Ewan Crawford: Failing UK economic model needs overhauled AS the Westminster programme of cuts accelerates, Scotland needs a detached platform from which to generate private sector growth, writes Ewan Crawford WHEN it comes to historically important documents it might not quite have the same resonance as the Declaration of Arbroath, but for Scottish nationalists the racy sounding academic journal Accounting Forum might yet be of some significance in the independence debate. Although not the only factor, arguments over the economy are clearly going to be among the most important when voters decide on Scotland's constitutional future. In this respect, judging by current evidence, the opponents of independence seem to have retreated to some extent from the traditional ground of asserting that Scotland is some sort of economic basket-case reliant on the kindness of others (ie English tax-payers). This, I suspect, is largely because the sheer scale of the UK deficit makes it difficult to argue that countries which borrow money should not be allowed to exist. Instead, the basic position can be summed up in the idea that, as David Cameron put it in The Scotsman earlier this year, the current UK arrangements mean Scotland is "richer and fairer" than it would otherwise be. Unfortunately, as academics from Manchester and London demonstrate, in my now favourite accountancy journal, when it comes to the current economic framework of the UK, that conclusion seems very hard to justify. Writing about the reality of regional inequality in the UK, they make some startling claims. It is not so much that the British national economy is not working as it should be but that it is in fact "ceasing to exist in its traditional political and economic sense as a political space of negotiation and an economic space of redistribution which guarantees minimum standards for all regions and individuals within its boundaries." Moreover the authors question whether "the [British] national is still the relevant unit of analysis because the British are not all in the same boat but, increasingly, are locked into different compartments." The argument advanced does not explicitly mention independence. Instead the focus is on the unbalanced nature of the British economy which concentrates private sector job creation in London and the South East of England. Although not discussed in the article, part of the success of London must be due to huge publicly funded infrastructure investment, with the Olympics as the biggest construction project in the world just the latest example. For other parts of the country, particularly what they call the ex-industrial regions, compensation used to be available by way of public spending in the form of welfare benefits and public sector jobs. Crucially, that public spending is now being withdrawn by the Conservative-Liberal Democrat coalition government. But perhaps the most significant policy point made is that even a traditional Keynesian stimulus, which does not take account of the regionally-divided nature of the UK economy, will not work because the benefits will fail to reach areas which have struggled to create private sector employment. It will be London and the South East that will gain most, even if stimulus there is unnecessary. For Scotland, and the debate on independence, this raises important issues. Firstly, it seems nonsensical to tie ourselves to economic policy-making on an all-UK basis if the UK as a single economic unit has effectively ceased to exist. Looking at the Accounting Forum academics" figures, Scotland has had some success in creating private sector employment but not enough. Taking into account the fact that we know Scotland contributes more to the UK exchequer than it gets back in public spending, we are in a different position from the other "ex industrial regions" such as the North East of England and the West Midlands. Unlike those regions, public spending here seems to have been part of an informal quid pro quo for successive Westminster governments, denying Scotland the means to exploit vast oil and gas reserves as well as the normal economic powers required to boost growth and private employment. Now, the public spending tap is being turned off but access to oil revenues and economic powers are still being withheld. This presents challenges for independence supporters. The SNP's current economic strategy focuses to a large extent on the fact that Scotland is a wealthy country with advantages in, for example, whisky exports, oil and gas, tourism, universities and its potential, in Alex Salmond's brilliant phrase, to be "re-industrialised" by harnessing renewable energy. Because of these advantages we are in a better position than most to stimulate private sector employment. And it is this focus on private sector job creation that should be at the heart of the independence debate. A pet tactic of SNP opponents is to talk up the economic uncertainty of the forthcoming referendum. In response, nationalists usually reel off impressive inward investment figures and Scottish successes. But without becoming defensive on this issue, it is clear that political and economic change is needed precisely because the current system is failing. The US and other countries recognise the importance of boosting manufacturing through smart taxation and tailor-made education and training. In Scotland we have a relatively low level of spend on research and development and it is in developing policies to improve such aspects that the pro-independence parties should be working on. We know the bulk of Westminster spending cuts are still to come and will be having an even bigger impact by the time of the referendum in 2014. More than ever, those cuts will encourage people to look at the alternative. To win the referendum, it will be vital to maintain a sense of mission to create a more equal society and protect principles such as universalism. But perhaps the most important task in response to the failure of UK economic policy will be to build a consensus on the need, and the means, to achieve Scottish private sector growth.