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Scotland and UK clash on cost of independence

The Scottish government is to argue independence could bring about an “economic bonus” worth £2,000 for each household, as the UK prepares its own contrasting costs figures.

The BBC reports Treasury ministers are preparing to publish their cost estimates on Scottish independence, and that the UK government will argue that keeping the union will ensure a dividend for everyone in Scotland.

The Treasury analysis on costs will be published by Chief Secretary to the Treasury Danny Alexander. It will highlight an ageing population, declining oil revenues and the prospect of higher interest rates as particular challenges for an independent Scotland.

Alexander told BBC’s Scotland 2014 programme: “One of the frustrations here is the nationalist government has not set out any costs at all of setting up a new state – they seem to assume it’s free.

“Just like they seem to assume that you can get all the oil out of the North Sea for free, just as they seem to think that they can get away with trying to bamboozle people to vote for independence on the basis of numbers that simply don’t add up – on oil revenues, on set up costs, on tax and on spending.”

But First Minister Alex Salmond has argued the Treasury calculations are based on a misrepresentation of research carried out by the London School of Economics, after LSE academic Patrick Dunleavy tweeted: “UK Treasury press release on #Scotland costs of government badly misrepresents LSE research.”

Salmond said: “This is a devastating verdict on the Treasury’s figures from one of the authors of the report they have been using to base their work on.

“And it totally undermines everything they have to say this week about the finances of an independent Scotland.”

He added: “The reality is Scotland is one of the wealthiest countries in the world, more prosperous per head than the UK, France and Japan, but we need the powers of independence to ensure that wealth properly benefits everyone in our society.”

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Comments

There are 23 comments at the moment, we would love to hear your opinion too.

  1. I suspect that the oil revenues will pay for this bonus but can remind tell Mr Salmond and his cronies that he can only spend the oil revenues once

  2. The point I think you’re missing is that it wouldn’t be spent “once” but a proportion of oil revenues would be invested for future use – unlike in the past when the Westminster Government has used oil revenues to pay for current spending with no thought for the future.Further, it’s not Alex Salmond and his “cronies” that would decide how oil revenues are spent/invested, but a democratically elected Scottish Government.

  3. So Douglas, where would the spending cuts come from to allow us to invest this revenue? Right now, the UK spends all the oil revenues and still spends way more than it takes in from taxes. What makes you think that Scotland can suddenly spend e.g. 50% of the oil revenue and still run the government in its current guise, as well as paying for a new Scottish HMRC, a Scottish financial regulator, Scottish DWP, etc, etc? I highly doubt that Socialist Salmond will want to or be able to cut government spending enough to allow a surplus to arise.

    I’m not saying independence isn’t what’s best for Scotland, I’m just saying that to use “we could save oil revenues” as a benefit of independence is complete nonsense without any evidence whatsoever that an independent Scotland can cut spending enough to be able to save any oil money at all. All of the SNPs plans for an independent Scotland include spending more money (“free” childcare, renationalising Royal Mail, removal of the bedroom “tax”, etc) not spending less.

  4. Yes the point I am making is exactly that – once the oil funds have been spent that’s it – from what I have seen Mr Salmond’s answer to any reasonable argument about costs is to say we have sufficient oil to pay for it again and again, I think this is tantamount to bribery with his giveaways and the majority of people realise that this is a diminishing resource, you have an ageing population, there are costs involved in breaking away, joining the EU, setting up your own currency, free uni education, repaying the English, Welsh and Northern Irish taxpayers for the money put up to bail out the Scottish banks the list goes on but there is always the oil.
    I see there are still some people around that believe it – Good Luck

  5. I suspect that the oil revenues will pay for this bonus but can remind tell Mr Salmond and his cronies that he can only spend the oil revenues once

  6. Oil revenues are part of the picture, not the whole picture.

    An Independent Scotland could well afford to run it’s own pensions, healthcare, tax system – we raise more taxes per head of population than the rest of the UK (fact).

    According to the OECD (and not Alex Salmond) Scotland would be the 14th wealthiest country in the world (based on GDP per head of population), the UK is currently 18th (fact).

    As for “repaying” the money for bailing out the “Scottish” banks – an Independent Scotland would take it’s share of the rUK debt overall (and afford to do so) and that has been stated from the very outset.

    Setting up our own currency? I think the myth that we “can’t use the pound” was blown out of the water very quickly.

    Free uni education? We already have that.

    Not forgetting of course our share of the cost of running Trident – which would be removed.

  7. Gordon Sinclair 28th May 2014 at 3:47 pm

    @ Douglas Grant

    I dont think that the picture is quite as rosy as what you say suggests, although I do think that Scotland can support itself.

    I think that people need to get past the idea that this is all about Alex Salmond. It isnt. If the vote goes the way of independence the good people of Scotland will be free to choose whichever political party they want. They just wont be based in the money pit that is Westminster.

  8. Douglas Grant 28th May 2014 at 5:29 pm

    Absolutely right, it’s not about Alex Salmond – after independence it’ll be up to the Scottish electorate to decide on the next government. That way we get the government WE voted for.

  9. George Morley 30th May 2014 at 5:12 pm

    Douglas Grant,
    Who pays for the free Uni then at the moment ? You don’t say where that money comes from.
    What about healthcare and prescriptions ?
    What about the cost of Pensions ?
    Will you pay all of the current ex-pat pensioners around the world the indexed pension uprating or leave them out and if paying them, where will that money come from ? Do you know how many there are and what cost ?
    A few answers to support your argument would nit go amiss.

  10. Douglas Grant 30th May 2014 at 7:34 pm

    Free university fees are paid from Scottish Parliament funds as they would be under Independence. The same with free personal care for the elderly and free prescriptions. A choice made by the Scottish people/parliament.

    Scotland currently contributes more to the UK than it gets back.

    Are you saying Scotland couldn’t afford these things and run it’s own economy (or worse do you still believe in the myth that we’re subsidised by England)?

  11. Andy Robertson-Fox 2nd June 2014 at 9:21 am

    But what about the State Pensions Douglas? Will an Independent Scotland freeze pensions to those who retire to say Canada or Australia as happens now? If the answer is “no” then what will be the situation for pensioners who last lived in Scotland before going to such a country? Will their pensions be unfrozen?.
    Oh yes, there was some rubbish turned out that under the current system Scots pensioners are underfunded because their life expectancy is not so great. But the “contract” on that is to make NI contributions over a specified period and, in return, from the date of retirement to receeive a pension for life…no refunds for dying early and no penalties for living beyond the average life expectancy age. Remember, too, that the NI Fund covers other benefits like sickness and unemployment and if that argument is maintained claims under these and other headings must be taken into account …and that could paint a very different picture from the Scottish angle of underfunding.
    You have always had the opportunity to vote for the government you wish for under the UK franchise; under independence the opportunity to vote for the government you wish for will remain – the naevity is that it will be any different!
    I think that even Jim Swinney has raised questions about how well Scotland would be able to afford all Salmond’s promises – that is not to say Scotland would not survive even if they have to apply for EU membership.
    There are far too many unknowns; the Yes campaign need to produce far more fact based information and just appreciate that not everything that comes from south of the border is scaremongering and my constant postings in the Scottish Press do not produce answers..especially on pensions..

  12. George Morley 2nd June 2014 at 2:53 pm

    Douglas Grant – you said
    “Are you saying Scotland couldn’t afford these things and run it’s own economy (or worse do you still believe in the myth that we’re subsidised by England)?”
    The state pension is a big issue and I see Andy Robertson-Fox has made this point.
    But there have been no actual figures quoted to back up your statement by the parliamentarians.
    That is of concern to anyone faced with a voting option.
    If I were voting I would want to know the while picture before placing my tick and it would not be based on any assumption or politicians word.

  13. Douglas Grant 2nd June 2014 at 6:18 pm

    Re pensions, I’ve taken this from the Yes website, perhaps you should have a look? I don’t however have an answer re frozen pensions for ex pats – worth a question to Yes?

    “There is a much broader debate to be had on what Scotland’s pensions systems should look like in the years after independence. We know that Scotland is better placed to afford welfare and state pension payments than the UK as a whole. As explained in our ‘Q&A’ on Pensions, social protection spending takes up 14.4% of Scotland’s wealth compared to 15.9% for the UK as a whole. Similarly, expenditure on social protection in Scotland would take up 38% of tax receipts – the equivalent figure for the whole of the UK is 42%”.

    So surely you can deduce from these facts that pensions are indeed affordable post Independence?

    As for getting the government you vote for under the UK franchise? For half the time since the 2nd World War, Scotland has not voted for the government that was voted into Westminster.

  14. Andy Robertson-Fox 3rd June 2014 at 9:30 am

    Exactly the point that I – and I think George Morley – am trying to make …”there is a much broader broader debate to be held on what Scotland’s pensions systems should look like in the years after Independence” There is nothing concrete to discuss just a few estimates on which assumptions are being made. I believe the people of Scotland, including those who are currently retired abroad and those who are contemplating doing so, who will be affected by whatever is cooked up should have a much clearer indication.
    As regards the UK franchise I never said that you necessarily get the government you vote for. When one votes at a general election one votes for the candidate who in one’s opinion will best serve the needs of the constituency. There are many constituencies within England and Wales who could make the same claim as you seek to make but democracy does not always work the way we would like…even if we opt to run away..

  15. I think the best course of action is for you to engage in the debate – and not to use ridiculously patronising phrases such as “if we opt to run away”.

    This isn’t about running away, it’s about taking control of our own future – and decisions on that future being made BY the people of Scotland FOR the people of Scotland.

    Have your say by all means but please don’t patronise us.

    Decisions on pensions will be made by a democratically elected Scottish Parliament – perhaps you would be best served contributing to that particular debate after Independence as you don’t seem to getting anywhere with the UK Government on the one question you seem concerned with.

    There are indeed many English and Welsh constituencies who could say the same thing about not getting the government they voted for – but I wouldn’t want to stick my nose into that debate as frankly has nothing to with me – let those constituencies decide for themselves.

  16. Andy Robertson-Fox 3rd June 2014 at 8:38 pm

    Thank you Douglas. I will make just a few points, if I may?

    First. The phrase was “even if we opt to run away” and was not intended to be patronising and poiinted out that argument for democracy it could equally be applied to some English and Welsh constituencies.
    Second. By commenting on here I believed I was engaging in the debate.
    Third the issue of pensions and the position of the UK government is quite clear I would have thought; in a NO vote the provisions of the New Pension Act complete with the iniquitous Clause 20 will be retained. In the event of a YES vote those remaining the rUK will carry on as before but what will Scotland do? I would have thought that it was in the interest of every man woman and, yes, child, to have some concrete proposals. They will, if spared, all be or become pensioners themselves. Some will no doubt be living in or contemplating moving to what are the present frozen countries
    Too, much I suggest is “being left to decisions to be made by a democratically elected Scottish Parliament” or simply labelled as scaremongering by the Yes campaign and that is why I raised the issue here – in an article which shows the divergence of opinion between Edinburgh and Westminster on the cost of independence.
    By the way in your “getting the government we voted for” do remember that from 1997 to 2010 you also got the government you voted for but I guess that does not fit with your philosophy.

  17. But again you miss the point Douglas by saying that – “Decisions on pensions will be made by a democratically elected Scottish Parliament ”
    Until this referendum vote it seems that you are happy to vote ‘yes’ and hope.
    I would want to know what I was voting for and know that the finances are seen to be ok .
    To take on a future unsustainable debt with an aging population then find the pension funding could not be sustained would see a problematic future and a bail out or drastic cuts elsewhere.
    Personally I am very concerned for my friends north of the border and don’t wish to see a disaster and until the result is known, if it happens, we are under the same roof are’nt we ?
    The future looks to be very stormy still.

  18. People are asking the impossible here. Firstly, until the negotiations are complete, how can you sign up to a whole raft of budgetary commitments to fringe issues like ex-pat pensions? Secondly, following a ‘yes’ vote, an election would be held and each party will have different priorities so a promise now is empty unless the SNP are forever in power. Of course that leaves an element of unknown but given the way Osbourne unexpectedly changed the face of the industry in one Budget, what certainties does the status quo offer?

    For me, the key questions are are we happy with the political set-up we have and if not, will independence change that? Given the right wing dominance in modern politics, primarily coming from SE England, the answers for me are ‘no’ and ‘yes’ respectively.

  19. Andy Robertson-Fox 4th June 2014 at 9:40 am

    Not really asking the impossible here, Annony Mouse. Both the UK government and the Scottish Parliament have already confirmed that retirement pensions will continue to be paid….but not yet said by whom. So really it should not be that difficult for the “Yes” vote camaigners to confirm whether it will continue the discrimination of frozen pensions which currently affects one in twenty-five of all UK pensioners…hardly a fringe issue.
    Perhaps the Scottish pensioner and future pensioner should be just a little bit more concerned – as indeed should all Scots – given that yet another report this time from Briiain’s leading economic think tank, the respected Institute of Fiscal Studies has warned that a “Yes” vote would mean a substantial increase in taxation and/or major spending cuts…
    While you may have decided which way you wish to vote and to gamble on Independence changing the political set up for the better there are others who do not ,and will not think the same way, But there is a third group who recognise that, as yet at least, the Yes campaign does not fulfil what they want and that is why they are asking questions.

  20. IFS – “leading economic think tank” and “respected”? The vast majority of its official funding bodies are Government departments – i.e. UK Government Departments – so not what you could call unbiased?

    Thanks for your comments Annony Mouse, I was starting to feel a bit isolated here:-)

  21. Andy Robertson-Fox 4th June 2014 at 7:21 pm

    “Britain’s leading economic think tank” – according to today’s edition of the “Yes” supporting Herald.

  22. Douglas Grant 5th June 2014 at 9:05 am

    The Herald’s opinion, not mine. The Scottish Sun supports the SNP, would you quote anything you read in there?

  23. Andy Robertson-Fox 5th June 2014 at 9:44 am

    If a leading newspaper has openly come out and supported the “Yes” campaign, or indeed the “NO” campaign do you really think it would print something that tended to undercut its position and favour the opposing view unless it recognised the validity of the comment?

    The Scottish Sun is not a paper I read but it would very much depend on what was said, what was the subject matter and whether or not I agreed with the comment. I don’t deal in hypothesis.

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