Speech by Kezia Dugdale, Leader of the Scottish Labour Party
Politicians & Professionals 2017, David Hume Institute, Edinburgh
16 January 2017

A year ago, we appeared to be entering an election where the Scottish constitutional question was off the table and a focus on the new powers of the Parliament was just around the corner. Today, we look on at a world turned upside down.

All of us in Scotland are now well used to tumultuous times, but even the events of the last few years left us unprepared for what has happened over the past 12 months.
Those 12 months have delivered a difficult set of election results for my own party, a loss for Remain, and for majority Scottish opinion, in the EU referendum, the election of a demagogic populist as President of the United States, and the question of a second Scottish independence referendum dominating our political debate.
But despite all the political turmoil, in the world beyond wood panelled rooms like this, and the surroundings of Holyrood, the picture is much the same as a year ago.
Unresolved questions about the future of our public services.
Continuing austerity policies from both the SNP and Tory Governments.
And a whole slew of powers being delivered to the Scottish Parliament which, unquestionably, makes it one of the most powerful devolved Parliaments in the world.
The world has been turned upside down, but as I have said before, the Scottish experience in 2014 was the canary down the mine for the wave of populism that we have seen since.
Here in Scotland, the victory of populism – in the form of SNP dominance – has been resounding, and is largely complete.
It leaves us with the question I want to address this evening – where now?
This is a question that applies to my own party as we prepare for the coming local government elections and carry on with the hard work of rebuilding to the next Westminster and Holyrood elections.
But, more importantly, it is a challenge to all of us who care about Scotland and the future of our country. Those of us who believe in using Government not as a bully pulpit, but as a platform to make real and meaningful change.
Because whether it is the First Minister’s push for a second referendum, Theresa May’s “red, white and blue Brexit” or Donald Trump’s call to “Make America Great Again”, there is a need to get beyond sloganeering and posturing.
We must provide people with a political debate that meets the scale of the challenges we face.
In “An Enquiry Concerning Human Understanding”, David Hume said:
“A wise man…proportions his belief to the evidence.” All of us in public life – wise women as well as wise men – could do well to listen to that advice.
With that in mind, this evening I want to address three things in an attempt to answer that question – ‘Where now?’

Where now?
First, the events of the past 12 months and what the response of political parties here in Scotland tells us about what might happen in the coming months.
Second, how I believe we should respond to Brexit and the SNP’s demand for a second independence referendum.
And, finally, what we need to do to address some of the fundamental questions facing the Scottish economy in 2017, and the risks we face if we do not.
Before Christmas, Radio 4 presented a series of historians who gave their views about which year in history 2016 most closely resembled. Some said 1913 and the relatively stable years that came before the outbreak of the First World War. Others pointed to the 1930s and the toxic mix of extreme politics, financial crisis and the growing threat of instability.
And others suggested it was more akin to 1979 and the beginning of the paradigm shift that led to neo-liberal economics, the ‘big bang’ and the erosion of the institutions that had provided security and safety since the war.
Regardless of the year they picked, every one of them agreed that 2016 was significant, a period of time which some people have referred to as a “hinge year”.
One where significant disruption leads to great change and sets the direction for the generation ahead.
In the past eight years we have seen people’s faith in every major institution damaged.
Parliament, the banks, the church, the BBC, the police service – even our national game.
These are some of the institutions of our country which have provided stability for decades, and whether down to corruption, carelessness or downright evil, every one of them has lost credibility and standing.
At the same time, falling living standards and increasing instability in work and in our own communities has left people poorer, angrier and more convinced that the people in charge just can’t be trusted.
Instead of responding to this with real thought and then action, the public perception – and much of the reality – was that after the financial crisis and the pain caused by it, those same people went back to business as usual.
• The UK Government continued to push ahead with an austerity agenda that punished those who were left poor and angry.
• Banks soon returned to paying large bonuses to the very people the public believed were responsible for the crisis.
• And, in many circles, complacency set in that the worst was behind us and our politics, and the way we run our economy, should – and would – return to normal.
It was that arrogance – largely demonstrated by a Conservative UK Government that was deeply out of touch with how people really felt – that led to the toxic conditions that created 2016.
The reaction we saw last year wasn’t created overnight, but it was long overdue.
People voted for Brexit for a variety of reasons, but binding most of them together was a desire to bring about radical change in the way we do things.

A failure of politics
The Brexit vote represents a failure of politics. It demonstrates clearly the extent to which people are willing to go to have their voices heard and to express their desire for real change.
The same was true in Scotland in 2014 – 45% of people voted in the knowledge that they were taking a significant risk, but that was, in their view, the price to pay for change.
For politics to succeed, not just in the coming years, but in the coming decades, there needs to be an honest conversation about what politics can achieve and how we might make change happen.
This is where I believe that the other two major parties in the Scottish Parliament are going wrong.
Both the SNP and the Scottish Conservatives appear, since the Brexit vote, to be casting about for an expedient political position rather than working in the national interest.
Our politics has become even more polarised and more attempts are being made to re-open the divisions of the past few years than there are to heal them and attempt to take our country forward.
Both the SNP and the Tories talk of unity, but unity cannot be achieved by a politics that sees one half of the country constantly facing off against the other.
It is a recipe for a cold war in Scottish politics with both sides camped out around their positions, and our public services, our economy and our whole country suffering as a result.
Ruth Davidson is so keen to present herself as the guarantor of the union, but the Conservatives have done more damage to the case for the UK than anyone.
The tone deaf response of David Cameron to the Scottish independence referendum was to launch English Votes for English Laws, putting partisan advantage ahead of the best interests of the country.
And the decision to go ahead with an EU referendum, against a background of deep public anger towards the establishment, and a cry for real change, was reckless and irresponsible.
At no point did Ruth Davidson attempt to make any arguments against these approaches.
Today, with the Tory Government in Westminster without a plan and Britain facing a hard Brexit, Ruth Davidson sticks with defending them, rather than offering an alternative for how Scotland can best deal with leaving the European Union.
The Scottish Conservative Party is claiming to protect a union it is in fact putting at risk, after allowing the UK to fall out of another union that provided jobs and opportunities that enhanced our economy.
That is part of the reason I believe that the biggest risk Scotland faces – along with independence – is a Tory hard Brexit and a Scottish Conservative Party that is doing nothing to overcome the divisions of the referendum and everything to exploit them.
In July, when I first laid out Scottish Labour’s response to Brexit, I made absolutely clear that we would support the work that the First Minister was undertaking to try to protect Scotland’s place in Europe.
I did that because I believe protecting our relationship with Europe is essential for the future prosperity of our country.
We need to be able to take advantage of the opportunities on our own doorstep.
It was also because our relationship with Europe isn’t just a transactional one. It’s about identity. My own and that of so many Scots.
My belief in the European project – from working closely with our friends and neighbours, to the benefits of free movement – has been core to my politics.
That’s why I have worked in good faith with the First Minister since June on these issues, and we have had weekly debates in the Scottish Parliament.
The Scottish Government’s proposals before Christmas contain a number of ideas which need to be explored with the UK Government, and I hope they are on the table for the Joint Ministerial Meeting this Thursday.
Regardless of Scotland’s final relationship with Europe, the First Minister has now accepted something that she did not on the day after the EU referendum – that Scotland will find itself outside of the European Union, even if a deal is struck to maintain our relationship with the single market.
The focus of the Scottish Government now should be on getting the best possible deal for Scotland out of these negotiations, not on continuing to make the case for a second independence referendum.
The First Minister has changed her position on this several times over recent months. First she said in her manifesto that Brexit would be a possible trigger for another referendum, and then most recently she ruled it out for the next 12 months.
Having ruled it out in 2017, this now means that a second independence referendum would need to take place between January 2018 and March 2019 when the Article 50 negotiations conclude.
A referendum after that date would mean potentially leaving Scotland outside of the EU and outside of the UK. A set of circumstances that would see us lose the economic relationship with both our largest trading partners.
If the First Minister is serious about getting the best deal for Scotland there is only one thing that she should do – take the threat of a second independence referendum off the table entirely.

A ‘People’s Constitutional Convention’
This would be in the national interest, and would put the opinion of a majority of Scots ahead of her own supporters.
Because here are the facts.
Nicola Sturgeon knows that a second independence referendum in the next few years would fail.
She also knows that a quarter of people who voted for her in 2015 would vote no.
That Brexit has made more people less willing to take a leap in the dark.
And – crucially – the majority of the Scottish public do not want another referendum any time soon.
As a nation, we are already divided enough. We do not want to be divided again.
If the UK is set to suffer from the uncertainty created by Brexit, as businesses question making investments in the UK, we cannot afford for Scotland to appear to be an even more unstable prospect.
If the First Minister wants to have a referendum while Scotland is still inside the EU that means the country would face another divisive independence referendum while the UK negotiates with Europe.
It would mean people across Scotland voting to leave our biggest trading partner, with no knowledge of what the UK deal with the EU might look like.
It would be as reckless as David Cameron’s original gamble of an EU referendum.
And it would be a proposal that Labour in the Scottish Parliament would vote against.
Leaving the EU – whether we retain single market access or not – means that the whole structure of political decision making in the UK is going to change.
Whether we like it or not, questions about how we run our affairs are going to be central in the coming years.
Since Britain joined the Common Market, and then the European Union, more and more powers have transferred to Brussels to enable us to work co-operatively with other members of the Union.
Leaving the EU means many areas of law and policy will return to the UK.
This will probably be the single biggest change to the UK’s governance since devolution.
Currently, the Prime Minister and the UK Government have no plan to deal with it apart from a “Great Repeal Act” which appears to be nothing more than an initiative to grab a headline.For progressives who believe that this country needs radical change, and for the public who have been demanding it, this is an opportunity.
I am against independence, and I am pro-union.That doesn’t mean I’m pro status quo.
Any politician who believes the solution to our problems lies in no change hasn’t been listening hard enough.
The return of powers from Brussels gives us the opportunity to think afresh about how our country is run.For me, that means convening a People’s Constitutional Convention.
The experience of the Scottish Constitutional Convention in the 1980s and early 1990s showed that it doesn’t take Government to create a popular movement for change.
It takes people working together around a common vision and a common idea.
Yes, the power of Government ultimately makes the vision a reality, but if it wasn’t for the will and determination of civic Scotland, church leaders and opposition politicians in the 1980s, devolution may have vanished after the failed referendum in 1979.
Last month, I presented my proposal for a People’s Constitutional Convention and wrote to Theresa May encouraging her to do just that. Instead of the future of our country being determined behind closed doors in Westminster, it should be determined by the people of this country. The Government’s response to my letter was to reject it out of hand.
I believe it now falls to the Labour Party across the UK to convene a constitutional convention to determine how government across the UK will work after Brexit.
And I was pleased to see Jeremy Corbyn back the idea again yesterday.
It is for us in Scotland to determine how best we manage our affairs and our future here, but we need to play a full part in any process to reform the United Kingdom.
This is not constitutional change for the sake of it. We are faced with the prospect of one of the biggest upheavals in our governance arrangements that we have ever seen. We cannot, and would not want to, escape this debate. This is an opportunity to respond to the circumstances that led to Brexit and to put Labour’s values into practice.
It is now widely accepted that the inequality that exists between different parts of our country is not just unpalatable, it is holding our whole country back.
Having a productive and growing economy relies on every part of the UK firing on all cylinders, not just one corner.
Our contribution to this debate has to be rooted in building our economy for the future and ensuring opportunities are spread across all parts of the UK, and all parts of Scotland.
As a starting point, there are three areas where I believe it is important that Scotland starts to look at taking responsibility.
The first is in the basic protections and guarantees around employment. The European Union has provided a backstop for protections, but when the social chapter ceases to apply here, we have to ask where that power best sits.
I would argue that the UK should continue to set a basic standard for the whole of the UK, but different parts of the United Kingdom should be able to build on those across the country. So, the Scottish Parliament would be able to build on a common UK standard, should it wish to.
The same principle would also apply to the minimum wage. A national floor should be set above which the devolved institutions across the UK would be able to increase the minimum wage.
The second area is in fisheries and agriculture. In this, as in a number of other policy areas, we should not undermine the devolution settlement by seeing the UK Government take responsibility for areas of policy which are clearly devolved. If an area of policy is not contained in Schedule 5 of the Scotland Act, then it should return not to London, but to Edinburgh.
Fisheries and agriculture may still require co-ordination across the UK, but this should be done in a negotiation between the Governments of the UK, as equals.
Finally, we need to seriously consider the case for decisions about immigration being taken at a more local level, along the lines of the model that is in place in Canada. This would allow different parts of the United Kingdom to have immigration policy that meets their particular needs.
The Fresh Talent initiative – which was developed by the last Labour-led Scottish Executive – set the precedent that there can be different immigration arrangements for Scotland. It is disappointing that there hasn’t been the political will to make anything similar happen recently.
This proposal is attractive and one that Scottish Labour will look at in more detail in the coming months, including with colleagues from Canada and Quebec, and we will also look in detail at the recommendations of the APPG on Social Integration.
New governance arrangements across the UK, that give a greater role to devolved institutions, would create a new phase of devolution for our country.
I believe this has to sit alongside a restatement of the partnership between Scotland and the UK in a new Act of Union, to modernise our Union for a new age.
Too many of our discussions about further devolution in Scotland have been reduced to an auction of powers. What we need instead is a discussion that meets the desires of a majority of people across Scotland – a strong Scotland with more power to determine our future, while maintaining and strengthening our relationship with the rest of the UK.
This is what a new Act of Union would enable us to do – to spell out in detail the renewed relationship between Scotland and the nations of the United Kingdom. It would make clear that our country is a partnership of equals where the four nations of our country pool sovereignty in order to maximise opportunities. And where being part of the UK continues to guarantee certain rights and privileges on which we can build.
I believe this is an ambitious agenda for change which is in line with what the majority of people across Scotland want.

Pro Union, but not pro status quo
Equipping Scotland with what it will need to prosper in a post-Brexit environment.
But we also need to be ambitious for the powers we have now.
After years of debate and discussion, our Parliament is now more powerful than it ever has been.
And as we face the prospect of Brexit we should not just be thinking about what it means for our institutions, but what the Scottish Government could be doing now in order to put us in the best position for the future.
Even before Brexit, the challenges we faced as a nation were immense. And, in many respects, Brexit does not change that.
We still face challenges to grow our economy, increase the productivity of our labour force and open up new opportunities for the Scottish economy.
According to the independent experts in the Scottish Parliament Information Centre, the Scottish Government has missed its targets on growth, productivity and labour market participation.
With more and more of the Scottish economy being owned by foreign based companies, we need to look at how sustainable this makes our economy in the future, and whether new models of ownership – such as co-operatives and mutuals – could bring ownership closer to home.
If I were in the Scottish Government, this is what would be keeping me awake at night.
Over the coming months, I will have more to say about how Scottish Labour believes we can build a more productive economy. But before I conclude this evening, I want to lay out three changes I believe the Scottish Government needs to make to give our country the best chance to succeed in the future.
The first is the action that they can take during the budget process in the coming weeks.
After the elections in May, I appointed myself as Scottish Labour’s spokesperson for finance because of the importance I place on the choices that the Scottish Parliament now faces in this budget.
This is the first budget where MSPs will be able to make full decisions on income tax – therefore placing with the Scottish Government the power to increase tax revenues if it wishes.
The current budget proposal from the Government would see hundreds of millions of pounds of cuts which would have a devastating effect on our communities. This comes after years of cuts have placed more and more strain on our public services.
My priority in this budget is for the Government to use the powers they have to reverse these cuts.
If we want resilient communities that can face the challenges of the future, we need to pay for it. Scottish Labour has made the choice to be honest with people and we have explained why we are asking everyone to pay a little more and those at the top to pay the most.
The SNP Government cannot continue to complain about the consequences of austerity if it is not willing to take action to stop it.
The proposed budget also means continued cuts to Scotland’s schools, as local authorities are forced to try to make ends meet.
Cutting the budgets of Scotland’s schools when our economy faces significant challenges is totally irresponsible. It doesn’t just limit the opportunities of the current generation, it will harm our economy in the future.
Every employer I meet tells me of the need to improve the Scottish education system and, in some of the fastest growing industries, I meet employers who have to look outside of Scotland to find the skills they need. This can’t go on.
Since 2007, the SNP has presided over an education system that has seen over 4,000 teachers lost along with fewer support staff in our schools. And in our colleges, there are 152,000 fewer places now than when the SNP came to Government nearly ten years ago.
So while funding to tackle the attainment gap is welcome, it can’t make up for the cuts of the past decade.
I always talk about the money we want to raise to stop the cuts to our schools as an investment. Because we are investing in the skills of the next generation of workers which is the key building block of a stronger economy in the future.
If people are the first ingredient of a successful economy, place is the second.
In Scotland we are blessed with a number of dynamic and innovative cities, from Inverness and Aberdeen in the north, to Glasgow and Edinburgh further south.
The geographic distribution of our cities means that there is a potential engine for economic growth in every corner of our country. We need to be in the best position to take advantage of that.
The City Deals which have been awarded across Scotland so far have and will inject millions of pounds into local economies, and in the future will go some way to unlock even more potential.
But we have to be even more ambitious.
The UK Government’s commitment to provide a City Deal to every Scottish City cannot be a wasted opportunity. The Labour-led local authorities in Glasgow, Edinburgh, Aberdeen and Stirling are to be commended for leading the work to secure city deals.
I want to see the same level of ambition from the Scottish Government.
This Scottish Government needs to ditch the timid managerialism which seems to have become its hallmark and start taking more lessons from pioneers such as Tom Johnson, who left us the legacy of hydroelectricity.
Government should be thinking radically about how we make the most of our cities and thinking big.
So, let’s not just trumpet a ten minute reduction in the time it takes to get a train from Glasgow to Edinburgh. Let’s start thinking aloud about how we could create an intercity network to connect our cities together in even less time.
We have an engineering hub in Aberdeen where it is easier and often quicker to travel to London by air than it is to Edinburgh by rail.
Why aren’t we talking about changing that?
In Glasgow, campaigners have called for a Crossrail service for years and properly integrated transport across the whole city region. The Government should be looking at how we can make this a reality.
And, in Edinburgh, we have a successful tech sector and a well-established finance sector working alongside each other. What more can we do in order to get them working properly together, so we can take advantage of the burgeoning opportunities and expertise in Fintech?
Absolutely none of this will happen by accident. It takes political will and a proper strategy owned by an individual in Government.
That is why it is so disappointing – when the evidence that cities drive growth is so persuasive – that the Scottish Government has no dedicated cities minister.
In fact, the word cities – which long appeared in the title of at least one cabinet member – has been dropped entirely.
Appointing a dedicated Cities Minister would be a strong signal that driving growth through our cities is a priority for this Government.
Finally, we need to stop opportunities passing us by.
The Government has been very successful at saving industries at risk, but when it comes to identifying growing industries and helping them to succeed, the picture is less positive.
For example, in the North East, we risk losing jobs in decommissioning to the North of England, as there is simply not enough political will to make that vision a reality. There is potentially nearly £18 billion of work in this industry between now and 2025 and if we do not turn our attention to it, other parts of the UK will be first to reap the benefits.
Similarly, the rise of automation in “middle class” professions poses a risk to jobs that we never thought were at risk of being replaced by machines. Many processes in finance have already disappeared and been replaced by computer algorithms and in the law, software already exists to replace costly humans when it comes to document reviews.
The same is true of other industries which we always thought were off limits to machines. How will we respond to this? The first wave of automation destroyed industries Scotland relied on. The latest wave cannot be allowed to do the same.
So if innovative tech is set to replace these skilled jobs, we need to be at the leading edge in that sector.
And we’re in a great position to do it. Scotland already has a leading tech sector and the UK’s largest tech incubator – Codebase – is here in Edinburgh, with nearly 80 startups based there. But what support is being offered to these businesses to stay if they continue to grow? And how are we expanding that out to the rest of the country, ensuring locally based support and not more centralisation as we are witnessing with the proposed changes to Highlands and Islands Enterprise.
As the very nature of business changes, has the government means of supporting those businesses kept up? How will we reap the benefits of this being right here on our doorstep?
Our Government has no published strategy on how we take advantage of these new opportunities, despite being in a perfect position to be able to do so. This isn’t a consequence of a lack of power – it’s a consequence of a lack of political will.
In the 1980s, the answer to the decline in manufacturing was ‘silicon glen’, and at its peak Scotland produced 30% of Europe’s PCs, 80% of its workstations and 65% of its ATMs.
Competition on the grounds of cost mean many of these industries have moved away, but the tech jobs of the future won’t be won on the basis of lower cost labour. The jobs we need to win are high quality and high skill, which rely on having a long term strategy from Government and a highly educated workforce ready to take these opportunities on.
Scotland can – and should – be the centre of tech innovation in the future.

• The next ten years
  As we approach a decade of SNP control at Holyrood, my thoughts are turning to the next ten years.
  And these questions about the future of our young people, and how we build a growing and successful economy after Brexit are the ones that will preoccupy me.
  We live in a time of binary politics, where we are identified by our choices at referenda – remain or leave, yes or no – and where too often our politicians cleave to those divides for political advantage.
  My argument tonight has been that this is not only short-sighted, it is dangerous and destructive.
  Labour has never succeeded when it looks at the world as it is and argues for no change, or is satisfied with the political debate as we find it.
  Throughout our history we have always been the party of bold and radical change, achieved in a progressive and pragmatic way.
  We have always been the people who look for the political road less travelled and achieve real progress.
  And the evidence is that we have been pretty good at it, when given then chance.
  The NHS.
  The Welfare State.
  The Scottish Parliament.
  All proud achievements of my party.
  Achieved through rational debate and pragmatic thinking.
  Our challenge now is to show that progressive politics – where we work together to find solutions to our common problems – can win against populism – whether that’s in the form of right wing parties or nationalist parties.
  I will leave you with this thought.
  Four days from now, Donald Trump will stand on the steps of the US Capitol and be sworn in as the 45th President of the United States.
  He is one of the least qualified people ever to take this office, but from Friday he will be at the head of the most powerful Government in the world.
  Four years from now, I want to look back on this as the high water mark of the populist wave which has swept through western democracies.
  But progressives won’t win by sitting still.
  Whether you’re a member of the Labour Party, the Democrats, the French Socialists or the Social Democratic Party in Germany, the challenges we face are the same.
  I believe the left can win through, not just by showing our ideas can triumph, but also by demonstrating that our vision – of working together towards a common goal – is fundamental to how most people on this planet want to live their lives.
  As David Hume wrote:
  “It’s when we start working together that the real healing takes place.”
  Thank you.