What is Scottish Labour for?

As Scottish Labour regroups after the General Election, the temptation will be to focus on organisation and structure. Important though these are, the real question the party has to ask itself is – what is Scottish Labour for?

After the 2007 and 2011 Scottish Parliament elections, Scottish Labour held reviews that gave detailed consideration to internal structure, election organisation etc. Tucked away in both reviews was a mention of political purpose and strategy, but it was left to another time, it was regarded as of secondary importance. No political party has a divine right to exist; it has to have a clear political purpose. Scottish Labour needs clarity over its key purpose and then needs to find a way of expressing it in language activists can explain and voters can understand.

For me the answer is, it’s inequality stupid.

UK income inequality is among the highest in the developed world and evidence shows that this is bad for almost everyone. This is of course the core message of the ground-breaking study by Wilkinson and Pickett, ‘The Spirit Level’. More recently the EU’s official think tank on life at work said: “…the level of wage inequality in the EU as a whole is below that of the US. However, wage inequality in the UK, the EU’s most unequal country, is now above that of the US average. The UK, Latvia and Portugal are the three most unequal countries in Europe“. They also found that since 2008 increasing inequality has been driven by in developments within the UK. Danny Dorling’s recent myth busting in the Guardian reinforces the point.

It has been argued that Ed Miliband’s focus on inequality was one of the failings of the UK Labour election strategy. However, while there clearly were failings, tackling inequality wasn’t one of them. Even Tony Blair recognised, he was “absolutely right to raise the issue of inequality”. The problem was that Miliband’s approach was too timid (e.g. the £8 NMW) and presented badly using language that didn’t include a big enough coalition. The trick is to explain the damage inequality inflicts on everyone, not just the poor and disadvantaged.

Having explained what is wrong with our society, Scottish Labour has to show how it will fix it. That requires some big and really bold policies, such as – childcare free at the point of use; building 10,000 social houses every year; raising real wages and tackling insecure work. There are many more examples in the Red Paper on Scotland 2014. The key is ‘big and bold’, policies that are inspirational. Not, as the current Scottish Labour policy consultation paper does, offer the sparkling promise of multiple reviews!

This is also about political positioning. Scottish Labour can only win on the left of the SNP – the Tories exist to stretch the SNP on the right. The SNP is a very broad coalition, which is why they duck difficult issues like redistribution and retreat into process. One social attitude survey question asked voters of each party, ‘do you support abolishing inheritance tax?’. SNP voters were more in favour of this proposition than Tory voters. There is a lot of SNP rhetoric about the big issues facing Scotland, lots of reviews and consultation, but less real action.

That is not to encourage Scottish Labour into more tribal rants against the SNP. Instead, Scottish Labour should acknowledge the positive actions, park the past and move on. Telling voters they made a big mistake is never a smart political strategy. For the future, it’s about Scottish Labour’s positive vision and how the broad SNP coalition is holding Scotland back.

That leaves how Scottish Labour addresses constitutional change. It is often argued that Scotland, and other parts of Europe, even England, is being subsumed in tide of nationalism. The evidence for this is actually very weak. A longitudinal study undertaken at the LSE shows that the number of people in Scotland identifying as more Scottish than British has significantly declined since 1999, while those identifying as equally Scottish and British is increasing. This chart illustrates the shift.


This doesn’t mean that Scottish voters don’t want constitutional change. They overwhelmingly want greater devolution, which is why the trade unions in particular argued for a second question in the referendum. Scottish Labour should not be a unionist party – it is a party that sees the UK as a means to an end, not an end in itself. This means being positive about greater devolution based on the principle of subsidiarity. Ironically, this is a task made easier by the loss of MPs, shifting the Party’s political focus from Westminster to Holyrood.

Another feature of Scottish Labour’s new distinctive offer has to be devolution to local government and communities. This is again about political positioning, making the contrast with the SNP’s centralism. This requires a new approach to public service reform based on local democracy and integrated local delivery in actual communities of place. However, that means the Party has to have a political strategy for local government. Too many Labour councillors are passive administrators, rather than agents of radical political change.

In short, Scottish Labour has to break away from its establishment mentality and become insurgents again. A party of ideas, prepared to take radical and practical action on the inequality that blights so much of Scotland, damages our economy and takes everyone else down with it.

Linking Science and Manufacturing: an Industrial Policy for a Better Society

Scott Nicholson sets out some ideas for linking science and manufacturing.


I believe that Scottish Labour should make the case for using science and innovation to power growth in our regional economies. Universities could be engines for regional growth via the creation of publicly owned spin-out manufacturing companies.

I feel the best use of resources would be to target funds towards universities in the poorest areas of Scotland and the rest of the UK or areas with the greatest unemployment. Glasgow would be a good example as it already has good universities and is positioned in one of the UK’s poorer regions. We cannot compete with low skill/pay economies in many areas of manufacturing but by linking science and manufacturing we will create high and middle skill jobs and allow us to take advantage of Scotland’s world class research to produce products for export that are only available from Scotland.

Industrial Policy

I do not believe the term “industrial policy” should be restricted to the industry that we normally associate with it. I think industrial policy should be about the state taking an active role in shaping the economy and providing people with what they need.

I know that there are market fundamentalists who wince at the term and wish the market to determine what it produces, without any interference. However, I think there is difference between an economy full of companies making chips for innovative medical equipment and an economy full of companies making chips for the oven.

If we as the Scottish Labour Party are not having open discussions about the direction our economy takes, it takes the direction wished by special interest groups. In the UK we have a kind of industrial policy of shifting resources to the financial sector and allowing them to engage in risky practices. Why would the British people want this policy?

I do not think they would but because government are not steering the policy, the financial sector and their influence can. I see a problem in a society in which students that should solve the world’s problems as scientists and engineers, move to the City of London, rather than create something useful. However, I also see a problem with scientists too often looking to solve intellectual puzzles, rather than actually producing that something useful.

We have problems like climate change, disease, hunger, energy supply and even internet provision, which industrial policy could be directed to tackle. However, we also have a problem with unemployment and I feel too often that innovation is directed toward ways of saving labour. So how do we provide society with what it needs (including jobs)?


Following the global financial crisis, we need to start looking seriously at less reckless industries like manufacturing. With regard to jobs, wages tend to be higher in manufacturing than service industries (which involve a lot of part time work). These middle-income, middle-skill manufacturing jobs build a sense of social cohesion which is not present in service industries. As a result I feel that manufacturing can help prevent a society dividing into rich and poor.

Manufacturing accounts for the majority of Scottish exports and without being able to export something, Scotland cannot really look to long-term economic growth. Germany is the EU’s largest and most successful manufacturers yet pay higher unit wage costs than the UK. So what is our problem? As already mentioned, there is a lack of political support for industrial policies and monetary policy is set to benefit the City. The short-term nature of the UK financial system disadvantages manufacturing, which requires long-term investment is skilled staff, research, development and equipment. In addition to this, the UK is also more relaxed about foreign purchases of indigenous firms, compared to other nations. This leaves UK manufacturing more open to research and development cuts and its staff to redundancy.

Science Policy

Science policy is very political and ideas that can be traced back to Friedrich Hayek float around suggesting that science is a force that cannot be steered and evolves in response to the demands of the market, in an almost Darwinian manner. I admit that this is probably the case in research and development with low barriers to entry, like someone in their bedroom developing an app for a mobile phone. However, it takes on average 9 years and $2.17 billion of research and development spending to produce a single new drug (including the cost of all the failures) in the pharmaceutical industry.

Successive governments have asserted the promotion of economic growth as the primary goal of science policy (which I disagree with) but in the past the state has sponsored companies like ICI with guaranteed contracts or monopolies. Government can attempt to correct market failure by giving money to companies, through subsidies, tax concession ,extending patents or even cash prizes but at the end of the day, the state is supporting expenditure that the companies should be making anyway and there is no guarantee that the UK will retain that economic benefit.

Resistance to innovation also comes from representatives of incumbent economic interests. Incumbent capitalists have lower incentives to invest in research and development than new entrants as innovation causes a lowering of profits from their existing businesses. Perhaps our political system that gives excessive weight to the holders of economic power, is putting a brake on investment, even though it would be beneficial for society?

The fundamental problem is that the social value of science, innovation and industry does not correspond with its market value, so there is no financial reward for private sector undertaking the research, development and production, to create the jobs that society needs. I personally feel that a UK Labour government should directly commission the research and development that society needs but the neoliberal dogma is that governments ‘can’t pick winners’. Mariana Mazzucato in her 2013 book, The Entrepreneurial State, discusses how the state can lead innovation and criticises the risk and reward relationships in current public-private partnerships. Mazzacuto argues that the state can be entrepreneurial and inventive and that we need to reinvent the state and government.

I feel that for years the private sector have generated huge profits by patenting state-subsidised research and selling it back to society at a profit. Science, innovation and industry – like the banks – are too important to fail and in capitalist hands, we see the results of short-term profit-maximising corporate interests. That is why we need to invest in publicly owned companies.

I do not believe the private sector is very good driver of innovation and that Scottish Labour should not court big businesses like the SNP, who would be the only businesses capable of substantial investment needed for an idea like spin-out manufacturing companies. I feel that successful, long-term research and development, that results in the manufacture of products that benefit society and contribute to long-term economic growth, would lower profit in the short term but then provide income streams to fund future research and economic growth.

I believe excessive financialisation in research and development causes the loss of a lot of invested monies to corporate lawyers and shareholders. There seems to be a perception that corporate reorganisation can provide quick returns for shareholders, so private companies attempt to increase profits through mergers, acquisitions and tax evasion. I do not feel this is the most effective way to use Scotland and the rest of the UK’s resources.

Before Friedrich Hayek, John Desmond Bernal in his 1939 book, The Social Function to Science, argued for more spending on innovation, as science was not merely an abstract intellectual enquiry but of real practical value. Bernal placed science and technology as one of the driving forces of history. I believe we in Scottish Labour should look to follow this path.

With regard to democracy, the Labour Party could give citizens a greater say in what is researched in order to help shift our society away from its reliance on the market to provide what society needs. The market responds, not to what society needs, but to what will create the most profit. This is a reoccurring theme throughout science. A UK Labour government should undertake consultation work with the general public and make the case for innovation not to be driven by greed but for the service of society.

Scottish Labour also needs to understand that for long term economic growth, Scotland must export something. Successful UK companies doing this seem to be producing higher tech/skill, custom goods like bespoke pH meters or horse ridding saddles.

Scotland cannot compete with China’s 1.5 billion low-paid/low-skilled workers but roughly 50 per cent of people go to university in Scotland so we can perform much better in higher-paid and higher- skilled work. By linking the manufacturing to the world leading research and development, we can produce products that are only available from Scotland. Perhaps, more profit would be reaped if the manufacturing was out-sourced but the overall goal of the industrial policy is the well being and quality of life of the Scottish people, who need jobs as well as technological advances.

I do not think a focus on international relationships is best for Scottish science, innovation and industry. Last year when the US pharmaceutical giant Pfizer was trying to take over the UK pharmaceutical giant AstraZeneca, I assumed that the reason behind this was to take advantage of the UK’s corporation tax rate of 21% which is substantially lower than the US rate of 35%. However, what really got my attention was that people were worried because they understood that if the deal went through, the UK would lose one of its few world-class companies and more specifically its jobs and investment. That seemed a well founded worry as Pfizer reduced research and development expenditure from $9.4 billion in 2010 to $7.8 billion in 2012 and closured its laboratories in Sandwich, UK.

As a result I would like to see legislature in place to allow government to block sales of companies to non-domestic owners. I would also like Scottish Labour to seek to make it easier for small biotech companies to grow in Scotland so the owners will not just look to sell off to a large international firm. I think Scottish Labour should look to build Scottish industry, rather than allow the sale of Scottish companies to foreign owners. This is obviously easiest when companies are in public ownership and for this reason, along with the many others listed, I feel the spin-out manufacturing companies should be state owned.


The UK needs to move away from an economy based on unstable and reckless financial services. To do this Scottish Labour and UK Labour need to discuss industrial policy. These industrial policies will need enduring political and financial support to produce long-term reliable economic growth. Linking Scotland’s world leading science to manufacturing can help avoid direct competition from low pay/skill economies but also provide jobs and social cohesion for the people of Scotland. More importantly, greater investment in public ownership can allow the Scottish people to decide what they need, rather than what the market decides is profitable.

Scott Nicholson