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Blogs Coffee House

The Scottish government’s own figures demolish the economic case for independence

9 March 2016

11:41 AM

9 March 2016

11:41 AM

What does a barrel of schadenfreude cost these days? That’s today’s starter for ten. The answer, according to the latest Scottish government figures, appears to be about £15bn. That’s the difference between spending in Scotland last year and the revenue raised from Scotland. A deficit of 9.7 percent or, for those keeping score, almost twice the UK’s deficit.

And, boom, there will be some Unionists tempted to sneer Well, that was a nice little case you had for independence, wasn’t it? Such a shame something happened to it.  They will have a point, albeit there is something unseemly about appearing to revel in the collapse of an industry – north sea oil – upon which so many Scottish jobs and families depend. Aberdeen has endured tough times before but these present difficulties are tougher than most. Even granite can weep.

Besides, Unionists minded to crow today as the Scottish government publishes figures that are, frankly, ruinous should remember that by doing so they are playing the nationalists at their own game. That is, if inconvenient, even disagreeable, economic news demolishes the argument for independence then it stands to follow that healthier economic figures, such as those projected with such heroic optimism during the referendum campaign, make a strong case for that independence.

It is true that the projections made in Alex Salmond’s White Paper were the economic equivalent of forecasting that Scotland will win the 2018 World Cup: a nice idea albeit one untethered to reality. And it is also true that many people who should have known better did manage to persuade themselves that 20 years of economic growth, labour force expansion, and annual productivity gains could somehow be wished into existence by a new state.

Nevertheless, while the Yes campaign undoubtedly needed a veneer of economic plausibility its strongest arguments never depended on anything so mundane as mere numbers. It was, instead, an argument built on identity and the twin senses of self and place. That argument still stands.

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Which is why Unionism needs more than just numbers on its side. It certainly cannot win without those numbers but numbers, not even ones as grim as today’s GERS figures, are not enough. Because what happens if the numbers change or the people decide the game isn’t actually about numbers at all?

Today’s figures, then, are useful for embarrassing the SNP but they are not a long-term solution to the dilemma in which Unionism finds itself. True, last year Scottish revenues amounted to £10,000 per capita while spending was equal to £12,800 and this amounted to what Unionists will be sorely tempted to describe as a ‘Union dividend’ of £1,400 a head. That, just two weeks before Salmond’s notional ‘independence day’, is a sobering thought. A bullet dodged, you might even think.

And it is certainly true that, at least for now, the SNP’s economic argument for independence is sunk. That argument always relied on a partial interpretation of the available economic data, fixed around a handful of years in which Scotland’s per capita revenues were especially strong and those years – alas, perhaps – were not the general rule. The SNP have not yet done any heavy lifting to repair this hole in their case far less the kind of heavy thinking to prevent such holes being punched in the future. The referendum defeat was instead interpreted as just a flesh wound. Tedious, perhaps, but of no great account in the long march to history.

Well, we know better now. The Scottish government’s own figures confirm as much. Sure, everyone runs a deficit but everyone other than cloth-headed SNP MPs and MSPs knows that deficits of ten percent are not sustainable. Scotland would, if Yes had prevailed, be now preparing for an independence budget which would deliver either swingeing cuts in spending or hefty increases in tax or, more probably, a combination of both.

Indeed the official figures likely under-estimate the size of the financial hole that would need to be filled. The 17,000 wealthiest Scots contribute some 15 percent of income tax receipts; it is likely that in the event of independence at least some of them would have chosen to leave. A disagreeable thought, no doubt, but one with inevitable, unavoidable, consequences. Add the new state’s higher cost of borrowing and you begin to appreciate how chilly the winds of freedom would have been.

Not – to be clear for at least the hundredth time – too wee, too poor or too stupid to make a decent fist of independence but, beyond peradventure (as Mr Salmond might put it) poorer than is currently the case within the United Kingdom.

Perhaps it would have been worth it. The march of a nation cannot be reduced to a matter of accountancy. Numbers matter but they are not the only fruit. But this, again, must apply to both sides of the constitutional divide. Britain, and the UK, must be worth something other than £1,400 a year.

People are not, in any case, bloodless calculating machines. They appreciate that these arguments are, in the end and at root, about something more than that. They are about who we are, how we see ourselves, and what we intend to achieve together. They are arguments about where we have been and where we may yet go.

And, from a Unionist perspective, the problem with bad news is that even when it’s good you cannot be seen to embrace it with too much gusto. But if these figures demand Unionists find the right tone, they also compel something rare from the SNP too: a measure of honesty.

 

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