We don’t follow many Unionists on social media, because you end up wasting your day arguing pointlessly with a lot of people who are never going to change their minds and getting in a bad mood. But we’re told they were all very excited about an article in yesterday’s Daily Record.
Penned by the paper’s political editor Davie Clegg, it’s a long diatribe about how the fall in oil revenues has created a black hole which now means Scotland is – stand by for a surprise! – too wee and too poor to be independent.
So far so meh – it’s not like it’s the first time we’ve heard that record played, after all. But as you can see from the image above, there’s also quite an interesting challenge printed in giant capitals at the foot of the page. We’re not in the Scottish Government, but it’s a rainy Saturday so we thought we might have a go.
The first thing to note is that there are actually very few “calculations” in the article. In fact, there’s basically just one, stretched out into a needlessly complicated graphic:
Alert readers will spot that it’s just a really long-winded way of saying “Projected oil revenues are lower than the White Paper anticipated a year ago”.
That’s unquestionably true (although it’s always worth keeping in mind that absolutely nobody ever has any idea what the oil price will be even a few weeks from now, let alone years, and everyone else’s predictions were at least as wrong as the SNP’s).
But analysing Scotland’s economy isn’t just a matter of seeing what the oil price is. In March this year the BBC reported that:
Professor Brian Ashcroft of the institute told the Financial Times:
“The oil industry is very, very important and in many ways the jewel in the Scottish economy, but the Scottish economy is much bigger than the oil industry and there are lots of areas that will benefit from lower oil prices.
In other words, while cheap oil damages Scotland’s balance sheet in an immediate and obvious way that makes for dramatic newspaper headlines, the positive knock-on effects on the rest of the economy from less expensive fuel more than outweigh it.
Companies stay in business that might otherwise have gone bust because of energy or transport costs, and consumers also have more money in their pockets. The pump price of petrol has fallen from a peak average of 148p a litre in April 2012 to 111p now, a huge drop of 25% (despite the common perception that the price never comes down when oil falls).
When oil is cheaper more people are employed, non-oil tax receipts are higher, welfare spending is lower and shops sell more stuff. Oil revenue, then, is a double-edged sword. So what else has the Record got?
Not much, it transpires.
“The financial fundamentals that would underpin independence have got drastically worse in the 13 months since the vote. The plummeting price of oil has effectively destroyed any pretence that a break from the UK would not involve major costs.”
We’ve just seen that that’s simplistic guff. But almost the entire article is exclusively about the oil price, with the same fact – oil receipts are down – being rephrased and repeated in different ways. Eventually, towards the end, we get a little bit of variation:
“If Swinney had been on the winning side of the referendum, he would currently be preparing the first budget of an independent Scotland. It would have involved a lot of pain.
His stark choice would have been to slash spending, hike up taxes or borrow vast amounts of cash at artificially high interest rates on the international money markets.”
“To make matters worse, the figures used above assume no negative impact on Scotland’s economy from renegotiating EU membership and implementing new currency arrangements.”
What new currency arrangements? Why would there be a negative impact from EU negotiations? We’re given no reasoning for either hypothetical.
“They also fail to take account of the costs of setting up all the instruments of a new state like a tax system, a welfare department, a debt management agency, a security and intelligence agency, a Scottish defence headquarters, a pensions regulator, transport organisations such as the DVLA and a passport office.”
The total cost of the administrative transition to independence was estimated last year by Professor Patrick Dunleavy of the London School of Economics at £650 million. That’s spread across several years, and in government terms is peanuts. For perspective, it’s roughly the amount of money wasted by a single Scottish Labour council on building some schools via the cripplingly expensive PFI method.
After that, the article goes back to oil again and then finishes. There’s not a mention of the financial upside of independence, the billions that could be saved on defence and wars, or any of the advantages of an economy not geared to damaging ideological austerity imposed by Tory governments that look set to rule the UK for a generation. It’s the worst-case scenario for all the negatives, and no case at all for the positives.
The Record, of course, is a tabloid newspaper not generally inclined towards nuanced in-depth analysis. And we already know that its grasp of both detail and arithmetic are somewhat shaky. But what we’ve covered here are not complicated concepts.
It’s not hard to understand that a low oil price has benefits as well as downsides. It’s not difficult to see how Scotland’s economy could be better run if it was the sole concern of its own government, rather than it being one small corner of a much bigger nation. And we’re sure even the Daily Record would agree that the mere fact of being free of Conservative rule would in itself be a huge boon in all sorts of ways.
The article serves no other purpose than to throw a bit of red meat the way of the paper’s core audience of diehard Unionists. But there’s an interesting stat on that too:
We wonder if there’s any chance that the Record will notice before it’s too late.