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Coffee House

New report puts price on freedom – but we are still none the wiser

22 June 2014

9:08 PM

22 June 2014

9:08 PM

You can’t put a price on freedom. Well now, it seems, you can: or rather, one senior academic has done so and his verdict? Scottish independence will cost £200 million.

On the surface, Professor Patrick Dunleavy’s conclusions on the set-up costs for an independent Scotland look good for the Nationalists.

After all, that £200 million is remarkably close to the figure Alex Salmond has been throwing around for the last week or so and some considerable distance from the £2.7 billion figure the Treasury has been bandying around.

In fact, Prof Dunleavy’s report (which was published today) makes the Treasury look pretty foolish and more than a bit amateurish.

For weeks, Danny Alexander has been warning of set-up costs of £2.7 billion for a new Scottish state – 12 times the figure that Prof Dunleavy has come up with.

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But, as ever in politics, it is not as quite as simple as that (however much the Nats would like it to be).

That is because, being an academic, Prof Dunleavy from the LSE put so many caveats and cautionary warnings into his report that it is easy to understand how the costs could climb well above the £200 million figure.

Indeed, he hedged his bets so many times, it is easy for both sides to feel they can get something from his report.

For instance, he concluded:

  • The immediate start-up costs on an independent Scottish state would be about £200 million – 1-0 to the Scottish Government.
  • The longer term costs could be far higher, particularly if negotiations don’t go well while IT costs could add hundreds of millions to that original estimate – 1-1.
  • The long-term viability of a Scottish state looks “strong” – 2-1 to Salmond and Co..
  • EU and Nato memberships cannot automatically be guaranteed, this could cause huge problems and be very costly – 2-2.
  • Big savings can be made through streamlining services and policy decisions like dumping Trident – 3-2 to Salmond.
  • The changes are going to take years to complete with everything probably not handed over until 2022, well after the First Minister’s target date for independence of March 2016 – 3-3.

For the last few weeks, both sides in the referendum debate have been trading blows on this vital subject of start-up costs. Leaving aside the rather obtuse argument about who has commissioned work and who hasn’t, the argument has boiled down to this: the Yes camp say the start-up costs will be modest, about £200 million or so while the No camp say the bill be huge – about £2.7 billion.

Clearly this issue matters because the set-up costs of the new state will help determine whether it is economically solvent or not. And now we have the definitive report and what does it tell us? It tells us that the Treasury estimates were woefully inaccurate and that doesn’t help the No camp at all.

But it also tells us that everything will come down to negotiations between the two governments. If they go well for Scotland, the start-up costs of a new state will be manageable and if they don’t, the start-up costs will be crippling.

So, even after a major, independent academic report, we are still pretty much back in the same position we have always been in – everything will depend on the negotiations between the two governments.

And, as should now be depressingly clear to everyone in Scotland, no-one will ever be able to predict the outcome of these negotiations with any certainty at all.

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