Ben Wray argues SNP leaders have made a complete mess of Scotland’s energy policy, allowing them to be outflanked by a centrist Labour party.
It didn’t take long for the Liz Truss era to blow up. If it wasn’t for a fortnight of state-mandated Royal mourning, it would have combusted even quicker. New Chancellor Kwasi Kwarteng’s ‘mini-budget’ is a political and economic disaster for the Tories, one which – less than two years until the General Election – they might not recover from.
The problem is not only that whatever Truss does from here on in will be seen through the prism of her first action; to hand over huge sums of cash to the super-rich in the midst of the biggest fall in working class living standards in 70 years. It’s also that she has created the expectation that by doing so, big GDP growth is around the corner, something that is extremely unlikely.
It’s unlikely because cutting taxes on the rich doesn’t induce broad GDP growth (they save it or spent it on luxury goods). But much more importantly, it’s unlikely because the Bank of England is working at cross-purposes with Kwarteng. Threadneedle Street is focused on bringing down inflation through interest rate rises, which probably won’t do much for inflation but will definitely suppress GDP growth. The speculation against the pound on currency markets will only push the BoE to raise interest rates faster, thus making the prospects of growth even dimmer.
There is a not inconceivable conspiracy theory doing the rounds that Kwarteng and Truss know all this and it’s really a ruse for another round of public sector cuts. Even if that’s true, what would that achieve politically or economically for the Tories? Austerity will only reduce demand further, while making the class divisions even more acute: tax cuts for the super-rich and public service cuts for the rest.
So the damage of this move is only going to get worse with time, and it’s already pretty bad as it stands. In the wake of the mini-budget, Labour has moved into its biggest poll lead over the Tories since 2001, 17 points ahead by one poll. Far from getting a bounce, Truss’ entry into 10 Downing Street has put the Tories further back than they were under the calamitous Johnson. As this article goes to print, the BoE has begun frantically buying up government debt in a bid to restrain market turbulence. No wonder there’s already questions over whether the new Prime Minister will make it through the New Year.
Keir Starmer has been able to get into poll position for the top job without doing anything at all. His speech to Labour conference was more centre-ground positioning (even echoing Tony Blair), which has got less to do with winning votes than with securing establishment support. Many elites will be looking at Starmer and thinking he’s a safer pair of hands than the incumbents.
Despite Starmer’s positioning, he has still somehow managed to outflank Nicola Sturgeon and the SNP to the left on energy. By announcing a public-energy company for renewable energy (‘Great British Energy’), Starmer manages to look like he’s doing something without doing what actually needs to be done, which is to take the whole of the energy sector into public ownership. But it’s still more than the Scottish Government can boast, as the First Minister proposed a public energy company in 2017 to much fan-fare, then dropped it four years and an election later after one of the ‘Big Four’ accountancy firms did a scoping exercise on it and found that it wasn’t worth the bother. And if the Big Four say ‘no’, who are those elected politicians in Edinburgh to argue?
Getting outflanked by Starmer on energy is particularly poor because this issue should be an open goal for any pro-independence leader in Scotland, a country which is energy abundant. Scotland’s energy generation is almost entirely domestic, and 60 percent of that generation comes from green energy sources. Once installed, renewables have a cost which is effectively zero. That’s why Norway, where 93 percent of their household heating comes from hydroelectric, currently has the cheapest energy bills in Europe.
The reason households across Scotland are paying extortionate costs to heat their homes despite the country’s abundance of cheap energy is the design of the UK energy market, which fragments and privatises the sector into energy generation, distribution and the grid. Wholesale prices are set by the ‘marginal price’, meaning whatever fuel source is currently most expensive (which today is gas).
As writer Prabir Purkayastha has pointed out, this design of electricity markets was first tested in Chile under General Pinochet, in what was the first major experiment in neoliberal economics from 1973 onwards. The dictator even wrote ‘marginal price’ into Chile’s constitution. “It was the Chilean model that Margaret Thatcher copied in the UK, which then the EU copied,” Purkayastha writes.
A Scotland based on energy sovereignty could drastically reduce its electricity costs by bringing its energy system into public ownership and ending fragmentation. It could then be re-purposed to meet all of the country’s domestic energy needs first before exporting, with the price set democratically (rather than by global gas markets) and at a level that ensures no one is in fuel poverty, eg with heating bills less than 10% of household income. If this were combined with a massive home insulation and refurbishment programme to reduce energy demand, Scotland could quickly catch-up with Norway as being one of the cheapest countries anywhere for fuel bills.
Such a vision would leave Starmer’s ‘GB Energy’ in the dust, but the problem is that it is highly unlikely to be embraced by Sturgeon, since the idea of energy sovereignty would mean seeking a rupture with both the UK and EU’s neoliberal energy markets. Sturgeon and the wider SNP leadership have been at pains to say that independence would mean deeper integration into international markets, even at the expense of the country’s economic sovereignty. The Growth Commission vision for an independent Scotland, authored by corporate lobbyist Andrew Wilson and officially endorsed by the party, argues that energy policy should “prioritise the commercialisation and growth of new sectors with export potential”.
Indeed, the Scottish Government has been directly responsible for strengthening corporate control of the energy sector. In January, the Scottish Government’s ‘ScotWind’ scheme leased-out large swathes of the country’s seabed to fossil fuel companies like BP and Shell to profit from the country’s vast offshore wind potential. These are the same companies currently making obscene mega-profits while over 40 percent of Scots are in fuel poverty.
There is a window of opportunity in this crisis to reboot the Scottish independence case around energy sovereignty through a publicly-owned energy system which would drastically bring down prices while decarbonising the country. Such a vision would be hugely popular and would lay down the gauntlet to Starmer. The only barrier to a much-needed renewal of the independence vision is the SNP’s ideological precepts, which are rooted in the fantasy belief that an independent Scotland can smoothly integrate into a global neoliberal order that is facing crisis and fragmentation at every turn.