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Thursday, 11 September 2014

Some Scottish Fairy Tales

1. Myth: Scotland's global relationships won’t change

Hot air balloons

Fact: Scotland would be a new country. It wouldn’t inherit all the international deals the UK has struck over many years, decades, and even centuries (everything from extradition and trade treaties to the International Declaration Prohibiting the Discharge of Projectiles and Explosives from Balloons). So it would have to start from scratch, negotiating to join everything from the UN to the IOC and NATO (more on NATO later). 
The UK is a well respected power that is a member of all the most powerful international bodies, G5, G7, G20, UN Security Council and by its history lies at the hub of the Commonwealth.  It has a long established alliance with the United States and is respected in the Western World as one of the few countries that has consistently stood against despots and for representative democracy.
An independent Scotland would lie somewhere between Denmark and Moldova.
Source: Scotland analysis: devolution and the implications of Scottish independence, February 2013

2. Myth: Remaining North Sea oil and gas is worth £1.5 trillion - and at least £6.8 billion in Scottish tax revenues in first year of independence

Oil rig

Fact: The Scottish Government assumes that oil and gas can be produced at zero costs (so rigs and pipelines can be built and run for free, and oil workers don’t need to be paid), despite the remaining oil being further off-shore and deeper under the ocean, so it costs more to extract. Over the last 2 years, taxes from the North Sea have been £3 billion below the Scottish Government’s most pessimistic forecast – that’s the same as the entire Scottish education budget.
Sources: Oil and gas analytical briefing, Scottish Government, March 2013, Statistics of Government revenues from UK oil and gas production, HMRC, April 2014

3. Myth: There would be tax cuts and more spending in an independent Scotland

Tax definition in dictionary
Fact: Scotland spent £12 billion more than it raised in taxes last year (that’s from the Scottish Government’s own figures, and includes North Sea revenues). But in fact it is worse than that. An independent Scotland would probably want to join NATO, which means it would have to spend 2% of GDP on Defence (£3 billion), and if it wants to be an international player it needs its own Foreign Office and embassies (the UK spends £1.3 billion).
Add in all the other regulators and institutions that are needed in an independent government and there would be a deficit of something approaching £20 billion. And that's before all the promised tax cuts and the spending increases (£1.6 billion on extra childcare - really?) 

Compare that with North Sea corporation tax revenues which vary from £3 billion to £8 billion in a good year (and were already included in the figures that gave the £12 billion deficit), and it’s hard to see how Scotland would be able cut corporation tax and air passenger duty on one hand but still spend more on benefits and create an oil fund on the other.
Source: The Government Expenditure and Revenue Scotland 2012 - 2013(GERS), Scottish Government; March 2014

4. Myth: Scots will continue to receive BBC programmes for the cost of the license fee


Fact: Alex Salmond wants a Scottish Broadcasting Service after a yes vote in September’s referendum. Fair enough, but he also says that Scots will be able to receive BBC programmes because the BBC will enter into a partnership with the SBS.  Now hang on their a moment. If the SBS is going to make programmes for Scotland, that is going to cost money, so there will be less than the full license fee available to buythe BBC services.  And does Mr Salmond think for a moment that other UK viewers will want BBC programmes to be sold at a discounted price to a foreign country? Dream on.

5. Myth: Scotland will be an EU member (and inherit the same terms and conditions that the UK currently enjoys)

EU flag

Fact: Not so.  The EU has made it quite clear that a new nation such as Scotland would have to apply just like every other new member, and would have to be accepted by unanimous consent (just like every other member). As Scotland is already part of a member state, that might be a quicker process than it would be for other countries, but it is hard to see why newer members would consent to Scotland joining on better terms than themselves, which means that Scotland loses the benefit of the UK's opt-outs and a 10% share of the UK's EUR5.5 billion annual rebate.
Source: Scotland analysis: EU and international issues, January 2014

6. Myth: Scotland will keep the UK pound


Fact: Labour, Conservatives and Lib Dems have all made clear if Scotland leaves the UK we’ll also leave the UK pound. A currency union would not work for the rest of the UK – so it will not happen.  There is nothing stopping Scotland from adopting the pound as a de facto currency, but since it would have no central bank or control over its currency, it wouldn't be admitted into the EU. 
Sources: Scotland analysis: currency and monetary policy, April 2013, Scotland analysis: assessment of a sterling currency union, February 2014

7. Myth: Scots will be able to play the National Lottery and share much-loved national institutions with the UK

National Lottery ticket

Fact: Mr Salmond doesn't seem to understand. The Scottish government says that it is their "intention" that Camelot will operate in Scotland under a new licence.  Fair enough, nothing to stop them doing that, but it doesn't give Scots access to the UK prize fund, nor does it give Scottish organisations access to a share in the profits of the UK National Lottery (it’s called the National Lottery – not the International Lottery). You can’t buy a ticket in France, so why would it run in an independent Scotland? The same goes for everything from the Met Office to the benefits system. Scotland will have to spend millions setting up new institutions.
Source: Scotland analysis: devolution and the implications of Scottish independence, February 2013

8. Myth: Scotland would not have to bail out its banks – international investors bailed them out before

Piggy bank

Fact: During the last crisis the UK taxpayer paid out £66 billion in cash to buy shares in the banks – more than £1,000 for every man, woman and child in the UK. If we include guarantees, UK taxpayers put up more than £320 billion of support to Royal Bank of Scotland alone. Can Scotland afford these sorts of sums on our own? Of course not.

9. Myth: The answers are in the independence white paper and it all adds up

Question mark

Fact: The white paper does not answer the key questions. Many of the independence plans, for example on currency and EU membership, are in the hands of foreign governments who would be acting in the interests of their own citizens ahead of Scotland’s. And the white paper does not add up - the plans to cut taxes and extend childcare need £1.6 billion of additional funding.
Source: Unfunded commitments in “Scotland’s future” HM Treasury, December 2013

10. Myth: Westminster won’t devolve more powers

M90 motorway

Fact: More powers were devolved in the Scotland Act 2012 (the largest devolution of tax powers in the UK’s history). As a result Scotland now sets even more of its own laws, from motorway speed limits to regulating air weapons. All three main UK parties have promised more powers will be devolved in future.


Demetrius said...

Good one. I posted today on the issue of Nationalisation. According to todays web info oil prices seem to be going south. Could BP go into the red?

Bill Bell said...

Looking back it is quickly becoming clear that the baloons issue was decisive in the No vote.

I wonder whether the International Declaration Prohibiting the Discharge of Projectiles and Explosives from Balloons will have the same devastating impact on Catalonia's increasingly vociferous bid for independence from their Spanish overlords.