Andrew Wilson: Growth Commission is still relevant to Scottish independence four years on

It is an even shorter walk from 6 North Charlotte Street which in the ­mid-90s was my office at the headquarters of the SNP. When I started working there the SNP were polling in the early 20s and had three MPs out of Scotland’s 72.

Two decades later I walked into Bute House in the January of 2016 to meet with the First Minister Nicola Sturgeon. I had known her since we were both in our teens as young SNP activists, she in the youth wing and I in the student wing. Her track record in government for already almost a decade had been one of steadily growing capability and stature. She was becoming the most outstanding politician of her generation in the UK, and I liked and respected her very much. On Thursday she will become Scotland’s longest-serving First Minister.

I didn’t know what to expect from the meeting other than a general discussion around the state of the country and our party’s prospects. However, she quickly turned the conversation to her desire to ­revisit the prospectus of the 2014 white paper for independence and to put right the weaknesses that were part of the reason we lost.

September 2014 seems a lifetime ago now given all that has happened in our world since. I ­remember the night of the vote and the foggy morning of its ­aftermath with crystal clarity. The campaign had ­engaged an entire population in fundamental ­questions about the country and society we wanted to become. A huge turnout delivered a vote that ­demonstrated that Scotland’s people were not ready for independence, just yet.

READ MORE: Nicola Sturgeon: Now is the time to debate Scottish independence

The First Minister wanted to renew the ­economic case for independence and secure sustainable ­answers to hard transition questions in particular on currency and public finances. She wanted to ­create a commission of eminent people to consider it ­carefully and without any rush, to challenge orthodox ­thinking and come up with a new and better framework on which to base the future case for independence.

I thought this was a great idea and a process that would have been ideally started many years before. I suggested the names of as many great economists and thinkers as I could. She looked at me towards the end and said, “can I stop you there Andrew and just make clear that I am asking you to chair and lead this”.

I was taken aback as I did not think it my place at all. But I thought for a few moments and was ­completely delighted by the challenge. The issues are ones I have been thinking about for most of my adult life. I believed passionately in the cause and ­wanted the best possible case to be built. So, it was my ­complete privilege to accept the opportunity to serve.

Over the next few weeks and months, I worked on a draft scope, potential names for a broad and ­balanced commission of varying interests, ­experience and ­expertise. At the time we were in no rush, and I wanted to ensure we had the people and the resource to commission research and advice from some of the best minds globally on the issues at stake. We also ­secured the services of Graeme Blackett of Biggar Economics whose support, challenges and thinking were of the highest standard.

Then in the June of 2016 the shockwave of Brexit transformed the terms of the debate and its urgency. This was a material adverse change that made a second referendum on ­independence a necessity.

The Sustainable Growth Commission (SGC) was launched in the ­September of 2016 and reported in the May of 2018 passing SNP conference one year later. Its analysis and 50 recommendations ­remain apposite now despite all the ­turmoil of the four years since, indeed a number have already been implemented. But the best policy prospectus must keep up with the reality of experience and the growing challenges of the moment and the SGC report is no different.

Our method then was to lead ­engagement with society in an ­outstanding programme led by the ­former minister and close friend and mentor of mine Jim Mather. He sought insights in dozens of events across the country. He sought a meeting with the then STUC leader six times but for reasons we couldn’t figure that was never secured. But we ensured the trade union perspective was heard, not least with the presence of a ­leading trade unionist, Marie Burns, on the ­Commission itself.

We engaged with a small country ­economic specialist, David Skilling in Singapore, who agreed to undertake a comparative analysis of the 12 best performing small countries in the world. Our aim was to determine the best ­lessons for us to learn on how they ­transformed their economies and societies and ­secured healthy public finances.

On currency we engaged some of the ­finest economic brains we could find. On the Commission itself the late and ­wonderful Professor Andrew Hughes Hallet worked with Professor ­Catherine Schenk at ­Oxford on the ­academic analysis on currency to underpin our thinking. But we also subjected our thinking as it developed to external ­analysts of vast experience of central banks, financial markets and money.

I hadn’t quite foreseen the level of criticism and controversy that was to be cooked up out of the process and then the outcome of the report, but I suppose I had been out of active politics since 2003 and before the advent of social media. I had anticipated brickbats from the ­Unionist side and was pretty much content with all that came then and since. I have heard nothing in any of the arguments from the numerous energetic campaign groups that have sprung up that have altered our thinking. Part of the reason for getting this work out was to ensure it could draw fire and so the prospectus could be solidified by the time a vote comes.

What did surprise me was the extent to which criticism was personalised and the extent to which a Scottish currency has become seen by some as an immediate day one priority. Come it will but all the evidence of history and our analysis led us to recommend that it is introduced patiently when the preparations for it are complete, when credibility for the new country is established and when it is in our economic interests to do so – all of which will determine its practicability.

We had actually begun our work ­determined to recommend the early adoption of a Scottish currency pegged 1:1 with sterling. But when we subjected that to scrutiny and criticism the risks associated with doing that loomed large in our mind. In short, a peg would be ­extremely difficult to defend with ­limited inherited reserves so the Government would have to borrow big to boost the central bank balance sheet early if it wanted to do so.

At the same time that borrowing would be from international lenders in the bond markets and so initial credit risk for a new borrowing nation would be supplemented with the risk of currency fluctuation as a peg could not be guaranteed.

So, to do this too early would risk the cost of borrowing ballooning for one thing and the currency value falling for another. The implications of the former would be more costly funding for ­public services, the implications of the latter would be inflation, capital flight and a real and unnecessary hit to jobs and ­living standards. So, we chose patience and preparation just as Ireland did a ­century ago.

A central bank will be set up early ­(recommendation 46) to act as lender of last resort and regulator. Some critics ­appear to think the Bank of ­England borrows on behalf of the UK ­Government, in fact it is the Debt ­Management ­Office of Treasury that does, and Scotland will need our own too (recommendation 39) along with an ­Asset and ­Liability ­Management ­Office (recommendation 40). It is my view that the Scottish ­Government should introduce both ­recommendations now in advance of ­independence and seek the approval of the UK Government to introduce ­Scottish Government Bonds to the debt markets now and on a scale that could allow the substantial investment we need in our economic recovery and transformation.

On public finances we challenged ­orthodox SNP thinking in two ways; first by determining that oil revenues should be excluded from our public finance ­calculations and treated as a genuine bonus. A Fund for Future Generations should be created (recommendation 34) which could invest any future oil proceeds now in the investment needed to accelerate the net zero transition. This should happen now before independence if possible and could help unify opinion on the next stage of the development of the North Sea reserves if the entire focus of the benefits was on transition ­investment to reduce carbon demand.

We also argued that the existence of a deficit should be accepted and dealt with as a reality. All countries ­require ­sustainable public finances and Scotland’s deficit is a demonstration of the need for independence and the failure of the UK economic model. Our projections ­demonstrated how this could be achieved in five to 10 years without austerity or varying taxation. In short it can be done. It will be challenging but of course governments after ­independence have choices to make on what the best size of government is. In my view the priority right now for governments must be on investing for recovery and net zero transition. Alongside that reducing the cost of public borrowing must also be a priority. Both can be achieved by the best talent in our institutions acting with ambition and discipline on a clear framework that is trusted by the people lending to the country.

And that is one of the key points to note about the whole SGC report and its ­recommendations. It is a framework for the transition from where we are now to securing strong foundations for the newest member of the United Nations, European Union, Nato and ­numerous other international co-operations. It ­emphatically does not seek to tie the hands of any future Scottish Parliament or Government in perpetuity.

It did provide a vision of the ­transformation and renaissance of ­Scotland that independence makes ­possible. It looked to the examples of a ­dozen success stories like New Zealand, Finland, and Denmark but the ­country may choose others and also its own unique way.

What we did not examine was the ­implications of Brexit and nearly six years on from the vote the detail of them remains unclear. But the implications for trade and borders will form part of the new prospectus for independence that the Scottish Government is working on now.

And that is extremely positive ­because Scotland deserves to make the choice with a full understanding of the ­intended transition plan and what will happen next. For campaigners now it is ­important to have a full understanding of that ­transition and the challenges it will create. But it is far more important now to focus in on the “why”.

The “why” is the very reason we want to go to the trouble of doing all of this in the first place, the “why” is what will win the vote, the honesty around the ­transition will help people believe the Government and country is now ready in a way it was not in 2014. It will also secure the ­legitimacy of what comes after the vote.

PAT Kane has suggested to me that the transition could helpfully be articulated with clear milestones of achievement along the way that people can look to and plan for. I think this is an excellent idea – the milestones are far more important than deadlines.

If Scotland votes to become an ­independent country, it will be the richest country ever to do so. That day will not be D-Day but Day One. The work then begins on transforming the economy and society to make future generations glad of the choices of this one.

We ought not to pretend we can ­become like Denmark overnight – that will be the work of a generation and more. But we can secure benefits very quickly and with the best policy choices we can manage the risks well and bring improvements to living standards purposefully and early.

I think the process will be challenging but I also think the benefits will begin to accrue quickly. Doomsayers talk of a decade of economic pain are wrong. They also seem to forget the UK has been in economic pain for more than a decade and the prospects are now deteriorating.

The early years can be positive on every level if we make the best of choices now. That doesn’t mean empty promises or the denial of difficulty. It really does not.

The best things in life may indeed be free but we all know that ­self-improvement takes hard work and effort and that it is always worth it. The same is true for the independence of our country. Hard work but transformational and worth it.