Wings Over Scotland

Yesterday, right-wing think-tank the Institute of Fiscal Studies issued a document entitled “Fiscal sustainability in an independent Scotland“. It’s rather less than glowing about the prospects of an independent Scottish economy.

For seekers of facts, the most important aspect of the report is not its findings but rather what data was used and from where it was gathered, which severely slanted the outcome of the report before it was even written. Because it doesn’t matter how diligent, honest and thorough an economic assessment is, if the input information that the economists are asked to work from is heavily skewed to begin with.

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So you find oil and want to make life better for your people. It’s an asset that makes you fabulously wealthy and provides the sort of financial security that people normally can only dream of. But you get coerced and cajoled into giving it to your neighbour to look after on your behalf. The neighbour gives it to their banker friends who all enjoy lavish lifestyles at your expense.

Whenever you get fed up with how you’re being treated and begin to long for the good old days when you were free to do as you wished, the neighbour comes up with ridiculous ploys, scare-stories and scenarios to keep you where you are; each time becoming more ridiculous and farcical in order to keep control of your money and please their banker friends.

No, you’re not Scotland; you’re Jed Clampett from the Beverly Hillbillies, an American show from the 60s with a plot so ridiculous only backward yokels would fall for it.

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The raison d’être of a government is to act in the interests of their populace, yet there’s a widespread perception that they instead now exist solely to serve the political and corporate elite, sometimes with not even lip service paid to the wishes of the public.

It’s a perception backed up by hard fact in the form of opinion polls, which demonstrate that the clearly-expressed desires of the electorate are regularly ignored by all parties in favour of blind ideology, cuts to services the public value, and tax breaks for those who don’t need them.

Whoever’s in power, the assets of the nation are sold off against the will of the people, in the name of a private-sector market ideology, for the short-term profit of wealthy City speculators, and for the benefit of other countries who ironically often end up running British industries as (foreign) state-owned public enterprises.

This happens because the votes of most of the electorate don’t count for anything.

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This week it was claimed by Stuart Adam, senior economic researcher at the Institute for Fiscal Studies (IFS), that taxes would have to rise almost 14% in an independent Scotland, if they were the sole method used to fill the Scottish budget deficit.

It’s a dramatic headline, for sure. But is it an accurate reflection on the relative finances of an independent Scotland and one that remained part of the United Kingdom? As ever, you have to dig a little deeper to find out what’s really going on.

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This week, the University and College Union (UCU) have set out their manifesto for higher and further education in anticipation of the independence referendum. It denounces the funding system preferred by the big three Westminster parties and offers full backing to the Scottish Government’s policy of free tuition, while calling for immigration changes in order to support students and academics coming from abroad to study and work in Scotland.

“It is right that students who benefit from higher-than-average incomes should pay something back, but they should do so through progressive income tax,”

“Business depends on graduates and should make a contribution rather than receiving tax breaks. Higher education should be substantially paid for through general taxation.”

“Scotland does not have great concerns about an immigration influx and should relax rules which could lead to greater recruitment of students, though they may be put off by negative perceptions of the UK system.”

While the report doesn’t say so explicitly, these views put the UCU clearly on the Yes side – immigration and taxation would continue to be powers reserved  to Westminster in the event of a No vote, and the prevailing political climate in England (particularly the south) suggests a very different direction of travel.

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A brand-new scare story raised its head this week, coming in from the blind side and catching the voting public unawares with the news that Westminster has decreed that independence would see Scotland struggle to sell its food and drink products abroad.

During a visit north of the border, Owen Paterson (the UK Secretary of State for Environment, Food and Rural Affairs), claimed that Scottish exporters gained massive advantages from the UK government’s “clout” in markets such as China and Russia. He said an independent Scotland would struggle in comparison.

“What I see time and again after the success of the Olympics last year, the Royal Wedding and the Jubilee, is that there’s a real interest in British products… There’s a real positive for great Scottish firms like Walkers and those in the Scotch whisky industry in using the British government.

The UK is the sixth biggest economy in the world and we have real clout. When we asked that our whisky is treated fairly and ask hugely important governments in very important potential markets like China and Russia to look at counterfeiting or geographical indicators, that is to the massive advantage of that industry.

How people vote in the referendum is down to them, but I would make a very strong case that there’s a clear advantage for Scottish farmers and manufacturers to stay within the UK.”

But the minister’s assertions fall apart under scrutiny.

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The accusation that the Yes campaign proposes an impossible Scotland of low tax and high spend (often mocked as “Scandinavian spending with American taxation”) is a tactic frequently used by ‘Better Together’ to undermine the economic case for independence, with the implication that services would be cut due to lack of funds.

(Of course, they say that independence means slashing taxes at the same time as saying taxes will rise in an independent Scotland, but we’ll let that go for now.)

It’s an allegation commonly placed at the feet of the SNP (usually by Labour when wielding the old “Tartan Tories” stick, whereas the Tories prefer to insist that the SNP are dangerous neo-Marxists) that looking to offer tax breaks and incentives to encourage development is in actual fact right wing low-tax economics.

But that’s not necessarily the case. Cutting one or two taxes to boost growth doesn’t create a “low-tax economy” any more than cutting out a single sausage from a full English breakfast makes it low-fat.

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It’s been a remarkable week in opinion polling, with YouGov calling the independence referendum for No on Sunday, Panelbase calling it for Yes on Monday, and TNS-BMRB, according to Prof John Curtice, calling it for Don’t Know by Wednesday.

When you look at those results more carefully it becomes apparent that only the initial YouGov poll holds good news for the No camp, and the reason for this comes down to the psychology of change.

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Almost every newspaper today reported a declaration by George Osborne that a No vote would result in a boost to Scottish family incomes of a dramatic-sounding £2,000. The headline figure, which some papers gave a more negative spin, was actually a cumulative sum spread over 30 years (because “£67 a year per family”, or £1.29 a week, sounds rather less impressive as a compelling case for the Union).

It hinged on forecast economic growth of 4% – due to “extra trade, labour migration and cross-border investment” – compared to that in an independent Scotland.

Those are two pretty sweeping predictions. Is the Chancellor that good a fortune-teller?

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We’ve already briefly discussed Bill Jamieson’s article in today’s Scotsman claiming an independent Scotland will be more likely to suffer financial collapse and wouldn’t be able to afford to bail out its banking sector, that its economy will diverge from the rUK due to differing economic policies (making Sterling a millstone round Scotland’s neck), and that Scottish banks would relocate their headquarters to London as a result.

We’ve heard these dire tales of “too wee, too poor” inadequacy a thousand times. “But you couldn’t bail out the banks!” is perhaps the most scratched and worn-out disc in the No campaign’s entire DJ setlist of doom-and-gloom tunes. What we need is some sort of independence Woody Bop Muddy, but while we look for his number let’s yawn our way through this tired old scaremongering cobblers one more time.

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In an interesting addition to the independence debate today, Jim Gallagher (former director-general for devolution in the UK government, and senior adviser to Prime Minister Gordon Brown on devolution strategy from 2007 to 2010) has written about the “positive case” from a business perspective for Scotland to remain in the UK.

His article for the Scotsman, entitled “Referendum comes down to money”,  is billed as “Rising to a challenge to make a positive case for the Union”. In it Gallagher argues that it’s only through membership of the Union that Scotland benefits from free trade.

Let’s see if he has a point.

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Last year’s argument over the referendum franchise saw the Scottish Government’s view win the day – that the matter should be decided according to a civic definition of nationality, rather than along the ethnic lines proposed by some in the No camp.

But what of the people of non-Scottish ethnic origin who’ve been thus enfranchised and entrusted with the future of the nation they’ve chosen to make their home?

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