Kate Forbes’ economic agenda is just as dangerous as her conservative views
OPINION: Scotland’s poorest would likely be worse off under the leadership of the SNP finance minister
There has, rightly, been a lot of focus on Kate Forbes’ conservative views on social issues. What we’ve not heard much of is her economic agenda, which is strange because she says her experience in this area is why she’s running for leader of the SNP. And it’s a shame because, for progressive Scotland, her economic ideology is as much of a threat as her opposition to sexual freedoms.
In the ‘National Strategy for Economic Transformation’, a paper published by Forbes last March, she described the next ten years as Scotland’s “decisive decade”. In that time, she wrote, “we face a choice to either lead or to lag behind other successful economies all whilst we recover from Covid, deliver net zero, tackle structural inequalities and grow our economy. We choose to lead.”
“The time for brave and bold action,” she continued, “is now”. So far, so good. But we can better understand what action she means by looking at her record as finance secretary. Forbes put together two budgets: the first at the height of Covid in 2021, which, as with Rishi Sunak, made her popular because it allowed her to dole out cash. A year later, the second delivered huge cuts to public spending, while leaving tax rates essentially unchanged. Then, she had argued: “We need to focus on how the public sector can reform to become more efficient, giving us space to realise our ambitions for better outcomes."
Only once she was off on maternity leave last summer, when John Swinney was back at the accounts, did Scotland get the post-Covid budget it deserved, with increased taxes on the wealthier boosting funding for health and social care.
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But the National Strategy’s detail tells us even more about what kind of action Forbes wants. While there is lots of nice talk of a “wellbeing economy” and “net-zero”, that’s just the clothes the paper’s disguised in. The meat and bones reads much more like a 1990s IMF report, underpinned by economic modelling that reveals three primary “programmes of action”: growing exports, increasing foreign investment, and boosting the flow of “internationally mobile finance”.
There is not a single mention of tax in the paper, despite Holyrood now having significant powers over it. Similarly, any progressive strategy for Scotland’s economic future should include serious roles for planning reform, land reform and the national investment bank, but these get only vague mentions. And issues like care, transport and education are also missing, despite a decent understanding of economics being rooted in human realities.
Instead, Forbes writes, the plan is for Scotland to become a “magnet for inward investment and global private capital”, an aim that is inevitably followed by erosions of workers’ rights, environmental protections and the public sector.
And the National Strategy is only the latest example of Forbes’ agenda. Within months of her election to the Scottish parliament in 2016, she was a member of the Growth Commission, which Nicola Sturgeon appointed to look into “measures to boost economic growth and improve Scotland's public finances”, both post-Brexit and “in the context of independence”.
The whole thing was a fiasco. Its membership included various bosses of big businesses, who did not consult even one representative from a trade union, civil society organisation or environmental or marginalised groups. Instead, the commission – chaired by Andrew Wilson, a former SNP MSP, then a corporate lobbyist, now a director at Santander – spoke almost entirely with industry lobbyists. Its recommendation, perhaps unsurprisingly, was to swerve Scottish public policy to the right.
It argued that Scottish government debt should, in effect, be capped at 50% of GDP – a lower level of public borrowing than almost any OECD country. This would be achieved, it said, not by new taxes on the rich, but by falling public spending as a share of GDP over the ten years after independence. If the fiscal rules it proposed had been applied over the past ten years, they would have meant deeper cuts to the Scottish budget than under George Osborne.
When Scotland becomes independent (as I hope it does), it’s true that this will be a moment of economic uncertainty and instability. But the assumption that such moments should be met with cuts to public spending isn’t just an ideological step to the right, it’s a leap back into the past: even institutions like the IMF have started to realise that austerity just makes things worse.
Forbes would push the SNP to the right, with an economic agenda closer to Cameron and Osborne than Sturgeon and Swinney
With little thought, the commission dismissed a Nordic-style economy. Rather than placing the transition to a sustainable economy at its centre, climate breakdown is an afterthought. Biodiversity goes unmentioned, as does childcare, which played a central role in the economic case for independence in 2014. “Flexible labour markets” on the other hand, get twelve mentions: so look forward to your zero-hours contract.
Its proposed currency plan was Sterlingisation: sticking with the pound even though the Treasury and Bank of England say they will refuse any of the formal arrangements of a currency union “for a possibly extended transition period”. While the commission’s other claims are ideologically right-wing – needlessly forcing the poorest to bear the brunt of any transaction costs of independence – and seem to have failed to engage with the past 20 years of lessons from the global economy, this is just downright batshit.
Scottish banks currently benefit from Bank of England liquidity facilities, helping guard against runs. If Scotland had its own currency and central bank or was part of a formalised currency union, then it would similarly be able to print money to ensure the system remained liquid. But without the capacity to do this, to acquire the sterling needed to stop the whole banking system from falling over, the Scottish government would need to either run a fiscal surplus, that is, tax more than it spent; somehow run a trade surplus without having the cash needed to invest; borrow on the international markets; or sell off state-owned assets in a privatisation fire-sell.
In a situation that would likely become increasingly unstable, lenders would demand increasingly high-interest rates, until the Scottish government was eventually forced to launch its own currency, not in the methodical way that would be possible were it floated on day one of independence, but in the firestorm of a full-blown economic crisis.
None of this is an inevitable consequence of independence: many countries have launched new independent currencies over the past 70 years or established or joined organised currency unions. Some small, impoverished states without major financial sectors have adopted another currency – usually the dollar – without any kind of agreement with its central bank. But no one has tried, as Forbes and all proposed, to run a country with a major financial sector using another country’s currency.
It may seem harsh to judge Forbes for all of the commission’s recommendations. She was just one of 14 members, and a brand new MSP to boot. But this report was published only five years ago and she defended it as recently as 2019. And she is the only member of the commission running to be first minister and leader of the independence movement.
Resetting the SNP
In the SNP leadership election, Forbes has been pushed by groups on the right. Early in the campaign, Chris Deerin of the centre-right think tank Reform Scotland wrote in the New Statesman that she was “the best candidate” to give the party a “reset”.
Interviewing her for the think tank days earlier, he described how “in a government that hasn’t always been seen as business-friendly… she’s impressed many in the business community”. And I’m sure those same people in her audience weren’t disappointed as she trotted out Tory-style creed after Tory-style creed, saying the government needs to let business “get on with it” and musing on how to attract businesses to Scotland through “tax incentives” and eliminating “regulatory burdens”.
Like a patronising Tory minister, she described the private sector as “the engine room” of the economy and the “wealth creator”, an idea whose simplicity is appealing but that collapses after closer examination. Take a hairdresser and a surgeon – both provide valuable services and you pay for them to take scissors to you: one from your pay packet, the other from your taxes. The idea that the barber is creating wealth because they are privately funded, while the medic destroys it because we pool our purchase of their skills together, is patently ridiculous. A more modern understanding accepts that the state, private and third sectors all create wealth, in conjunction.
Speaking to Deerin, Forbes was also careful to point out that the recent rises in income tax for the wealthiest happened when she was on maternity leave. She called for “radical” changes to the NHS and, while saying it must stay free at the point of use, didn’t rule anything else – including privatisation – out.
She said her “primary interest” in the education system is that young people should leave “able to participate in the workforce as effectively as possible”. For much of the SNP’s time in government, it has recognised the need to produce well-rounded citizens, with sex education and lessons about politics and current affairs as well as reading, writing and maths. Forbes appears to be hinting at a change of direction, swinging towards allowing education policy to be set by the demands of global capital. Asked about trials ‘freeing’ schools from the ‘burden’ of democratic accountability to local authorities – as Tories have done with academies and free schools in England – she made positive noises.
Deerin put to Forbes that the Scottish government’s targets for reaching net-zero carbon emissions are unrealistic and over-ambitious, and, while she didn’t adopt those words, she promised a “change in tone” towards big oil companies. Speaking to The Sunday Herald more recently, she went further, saying: “Any transition that happens too quickly will not only damage the Scottish economy in the short term, but also the long term.”
It’s hard to watch the event, or go through Forbes’ political history, without concluding that Deerin is right; as leader, Forbes would reset the SNP, transforming it into a party of the centre-right, with an economic agenda closer to Cameron and Osborne than Sturgeon and Swinney.
Economic ideas like Forbes’ have historically led to stagnating wages and an accumulation of wealth for the mega-rich
The right-wing media loves nothing more than politicians who can dress their agenda up as progressive – smiley faces who make the case for serfdom to capital as though it isn’t just the natural order of things, but somehow socially just. It’s no wonder they are obsessed with Kate Forbes.
I grew up in a rural constituency in the north-east of Scotland, which the SNP first took in 1997 and has won at every election since. I saw how the party built a voter base through the working-class estates in the market towns and mill towns, by campaigning to defend public services, by running as a party of the centre-left. Over the past decade, in my job as a journalist, I’ve repeatedly explained that Labour’s claims that the SNP are ‘Tartan Tories’ have little connection to reality. If Forbes were to win, I’d no longer be able to make that argument.
The economic ideas peddled by Forbes have been tried again and again and again across the world for the past 40 years. They have always been pitched by sensible-sounding politicians who make persuasive-sounding, technocratic arguments, implying that they are the grown-ups and everyone else is living in a fantasy land.
But in reality, these policies have led to historic stagnation of wages for ordinary people, astonishing accumulation of wealth for the mega-rich, and the rapid destruction of the planet upon which we all rely. Even before the pandemic, governments across the world were waking up to this: developing industrial strategies, agreeing on minimum corporation tax rates and accepting that the arguments for austerity had been disproved.
And in recent years, leaders have looked ahead at the challenges of Covid recovery, the climate crisis and the spiralling prices triggered by the Ukraine war, and understood that decisive state action is needed. With investment packages worth hundreds of billions of dollars in the US, the EU, Japan and China, the neoliberal idea that states should step back and let markets rule has been banished to the fringes. Government is back.
But all of this seems to have passed Forbes by. Ordinary Scots can’t afford the economic implications of her becoming first minister.
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