From the national to the local

Yesterday, I was speaking at the book launch of 'A New Scotland: Building an Equal, Fair and Sustainable Society'. I have previously written about the themes in the book, which I picked up in my Afterword. These go beyond traditional economic thinking to include inequality, public services, and economic and political governance. While there is plenty of challenging analysis, there is also optimism that a better Scotland is possible.

My substantive contribution to the book was on local economics. There is plenty of commentary on macroeconomic policy in Scotland, not least within the confines of our interminable constitutional debate. However, there is far less analysis of how our over-centralised political and economic governance undermines the local economy. 

One of the issues I cover is the importance of ownership. This is a crucial issue with Community Wealth Building because local ownership is less likely to bolt when the cold economic winds blow. This week the Herald, in conjunction with The Ferret, ran a timely series of articles on ownership in Scotland. 

Their research looked at 23 major shopping centres in Glasgow, Edinburgh, Dundee, Aberdeen, Inverness, Perth, Stirling and Dunfermline, excluding retail parks. They found 18 involved ownership structures that made some use of companies registered to tax havens. In other words, more than three out of four of Scotland's largest city shopping centres are owned in or linked to tax havens. Tax dodging deprives governments of tax revenues, increases inequalities and undermines smaller and domestic businesses. As Paul Sweeney MSP said, “The levels of influence held by these multinational organisations is as unsustainable as it is unbelievable. For years, city centres and high streets have been left chasing their tails because large shopping centres have had carte-blanche to reconfigure the very fabric of our major cities.”

This isn’t just an issue for the retail sector. While the majority of cultural assets in Scotland’s cities remain in the hands of local councils and charities, others are not. These include venues such as the Edinburgh Playhouse, King Tut’s Wah Wah Hut, and Glasgow’s King’s Theatre, owned by global companies with links to offshore tax havens. In addition, cinemas and theatres are at risk of being taken over by tax haven-linked private equity companies.

The research also found that Scotland’s three largest airports and some major sea ports are linked to offshore entities and that a firm building Scotland’s digital infrastructure is ultimately owned by a private equity fund. One of the firms building broadband services across Scotland is backed by a state-owned Emirati company, which invested in an Israeli firm behind controversial spyware called Pegasus. The spyware is alleged to have been deployed by foreign governments against dissidents, journalists, diplomats and members of the clergy.

The Scottish Government has a welcome commitment to a 'wellbeing economy' and supports, in principle, Community Wealth Building. However, if this is to be more than just another glossy document full of ambition, it must be backed up by action. As IPPR Scotland puts it, “The Scottish Government has a stated ambition to create a ‘wellbeing economy’, built on inclusive growth and community wealth building. That needs to see wealth not just being created in our local economies but retained there, too.”

In the book, I highlight the local initiatives that could help to regenerate our town centres and High Streets. These include creating spaces for small businesses and cooperatives and 20-minute neighbourhoods that promote a circular economy. And most importantly, investing in the social infrastructure, like libraries and leisure facilities, which binds our communities together. All of these actions can be delivered under devolved powers. A better Scotland recognises that not all the solutions to our challenges can be dictated from the centre. They must be developed and organised from communities of interest and place because ownership matters.

Action on health inequalities

As the UK and Scottish Governments start the process towards another round of Austerity, we need to remember the impact this will have on health inequalities. Those in Scotland’s most deprived areas are 3.9 times more likely to die from an avoidable death than those in the least deprived areas. The leading causes of avoidable deaths were cancers, circulatory system diseases and alcohol and drug-related issues, and Covid-19. In addition, life expectancy in Scotland has been two years lower than in other UK countries for decades.

Mortality rates in higher-income countries have steadily improved for more than a century. However, these improvements started to stall after the last round of Austerity in 2012, actually increasing in the most deprived areas. In 2019, the UK ranked 24th in the OECD in life expectancy, behind all other English-speaking countries (except the US) and nearly all countries of Western Europe.

These trends were noticeable before the pandemic, which has exacerbated them, but there has been no return to pre-pandemic levels. As a GCPH/University of Glasgow report highlighted, ‘there has been a stalling of improvement overall, accompanied by increasing death rates among large sections of the population living in more socioeconomically deprived areas. This is hugely worrying. Put simply, we should not see such trends in a wealthy society such as the UK.’ Austerity is evidenced as making an important and substantial contribution to these trends.

While drug-related deaths, in Scotland in particular, are an important factor, they are not the sole or majority contributor to stalled mortality trends. Changes in rates can be observed even when drug-related deaths are excluded, and the increase in drug-related deaths is likely to have been partly caused by the same underlying factors associated with the overall mortality changes.

An independent review by the Health Foundation found large and sometimes widening health inequalities among children living in Scotland’s most and least deprived communities. They found that by 2016-18, infant mortality was 2.6 times higher for babies born to women in the most deprived areas compared to those of the least deprived, compared to a difference of 1.8 times in 2000-02. A key issue is obesity, which by 2019/20, was around 6% among the least deprived five-year-olds compared to roughly 13% in the most deprived. In 2001/2 there was no gap. This will not be resolved simply by targeting behaviours because there is no difference in physical activity by deprivation. There are differences in diet, and a healthy balanced diet is considerably more expensive calorie for calorie and therefore increasingly inaccessible to those on the lowest incomes.

Child poverty has long-term implications. People who experience deprivation as children are more likely to choose to do things that, although pleasurable in the short term, are unhealthy in the long run. This includes overeating, taking drugs, smoking cigarettes and gambling. This can help to explain why some people go on to become addicts while other people can avoid some of the more harmful effects of drugs and alcohol.

Politicians are failing to address the underlying causes of inequality. In Scotland, we have plenty of analysis but limited action. Audit Scotland recently reported that ‘the Scottish Government has not yet demonstrated a clear shift to preventing child poverty.’ Others, like Suella Braverman, seek to cover it up by focusing on immigration. Public anger at a lack of affordable housing and secure work, declining living standards and austerity has been redirected at the caricatured foreigner. Instead, we should be focusing on the economy and public services with actions such as those suggested in the GCPH report, including:

• Changing the economic structures that lead to immense wealth and income inequalities.

• Increase all benefits and tax credits in line with inflation every year, and put in place a one-off increase now to compensate for the loss of real income since 2010. Using devolved fiscal powers to top up reserved benefits and reverse UK cuts. Create new devolved benefits and increase existing benefits to support those in low-income households.

• Improve the availability of ‘good work’ by increasing in-work benefits, strengthening trade unions, minimising health and safety risks and increasing the statutory living wage to the Real Living Wage.

• Address tax evasion and avoidance and increase taxation of wealth, assets and corporate profits.

• Increase public sector funding for preventative services, and reinstate cuts in public services, particularly local government.

• Eliminate fuel poverty through action on housing insulation and heating and grow a social rented housing sector that is accessible, affordable and provides secure tenancies.

More than ten years ago, the visionary Christie Commission highlighted the impact of inequalities on the economy and our public services. They recommended more collaborative working, preventative spending, and building services around people and communities. Sadly, we see greater centralisation, silo working and little preventative spending. So, it was good to see the recent report of the Scottish Parliament’s Health Committee on health inequalities reference the report. What we now need is some focus on delivering its recommendations. Tackling health inequalities should be the priority of all governments.