the decline of miners’ earnings relative to other manual workers which the older union officials had tolerated in the 1950s and early 1960s. The result was an upsurge of militancy in the coalfields, with Scottish miners engaged in big unofficial strikes in 1969 and 1970, and making a full contribution to union victories over Edward Heath’s Conservative government in the national strikes of 1972 and 1974. This militancy, chiefly articulated by Communist Party members including Michael McGahey, President of the Scottish Area of the National Union of Mineworkers (NUMSA), was shaped, however, by devolutionary as well as class politics. McGahey was an early and consistent proponent of Home Rule, and NUMSA officials from the later 1960s through to the great but doomed strike of 1984-5 consistently linked the tensions in their industry, notably managerial incursions on union rights and closure of pits on ‘economic’ grounds, to the remote administration of policy from Westminster and Whitehall.

Class and devolutionary – or even nationalist – politics were also blended in industrial affairs in Clyde shipbuilding, most notably with the 1971-2 Upper Clyde Shipbuilders’ work-in. The work-in leaders, notably Jimmy Reid, Sammy Barr and James Airlie, were comrades of McGahey and other NUMSA figures in the Communist Party. They blamed the collapse into liquidation of the UCS combine in 1971 on the ‘faceless men’ in Whitehall who decided to end operating subsidies, and Reid in particular was successful in subverting established discourses in industrial politics by characterising the Conservative government as the  irresponsible wrecking force in the dispute. The workers by comparison, Reid sternly observed, were behaving responsibly, getting on with the important job of building ships and so supporting communities and the broader regional economy of west central Scotland. The impact of the work-in was strengthened by the deteriorating economic picture in Scotland in the winter of 1971-2, with Heath’s economic management – geared to eliminating ‘lame ducks’ – leading to a sharp escalation of unemployment. This worried Tory figures and business leaders as well as trade unionists in Scotland. On 14 February 1972, as both the work-in and the national miners’ strike reached their climax, an extraordinary public meeting was held in Edinburgh’s Usher Hall. This was the Scottish Assembly on Unemployment, convened by the Scottish Trades Union Congress (STUC), and attended by a very broad range of economic and political actors, including representatives of all major political parties, local authorities, trade unions and business organisations. Speakers included McGahey and other key union figures, but also the chairman of the Conservative Party, Sir William McEwan Younger, and Teddy Taylor, Tory MP for Cathcart in Glasgow, who both raised the linkage between rising unemployment and the distant and therefore ineffective administration of economic policy and regional development.

Younger was also pressing Heath’s government early in 1972 to support Oceanspan, a grand scheme for economic and industrial regeneration in Scotland prepared for the SCDI by Bill Lithgow and Lord Clydesmuir, scions, respectively, of great shipbuilding and steel-making dynasties. This required major capital investment in deep water ports on the west and east coasts, to transform central Scotland into a ‘land bridge’, with raw materials and other goods flowing between the Atlantic and European worlds, in the context of EEC membership. This was bold and imaginative, not to say potentially expensive, and directly challenged Whitehall and Westminster control of public policy, with enhanced investment and transport planning powers envisaged for the Scottish Office. Treasury and other Whitehall objections duly prevented the plans from securing government support, and it is tempting to see this episode as a terminal point in the history of indigenous Scottish capital. Political leadership – or at least political eminence – within Scotland certainly appeared to be passing from business to labour. Trade union density and electoral support for the Labour party was increasing across the 1970s, despite the progress made by the SNP, notably in the 1973 Govan by-election and the 1974 General Elections. The Heath government, humiliated twice by the miners, also conceded defeat on the Clyde, reversing the decision on subsidies to keep most of the UCS workers in employment in a reshaped industry that now included a venture with the US oil rig manufacturer, Marathon, at Clydebank.

North Sea Oil is, of course, a familiar part of the established devolution-cum-nationalist narrative, the riches boosting immeasurably the apparent possibility of independence and therefore support for the SNP but jealously protected by the UK government. There is a strong flavour of conspiracy within this narrative. In 2005 the SNP seized upon a memorandum on the political economy of the North Sea written by Gavin McCrone for the Scottish Office’s Economic Planning Department in February 1974, just before the General Election that unseated Heath’s Conservative government. The SNP’s then industrial spokesperson, Kenny MacAskill, claimed that the UK government buried McCrone’s paper because it demonstrated that ‘booming oil revenues’ from the North Sea had made Scottish independence ‘not only theoretically possibly but economically desirable’. This was a partially accurate characterisation of McCrone’s analysis, but ignored his warning that an oil-fuelled ‘Pound Scots’ would greatly appreciate in value relative to sterling, pricing Scottish manufactured goods out of foreign markets and encouraging a marked growth in consumer goods imports. Oil was undoubtedly mismanaged by the UK governments, especially during the 1980s, when a version of the McCrone scenario developed, but there is no obvious evidence to suggest that an independent Scotland governed by the SNP could have produced a substantially different outcome, with manufacturing on the slide.

An important lesson and a key paradox emerge from this short history of devolution’s essentially economic and industrial origins. The lesson – shown most vividly with the complexities and contradictions identified by McCrone in his analysis of the political economy of North Sea Oil – is that independence, or indeed any form of constitutional change, will not in itself produce radically improved economic and social conditions in Scotland. The paradox relates to the fact that devolution was intended by its advocates in the 1960s and 1970s to enhance democratic control of economic and industrial developments in Scotland, boosting employment and working class living standards. But in practice Scotland’s constitutional powers have been increasing since 1999 just as the capacity of democratic governments to command and control the tide of human affairs has receded in the face of globalised capitalist power. The Scottish Parliament of the future would be ‘a Workers’ Parliament’, James Jack of the STUC told the 1972 Assembly on Unemployment. Who would be bold enough to venture this now?

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