Ben Wray: Why Holyrood risks becoming just another power-guzzling Westminster

08/03/2017
angela

CommonSpace columnist Ben Wray says Scotland must take a stand against the dark forces of corporate influence and lobbying

SOMETHING happened last week which passed most people by but came as a great relief to me. It gave me a bit of hope that maybe Scotland can have a different politics to corrupt, corporate-controlled Westminster.

To his great credit, Bruce Crawford, SNP MSP and convenor of the Scottish Parliament’s Finance Committee, told the Scottish Government’s finance minister, Derek Mackay, that he had to go away and get some independent economic evidence for his plans for an Air Departure Tax, which would see the tax cut in half at first with the eventual idea of scrapping it entirely. 

Mackay admitted he currently didn’t have any independent evidence, and would endeavour to find some.

On this occasion, the finance committee applied the proper checks and balances and that is why I’m relieved: but what about when it doesn’t? The balance of power is weighted against the likes of us and towards the corporations.

I’m sure many of you are thinking “so what?” – that doesn’t sound like anything too exciting or extraordinary. After all nothing has actually been won, and it is not exactly an issue that the whole future of Scotland hangs on.

All of that is true, but it is symbolic of something much bigger – that the corporate-political-media-thinktank nexus of elite power in Scotland can be challenged. Let me explain.

The story starts with research by a consultancy firm and accountancy firm commissioned by and for the aviation lobby.

First, York Aviation – with a long track record of writing reports for aviation companies and airports – published a report for a number of Scottish airports in 2012 arguing Air Passenger Duty (APD) hindered GDP growth in Scotland. This was followed up in 2015 with a more detailed work for Edinburgh Airport, finding that a 50 per cent cut to APD would boost employment and tourism sufficiently that £1bn gross value added could be expected by 2020, offsetting a fall in direct tax revenues from APD of £650m.

In 2013, the accountancy giant PriceWaterhouseCoopers published a report on behalf of a consortium of UK and Irish airline operators looking at the potential economic impact of abolishing APD across the UK. They found that a gain of £250m to the exchequer could be expected from scrapping APD.

The work of York Aviation and PriceWaterhouseCoopers on behalf of aviation and airport companies has, from that point onwards until today, constituted the sole economic evidence base for the Scottish Government’s commitment to first cutting and then scrapping APD.

Anyone who attended the SNP 2015 conference in Aberdeen could not have failed to see the corporate lobbying effort going on there: when I first walked in I thought I may have gone into the wrong building and was at a conference for Heathrow Airport. 

The Scottish Government’s White Paper for Independence in 2014 referenced the 2012 York Aviation report and the 2013 PriceWaterhouseCoopers report. After the Scotland Bill passed and APD was devolved from 2018, the Scottish Government’s consultation on cutting Air Passenger Duty referenced only the 2015 York Aviation report and the PwC report in making its economic case.

Finally, after the consultation responses, the Scottish Government published its plans for an Air Departure Tax: again, the work of York Aviation and the PwC was all the economic evidence they could muster.

An APD stakeholder forum had been set up in March last year to support the Scottish Government’s consultation: but only one member of it was not a representative of an airport or aviation company – Mike Robinson from Stop Climate Chaos and Environment Scotland, who complained that everyone else in the room was “very much on the same page”.

Enter Common Weal’s intervention into the debate. We supported and agreed with the environmental critique of the APD cut, but we were concerned that no one seemed to be challenging the economic case for it, and at a time of austerity didn’t believe a substantial cut to the Scottish Government’s budget should be pursued without very good reason. We therefore decided to write a report focusing solely on the economics of the APD cut.

Not too long after, SNP MPs controversially backed the expansion of the Heathrow third runway. Corporations don’t spend all that money on lobbying for nothing.

What we found, over two reports (here and here), was that the evidence of York Aviation and PwC was massively and irredeemably flawed. Here’s the key conclusions of our work:

– Even if the most optimistic case on economic growth commissioned by the airline industry is accepted, the cost of cutting APD will never be recovered on the basis of tax growth. This will be a permanent cut in the Scottish Government’s budget.

– At least one in three flights are business-related. Even the airline industry accepts that these are not price-sensitive and so will be unaffected by a tax cut. So even the proponents of the tax cut accept a third, or about £50m, of the tax cut will have no impact.

– The case from the airlines fails to take into account the impact on outwards flights. Scotland is a comparatively expensive destination so incoming tourism is much less price-sensitive. 

However, outgoing tourism from Scotland is much more price-sensitive. The economic cost of Scots who would otherwise have spent money in the Scottish economy spending it abroad instead has been omitted from the economic case. This could actually reduce tourism in Scotland because of a substantial fall in domestic tourism.

I worry about the fact that leading figures in Scottish politics don’t even feel like they need to distance themselves too much from this sort of corporate influence.

– The spending of inbound tourists is generally more weakly linked to the economy than the spending of domestic consumers so even if the total volume of tourism remained the same the economic impact could actually decrease.

– The reduction of the value of the pound sterling in the aftermath of Brexit is likely to have a substantially greater impact on tourism than the ADT cut is capable of inducing. The tax cut can only partially subsidise this Brexit effect.

– A substantial proportion of any tax recovered from what growth an ADT cut might induce is recovered through corporation tax which does not come to the Scottish Government – and in the case of some multinationals may not even be captured in the UK.

– While the economy most directly linked to airport traffic will see an increase, this increase will ultimately be capped by the capacity of the airports in question. The seasonal nature of tourist traffic will exacerbate this impact.

– No assessment has been made of what economic impact could be achieved if the same £150m was spent on an alternative economic stimulus. The case for this tax cut has not been tested against any alternative use of this money.

Nicola Sturgeon appointed Andrew Wilson, head of secretive corporate lobbying firm Charlotte Street Partners, to head up the SNP’s Growth Commission which is set to play a leading role in developing a new plan for Scottish independence. 

This work still constitutes the only independent economic assessment of the plans for an APD cut in Scotland, and no one – not the Scottish Government, the PwC or York Aviation – has yet challenged the substantive conclusions we have put forward. 

Apart from a mention in a recent blog by BBC Scotland economics correspondent Douglas Fraser, our report has only been reported on CommonSpace. It was sent to all of the media when the first report was published last May and again when the new report was published last week, the day after the finance committee told Derek Mackay to come back with some independent economic evidence. Phone calls to follow it up. Nothing.

Contrast this with Reform Scotland, which weighed in to wholeheartedly back the APD cut proposals last August – it was covered by the BBC, STV and the Herald as if it was independent evidence of the case for an APD cut, but look at the report and it simply regurgitated the existing evidence from York Aviation and PwC.

Our report – providing new, independent evidence – ignored; Reform Scotland’s – reiterating existing research on behalf of the aviation industry – reported on extensively.

This is how complacent, arrogant elite rule works – no conspiracy theory is required to understand it. It is simply a number of powerful people across government, media, think-tank’s and consultancies solely listening to one another and ignoring or dismissing other opinions when what they have to say is inconvenient. 

It is the stacking of consultations with multiple submissions by the aviation lobby and those that work on their behalf all saying the same thing, so the evidence looks overwhelming.

 

 

On this occasion, the finance committee applied the proper checks and balances and that is why I’m relieved: but what about when it doesn’t? What about when Common Weal or Friends of the Earth or one of the other non-corporate backed organisations don’t respond to a consultation because they don’t have the time or resource? The balance of power is weighted against the likes of us and towards the corporations.

Anyone who attended the SNP 2015 conference in Aberdeen could not have failed to see the corporate lobbying effort going on there: when I first walked in I thought I may have gone into the wrong building and was at a conference for Heathrow Airport. 

Everywhere you looked, Heathrow Airport was in your face: it even had its own huge Heathrow lounge to wine and dine delegates. At the 2016 conference in Glasgow (in which community and not-for-profit organisations were priced out) CommonSpace reported on an exclusive, expensive Heathrow “private airport style lounge”. Not too long after, SNP MPs controversially backed the expansion of the Heathrow third runway. Corporations don’t spend all that money on lobbying for nothing.

No one will know whether Wilson’s findings will have been partially shaped by his day job because no one knows who Charlotte Street’s clients are. That puts everything the commission finds under a dark, shady cloud.

I worry about the fact that leading figures in Scottish politics don’t even feel like they need to distance themselves too much from this sort of corporate influence: Nicola Sturgeon appointed Andrew Wilson, head of secretive corporate lobbying firm Charlotte Street Partners, to head up the SNP’s Growth Commission which is set to play a leading role in developing a new plan for Scottish independence. 

No one will know whether Wilson’s findings will have been partially shaped by his day job because no one knows who Charlotte Street’s clients are. That puts everything the commission finds under a dark, shady cloud.

The corporate-political-media-think-tank nexus of rule by and for elites is how Westminster works and will continue to work. It’s an unashamed revolving door: many of those near the top of government over the past 20 years, Tory or Labour, now do work on behalf banks. 

 

 

If the same power nexus exists in the same way in an independent Scotland you can forget all that fairness and social justice lark: it will be nothing more than empty phrases. 

We need to fight it now.

Picture courtesy of ru_anderson

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