Kezia Dugdale: Tory Brexit gamble has not paid off – and it has held back healing the divisions of the Scotland referendum

This is the full text of the speech by Kezia Dugdale, Leader of the Scottish Labour Party, at the IPPR in London today.

Thank You Tom.

I want to begin by thanking you and everyone here at IPPR for inviting me to speak in London this morning.

IPPR has always been at the leading edge of progressive thinking in the UK.

Many of the achievements of the previous Labour Government were developed and incubated here long before my party re-gained power after eighteen years in opposition.

That’s why I’m so pleased that you have now set up in Edinburgh and that IPPR Scotland is flourishing under the leadership of Russell Gunson.

One of the lasting legacies of IPPR’s work in the early 1990s is the report of the Commission on Social Justice.

Established at the instigation of John Smith, the report produced a blueprint for the incoming Labour Government in 1997.

In John’s words, the Commission was set up to stop the waste of “our most precious resource – the extraordinary skills and talents of ordinary people.” It is still one of our party’s greatest tragedies that he never had the chance to see that vision put into practice.

IPPR’s new Commission on Economic Justice will, I hope, take inspiration from that work to provide some of the answers, and the blueprint, for how we tackle economic inequality in the UK and establish how prosperity can be shared by all who live in this country.

John Smith’s Commission is perhaps a good place to start this morning.

In 1992, after thirteen years out of power, and after another crushing and unexpected General Election defeat, minds were focussed within Labour on how we could again win power.

It was clear that while our values of equality, solidarity and tolerance endured, the solutions we needed were not the same as those when Labour was last in power in the 1970s, and neither were they to be found in the policies of opposition from the 1980s.

The Commission on Social Justice, in its introduction, described a UK transformed by three revolutions.

An economic revolution brought about by increasing globalisation, innovation and a changing Labour market.

A social revolution that had seen the role of women in society transformed, the traditional family model change, inequality ingrained and relationships between people in our communities strained.

And a political revolution that challenged the centralisation of power, demanded more individual control and accepted a different role for Government in society.

Labour’s prospectus then was that the UK needed to modernise and change to meet the challenge of our time. That our policies had to begin with people’s lived experiences. And that we needed to respond to the demands of a population who were tired of the Tories, desperate for change, but were equally nervous about handing power to an untested opposition.

But above all else, it called for bold new thinking to challenge the orthodoxy on both the right and left, in order to meet the challenge of these three revolutions.

Over twenty years on, we are in a similar position, and the three revolutions of 1992 could equally be applied to the UK, and Scotland, today.

Our economy, society and our politics have been transformed even further, but there is absolutely no consensus – no agreement – about the direction our country should take.

What that has led to, in my view, is a society more dangerously divided than at any point in our recent history.

The public reject the status quo but there is no settled will about the direction we should take.

And instead of grappling with the complex messages that people are sending us, and trying to find the solutions in the shades of grey, politicians of all parties are attached to solutions that are black or white, dividing us further.

In short, we are trying to answer highly complex questions with simple answers.

Abraham Lincoln’s view that “revolutions do not go backward” finds evidence in what we have seen in Scotland, the UK and around the world in recent years. Anyone in Labour, or any party, who claims that we can sit on the margins and wait for politics to “settle down” will rightly be consigned to history.

The future shape of the UK, how we govern ourselves and how our economy and society should develop is now the single biggest political question we face.

This morning I want to set out where the political fault lines lie in Scotland and the United Kingdom, why I believe we are so divided, but how the circumstances we find ourselves in – and the public appetite for change – means we have a significant opportunity to change our country for the better.  

We have to first ask ourselves how we have reached where we are today.

And let’s not be shy about this.  

When David Cameron stood in Downing Street in February of this year and announced the date for the EU referendum, he did not foresee the political turmoil that was set to engulf him just four months later.

But why didn’t he?

Many of us were shocked by the outcome of the EU referendum, but had also known for some time that it was going to be close.

The resentment against the established ways of working has many roots.

Think about the last decade.

The financial crash of 2008. The MPs’ expenses scandal of 2009. The near endless crises that had engulfed every major national institution from the church to the BBC.

All of these created a climate in which people across the country were angry and distrustful.

Endless austerity from the Tories punished the very people who already felt that Government was remote, out of touch and taking the country in the wrong direction.

Working people on modest incomes saw their pay packets shrink and opportunities for their children diminish, but the only answer from the Government were more cuts and efforts to undermine many of the common bonds that have held our country together.

Looking back now, it is clear that a public reckoning was long overdue.

The Tory’s victory in 2015 while bruising for my party was – with the benefit of hindsight – not much better for David Cameron.

The Lynton Crosby playbook of divide and conquer delivered an election victory for Cameron, in the face of a plan for real change from Ed Miliband.

But the Conservatives failed to return to Downing Street with any governing purpose, and with a country before them that was even more divided than before.

And if David Cameron had learned anything from Scotland in the previous five years, he should have recognised two things.

The first was in the election of 2011. That was the election that returned me as a member of the Scottish Parliament.

The night I was elected, I watched colleagues being swept away in a populist SNP landslide which sent a clear message to Labour.

The lesson – right at the beginning of my time as an elected politician – was that there are no certainties in politics.

The second was the bruising and divisive independence referendum. It’s important to remember that we won decisively.

It was our arguments about why we are stronger together – as part of a union – that swayed the hearts and heads of Scots.

And more than two years on, those of us who fought for the UK shouldn’t be embarrassed about winning – we should be proud.

Deciding to remain part of the UK was the right decision then, as it is now.

The people who should be embarrassed about what has happened since are the Tories.

I was stunned when David Cameron walked out of Number Ten and immediately undermined everything we had achieved with his divisive comments on English Votes for English Laws.

But we must never forget why we fought to save our United Kingdom.

I am proud – immensely proud – to have fought to keep the UK together in 2014.

I was proud because it was a Labour argument I was making.

The UK provides the redistribution of wealth that defines our entire Labour movement, and it provides the protection for public finance in Scotland that comes from being part of something larger. Something good. Something worth fighting for.

But there is no escaping that the battle of two years ago has unleashed polarised constitutional politics that have changed Scotland forever.

Scotland’s experience – both in 2011 and in 2014 – was the canary down the mine for the rest of the UK, but instead of paying attention, too many people dismissed our plight as some sort of local difficulty.

Too many politicians here in London thought that England was exempt. That nationality and identity were issues they didn’t need to worry about, and divisive constitutional politics did not apply.

As we see the rising threat of UKIP in the North of England and the Lib Dems successfully taking advantage of the divisions of the EU referendum, it’s clear that this new fault line is here to stay.

Politics driven by nationalism and identity, which were for so long mostly confined to Scotland, have now taken their place firmly in the mainstream of all UK politics.

So David Cameron’s legacy will be six wasted years which failed to deal with the consequences of the financial crisis and which cemented in Britain deep divisions which will take years to heal.

The popular revolt in England which culminated in the Brexit vote on June 23rd wasn’t just about immigration or identity or economic disadvantage.

It was about all of those things and it was compounded by a sense that the system was broken, and then further fragmented by a Tory Government that was deaf to the needs of the vast majority.

The Tories’ Brexit gamble has not paid off. And for Scotland, it has prevented any healing of the independence referendum divides.

The Tories – whether Ruth Davidson or Theresa May – are responsible for putting the Union at risk.

There is simply no escaping the fact that it was the Conservative Party that stoked nationalism in England and, with Brexit, provided Nicola Sturgeon with the excuse she needed to reopen the constitutional debate.

We are now faced with a Tory Government in Westminster which looks set to force hard Brexit on the whole of the UK. And an SNP Government at Holyrood which wants to exploit the divisions to win independence.

This is the position that the majority of Scots – the moderate, pro-union Scots and also many former yes voters find themselves in.

More than ever, we have two governing parties in Scotland that are out of step with what the majority of people in Scotland want.

Just two years ago, we decisively rejected independence, and we have rejected Brexit. Our settled will is to stay in the UK with a close relationship with Europe, which should mean access to the single market.

But neither the SNP nor the Tories are proposing that. The Tories want Scotland in the UK and out of Europe, and the SNP want Scotland in the EU, but out of the UK.

Continuing to pull our country in each of these directions risks breaking the Union once and for all.

Yet the prospectus for independence in 2016 is, in fact, far weaker than what was proposed in 2014.

In the last referendum, the SNP wanted to break the political union, but their argument was that the economic union between Scotland and the rest of the UK could be maintained. In other words, we would continue trading freely, we would continue to use the pound and the Bank of England would continue with its role in Monetary Policy.

Today, we are faced with an SNP blueprint which would see us out of the UK single market, an uncertain future with Europe, the adoption of a separate Scottish currency and the need for the establishment of a new central bank.

This would be an act of economic vandalism far greater than even Tory Brexit has handed us.

What is needed is a solution that meets the demands of the Scottish people. To be part of the UK and with a close and abiding relationship with Europe. At the same time renewing the UK for the new century, so the strain it is under from Tory and SNP nationalism does not ultimately destroy it.

For me, this starts with reaffirming our belief in the UK for the twenty first century.

In 2014, I argued passionately for the UK because it is the single greatest force for redistribution we can have.

I’m not blind, however, to how it has left many behind. As Andrew Haldane, the Chief Economist at the Bank of England, warned last week, the inequality gap between different regions of the UK has widened over time. Opportunities, prosperity and economic power are not being shared across the UK as they should be.

In much the same way, over time political power has become concentrated in too few hands. Power and wealth hoarded in one corner of our United Kingdom has not worked for the vast majority of people.

In Scotland, the vision of devolution pushing power down to communities has been stalled and diluted by an increasingly centralising SNP Government.

That concentration of economic and political power, mixed with growing economic inequality and a feeling in communities that they have been left behind means the structures of our society are under strain like we haven’t seen in my adult lifetime.

The economic, social and political revolutions I spoke about earlier now need to be met with bold and radical thinking about how we change the way we run our country and our economy.

While Brexit has led us into a period of instability and chaos, it also provides us with an opportunity to confront problems in our society and make lasting changes that have been long overdue.

Nothing about the Brexit vote has diminished my belief that we should be doing all we can to work together to meet the challenges that we face. I made the case for working together in the European Union for the same reasons that I argued to remain in the United Kingdom.

Because I believe in the values of co-operation and solidarity – socialist values – and I believe that is best delivered through political and economic union.

The Act of Union of 1707 still underpins the relationship between Scotland and the rest of the UK. In fact, it forms part of the argument that the Scottish Government will be using this afternoon in the Supreme Court.

Following the Tories’ Brexit gamble, we need a new Act of Union for this new century.  

That is why the time has come for the rest of the UK to follow where Scotland led in the 1980s and 1990s and establish a People’s Constitutional Convention to re-establish the UK for a new age.

The convention should bring together groups to deliberate on the future of our country and propose a way forward that strengthens the UK and establishes a new political settlement for the whole of our country.

This is a Convention that the Government should convene, and I have written to Theresa May today outlining Scottish Labour’s desire to see this happen. However, if the Government is not willing, as Gordon Brown has said, the opposition should convene a Convention.

Some may say this is unrealistic, but it would follow the model of the Scottish Constitutional Convention which, without Government support, established the basis for the settlement that delivered a Scottish Parliament in 1999.  

It would also – for the first time – provide a coherent approach to answering the question of how our country is best governed.

While devolution has been positive for Scotland, Wales and Northern Ireland, we have to acknowledge that progress has been erratic and while there has been significant progress in some parts of the UK, other parts have been left behind.

So I would not want the convention to just deliberate and report, but to produce a new Act of Union which would reaffirm the partnership between our nations and renew it for the future.

After more than 300 years, it is time for a new Act of Union to safeguard our family of nations for generations to come.

This would mean a radical reshaping of our country along federal lines where every component part of the United Kingdom – Scotland, Wales, Northern Ireland and the English regions – take more responsibility for what happens in their own communities, but where we still maintain the protection of being part of a greater whole as the UK.

It would involve significant changes to how central Government operates.

I have argued before, during my leadership campaign, that the House of Lords should be replaced with a Senate of the Nations and Regions. This would rectify the anomaly that sees unelected Parliamentarians having significant influence over our laws, and it would modernise the UK’s governance arrangements.

I’ve also argued that it should sit outside of London – showing people in the rest of the UK that central Government does not need to operate in one square mile, and that power is on the move.

Let me be clear. None of what I propose today undermines the central purpose of the UK – to redistribute wealth and resources within our union of nations. In fact, I believe it would save it.

And this is why it matters.

As we speak, Scotland has a £15 billion deficit in its public finances – a deficit that is even larger than the £11 billion of damage that the First Minister suggests could be created by Brexit. This would mean significant public spending cuts that would deal a direct blow to Scotland’s schools and hospitals, which are already in crisis under the SNP Government.

It would also not undermine the solidarity that comes from our common pensions and social protections – these are part of the bargain that come with being part of the UK. In short, it does not bear any resemblance to the Nationalists’ destructive proposals for Full Fiscal Autonomy.  

All of these issues would be considered by the convention, but there are two immediate key areas which have arisen because of Brexit where I believe there is a strong case for Scotland to take control, and these are both linked to the responsibilities that will soon return from Brussels.

The first are the powers over devolved areas such as fishing and agriculture. The UK Government is currently equivocating about whether these powers should be returned to London or to the devolved nations. Donald Dewar’s vision for devolution was that whatever is not reserved is devolved. These policy areas – clearly never reserved to the UK Government – should return to Scotland.

If co-ordination is required at a UK level, it would be for the Scottish Government to make the choice about how this happens, with the Scottish and UK Governments negotiating on an equal footing.

The second is the end of the application of the social chapter in the UK. This means that minimum labour standards will fall to Westminster to determine. Without any check or balance, a current – or future – Tory Government could diminish our rights at work even more, taking us to an even lower standard than we have today. In fact, many Tories are already suggesting this.

Just look at what has happened in the few years of Tory Government – employment tribunal fees hiked, denying access to justice for too many.

The term for qualifying service has increased, meaning that it is two years until many employment rights come into force – making it easier to fire employees.

And the Trade Union Bill – passed under Cameron – has restricted the ability of trade unions and other campaigners to organise, meaning that some critical checks on employers and Government have been lost.

Before Brexit, the guarantee of European law meant that our basic rights could not be undermined. If the Tories pursue hard Brexit this will no longer be the case.

John Smith once accused John Major of wishing to turn Britain into the sweatshop of Europe and trying to compete with Taiwan on wages but not against Germany on skills. We cannot allow Theresa May to attempt the same now.

That is why we need to look again at these protections and ask how our rights in Scotland are best guaranteed after Brexit. My belief is that the responsibility for guaranteeing the employment rights of workers in Scotland should sit with the Scottish Parliament.

The UK would set a minimum for the whole country on which Scotland could build if it chooses. In the same way, while the UK Government should continue to set a floor for the National Minimum Wage, it should be for the Scottish Government to determine the level in Scotland.

This settlement would provide the basis for a new federal Union for the 21st Century.

One where, for Scotland, the maximum powers are in the hands of the Scottish Government, but where the UK Government continues to provide the safety net of social protection, to set minimum standards which the Scottish Government are able to choose to extend, and where redistribution is at the core off the UK’s mission.

I believe a new federal UK, with a strong Scotland able to carry forward a significant relationship with Europe, is what people across Scotland have voted for. It goes far to meet the dual mandates of the Scottish people, and gives us the best possible protection for our jobs and our economy.

That is why at on the first day of our Party Conference in Perth in February, I will ask the Scottish Labour Party to back this vision for a new Act of Union to establish a federal UK. This will restate Scottish Labour’s belief in the United Kingdom as a redistributive union and set a bold and radical new direction for Scotland and the UK.

This will be the culmination of work that I first spoke about in July, which the Scottish Shadow Cabinet endorsed in September and which I will ask our party members to back in February.

There can no longer be any doubt that the UK – and everything that progressives are fighting for – is in peril. The Tories are to blame for that, and Ruth Davidson must never be allowed to forget that it is her party that nurtured the divisions that Nicola Sturgeon thrives upon.

Our Union must be saved. We must heal our divided society. It is only Labour that can do that.

I am absolutely clear that what I have set out today – and what I will ask my party to back in February – is not an end. It is a means to an end.  It is the way we will meet Labour’s historic mission of tackling poverty, reducing inequality and providing opportunities for all.

Few of us came into politics to wrestle with the constitution, but we all did so to try to influence and bring sense to the biggest issues of our day.

Nationalism does not provide the answers for our time, and it falls to us to make that case.  

The UK is in the middle of a historic moment in time that will determine the direction we take for a generation or more. If our ideas and values do not win out, the future of our politics is one of right wing populism and nationalism.

I have never been clearer that this is the time for Labour’s values – values of solidarity, equality and co-operation.

This weekend, the winning candidate in the Austrian presidential election saw off a challenge from a far-right nationalist. The slogan he won under was “people who love their homeland don’t divide it.”

I couldn’t agree more. The solutions our country need will not be found in the divisive politics of either the nationalists or the Tories.

It is time for a radical new settlement founded on ideas of the left.

A settlement that can strengthen our divided country for a new age.   

And re-affirm our belief that our society can only survive when we work together.

A settlement that not only secured Scotland’s place in the UK but secures a bright future for the UK as a whole through a new stronger union fit for the 21st century.

Thank you.