10 July 2020

Devolution is dragging the UK’s economic recovery down


In The Ashdown Diaries shortly after passage of the devolution legislation Tony Blair is quoted as saying (while laughing) ‘Yes, that is a problem. I am beginning to see the defects of all this devolution stuff’. Two decades on the problems unlocked by his absent-minded reforms are ever more pronounced as we leave lockdown.

Last weekend those parts of the country following the UK Government’s Route Map out of lockdown saw a version of normality slowly return. Alas this was largely not what happened in the devolved nations. England’s solo ‘Super Saturday’ was a reminder that varying exits foreshadow slower recoveries in the devolved nations.

Scottish First Minister Nicola Sturgeon has made much of her government’s ‘gradual and incremental’ reopening of Scotland’s economy. Consequently, its tourism and hospitality industries remain mothballed, lagging England’s reopening by two weeks. Edinburgh Airport’s Chief Executive has warned that divergence from the UK Government over air bridges threatens long-term economic damage. Pubs, bars, restaurants and hairdressers are faced with a similar lag. Schools return on 11th August only after the ‘mother and father’ of SNP climb-downs.

A slower opening up sits well with the SNP’s illiberal interventionist governing philosophy. Sturgeon describes herself as “a bit of a control freak”, while Edinburgh University’s Professor of Public Policy James Mitchell has criticised Sturgeon’s centralising First Ministership for its reliance on “acolytes” and a failure to “tolerate dissent” that “speaks of an insecurity”. Scotland’s respected Fraser of Allander Institute has noted the proliferation of “different strategies, advisory groups and bodies” that have “cluttered the policy and delivery landscape”.

With the SNP’s raison d’etre being independence, nationalist signaling is inevitable. Sturgeon refuses to rule out quarantining English holidaymakers. ‘Guards at Gretna’ is a public relations disaster for Scottish tourism. So is social media footage of biohazard suit-wearing independence activists on the Berwick Road near the border demanding UK tourists “stay the **** out” of Scotland that it took the First Minister two days to condemn. Top Scottish Government advisor Devi Sridhar was forced to delete a tweet suggesting that Unionist Scots were ‘anti-Scottish’.  

It’s not just Scotland that is dragging its feet. Despite Labour’s Shadow Chancellor encouraging people to go out this weekend, Welsh Labour’s interminable lockdown casts a dreary shadow over the Welsh economy. It was only on Monday that Wales’ arbitrary and cruel five-mile travel rule was lifted. Two-metre distancing makes reopening unviable for many businesses. Some pubs, bars and cafes can re-open from 13th July but only outdoors. The Welsh Government has flattened domestic tourism yet invites flights out of the nationalised Cardiff Airport. School heads demand clarity on autumn reopening as parents struggle to plan their return to work.

The lockdown left is comfortable wielding the visible hand of the state. Since the fall of Jeremy, First Minister Mark Drakeford has gone from The Cardiff Corbynista to The Last of the Corbynites. Unions countermand Wales’ Chief Medical Officer over schools re-opening. Less than ten school days from September, schools are still without a plan. That the Welsh Labour Government draws heavily on networked left-wing careerists and is light on business and organisational experience could have something to do with it.

Welsh Labour’s ‘Slate Curtain’ mentality is epitomised by their Health Minister Vaughan ‘Chipgate’ Gething who declined to rule out quarantining English tourists arriving in Wales. Such miserablism means the ‘stay local’ rule prevailed over the weekend perhaps for fear of drinkers popping over the border as though the old Sunday licensing laws were still in force. It’s perhaps no surprise that Wales’ lockdown rules have resulted in Dyfed Powys Police issuing more lockdown fines than any other constabulary in Britain.

Northern Ireland’s recently formed power-sharing Executive is in a different position to that of Scotland and Wales. Northern Ireland has no land frontier with England, its First Minister is a Unionist and her Democratic Unionist Party is the major coalition partner in an Executive that has existed since the beginning of the year rather than for decades. Nonetheless, Arlene Foster and the Northern Irish Executive have followed a policy of ‘no dash for the lockdown exit’.

Slower lockdown exits run from Bute House, Cathays Park and Stormont Castle put paid to the more rapid one-nation lockdown exit their economies need to rev the engines of recovery. Even SNP economist Andrew Wilson predicts the worst recovery in the developed world for Scotland, while Economic Intelligence Wales reported the highest percentage rise in business dissolutions in the UK.

Differently paced exits also add new vicissitudes to the territorial constitution. Different social distancing rules and workplace regulations, irresponsible talk in Edinburgh and Cardiff of intra-UK quarantining and divergent plans to ease the quarantining for lower-risk foreign visitors portend hardening borders thus undermining the UK’s internal market.

Political differentiation in the devolved capitals also challenges territorial equity in a way that is keenly felt in the rest of Britain. The broad fiscal shoulders of the British state finances the furlough scheme, Self-Employment Income Support and business support. Regional government and local authorities are largely funded through block grants raised through taxation and borrowing by the UK Government. Yet taxable economic activity is being resumed faster in non-devolved England.

Sturgeon and Drakeford have sought to widen the gap with Whitehall and increase divisions in the territorial constitution. Ahead of the Chancellor’s economic statement devolved finance ministers demanded Rishi Sunak ‘hand over the tools’ to them. Yet we must not fall into the trap of thinking devolution is an arc of history leading to ever-looser Union or even secession.

Many in the devolved nations have benefited from the fiscal firepower of the British state and the ‘National’ Health Service. Now post-Covid reconstruction is an opportunity for the Prime Minister (and Minister for the Union) to draw the UK family of nations closer through a British recovery. Whitehall must ensure the leveling-up agenda, ‘New Deal’ projects and Shared Prosperity Fund investments fly the flag for the Union.

Having insisted he will ‘never be neutral on the Union’ Johnson has ruled out a Northern Iris border poll and a Scottish IndyRef2. Nonetheless his Conservative and Unionist UK Government must relentlessly press home the message that the “awesome foursome” are better together.

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Matt Smith was the Conservative parliamentary candidate for Cardiff West in the 2017 General Election and has stood for the Welsh Assembly. He currently works as a lawyer.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.