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Ruth Davidson speech to Adam Smith Institute

25 Aug 2015

Good Evening Ladies and Gentlemen.

Thank you for the opportunity to speak to you this evening.

It seems to me that there is a rather long and – if I might say – inglorious tradition of Scottish politicians hanging speeches round the neck of Adam Smith and his legacy.

I’m sure you’re familiar with them, but – for me – there seems to be two main types.

The first type is what I would refer to as the Gordon Brown method.

The Brown method is where you examine Smith’s philosophy from three hundred years ago and demonstrate that, astonishingly, it coincides almost exactly with your own policy agenda here in early 21st century.

Yes, it turns out that Adam Smith was a kind of New Labour prophet, just waiting to be discovered all this time.

Which shows your current policy platform isn’t a tricksy wheeze to triangulate left and right, all the better to scoop up the votes of middle England. Oh no!

It turns out that it has a “golden thread” linking it right back to the heart of the Scottish enlightenment where, before the words “Tony Blair” were ever heard, it was first discovered that liberal economics and social justice could go hand in hand.

The fact that Smith actually came from Kirkcaldy is just the cherry on top of the cake.

I can only say that if I was Gordon Brown looking for some kind of ballast to hold my political beliefs together, I probably wouldn’t have been able to resist either!

But that isn’t the only type of speech of course. There’s a slightly shabbier version of the Brown method which adds a great dollop of parochialism mixed with hubris.

This is the one where Politician B seeks to assert that pretty much everyone has got Adam Smith wrong from Day One. Apart, of course, from the speaker himself.

And why have they got him wrong?

Broadly speaking, continues Politician B, this is because they are not Scottish.

And, in not being Scottish, they therefore fail to understand the true meaning of Adam Smith.

Target number one is, of course, the Adam Smith Institute.

Far from being an organisation set up to carry forward the example of Smith’s ideas, declares Politician B, the Adam Smith Institute is a sham.

It is a misrepresentation. Clearly an imposter – and proof, if proof were needed, for heaven’s sake, it’s doesn’t even have an office in Scotland.

It looks only at the Wealth of Nations. It looks only at the invisible hand and all the free market stuff.

It forgets entirely, continues Politician B piously, that Smith was also the author of the Theory of Moral Sentiments. That Smith also thought about the good society as well.

Not like all those right wingers in London who have tried to appropriate Smith for a Thatcherite inheritance.

They don’t get Smith, Politician B continues. Not like him. In fact, he thinks to himself, no-one understands anything about Scotland quite as well as he does.

No-one, indeed, is half as Scottish as him either.

I speak of course, of the Salmond method.

Ladies and Gentleman, I may exaggerate – but only slightly.

And let me say at the outset this evening that I promise to try and do two things. I will try to steer clear of both the Brown method and the Salmond method.

I promise no claims of Adam Smith as a paid up member of the Scottish Conservative party – or a £3 entryist.

And I will attempt not to preach about why all of you have got Smith completely wrong, and only I have the answer to what he was really trying to say.

However, I do take one lesson from all of this.

It’s that, if politicians of all types and tribes find an echo in Smith’s writings which supports their own case, that’s because he speaks to something essential in our humanity – things that unite us all, no matter our politics.

I see Adam Smith as a great Scottish humanist. Not for him the grand delusions of “men of systems” who seek to organise the world to their own ends.

He recognised that people weren’t pieces on a chess board who could be moved around by outside forces. He saw us for the individuals that we are.

From this basic insight, flowed everything: his liberal outlook on life, his practicality, his sense of justice.

He eschewed the simplistic, booming slogans promising to impose equality, liberty and fraternity on everyone.

Smith’s view was more optimistic – that, being essentially virtuous, it is best for society if people are left to pursue their self-interest.

As Eamon Butler writes in his primer on Smith, he understood that we humans are complex.

We act out of self-interest, of course, but also out of sympathy with our fellow man and woman. If we are not chess pieces, then nor are we islands either.

A Wealth of Nations and the Theory of Moral Sentiments express this complexity perfectly.

They are, as Butler writes, complementary attempts which show how self-interested human beings can live together peacefully and productively.

My lecture this evening is entitled “lessons from Adam Smith: the need for a Scottish alternative”. So let me start by asking how we are getting on with that task in Smith’s homeland – living together peacefully and productively.

I repeat. I won’t try to divine what Adam Smith would have made of the current political landscape in Scotland.

What follows is my own analysis of the situation we face.

I will then set out the problems and issues I identify flowing from the current nationalist regime, and how we in the Scottish Conservatives are determined to set out a clear Scottish alternative to that ahead of yet another electoral test in May next year, when the next Scottish Parliament elections are held…

So, firstly, where stands Scotland?

In less than a month’s time we will mark the first anniversary of the referendum vote. What’s clear is that the echo of that referendum still dominates our politics.

Most obviously, we saw this in the general election in May.

In the referendum, 1.6 million Scots voted to leave the United Kingdom. It wasn’t enough to gain secession. But put that voting block in a first past the post system, and it represents a winning hand.

This is what happened in May. Most of Yes voters – some 1.4 million – stuck with the one significant party that had backed a Yes vote last September.

By contrast, No voters were divided among the three pro-Uk parties. Inevitably, the outcome was that the SNP therefore won practically every seat.

This perhaps explains the paradox of a country which rejected independence this time last year only to then hand a landslide to the one major party which backed it nine months later.

In case you’re wondering, the election of the self-styled ’56’ has not led to a surge in support for independence. It hasn’t. Scotland stands pretty much where it was.

…which explains the other paradox in all of this – which is why Nicola Sturgeon – despite her party’s success – is not, as we speak, leading a fresh charge for separation ASAP.

With the oil price sinking ever further below $50 a barrel, and with the white paper’s case for independence getting more absurd by the day, she is in no great rush to lead her party into the valley of death.

She knows that going too early and it would likely be a heroic failure.

She also knows that the SNP can’t afford another loss.

Alex Salmond’s memoirs were called “the Dream will never die”. More accurately for the SNP, it should be “The Dream MUST never die”.

The dream must never die because, if it did, then the SNP would be, in large part, over. It would be the end of the road for the Nationalists. Travelling hopefully to arrive is all that keeps many in the movement – held together with their political polar opposites in all things – bar the constitution.

And, all the evidence right now suggests the SNP would lose that second referendum.

As we know from Quebec, a second loss – no matter how small – is enough for that dream to fall to its death from a pretty high cliff.

So, Nicola Sturgeon knows she needs to keep the dream travelling down that road for some time to come.

So that’s where we stand politically in Scotland: with a ruling party which wants another referendum, but which fears going ahead and having one.

And right there lies our problem.

Simply put, under this Nationalist administration, we face inertia and drift.

Instead of focussing on the things that matter – more jobs, better schools, a health system that works, fixing a Frankenstein of a single police force entirely of their own making – instead of all that, we have an SNP administration which has parked Scotland in constitutional gridlock.

We are run by a party which knows it has to keep power and keep control – so it is ready for when finally something comes up to help them.

Maybe it’ll come in the form of instability in the Middle East which suddenly pushes North Sea oil past $100.

Maybe something absolutely ridiculous will happen elsewhere in the UK – like Jeremy Corbyn being elected leader of the Labour party.

The SNP is a past-master at waiting for opportunities, and then exploiting them to the full, with nothing but the goal of separation in mind.

My point is this. The SNP might be happy to wait. But Scotland can’t afford to wait.

We can’t afford another few years of hanging around, looking up at Nicola Sturgeon every day to see whether she’s made up her mind about when she wants another referendum.

Not while we’re failing to tackle the underlying problems in our society.

In short, we can’t afford five more years of this SNP Government.

Forget the spin about SNP competence for a moment. It was always a myth, one which only was believable because – for all the SNP’s failings – they at least had the merit of not being Scottish Labour.

The truth is that this Government is taking Scotland backwards.

Examine the facts of the SNP and it is far removed from the self-satisfied and slick presentation that is often portrayed.

The reality is that this is a Government which is characterised by a desire – first and foremost – to control.

Its first instinct is to seek to impose a centralised, statist system across all walks of public life. Because more control means a greater chance of branding the separatist logic across Scotland, and beyond.

The effects of this top-down centralising agenda have been overwhelmingly negative.

In health, where political control over the NHS is now tighter than ever, we have a system which is teetering on the edge.

Again, forget the SNP rhetoric about Tory austerity being the cause – the Institute of Fiscal Studies found that NHS spending in England has risen by 5% in real terms since 2009, compared to a cut of 1% in Scotland over the same time frame.

This is despite the fact that austerity has been less in evidence in Scotland than down South – departments have been cut by 13% in England, compared to 8% in Scotland.

Far from using this money to better effect, however, reforms have been shunned and central control has been tightened. The result is that, in one recent survey, fully 60% of NHS consultants say that bureaucracy is making it very difficult for them to do their job.

The situation in education is, if anything, worse. The pattern is familiar: moves like those by the Conservative government in England to weaken centralised control and free up schools to innovate have been blocked.

Instead, a top-down system has been kept in place, all the better to ensure full political control. To give one example, not so long ago, Scotland took part in two leading international literacy and maths studies. The problem was that they tended to show Scotland not performing so well as others.

So the SNP did what any responsible government would do in those circumstances. It withdrew Scotland from the study. Problem solved.

Unfortunately, other studies are still being published. And they continue to show that our numeracy and literacy levels are falling. Furthermore, the gap between the richest and poorest in society remains obstinately wide.

The SNP’s response to this disgraceful state of affairs has been illuminating.

It is, of course, page 1, paragraph 1 of the SNP playbook that it shuns any reform which is being promoted by the hated Tories.

Rather, the SNP’s response has been true to its own statist and centralising values. Firstly, it has legislated to force the councils which run schools to close the attainment gap – next up, a law to ban bad weather in Glasgow.

Secondly, it has wheeled out the chequebook – and has found £100m down the back of the sofa to be spent on closing the attainment gap, quite how, with what strategy, framework or benchmarks, don’t ask.

And thirdly, it puts its fingers in its ears to all criticism. Only last week, the facts showed that while the proportion of the poorest 18 year olds going to University in England is rising, the number in Scotland is actually going down. The situation is worse in Scotland than in any single other part of the UK. The SNP had no response to the cold, hard, facts, so simply claimed the figures were not comparable.

It’s the SNP way – old-fashioned command and control government, given a New Labour spin, and topped with a dollop of pious self-congratulation.

The examples are legion.

This is the Government which took the decision to turn eight police forces into one – a single force which now feels in no way accountable to local communities in Scotland.

It is a Government which, in a newly published Higher Education Bill, seeks to extend government control over the way Scottish Universities are run.

It is a Government which has shunned autonomy in local government to the extent we are now seen as one of the most centralised nations on the planet.

You get the picture.

So we need change. And this is soon to become all the more urgent for us in Scotland. Because, starting from next year, vast new financial powers are to be transferred to the Scottish Parliament, and the old ways will simply no longer do.

Already Ministers have control over the stamp duty we pay on the purchase of property – and have made a complete hash of it.

To that power, soon will be added complete control over income tax, over the proceeds of VAT, and over £2.5 billion pounds worth of benefits currently delivered by the UK Government.

I have welcomed the transfer of these powers to Holyrood – indeed it was the Scottish Conservative party’s own recommendations which are now being carried through by the UK Government.

I did so because I believe that Governments like the SNP will never be responsible or accountable unless they have to look taxpayers in the eye.

Devolution created a fault line – allowing newly appointed Scottish Ministers to flash the public cheque book, without ever having to ask ordinary working people to hand over their hard earned money in the first place.

The reforms that are coming will change that. No longer will the SNP be able to say that everything good in Scotland is because they spent money on it, and everything bad is because nasty Westminster didn’t give them enough.

And it is my fervent hope that the discipline created by this new system will finally force parties like the SNP to face up to the consequences of their actions.

That we finally start incentivising the right kind of policies

And this is where we, the Scottish Conservatives, come in.

Let me correct another myth: Scotland is not a socialist nation.

Yes, parties of the left have been in predominance in recent years. But the idea that Scots are yearning to pay more tax so they can have ever more enormous welfare provision simply isn’t true.

One of the spectacles I’ve most enjoyed in the current Labour leadership contest has been the sight of Owen Jones , the sage of Stockport, declare how a lurch to the left under Jeremy Corbyn, will help win back Scotland.

Good luck with that one, Owen.

The facts are these: only around a quarter of people believe benefits are too low and cause hardship. Only around 40% want government spending to increase. The vast majority think the UK government policy of the welfare cap is the right way forward.

The idea that Scots are yearning to pay more tax to fund ever higher welfare policies simply isn’t true.

Even Alex Salmond once commented that Scotland “didn’t mind the economics” of Lady Thatcher. For once he speaks for Scotland.

What Scotland wants, I believe, are parties of heart and head – parties which know their way round a balance sheet, but have a beating social conscience at the heart of their policy offer, too.

This is what the Scottish Conservatives offer. And with more financial powers at Holyrood, it will be ever more relevant and necessary.

Let me give one example.

Very soon, it will be for Scottish Ministers to decide on the income tax rates for Scottish taxpayers. Scotland will need to raise income from its own taxpayers, not solely from a block grant.

The approach from our opponents on the left has been predictably nonsensical. Scottish Labour’s new leader Kezia Dugdale was barely in the job a week before stating her desire to raise taxes on middle to high earners.

This, of course, will receive the warmest welcome from George Osborne – as its most immediate impact will be to encourage Scotland’s top-rate taxpayers to leave Scotland for South of the border.

It is Labour at its most typical: borne of legitimate intentions, but utterly naïve and self defeating.

As Conservatives, we set out a different course. What we need isn’t a policy designed to deter high earners from Scotland – what we need is the ambition to attract earners across the whole spectrum to help boost public services.

At the last count, Scotland had just 14,000 additional rate taxpayers – that’s 5% of the UK total; a level far below our population share.

I want to see the Scottish Government commit to matching the UK average so we have another 10,000 additional rate taxpayers living in Scotland – growing the income of working Scots as well as attracting the brightest and best from across the UK.

The benefits would be huge. At a conservative estimate, it would increase tax revenues in Scotland by £1.5 billion a year – enough to pay the salary of every schoolteacher in Scotland all 50,814 of them.

This is not unachievable, we can make this happen.

We do that first by guaranteeing that tax rates in Scotland will be no higher than the rest of the United Kingdom – something I urge the Scottish Government to do immediately. This sends out the right message to everyone from across the UK that Scotland is not about punishing earned wealth.

And secondly, I want to see us in Scotland rolling out the red carpet to our neighbours across the United Kingdom.

I make this call deliberately this evening in London. As a Brit, I consider myself fortunate that we live in a country with this global hub on our doorstep.

A city which, in the last twenty years, has gone from being one of the also-rans, to become a challenger for the world’s capital.

London is an incredible asset for a country the size of the United Kingdom, and I want the rest of the UK to get more out of London.

Under this Conservative government, we’re seeing great efforts to ensure that the success of London is felt right across the country. Manchester and Birmingham are increasingly impressive alternatives to the capital. We are seeing a flowering of confidence across the UK.

I want to see Scotland capitalising on that too.

There is a problem, in that the SNP government keeps sending the wrong messages.

Politics is all, and the SNP’s interest lies in continually trying to find a wedge to drive between us and the rest of the UK.

Two weeks ago, the SNP made the entirely populist decision to ban GM crop development in Scotland. Will a well-paid scientist or bio-tech expert bring her family to Scotland now? I doubt it.

Over the summer, the SNP – egged on by Labour – set out an equally populist ban on fracking technology. Will that encourage engineers to come and find opportunities in Scotland? I fear not.

I know from speaking to business leaders at home that there are real worries that we are missing out of this Great British revival. They worry that uncertainty over our future will make us less of a competitive alternative.

I want a Scottish Government that unambiguously and enthusiastically seeks, attracts and retains the best talent that Britain has – and which recognises that we need to be in the hunt for talent.

In Glasgow, 15,000 new jobs have been created through the success of the new international finance sector. I want to attract 15,000 more people who otherwise might feel the pull of London’s capital.

And in engineering, the creative industries, life sciences and academia, it should be our absolute priority to market Scotland as the best place in the UK to do business.

And if I may borrow a line from Adam Smith for a moment, I do so for our self-interest. We are in the market now for human capital. We need more taxpayers to help us pay our way.

That’s why Scotland can’t hang around waiting for Nicola Sturgeon to decide what she’s going to do. We in Scotland need to put the constitutional battle behind us and get on with earning a better living in the world.

Now I fear I have talked too much about Scotland to a London-based audience already.

But I do believe that it is vital and necessary to speak up.

There is a danger within the United Kingdom that we sleepwalk away from one another.

A danger that people see only the voices from the SNP and assume that they automatically speak for all Scots.

It never was the case, and it certainly isn’t now.

And I am determined to speak up for the Scots who want an alternative voice to be heard.

Not a view which always seeks to put the constitutional question first – which tries to drive a wedge between Scotland and the rest of the United Kingdom.

But a voice for the many thousands of Scots who know that by staying one United Kingdom we can build stronger foundations for us all.

Who recognises that Scotland exports twice as much to England, wales and Northern Ireland as we do to the rest of the world combined.

You are not just our neighbour, our brother in this family of nations. You’re our best customer.

And I am determined to be a voice which stands up unashamedly for the Conservative values which are held deeply by so many – and in Scotland too.

The view that people make better decisions about their lives than the state.

That hard work should be rewarded, that aspiration and opportunity shouldn’t be dirty words, that a pound in the pocket is better spent by the person who earned it rather than by some nameless, faceless government official.

A belief in the invention and creativity of people, and where governments get in the way of that, they should remove themselves from the field.

A belief that there’s no such thing as government money, only the money governments take from the people and businesses of this country, and they should take less of it.

And an unshaking belief that it is the most natural thing in the world to want to build a better life for your children than that which you enjoyed – and you should be praised, not upbraided, for attempting to do so.

We need to champion genuine school choice precisely because children learn differently and should have the opportunity to be taught differently.

We need a police force that represents the communities it serves, not feels remote from them.

A health service which backs doctors’ clinical assessments, not buries them in target ticking.

Universal values of responsibility, hard work, just reward – helping those at the bottom and clearing a path for others to explore even greater horizons.

Getting back to proper, old-fashioned, blue-collar Toryism that somehow, somewhere, half our party forgot.

It’s how I was raised and half of Scotland like me.

But somehow, someone branded these values hard-hearted and cruel – and we let them do it. It is Labour’s greatest achievement in fighting the Conservatives that they persuaded people that our motives were malign.

It was not, is not, no ever will be the case, but we on the centre-right need to work night and day to change the script and show it isn’t true.

No one gets into politics to talk about marginal tax rates.

But such decisions matter.

They can create a virtuous cycle.

Acting now to make Scotland the most competitive and attractive place to do business within the UK, doesn’t just bring in more tax to pay for public services – it does something much more important.

It tells kids, growing up today in Dumfries, Stirling or Adam Smith’s home town of Kirkcaldy that no matter what they want to do in life, no matter the career they pursue, there are opportunities here for them.

It allows the gamer in Glenrothes to know they can create the next Grand Theft Auto in Edinburgh, the Designer in Denny to know his creativity can find a manufacturing base and a world market. And – even better – it can encourage the Big Bang fan in Birmingham, Bangor or Belfast to think they should come to Scotland as it’s the best Science and tech hub in the whole UK.

That’s why it matters. It matters that we tell our children they can have a better life than us, seize the opportunities on their doorstep, and have a future limited only by their own ambition.

So my job over the coming nine months will be to set out that plan and demonstrate that there is a Scottish alternative to the SNP’s old politics of grievance — a centre-ground plan, based on work, which will deliver security for Scotland and a stable future for families.

…a plan which reaches out to those who want to keep Scotland in the UK, and build strong foundations for our society. There is a proper, practical, pro-UK alternative to the SNP, and we are determined over the next year to provide it.

If I may be allowed to borrow briefly from the Brown method, in that – I believe – our party does follow in the practical, pragmatic tradition of Adam Smith.

And I am convinced more than ever, that we are within reach of winning our case.