Scotland’s Economic Prospects In and Out of Union, and the Death of the Post-War Dream

At the end of my first day back on the stall, an individual approached the stall wanting to know our reasons for voting Yes. It soon became clear that rather than undecided, he was a ‘No’ voter, so as my colleagues packed up tables and diminishing numbers of leaflets in the background, I continued to talk to him. Although ‘No’ supporters are ‘high risk’ in terms of time investment (and there is always the danger of them simply being a deliberately time-wasting troll – but for that they usually pretend to be undecided), this is also part of winning the potential peace if we get a Yes vote, and if at least some concerns can be alleviated amongst the more rational and less headstrong of them, then the smoother that transition might be. We don’t want ‘Project Fear’ to reap its own harvest of further fear in the wake of an actual ‘Yes’, having spent its entire campaign trying to create uncertainty about the future of a much wealthier (per head) independent Scotland, without turning any scrutiny to the massive uncertainties of remaining tied to a UK economy that is going down the pan with an ever increasing debt mountain (and punishing the poor and disabled on its way down).

It appeared, from his account, that he had been swayed to ‘No’ by the arguments of a variety of economists. I suggested that he look at Joseph Stiglitz’s analysis, but wanted to use it as a prompt to get a particular article on the economy up on this blog.

Others elsewhere have noted the degree to which the UK’s economy continues to decline, thus starting to raise the possibilities of further cuts than those already waiting in the wings after a ‘No’ vote. Others elsewhere have run the numbers for what Scotland’s net surplus contribution to the UK has been over the last thirty years (£222 billion). For further figures on Scotland’s longer term pre-oil overpayment, I refer the interested to Business for Scotland: http://www.businessforscotland.co.uk/scotlands-century-of-lost-wealth/ and also for figures predating Ireland’s break from the UK to ‘The Historical Debt’, an article on Wings Over Scotland that reprints figures from a 1960s (pre-oil) publication.

The Financial Times (February 4th) has noted that Scotland would start with better finances (10.9% better, to be precise) than the UK from day 1 of independence. This – like many reports – also makes the flawed assumption that the expenditure plans of the Scottish Government would remain the same as currently (i.e. devolved rather than independent), whereas the lack of burden of UK –spending plans currently not directly benefiting Scotland would also be lifted. If you like, this is the dividend savings of self-government – freed of supporting infrastructure projects elsewhere in the UK with no direct Scottish benefit (particularly London-centric ones, such as the Olympics – see earlier blog for the tourism impact on Scotland that year) such as HS2 (which Scotland will pay £4.8-7.9 billion towards, despite it stopping 150 miles short of the border), the replacement for Trident (£250 million per year for Scottish taxpayers, currently £160 million per year for the current model), shares of the £3 billion Westminster refurbishment (never mind the £60 million per year currently paid to running Westminster and the Scotland Office – and that is without the imminent 10% pay rise announced for MPs) and the £4.2 billion London sewer upgrade (perhaps related to the preceding item in the list – who can say?). They also do not take account of export duty and VAT currently lost to Scotland via payments through port of exit (for duty) and head office location (for VAT).

The proposed budget in the SNP’s Scotland’s Future manifesto includes £800 million per annum on defense, in order to set up a Scottish military. There are also the opportunities that come from paying for a Scottish rather than London-based civil service – and from closing tax loopholes (£2.8 billion currently estimated to be lost in Scotland by HMRC) partly through replacing the horrifically complicated UK tax system with a transparent and efficient one with fewer loopholes.

All of these are positive opportunities to save vast amounts of money as well as expand our activities and pay towards an oil fund. But there is a rising political pressure (undoubtedly a vote winner with those in the UK that are outside of Scotland) to scrap the Barnett Formula, which (if replaced by an average system for all), will leave a hole the size of 30% of the Scottish block grant. This should also be viewed against the alternative, whereby the Scottish Government Budget allocated from 2011-2016 is planned to drop by almost 10%. Where, of the 42 nations analysed, the UK’s pensions are not only the worst in Europe (see previous blog) but 39th out of 42 in the Organisation for Economic Co-operation and Development (Mexico, Indonesia and South Africa are the only countries that come lower in pensions).

Currently we have a political climate that demonises the poor, to the extent that a welfare agenda that saves £6 million by Ian Duncan Smith with a benefit cap in its first year, yet costs £120 million to implement, is presented as legitimate or beneficial. Where, under the pretense of eliminating the DWP estimated £1.2 billion of benefit fraud, cancer sufferers assessed as able to work, while benefit overpayments due to error are £1.4 billion (DWP estimate) and dwarfed by the £16 billion of unclaimed benefits both go unaddressed. And figures for tax avoidance are estimated between £30-120 billion, yet that is not a priority. Labour’s complicity in the welfare cuts (even promising to go further) and the privatisation of the NHS in England and Wales dragging NHS (Scotland) down the same route of a privatized health service through corresponding funding cuts paint us a picture of the future of health and welfare within the UK that is increasingly bleak. This is the Death of the Post-War Dream, as the Westminster government ties its people into nuclear energy companies with ridiculous guaranteed tariffs when we have our own burgeoning energy resources, nuclear weapons sit on the Clyde as a ghost of Empire that are entirely redundant for us in the modern age, and not tackling but creating more poverty when we could seriously address it as a priority which it has ever been for Westminster.

Our priorities are not those of the SE of England, and they are the ones who determine the government of Westminster – NEVER us. And for that reason, we cannot expect to ever receive an equitable deal within the Union – that is simple politics. If we take responsibility for ourselves and our actions, we can avoid continuing as the rich nation held in poverty by its neighbor, and be what we can be.

 

“Even excluding North Sea output ….Scotland would qualify for our highest economic assessment” (Standard and Poor’s, global credit rating agency, February 27th 2014)

 “An independent Scotland could expect to start with healthier state finances than the rest of the UK” (Financial Times, February 3rd 2014)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s