speri.comment: the political economy blog

Interpreting the SNP’s landslide

The election outcome in Scotland challenges the UK political establishment to respond to the multinational character of the state

Nicola McEwen, Professor of Territorial Politics at the University of Edinburgh

nmcewan100Last week’s General Election transformed the Scottish political landscape.  It finally ended 60 years of Labour Party dominance of Scottish politics and revealed the heterogeneity of UK politics in all its complex glory. The Conservatives had long since ceased to be a British party, however passionate their apparent commitment to maintaining the Anglo-Scottish union.  With the electoral demise of the Labour Party and the Liberal Democrats north of the border, perhaps the British party system has had its day.

It is difficult to overplay the scale of the SNP’s victory.  Sure, winning 95% of Scottish seats with 50% of the vote is an anomalous feature of an electoral system which now overstates the party’s strength where once it overstated its weakness.  But a 50% vote share in a multi-party system is still no mean feat.  Neither Labour nor the Conservatives alone have ever reached quite these heights (though Labour came within a whisker of doing so in 1966).  The size of the electoral swing was staggering and unprecedented.  The national swing, of over 20% from Labour to the SNP, was twice as large as the Conservative-to-Labour swing achieved by Blair in 1997 – then, by some distance, the largest on record since 1950. In fact, in some constituencies, the SNP achieved swings close to 40%.

While the scale of the political transformation is breath-taking, it would be wrong to assume it has been sudden.  Labour’s support has been eroding gradually since the Scottish Parliament’s establishment, most notably in Scottish parliamentary elections.  Internally, the party in Scotland has struggled to adapt to devolution, while the generational shift at the heart of the British Labour Party has produced a cohort of leaders who have little connection with, or resonance in, Scotland.  It is difficult to see this changing when we look to those vying to be the next Labour leader.  The Labour Party in Scotland was also hurt by its association with the Conservatives in the independence referendum campaign and by the negative nature of that campaign – a negativity which also re-emerged in its General Election campaign in Scotland.

This dramatic upsurge in support need not mean that Scottish independence is now inevitable or even more likely.  There is little evidence to suggest that the 55% who voted ‘No’ in last year’s referendum have changed their minds.  The SNP Leader, Nicola Sturgeon, whose performance and popularity have undoubtedly contributed to her party’s success, was at pains in the election campaign to stress that independence was last year’s debate.  A second referendum would require a new mandate, a significant change in circumstances and evidence of popular demand.  More strategically, Sturgeon would only contemplate another referendum if she was confident she would win it.  Losing one referendum was always going to be victory of sorts so long as the ‘Yes’ vote cleared 40%.  Losing a second referendum would, however, be a devastating setback for her and the SNP.

The two themes that dominated the SNP campaign were an end to fiscal austerity and a stronger voice for Scotland at Westminster.  These aims and ambitions were predicated on a hung parliament in which the SNP would hold the balance of power thus be able to wield influence in concert with other progressive, anti-austerity parties.  As the third party in the Commons and facing a UK Government with a slender majority, the 56 SNP MPs may still be able to exert some influence in the committees and in the chamber, at least in shaping the legislative and political agenda, if less obviously in legislative decision-making.  But the biggest opportunities lie in the intergovernmental arena, where the SNP Government and the First Minister in particular will look to increase their authority and strengthen their political autonomy.  This means taking yet another look at the powers of the Scottish Parliament.

The UK Government has reiterated its commitment to introduce early legislation to implement the cross-party Smith Commission proposals agreed in the wake of last year’s referendum.  Notwithstanding some disputes over their interpretation in the UK Government’s command paper, these proposals promised a significant increase in the powers and responsibilities of the Scottish Parliament, including the responsibility for raising 100% of tax on earned income, as well as new responsibilities in social welfare equivalent to around 14% of social security spending, including disability benefits, carers’ benefits and Social Fund benefits.  The UK Government had envisaged this package of proposals to be ‘An Enduring Settlement’.  Yet this was never likely, even before the General Election, given the new constitutional anomalies and interdependencies they would generate.  Now, in the wake of the election, they appear obsolete before they have even reached Stage 1 of the legislative process.

In short, there is now a lively debate already taking place in Scotland about a new devolution settlement.  The SNP manifesto prioritised the devolution of powers over employment policy, including the minimum wage, business taxes, national insurance and equalities policy, in recognition perhaps that tax and welfare alone are blunt tools for addressing income inequality.  There are pressures, too, to achieve greater control over welfare before the next round of spending cuts begin to bite.  Managing and, crucially, financing welfare devolution within the current system of territorial finance is fraught with difficulty.

Much of the debate has centred on the SNP’s longer-term ambition to seek ‘full financial responsibility’ within a UK fiscal framework.  Quite what this would entail has never been fully defined.  Assuming it would mean transferring to the Scottish Government responsibility for all or most revenue and spending, it would surely mean an end to the Block Grant and the Barnett formula, an end to tax-sharing infrastructure, extensive new borrowing powers and, potentially, the transfer of responsibility for Scotland’s share of the deficit.

Attempts by the Institute for Fiscal Studies to provide an impartial and informed analysis of the financial consequences of full fiscal autonomy during the election campaign also revealed how contested the figures can be.  But, in light of the recent collapse in revenues from the North Sea and the projected gap between Scottish revenues and spending commitments, few outside the ranks of the SNP believe it would produce a positive economic outlook, at least in the short term.  Given how calamitous all of the UK parties portrayed full fiscal autonomy in the election campaign, it would be odd indeed were the UK Government now to rush headlong into such a policy when even the SNP seems content with a more gradual acquisition of financial powers.

Quite where we go from here remains unclear.  The election outcome has provided further affirmation that last year’s referendum, far from settling the question of independence, has ignited debate within Scotland about the nation’s future and its relationship with the rest of the UK.  The General Election should now spark extended debate across the UK about the UK’s territorial integrity, the principles and purpose of its political unions and the capacity of its political infrastructure and political parties to reflect its multinational character.

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Categories: Economics, Politics and policy, SPERI Comment, Tax | Tags: , | Leave a comment

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