Johnstone’s View - Six months must be an eternity

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They say that a week is a long time in politics. If a week is a long time, then six months must seem like an eternity.

With that said, does anyone remember Ed Balls?

He is now a figure from the past, but he was once a significant figure in the Labour Party.

Some of us will remember him claiming that the chancellor George Osborne’s approach to re-booting the UK economy would not work.

It was Mr Balls who, in a famous speech to the STUC in 2012, warned: “we ... risk a lost decade of slow growth and high unemployment which will do long-term damage.” None of that came to pass, of course.

I also remember Labour’s favourite economist, Professor David Blanchflower, claiming that unemployment would go up to 5 million. Both have been proved wrong. In fact, we have seen growth in employment, in full-time employment and in the number of hours worked. We have also seen increases in wages, and wages are now rising ahead of inflation.

However, we recognise that there is more to do. In particular, the problem of low wages, coupled with the system of tax credits which quickly became a subsidy to low wage employers, has left the poorest in society in a poverty trap from which they cannot escape. That is precisely why the UK Government has more than doubled the basic rate income tax threshold which will now save every income tax payer over £1,000 a year, and introduced the national living wage which will come into effect from next April and rise to £9 an hour by 2020.

It is hard to imagine any measure that will have a more positive impact on earnings for the least well-off than pushing up basic hourly pay rates and it was no surprise that it was warmly welcomed by the Living Wage Foundation. Coupled with the substantial increase in the tax threshold, which mean that many of the poorest are paying no income tax at all on their incomes, this will be a real step change in incomes.

However well things might be going, there is always something which will bring us back down to earth with a bump, and this week’s news about the steel industry has reminded us all that, regardless of how well things are going at home, the rest of the world is largely beyond our control but well able to impact on our economy.

The widespread ‘dumping’ of steel onto the world market at prices below cost of production is having a serious impact on our own steel industry with hundreds of Scottish jobs now to be shed. It would have been much worse but for the tough decisions where taken a generation ago.

The irony for us here in Scotland however is that, but for some blundering decision making by the Scottish government, we might have been spared the worst of this international crisis, for it was they, and no one else, who decided to award the biggest Scottish steel contract in living memory.

This has now turned out to be a devastating blow for the steelworkers and their families who rely on Scottish plants owned by Tata Steel for their livelihoods.

Concerns were raised at the time when Tata was not awarded the Forth Bridge contracts that Scottish plants were losing out to China, but with the Scottish Government at that time falling over each other to ingratiate themselves with the Chinese Government, nothing could be done to change their minds.

It now seems that hundreds of Scottish jobs have been sacrificed on the altar of an international investment strategy which has delivered the sum total of two pandas.

This decision, which could have saved the Scottish steel industry but has now lead to its complete destruction, was made within the Scottish Government.

We need to know who is individually responsible and more importantly, what action Nicola Sturgeon will take against the Minister who finally killed the Scottish Steel industry.

This all comes in the week following the publication of employment figures which should also spell out a warning for the Scottish Government. After a five year run in which Scottish figures have matched or exceeded the performance of the UK as a whole, last week ‘s numbers held a clear warning.

The Scottish jobless rate now stands at 6.1%, compared with a UK figure of 5.4%.

Responsibility for this increasing divergence in performance lies squarely at the feet of Scotland’s nationalist government which has spent the last five years railing against Conservative economic policy and pressing for the very measures which have so obviously failed comparable economies.

It’s time for this nationalist government to stop their carping and get with the programme before thousands more Scots end up paying the price with their jobs and security.