Arctic role models: Should Scotland look north for inspiration?

Sunrise over Aberdeen beach, picture taken by Sarah Rose Sunrise over Aberdeen where you are closer to Stavanger in Norway than the capital of England

Stand on the quayside at Aberdeen and you are closer, geographically, to Stavanger in Norway than you are to London. In the centuries when travel was easier by sea than by land, the Norsemen came south to plunder, conquer and settle.

Many of the place-names of Scotland are the legacy of a time Nordic Europe drew the lands bordering the North Sea around it and bound them into one ocean-going community of peoples. Sutherland is so called because it was once one of the southern parts of that community.

Does anything survive of that distant time? Does the North Sea separate us from, or connect us to, our Nordic neighbours?

One of Sweden's most popular tourist attractions is the 17th Century warship Vasa.

Its hull is 70 metres long and decorated with oak carvings of mermaids, wild men and sea monsters - which are designed to celebrate the might of Imperial Sweden and to intimidate its enemies.

Who? What? When?

  • Voters in Scotland - including for the first time 16 and 17-year-olds - will have their say in a referendum on Scottish independence.
  • They will be asked the "yes/no" question: "Should Scotland be an independent country?"
  • The referendum takes place on Thursday 18 September, 2014.

It is a visually stunning reminder that Sweden once dominated the northern tier of Europe, drawing many of its Baltic neighbours into its orbit. Both Norway and Finland have, at different periods in their history, been joined to Sweden in a union.

All three of these nations are broadly comparable to Scotland, whose people will take part next year in an independence referendum.

At first glace all of these countries have;

  • Small populations spread across large territories
  • Long coast lines (the word Norwegian 'fjord' is surely derived from the same root as the Scots 'firth')
  • A traditional dependence on maritime activities, including fishing and shipbuilding
  • And Norway has an oil industry that has helped turn one of the poorest countries of Europe into one of the richest in the world

They have also evolved a way of living, and of governing, which is the envy of much of Europe.

My story

Allan Little

"I'm Allan Little. I was born, raised and educated in Scotland, but I haven't made my career here.

"For the past 25 years, I've worked as a foreign correspondent, reporting from more than 80 countries.

"I've seen nations torn apart and die, but I've also seen others born, and find their way in a new, changing world.

"Over the coming year, I'll be covering much of what happens here, in my home country."

They're often held up as an example of what Scotland could aspire to become - benign, non-belligerent, socially harmonious and prosperous social democracies.

This reading appeals particularly to the pro-independence left in Scotland.

The Nordic model is "a high wage economy, based on highly productive enterprise," says Robin MacAlpine of the Jimmy Reid Foundation.

He explains: "You use the money that generates through tax, to create extremely strong public services.

"You have this chain - good economy, good jobs, good wages, good taxes, good public services, and high social cohesion."

Finland illustrates well both the strengths and weaknesses of small independent nations on the periphery of Europe.

For decades after WW2, it was almost entirely dependent on trade with the Soviet Union. And it thrived.

In fact it over-reached itself. In the late 1980s it deregulated its banking sector and entered a period that came to be known as the "casino years".

NORWAY

Children in Oslo, Noeway
  • Population - 4.9 Million (2012)
  • Life expectancy (average) - Men 77 years, women, 83 years
  • Individual tax rates - From 0% up to 47.8% (2013)
  • Unemployment - 3.5% of the workforce
  • Education - Norway has free education from the ages of six to 18. Some 195,000 students are at Norwegian universities with the majority receiving the state education loan fund. Generally, students at state universities and university colleges do not pay tuition fees.
  • Health system - The system is funded by taxes, with a state insurance scheme giving basic levels of welfare. In-patient hospital treatment is free, but visits to doctors, dentists and specialists, as well as prescriptions medicines, incur charges.
  • Paternity leave - 46 weeks of parental leave at 100% of pay or 56 weeks at 80% of pay. Up to 14 weeks of this leave can be taken by the father.

Martti Sanna, an economic adviser to the Finnish government, says: "House prices were going up like never before.

"There was a feeling that we were more or less invincible."

The Nordic legacy

Many Scottish place names have Norse origins.

  • 'Dalr' (dale) meaning valley. Examples include Brosdale, Helmsdale, and Laxdale.
  • 'Lax' meaning salmon. Examples include the Lewis villages of Laxay and Laxdale.
  • 'Vik' (wick) meaning a bay. Examples include Wick, Lerwick and Uig.
  • 'Fjord' meaning sea-loch. Examples include Gruinart, Snizort, Collafirth, Seaforth.

Then the crash came. It provided a signature lesson on the key weakness of many small nations: that their economies are often dangerously dependent on a relatively small number of volatile sectors.

In Finland's case, its dependence of the Soviet Union meant that in 1991 its main export market disappeared almost overnight.

"The world economy was also in turmoil and this resulted in a large banking crisis," says Sanna. "And very suddenly, more or less the whole Finnish economy collapsed."

The economy shrank almost overnight by 10%. The government was forced to make drastic cuts in public spending in what was already a high-tax country. Things got steadily worse.

The Finns did not riot, they did not strike, they did not demand the ring-fencing of health budgets, or insist on spending money they did not have. Unemployment soared.

Banks went bust

Is this a cautionary tale, useful, perhaps, to the Better Together campaign, which argues that Scotland, had it been independent, would have sunk under the weight of the near-collapse of RBS and HBOS?

Yes and no. It took years of pain but Finland recovered. This year it was rated No1 in Europe in a recent global dynamism index. Sweden and Norway came second and third and these were the only three European nations to make it into the top 10 of that league table.

The secret of Finland's successful emergence from economic catastrophe was its independent currency, the Markka.

Sanna says: "We tried to keep it at a fixed rate against other currencies.

"But we had to give it up and let it float. It devalued considerably and this helped exports. We let a couple of major banks go bust and the ones that were left merged. The whole banking sector was completely overhauled."

FINLAND

Helskini
  • Population - 5.4 million (2012)
  • Life expectancy (average) - Men 76 years, women 83 years
  • Individual tax rates - from 6.5% up to 51% (2013)
  • Unemployment - 8.1% of the workforce
  • Education - Education in Finland is free to all beginning at the voluntary pre-primary level and continuing through upper secondary school. Universities do not charge tuition fees.
  • Health system - Primary healthcare is universally available, funded mainly by taxation. Fees are charged for doctors' visits, and other medical expenses including outpatient care and prescription drugs but these are partially or fully reimbursed by the country's compulsory National Health Insurance scheme. The scheme also provides Sickness Allowances (compensation for loss of income during incapacity for work).
  • Paternity leave - Paid maternity allowance for 105 working days. Paternity leave is 54 working days altogether (approximately 9 weeks).

An independent Scotland, in any similar crisis in the future, would not have this option, because under current plans Scotland is not to have an independent currency.

Sweden, Norway and Denmark have all kept their own currencies. Among the Nordic states, only the Finns, ironically, joined the Euro.

Nokia - Ringing the changes

Nokia phone

1865 - Nokia starts out as a riverside paper mill in south west Finland and branches out into making rubber boots and car tyres.

1962 - The company makes its first electronic device for use in nuclear power plants.

1963 - Radio telephones for the army and emergency services are made by Nokia.

1984 - The Mobira Talkman portable car phone goes on the market.

1987 - Phone technology moves on and Nokia introduces the handheld Mobira Cityman.

1992 - The first digital handheld GSM phone, the Nokia 1011, is made.

1994 - The 2100 series is launched, the first phones to feature the Nokia Tune ringtone.

1998 - Nokia is the world leader in mobile phones.

2007 - The firm combines its telecoms operations with Siemens to form a joint venture named Nokia Siemens Networks.

2013 - Nokia joins forces with Microsoft to strengthen its position in the smartphone market.

They did so largely for political, rather than economic reasons, and many - given what has happened since - now regret the loss of their currency independence.

But it wasn't only currency independence that brought Finland back from the brink and made it one of the continent's most successful societies. It was a series of factors that illustrate the fleet-of-foot flexibility of small independent states.

The one area of public spending the government did not cut was research and development. While hospitals and schools were being squeezed, the government increased spending in this field by 25%.

At the same time, an old Finnish company that had built itself up over more than a century decided to take a major gamble. Nokia had started life in the nineteenth century in the wood pulp business. By the late twentieth century it also made electrical cabling and rubber boots - hardly the stuff of the digital future and the knowledge economy.

Erkki Ormala, a former senior executive at Nokia, now an academic, says: "The decision was made to divest all the other businesses and to concentrate on mobile communications.

"The rest is history."

For 20 years, tiny Finland dominated the world's mobile phone market. At the height of its success, Nokia was supplying 40% of the global market.

The sale of Nokia to Microsoft this summer marked the end of the company's dominance. The company has laid off 10,000 workers globally. Unemployment in wealthy little Finland is 8%, higher than Scotland's.

But it has weathered the storm because during the years of Nokia's ascendancy, Finnish investment created scores of smaller, independent hi-tech enterprises selling services to Nokia. The games manufacturer Rovio is one. Their computer game Angrybirds has sold 1.7 billion downloads worldwide.

Start Quote

In everything, from pension policies to the way you run public services, the Swedes are at the forefront of liberalisation.”

End Quote Fraser Nelson The Spectator

Is there a lesson here for Scotland? A decade ago, I asked the CEO of a small but highly successful internet security company a simple question - if Finland were still in a union with Sweden, and its tax regime was decided in Stockholm rather than Helsinki, what would the Finnish economy look like?

"Nokia," he said, "would still be making rubber boots". Tax autonomy is vital to the success of the Nordic model.

It is not only the left in Scotland that applauds the Nordic model. Finland, Sweden and Norway all now have right-of-centre governments.

Fraser Nelson, the Scottish editor of the far-from-left-wing London weekly The Spectator, looks to Sweden for inspiration, and wishes David Cameron would have the guts to be as right wing in some of his thinking as the Swedes are.

Sweden is "one of the few countries in the world that is cutting tax and getting growth as a result," he says.

He adds: "In everything, from pension policies to the way you run public services, the Swedes are at the forefront of liberalisation. They're showing that there need not be a tension between free-market ideas and progressive ends."

SWEDEN

Stockholm, Sweden
  • Population - 9.5 million (2012)
  • Life expectancy (average) - Male 78, Female 83
  • Individual tax rates - From 0% up to 57% (2013)
  • Unemployment - 8.0% of the workforce
  • Education - Schooling is free in Sweden. Preschools and university education is funded by the government in part.
  • Health system - The Swedish system gives everyone who lives or works in Sweden equal access to heavily subsidized healthcare. It is funded by tax and patient fees cover only a small percentage of costs.
  • Paternity leave - 60 days for each parent are counted respectively as maternity and paternity rights. The is 60 remaining weeks of parental leave, of which 270 days are paid at 80% of earnings and the 90 remaining days paid at a flat rate.

In Sweden 10% of the public health service is contracted out to private companies. Swedes also pay a fee to visit their GP.

Britta Walgreen is the chief executive of St Goran's hospital on the outskirts of Stockholm.

"We have a contract with the local authority to provide care as part of the public health service," she told me. "We are paid for each patient we treat. But if we improve the service, and we are able to discharge a patient two days early, we are paid the same but our cost comes down."

It is not uncontroversial even in Sweden, because some public money ends up as private profit.

Start Quote

Lars Tragard

Sweden is in many ways a harsh society. There's not a lot of compassion for loafers, for people who do not work. This is not a generous welfare state. We don't have a lot of welfare queens”

End Quote Lars Tragardh Historian

Walgreen, a former anaesthesiologist, told me: "I think the important discussion is not whether the care provider is public or private but what it can deliver.

"Just being publicly owned is no guarantee that the quality is high."

This flexibility, too, is key to the Nordic model's success. Would such a policy fly in Scotland? Would any government here dare to propose reforms that would, in our ideologically binary political culture, look like the privatisation of the health service?

Sweden's welfare model is also little understood here. It is not generous to the unemployed. It is designed to keep people in employment, not to reward them for being out of work. If you are on the dole for more than 12 months your welfare payments fall drastically and you are required to attend seminars and training workshops.

Many take unpaid jobs for work experience. The unemployed are stigmatised in Sweden.

The historian Lars Tragardh told me: "Sweden is in many ways a harsh society. There's not a lot of compassion for loafers, for people who do not work. This is not a generous welfare state. We don't have a lot of welfare queens."

But Sweden spends more on childcare for working parents than it does on its armed forces. Anna Nyborg is a young mother-of-two, and a senior executive at Ericsson in Stockholm.

From the age of 12 months, the county is required by law to provide children with day care. For two children under school age, she pays £200 a month.

She explained: "And this includes food and nappies and everything."

Anna Nybord The senior executive has subsidised childcare for her two young children

As a result, the Nordic countries have more women in work than almost anywhere else in Europe. It is welfare spending designed to sustain and support wealth creation, rather than to drain from it.

But it is still costly.

Tragardh took me out onto the roof of his university building and in a bracing Nordic wind we looked down onto the rooftops of Stockholm.

He says: "You get 360 degrees up here. There's the royal palace. There's the fairground. But what is Stockholm's tallest building? There it is and it symbolises Sweden's love affair with the state: that is the headquarters of the national tax authority."

Scandinavians pay the highest taxes in the world. In Sweden, if you're only reasonably well-off, you surrender close to two-thirds of your income to the tax man. It is a condition that Swedes have reconciled themselves to over the years.

Land ownership

It is the egalitarianism of Nordic society that appeals to many in Scotland. Where does it come from? Can Scandinavia's social harmony be taken off the peg and made to fit a non-Nordic society?

The Nordic world has been, historically, much more classless than Britain. They have a tradition of land ownership that is radically different to anything that Scotland has experienced.

In the eighteenth century Swedish peasants owned the land they worked. They had title deeds - property rights. That put them in a different relationship with the power of the crown than their counterparts in Scotland where, as the journalist Lesley Riddoch points out in her book Blossom, a thousand people still own 60% of the privately-owned and, and where only in recent years has the number of people owning their own homes passed the 50% mark.

SCOTLAND

People in Edinburgh
  • Population - 5.3 million
  • Life expectancy (average) - men 76 years, women 80 years.
  • Individual tax rates - From 0% up to 45% (2013) (as part of the UK system)
  • Unemployment - 7.4% of the workforce
  • Education - Scotland spent more per capita on tertiary education than England, Wales and Northern Ireland in 2011-12 because Scots students do not pay tuition fees in Scotland, and under-graduate courses generally run for four, not three years.
  • Health system - The NHS is free at the point of use for anyone resident in the UK. The health service in Scotland is the responsibility of the Scottish government. Prescriptions are free in Scotland, Northern Ireland and Wales.
  • Paternity leave - New mothers have the right to take 52 weeks leave, with 39 being paid through statutory maternity pay, maternity allowance or contractual maternity pay. New fathers are entitled to at least two weeks' paternity leave on the birth of their child.

But the Nordic country that is arguably most similar to Scotland is Norway. If you'd sailed into Oslo 30 years ago, you'd have passed shipyards and marine workshops on the waterfront.

They were, by then, already in terminal decline. There was a lot of public pressure on the government to use the country's new oil wealth to rescue the industry and save jobs. It didn't happen. Norway, ruthlessly, let its declining old industries die.

For Norway understood very early that its oil wealth, if mismanaged, would be a curse rather than a blessing. Windfall resources like that can have the effect of so inflating a nation's currency, that every other sector of the productive economy becomes uncompetitive and collapses.

Old and new oil platform The 1970s marked a turning point for Norway - oil was discovered

Norway's political parties entered into a self-denying pact. They agreed not to spend a penny of the oil revenues in Norway itself. So they save it all instead, investing in companies overseas.

Its oil fund is now worth £400bn. What's more 96% of the interest on that fund is reinvested in it. The Norwegians allow themselves to spend only 4% of the interest each year - and none of the capital. But even that is enough to pay for 10% of the annual public budget.

It is a quiet Nordic rebuke to the rest of us. Britain's oil wealth - of course much smaller as a proportion of GDP - has been used as part of the overall tax take.

Start Quote

The Nordic countries come out on top when it comes to innovation, creating new businesses, and flexibility”

End Quote Jonas Store Norway's former foreign minister

And an independent Scotland, initially at least, would need to spend its oil revenues to meet existing commitments. The Scottish government argues that it could, in time, start an oil fund. But the Norwegians have a 40-year start on us, and much, perhaps most, of the wealth that was there has now gone.

Norway declared independence from Sweden in 1905. There was tension between the two nations and even the threat of war. But there were negotiations at the end of which the Swedish King renounced his claim to the Norwegian throne, in effect dissolving what had been a United Kingdom.

Echoes of that tension remain. The Norwegian journalist Marie Simenson worked for a time as her newspaper's correspondent in London, and reported from Scotland during the 1997 referendum campaign.

She told me: "Norwegians used to have an inferiority complex about the Swedes.

"The Swedes were the big brother of the Nordic countries. They ruled over Norway till 1905. It's still there especially among older people - the Swedes seem more posh, more sophisticated, and we are still like farmers and fishermen and so forth.

Vasa More than 1,000 years ago, Swedes set sail in boats, like Vasa which now sits in a museum in Stockholm

"I saw these same traits in the Scottish view of England. The Scots are like the Norwegians - they are outgoing and so on, but if you push their buttons, they're a bit touchy. It's the same with the Swedes. In sport, it is the most important thing to beat the Swedes."

The warship Vasa sank, just 120m from the shore, on its maiden voyage in 1638. It keeled over under the weight of its own grandiose, unsustainable ambition.

Twenty years ago, the received wisdom in Europe was that the Nordic economic model had had its day - the public sector was too big, the state, like the Vasa, top heavy.

Norsemen Jarl Squad arrive at Lerwick harbour in a 30-foot longboat Norsemen return to places like Scotland - but not to conquer and pillage but to celebrate their heritage

Norway's former foreign minister, Jonas Store, told me: "We were told that we were doomed in the new global economy.

"But we've seen over these last years that the Nordic countries come out on top when it comes to innovation, creating new businesses, and flexibility.

"We have higher employment, sounder public finances, safe and solid public welfare, because we have unions that take collective responsibility and strike responsible deals. We have a high level of social capital, as well as financial capital."

Could an independent Scotland emulate the model? And if it could, why couldn't a strongly devolved Scotland within the UK do the same?

For what, in the Nordic context, does "sovereignty" mean? And, given the extraordinary degree of interdependence and co-operation that exists between them and the rest of Europe, in what sense is any of these countries (in the parlance of the Scottish constitutional debate) "going it alone"?

It's not for me to answer the questions.

But as an old foreign correspondent returning to my own country at a time of historic decision-making, I wonder this - shouldn't we at least try to see the choice we face next year in its broader European context?

More on This Story

Scotland Decides

More Scotland stories

RSS

Features

Elsewhere on the BBC

Programmes

  • A person taking a photo of fireworks on a smartphoneClick Watch

    A look at the latest gadgets which could make it easier to take the perfect night-time picture

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.