THE public discussion of this subject is imbued with moral dimensions and refers to disparate views of Scottish historical development over the course of the twentieth century.2 Indeed, this theme contains a central question of modern Scottish history: how do we explain the apparent demise of the empire-leading, economic success story of the late nineteenth century and its replacement by a society and economy seemingly dependent on the state and unable to diversify or demonstrate the flexibility necessary to prosper in the economic conditions of the early twenty-first century.3 There is, however, an alternative view which emphasizes that the Victorian success story was accompanied by cheap labour, appalling working conditions and, especially prominent in Scotland, poor housing. These conditions spawned social indicators that hardly made Scotland the envy of the world—the very high levels of infant mortality being one of the most noticeable.4 The conquest of these historic problems in the post-war period through the National Health Service and the provision of public housing was the primary achievement of the state, as was the realization of a measure of prosperity through full employment in the post-1945 period.5 So, the important role of the state in Scottish history since 1918 can partly be explained by historical forces arising from the speed of Scotland’s economic development in the nineteenth century and the twentieth-century attempts to deal with the legacies of this process. These problems were too profound to be dealt with by private enterprise; only the mobilization of the resources of the state could eradicate the slums or improve the health of the nation.
There is, however, a problem in attempting to understand the state in a Scottish context. There is no doubt that sovereignty and authority are located at a United Kingdom level, even in a post-devolution context. Suggestions of Scottish autonomy or semi-independence are cultural or political, rather than constitutional or legal. Indeed, it might be argued that since the passage of the Scotland Act of 1998, with its definition of reserved powers and its necessary emphasis that the devolved Parliament does not affect the sovereignty of the Westminster Parliament, this point is explicit in the relationship between Scotland and the United Kingdom. Thus any attempt to explore the relationship between Scotland and ‘the state’ must deal with two separate but related issues: the extent to which a ‘Scottish’ state exists and the relationship between Scottish society and the United Kingdom state.
The political context to the debate over state intervention in Scotland is also an important consideration. Much of the moral tone of the debate was generated in the 1980s when Conservative governments deprecated government intervention, sought to reduce public expenditure, and berated the Scots for their apparent dependence on the state. There was, however, a paradoxical element to much of this comment. High levels of per-capita public expenditure were criticized and identified as a reason for the persistence of an old-fashioned economic and social structure in Scotland. This worked against one of the key policies of the government: economic transformation. Another central objective of the same government, however, was the maintenance of the Anglo-Scottish Union and the same evidence of high levels of state intervention in Scotland was capable of being repackaged as a key benefit of the Union.6
Although moral criticism of the Scots for dependence on the state were heard less vociferously in the period of Labour government from 1997, there was an undercurrent of suspicion about the method of calculating the block grant to the Scottish Office from 1979 to 1999 and the Scottish Parliament, which was funded by the same method, after 1999. Labour MPs and local newspapers in the north of England were particularly vocal in this line of argument, an extension of their traditional suspicion of the effects of devolution to Scotland.7 Herein lies an interesting tension. The relatively high levels of public expenditure that have supported state intervention in Scotland help to shore up the Union, but the same factors have the capacity to cause resentment in areas with a similar economic structure and thereby potentially weaken the same Union.
This negative view of public-sector activity has not gone away with the demise of Thatcherism. In 2005 the chairman of Scottish Enterprise argued that the scale of government spending in Scotland ‘crowded out’ private-sector activity. Although there is no clear relationship between low levels of public spending and corporate taxation and economic growth, there is a negative perception of state activity in the Scottish media and in political debate. In Scotland public spending was just under 50 per cent of GDP in 2005 (the UK figure was 44 per cent), higher than Ireland (34 per cent) but lower than Sweden and Denmark at 56 and 57 per cent respectively. This data suggests that there is no necessary link between growth and public spending.8
The current economic crisis is also relevant as a context for this discussion, both in the intellectual responses to the downturn and in the policies that governments have adopted in their attempts to deal with the difficulties. This evidence may provide some support for those who wish to defend the extent of state intervention in Scotland over the period since 1945, or at least for those who wish to take the edge off the criticism of interventionist policy. The intellectual response contains a broad defence of interventionist policy, Keynesian economics, and considerable scepticism about shrinking the state and cutting public expenditure. The idea of an active state can be defended as a means of social and economic recalibration around ideas of fairness, equality, and collectivism; as opposed to the excessive individualism and market failures that have been identified as drivers of the crisis.9
The history of the development of state intervention in Scotland over the period since 1918 also contributes a legacy to the current devolved government in Edinburgh. In November 2010 Scottish Finance Secretary John Swinney implicitly noted that he was constrained by the extent of state activity in Scottish economic and social life as much as by the limited fiscal powers contained in the Scotland Act of 1998. He reminded the Scottish Parliament that approximately 55 per cent of his resource budget (as opposed to his budget for capital projects), or around £14 billion, went on public-sector pay.10 This allowed the devolved government to argue that pressure to depart from the Scottish consensus on an active state was being driven by London and that if the Scottish Parliament had sharper fiscal tools at its disposal different routes through the crisis would have been available. An alternative point of view would see the Scottish government limited not so much by the nature of recent constitutional change but by the legacy of Scottish political and economic development over a much longer period. It is to this subject that we must turn.
Even before parliamentary devolution, the extent to which extensive areas of Scottish life were governed through autonomous or semi-autonomous institutions seemed to indicate that the Union of 1707, unlike the Anglo-Irish Union of 1801, was sufficiently flexible to permit a degree of Scottish autonomy.11 This can be emphasized in a benign explanation of the seemingly extensive role of the state in Scotland since 1918. In the educational field, for example, the combination of Scottish autonomy and the small private sector, compared to other areas of the UK, has seen an increase in public expenditure in this area by a factor of ten since 1918.12 Perhaps less benign was the distinctive organization and relatively high spending in the area of health services since 1945. The organizational distinctiveness was a product of building the NHS in Scotland from the pre-1945 Scottish welfare, hospital, and medical-education systems, pushing it down a different route from England.13 The high levels of expenditure come from Scotland’s unenviable health record in the post-1945 period. In the early part of this period the legacy of rapid industrialization and urbanization in the nineteenth century could be conscripted as an explanation. As the state conquered the classic problems of this legacy—such as infant mortality or tuberculosis—it began to face other seemingly intractable problems arising from poverty, poor diet, high levels of alcohol consumption, and heavy smoking. These factors ensure that this remains a key concern of the state in Scotland.14
The third prominent theme in the discussion of the relationship between Scotland and the state is rather different. It focuses not so much on political relationships as on economic conditions. This point of view suggests that far from being in a semi-autonomous position Scotland has, in fact, been dependent on the British state for much of the twentieth century and that this has inhibited Scottish economic development in the late twentieth century. In part, this view stems from the 1980s when the government in the United Kingdom sought to roll back the frontiers of the state. Through a combination of voting patterns and social conditions Scotland, with its ‘culture of dependency’, was perceived to be an obstacle in the way of such a project.15 The Prime Minister, Margaret Thatcher, was puzzled by the unwillingness of the Scots to embrace her political philosophy. She implied that the condition of semi-independence or autonomy was at the heart of this problem. The Scottish Office structure captured her ministers and made them advocates for Scotland in the government rather than advocates of government policy in Scotland. Scottish civil society, including the media, the Churches, and the trade unions, were part of a political conspiracy devoted to defeating the objectives of her government.16 Recent historians have argued that the matter does not rest there but has to take into account reactions to clumsy attempts at economic and social restructuring in the 1980s.17
Lying in the background to this discussion is a perception that Scotland is treated with excessive generosity by the Exchequer. This point can even be elevated into an explanation of the extensive state activity in Scotland. There is a history of public expenditure in Scotland being based on apparently generous formulae rather than an objective assessment of basic need. A formula of limited application and named after the then Chancellor of the Exchequer, G. J. Goschen, was developed in the 1880s and lingered until the 1950s.18 This was not the means of general allocation of Scotland’s share of public expenditure, but it was most often deployed in education spending.19 In the 1970s, during the fractious debate over devolution, it was recognized that a new arrangement was required to find the size of the block grant to the putative Scottish Assembly and to make marginal changes to Scottish expenditure across a wider spectrum than Goschen had covered. This led to the Treasury undertaking an assessment of Scotland’s public expenditure needs and coming up with another formula, designed to be temporary, based on population shares, which identified Scotland’s share of any changes to public expenditure in England at 10/85ths: the ‘Barnett Formula’, after Chief Secretary to the Treasury Joel Barnett. This was the sole survival of the failure of the 1978 devolution scheme and has been altered from time to time to take account of population changes.20 It means that any change to government spending in England and Wales on a particular area, such as health or education, devolved to the Scottish Office or, since 1999, the Scottish Parliament, will be reflected by a change to the grant to Scotland according to the formulaic proportion. Given that the period since the formula was introduced has been one of growing public expenditure, this has delivered relatively high levels of spending to Scotland.21
This is relevant but is far from the whole explanation for the distinctive role of the state in Scotland. Scottish government expenditure covers only about 60 per cent of public money spent in Scotland. The remaining 40 per cent comes from UK government spending on areas that have not been devolved—social-security payments and defence spending being two notable examples. The UK government’s share of expenditure includes non-identifiable spending—spending that benefits the UK as a whole and cannot be allocated to any particular territory or region. Disputes over the measurement of this element of spending have dogged all attempts to find a definitive answer to the questions about the territorial allocation of spending in the United Kingdom, from the Catto Committee of the 1950s that investigated whether it would be possible to identify Scotland’s share of revenue and expenditure and, more ambitiously, imports and exports.22 Most investigations of the balance between revenue and expenditure relating to Scotland have concluded that the latter exceeds the former as a result of a relatively low base of taxation and relatively high levels of expenditure. That much of this material was motivated by the anti-nationalist politics of demonstrating that the Scottish economy was in deficit should be noted. This was certainly true of the inception of Government Expenditure and Revenue Scotland, which, despite its shortcomings, is regarded as the best source of information on the topic.23 By the 1970s there was a widespread awareness that per-capita public expenditure in Scotland was higher than in England, and this has continued. This should not be seen, pejoratively, as ‘subsidy’, nor as evidence that Scotland was ‘dependent’ on England or the state. This view was widely held among English politicians and Treasury civil servants.24 Despite the prejudice there was a rational basis to this state of affairs. It was the product of political decisions made by governments of both parties to spend money on particular problems, such as housing or transport, which had Scottish peculiarities, and which helped to create a large state sector in Scotland.25 The existence of large, sparsely populated areas made Scotland a more expensive country to service. A rational argument could be made that if social and economic equity across the UK was the objective of government, then that required varying levels of public expenditure in its different parts. The alternative was to say that the underlying principle was flat levels of public expenditure across the country and to accept the political consequences, among them likely strain on the Anglo-Scottish Union. The Calman Commission on Scottish Devolution, which was established by the Scottish and UK governments in 2008 to examine the experience of devolution, has emphasized the extent to which the Barnett Formula has provided stability in the funding arrangements, and is an important part of the social and economic elements of the Anglo-Scottish Union. The same Commission has also noted that the reliance of the devolved government on grants from Westminster compromises the accountability of the Scottish Parliament in matters of revenue raising.26 Clearly the matter of public expenditure is central to the extensive activities of the state in Scotland, but the allocation of expenditure by formula to Scotland (and Wales and Northern Ireland) means that it is relatively easy to focus on the levels of state activity there and to make political points arising from it. Information on levels of spending on English regions is more obscure, a point made less frequently.27 Thus the activities of the state in Scotland are a combination of the funding of areas of Scottish life that can be seen as the operation of Scottish civil society—the tangible elements of the ‘stateless nation’ version of Scottish development—and the working of the UK state.
Thus far we have examined the way in which the union has operated to expand the role of the state in Scotland in the post-1918 period. The issue, however, has other dimensions. A key element is the way in which the task faced by the state was conditioned by its inheritance from the pre-1914 period. As noted earlier, private enterprise was dominant in Scotland in the nineteenth century, a period in which the economy had undergone successive phases of industrialization and society had been transformed by migration and, particularly, urbanization. The state expanded in the twentieth century in an attempt to deal with the consequences of this pattern of development. This can be seen very clearly in the field of housing policy. In the nineteenth century, Scotland’s housing was not only a byword for overcrowding and poor amenity but also for the dominant role of the private landlord; both factors were legacies of the particular pattern of Scottish urbanization in the nineteenth century. Although in 1915 the government recognized that the exigencies of wartime necessitated unconventional action in order to deal with the symptoms and consequences of the rent strikes of that year, there was a degree of political discomfort in contemplating even this minimal level of intervention.28 The beginnings of a new housing market in Scotland were established in the interwar period, especially with legislation passed by Labour governments in 1924 and 1929, the latter emphasizing slum clearance. These Acts placed considerable power in the hands of local authorities as builders and landlords of vastly increased numbers of houses in the public sector in Scotland.29 Conservative politicians were also active in this area, evidenced by legislation of the early 1920s and the establishment in 1938 of a central-government agency, the Scottish Special Housing Association, to address the housing issue in the ‘Special Areas’ and to provide a counterweight to the way in which housing gave enormous social and political influence to local government.30 By 1944, however, after nearly a generation of effort by the state, 23 per cent of the Scottish housing stock was overcrowded and 44 per cent was of one or two rooms: the figures in England and Wales were 3.8 per cent and 4.6 per cent.31 This fact laid the foundations for a concentrated assault on this deep-seated problem in the post-war years. This is the area where the state had its greatest impact on modern Scotland. In the thirty years after the Second World War there was a bipartisan consensus and a confidence that investment in replacing old housing stock would eradicate historic problems. From the early 1950s to the mid-1970s, twenty-five thousand to forty thousand new houses were built each year, the majority in the public sector.32 This reshaped urban Scotland, even in Edinburgh, a bastion of private building in the interwar years.33 The new Conservative government in 1979 interpreted this as evidence of a stultifying dependency culture, but only the state had the resources and will to tackle Scotland’s housing problems. In the mid-1970s the Labour government cut subsidies for building, public-sector completions fell, and owner occupation advanced as 450,000 council houses were, under Conservative legislation, sold to sitting tenants. By 1981 the public rented sector—with 54.6 per cent of Scotland’s housing (26 per cent in England)—dominated the Scottish housing market. Concomitantly, relatively few Scots owned their own houses: only 34.7 per cent of Scottish households compared to 58 per cent of English and Welsh households in 1981.34 In the twenty-year period to 1999, however, owner occupation grew from 35 per cent to 62 per cent of housing stock.35 There can be few geographical or policy areas in the United Kingdom in which the state has developed so far and placed such a profound stamp on society, or retreated so markedly over a relatively short period, as in the field of Scottish housing.
Housing, however, might be seen as a symptom of a wider problem: the essential structure of the Scottish economy. Discussion of this area combines the themes of inheritance from the nineteenth century as well the importance of the role of the central British state. The key area of state intervention in Scotland in the period since 1918 has been in the management of the economy. This provides the biggest distinction from the period before the Great War when governments did not perceive this to be part of their duty. This area of state activity is manifestly not part of ‘Scottish autonomy’: throughout the period covered by this chapter it has been the Treasury and the Board of Trade in Whitehall that have made economic policy.36 Consideration of this area takes us back to some of the definitional points raised in the introduction, most notably the way in which the state worked closely with groups of businessmen in pursuit of shared economic objectives.37 Indeed, one might argue that herein lie some of the fundamental reasons for the extent of state activity in Scotland in the period since 1918. There are two broad points here: the first concerns the economic structure that was inherited in the aftermath of the Second World War; and the second relates to the relationship between the state and the business community in Scotland. These points will be examined in what follows.
The experience of war in the twentieth century helped to draw the state into interventionist activity, but since the experience of war was not distinctively Scottish the particularity of the way in which this influenced Scottish life has to be explained. There had been extensive state intervention during the Great War, especially in the realms of control of industrial production and fiscal policy.38 More significant in a Scottish context, however, were the compromises that were reached between private industry and the state in the form of the Munitions of War Act in 1915 and the creation of the Dilution Commission in 1916. The objective of these novel policies was to secure an environment in which industrial relations could be managed in a way that would not compromise the production of munitions and other war materials.39 These innovations brought government into a close relationship with the employers and their supporters, some of whom felt that workers should be conscripted by the state in order to reduce friction with private employers.40 These views capture the sense that state intervention in the Great War was conceived in the immediate context of the conflict and not as a precedent for long-term action. Another example of this outlook would be the 1915 legislation that restricted the power of house owners to increase rents in areas of munitions production.41 Indeed, partnership between government and private enterprise during the Great War was weighted towards the latter to a greater extent than during the Second World War and later periods.
The legacy of the Second World War was entirely different and more important in an analysis of the long-term growth of the state. Although the Scottish economy had been much more geared to the demands of the war in 1914 than in 1939, there were several additional factors that elevate its importance in an analysis of this theme. The first is the legacy of the interwar period when the repercussions of the economic depressions had a very severe effect on the Scottish economy, which was still dominated by heavy industry. The principal manifestation of this was very high levels of unemployment, a problem that increasingly came to be seen as a fitting case for government intervention. In the 1920s the response to regional unemployment was to move the workers to the jobs. This was not successful and an additional approach, one that was retained in ‘regional policy’ until the 1980s, was tried in the 1930s. The Special Areas legislation of 1934, 1936, and 1937 sought to provide indirect assistance to areas with high levels of unemployment.42 The National government (1931–40) in London had to be dragged towards these initiatives but, although Scottish Unionist enthusiasm was greater, they made only a marginal difference to unemployment.43 The deep-seated nature of these problems, however, seemed clear to contemporaries, across the political spectrum, in the 1930s.44 The Scottish Economic Committee, an offshoot of the Scottish National Development Council and composed of businessmen, trade-unionists, and academics, published a number of analyses in this decade. They identified structural problems, and argued for diversification and stimulation of the home market for consumer goods through government planning.45 The Scottish Economic Committee (SEC), although composed of individual businessmen, was taken so seriously by the government that it can be regarded virtually as part of the state. This concern with unemployment was an important element of continuity in attempts by British governments to use the resources of the state to iron out regional economic disparities, something that remained a concern until the 1980s. A second important legacy of the interwar period, more particularly the 1930s, was the contribution of rearmament, especially warship building, to the recovery of the Scottish economy in the five years before the outbreak of the Second World War.46 Thus, as Scotland entered the Second World War it had an economic structure inherited from the Victorian period that had not undergone significant modernization, despite the arguments of the SEC. The Second World War saw some isolated initiatives that brought new industrial enterprises to Scotland, such as the expansion of the Rolls Royce factory at Hillington in Glasgow or the establishment in 1944, with the help of funds from the Ministry of Aircraft Production, of Ferranti’s Edinburgh factory.47 These developments did not amount to a reorientation of the Scottish economy and with other wartime developments, such as the establishment of the North of Scotland Hydro Electric Board and the expansion of the shipbuilding industry, the Second World War helped to embed the state in the Scottish economy and confirm the problematic economic structure of the 1930s. The level of employment in shipbuilding in 1947, for example, was 136 per cent of what it had been in 1939, and other industries that expanded their share of the workforce included the railways (240 per cent), engineering (136 per cent), the metal industries (140 per cent), and in a reminder that wartime tends to expand the bureaucracy of the state, the number of employees in government service in 1947 was 298 per cent of the total in 1939.48 In addition, Scotland was more heavily represented in those areas of the economy that were nationalized in the late 1940s, especially industries such as coal and iron and steel (although it was privatized in the 1950s and renationalized in the 1960s). This, it has been argued, acted as a drag on innovation in the Scottish economy, making key sectors less amenable to adventure in times of plenty and inflexible in more difficult times.49
There is a great deal of evidence for the existence of a close relationship between business and government in Scotland, and frequent suggestions that this has created a cosy relationship which has sustained a comfortable reliance on the state.50 Marxist theorists have argued that it is difficult to find another group in society which is able not only to wield influence by placing pressure on government but to enter into a partnership with the state and even to subvert the objectives of the state in its own interests.51 Nevertheless, the cosiness and complacency of this approach can be overemphasized. There were persistent efforts by the business community and government to try to find ways to shift the economic structure onto a different and more diverse footing that would be less reliant on the state. This was attempted, as we have seen, in the 1930s by the Scottish Economic Committee. Perhaps the businessmen of that generation were drawn closer to government by the experience of wartime cooperation. Sir James Lithgow, the shipbuilder who had presided over the rationalization of that industry in the 1930s, had also been active in the Scottish Economic Committee and had acted as controller of merchant shipping during the Second World War.52 Lithgow was well aware, through his ruthless implementation of rationalization in the 1930s, that wartime expansion was not a recipe for peacetime prosperity. Ill-health minimized his role in the industry in the post-war period, however. Steven Bilsland, the banker and son of Sir William Bilsland, whose fortune had been made in the food industry, proposed a Scottish Development Finance Corporation with the aim of working with the Scottish banks to provide funds for innovative business ideas, but this idea was not supported by his fellow bankers.53
Perhaps the most important effort by the business community in partnership with the state to provide suggestions for the reorientation of the economy came in the early 1960s. The Scottish Council (Development and Industry) appointed a committee that investigated the condition of the Scottish economy and produced an influential report. The latter committee, chaired by Sir John Toothill, the chairman of Ferranti, argued for a fundamental reorganization of the Scottish economy away from heavy industry, and also suggested a greater emphasis on identifying sectors and spaces for growth rather than targeting areas with high rates of unemployment.54 Toothill was an interesting character. He did not have the same baggage as many of those we have already considered. He came north with Ferranti in 1944 and was aware of the practical as well as the business dimensions of his trade through his training in both engineering and accountancy. His was a challenging prospectus and one that was greeted with some enthusiasm in business circles in Scotland and within the Scottish Office, with whom his committee had a close relationship. This might be taken as further evidence for the incorporation into the state of this group of leaders within light industry, but the matter may not be as simple as it appears. Government departments such as the Board of Trade and the Scottish Office were very keen to have a report that would not be perceived to be partisan, and they were also willing to second civil servants to bolster the secretariat that would support Toothill: evidence, perhaps, of a close link between the formal state and the business interests in the Scottish Council.55 Indeed, the point might be taken further in that one of the results of the publication of Toothill’s report was the reorganization of the Scottish Office and the establishment of a new Scottish Development Department.56 At a wide British level, however, there was much less enthusiasm for Toothill’s ideas, which would have required a fundamental reordering of economic policy were they to be implemented.
This episode demonstrates a number of important points about state intervention, above all the fact that the state was not a monolithic entity. It provides some evidence for the autonomy of Scotland in that business interests and the Scottish Office were able to cooperate to produce a plan for the Scottish economy which was implicitly critical of central-government policy, as had been the Scottish Economic Committee in the 1930s. Nevertheless, it also hints at the circumscribed nature of such autonomy, in that beyond bureaucratic reorganization Toothill’s investigation was to have little effect in terms of policy in the short term. Nevertheless, the episode provides evidence for the close relationship between the state and business leaders in Scotland. Business leaders made further efforts to persuade Conservative governments of the need for a fundamental shift in the economy in the late 1960s and 1970s with their ‘Oceanspan’ project. This was an attempt to make central Scotland a bridge for trade between the USA and Europe. The economic aim was to import raw materials on the west coast, feed manufacturing industry and export finished goods from the east coast. The political aim was to provide an alternative to Labour’s regional and nationalization policies.57 Many of the same organizations and leading figures whose ideas we have traced since the 1930s were involved: the Scottish Council (Development and Industry) and businessmen from the Lithgow and Colville families. Oceanspan, like the Toothill Report, failed to achieve its objectives, but it provides evidence that the Scottish business community were prepared not only to engage with but also challenge the outlook of the state. Of course this was partly political. In 1968 Sir William Lithgow (son of Sir James) wrote to The Times from his shipyard in Port Glasgow arguing in favour of what he called ‘social capitalism’, which involved lower taxation on wealth-creating activities with the objective of greater individual self-reliance and less reliance on the state.58 This would allow the state to invest in facilities, such as modern hospitals, for the really needy. Harold Wilson’s Labour government of the day, however, had different priorities.
In part, the failure of these radical suggestions for economic restructuring of the Scottish economy was due to the commitment of governments to dealing with regional imbalances in economic indicators, especially unemployment. The heyday of regional policy came in the 1960s and 1970s with governments of both parties committed to the idea, although using different tactics.59 This policy is particularly associated with Wilson’s Labour government between 1964 and 1970, but it has been suggested that much of the intellectual architecture that supported Labour policy after 1964 had been put in place by the Conservative government which preceded it, although that government was less active in implementation of policy than its successor.60 In a specifically Scottish context, however, landmarks from this period include a massive loan from the government to the Scottish steel industry, then in private hands, to build a strip mill at Ravenscraig in Lanarkshire, as well as support for vehicle- production plants at Linwood in Renfrewshire and Bathgate in West Lothian.61 Indeed, it might be argued that these initiatives were barometers of the rise and fall of regional policy and the determination of government to implement them against the wishes of the private enterprises concerned. The withdrawal of support in the early 1980s and lack of political concern, with the consequential additions to the ranks of the unemployed—in contrast to earlier periods—condemned these plants to closure and signified the move away from state intervention to plan the economy. This presaged a period in which government would adopt the rhetoric of hostility towards the active and expansive state. This would have the effect of separating the task of economic restructuring, through policies such as privatization, from its Scottish political and constitutional consequences.
This essay has explored the links between the role of the state and the operation of the Union in Scotland in the period since 1918. Although aspects of this topic—housing, economic development, the regeneration of the Highlands, education—have attracted a great deal of attention, there are big questions that remain to be examined by new research. It would be constructive if discussions of public expenditure in Scotland moved on from ritual denunciations of ‘subsidy junkies’ to a more considered approach to the impact of state activity on Scottish economic and social history. This cannot be done if Scotland’s relationship with the state is treated in isolation from the impact of the state on other regions and nations of the United Kingdom, and much further work on this wider theme remains to be done. Attempts to link the role of the state into newer debates about Scottish history would also be helpful. One example would be the role of the state as an actor in the environmental changes that have taken place over the course of the century. This would involve detailed work on the generation of energy, the management of resources, the use of the landscape, the development of transport, and the history of pollution. The consequences of environmental change are a huge challenge for politicians at all levels and may provide a positive role for the state to play in a regulatory and activist role. The historical contextualization of these issues would be a signal contribution to understanding these problems.
The chapter has noted how the operation of the Union for much of the period delivered conditions where there was a consensus over the role of the state. For most of the period since 1918 there has been a recognition that many areas of Scottish society—education, health, rural society—were run by semi-autonomous institutions resourced by the British state. Through a variety of mechanisms, including explicit formulae, as well as physical conditions and political choices at all levels of government, relatively high levels of public expenditure have been a feature of the role of the British government in Scotland. This has persisted, until very recently, through a variety of different political contexts, even in the 1980s when the aspiration of government was to reverse this process. The extensive role of the state in Scotland was also developed as a response to massive social and economic problems which were, in the realm of housing, for example, legacies of earlier periods of development. Through this process the state stamped its mark on the social landscape of twentieth-century Scotland. The extreme difficulty of dealing with the problems posed by Scotland’s industrial structure in the post-1945 period has had important long-term consequences. The ultimate failure of both the British and Scottish dimensions of the state in this area left Scotland particularly exposed to the economic conditions and Conservative ideology that characterized the 1980s. This produced a rapid and politically insensitive reorientation of economic structures which, in turn, helped to pave the way for devolution in the late 1990s and the revival of conditions where an expansive role for the state could once again be considered. Current economic conditions and the response of another government determined—even more so than its predecessor—to shrink the state, revive the prospects of polarization of Scottish and British political outlooks over the role of the state in society, and prompt continuing debate over the nature of the Union.
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