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Where has all the money gone, Nicola Sturgeon?

24 August 2016

1:37 PM

24 August 2016

1:37 PM

Just three years ago, the Scottish government enjoyed claiming that an independent Scotland would be one of the wealthiest countries in the world. Perhaps even the sixth wealthiest, as measured by GDP per capita. Sometimes the claims made were a little more modest. Scotland might be only the 14th richest country on earth. But, however the figures were calculated and wherever Scotland was presumed to rank, one thing remained consistent: Scotland would be richer than the United Kingdom it would be leaving behind.

Well, you can’t make that case any longer. In truth, it wasn’t a case sensible people bought in the first place. It was too good to be true, too dependent upon time-sensitive statistical chicanery, to be entirely convincing. In like fashion, the suggestion an independent Scotland could spend more, borrow less and tax just the same insulted the electorate’s intelligence.

Of course Scotland could afford to be independent. But being rich enough to afford independence does not contradict the fact Scotland would be poorer than it would be as a part of the United Kingdom. Perhaps that’s a price worth paying, though it is worth noting that the SNP aren’t convinced the people are ready to pay it. And there really is no doubt any more. Today’s publication of the latest Government Expenditure and Revenue Scotland statistics (GERS) hammers another nail into the economic argument for independence.

Scotland, right now, has a fiscal deficit amounting to 9.5 per cent of GDP, more than twice the deficit figure for the UK as a whole. That amounts to almost £15bn or, to put it another way, almost 20 percent of government spending in Scotland. That’s more than is spent on education, transport and policing combined.

In 2015-16, Scotland raised £53.7bn but total public spending amounted to £68.6bn. That’s more than a fiscal gap, it’s a fiscal Marianas Trench. To put it into some international perspective, it’s a larger deficit than that run by any country in the EU.

Suddenly the promise of a second oil boom – much-trumpeted by the SNP during the independence referendum – seems a sardonic joke made at the expense of the Scottish people themselves. Oil revenues amounted to £60m last year. Or less than the cost of a hospital. Independence would have been an expensive business.


Ah, say the nationalists, but an independent Scotland would do things differently. Well, yes. It would have to. Deficits of nearly ten per cent of GDP can’t be sustained for more than a handful of years. Even the Greeks know that.

Yesterday Nicola Sturgeon said that, after Brexit, the UK ‘is no longer a safe haven’ for Scotland. That was an unfortunate but telling phrase all too redolent of Alex Salmond’s belief Scotland plays the role of a ‘surly lodger’ paying rent to the United Kingdom. A denial that it’s actually our house too and that the UK is no more a safe haven for Scotland than it is for Lancashire. It is, instead, a country that’s ours just as much as it belongs to any Devonian or Londoner (it’s just that we have another country too).

But if the UK is not a safe haven then, judged by the Scottish government’s own figures, a putatively-independent Scotland is a fiscal war-zone. Perhaps those figures are incomplete – the sterner kind of nationalist thinks so – but they are the best we have and are, again, produced by the Scottish government.

If independence was off the table this might not matter very much. But it’s not off the table. The SNP and the wider ‘Yes’ movement are preparing for another thrash at independence, perhaps at some point in this parliament. Civil servants are preparing a bill legislating for another referendum (though, technically, this is beyond the Scottish parliament’s legal competence) and Ms Sturgeon has promised further details when she outlines her latest programme for government later this autumn. (You may remember, wistfully, that education was going to be her top priority. But if you really believed that then you’re a sucker.)

True, Brexit has an impact. True, too, that we are not where we might like to be in a fiscal sense. But it takes some gall, some neck, some cheek, to complain bitterly about Westminster austerity while pursuing an agenda that guarantees the kind of austerity George Osborne never even dreamed of. Kilted austerity would be a brutal business.

All of which leaves Scottish politics in a strange and resentful place. The political argument for independence post-Brexit may be stronger than it was in 2014 but the economic argument for it is demonstrably worse. To the tune of about £1,600 a person per year. Could Scotland afford independence? Of course it could. But does it need it? The electorate decided it did not just two years ago. And there has been no dramatic shift in public opinion since then.

Last week Alex Bell, the SNP’s former head of policy, admitted that the White Paper on Independence, all 600 plus pages of it, had been drivel and suggested those responsible for it should hang their heads in shame and apologise for misleading the Scottish people. Only then, he theorised, could the SNP start again and make a new and better and more plausible and honest independence offer to the electorate.

But Scotland is a small-c conservative country. It has voted in three referendums in the last six years and has opted for the status quo on each occasion. An independence offer that promised blood, sweat, toil and tears might be a more honest prospectus but it’s not evident it’s one the people want to hear, far less embrace. Like Jack Nicholson, the SNP worry that the Scottish people ‘can’t handle the truth’. If they could there’d be no need to try and hide it.

Perhaps that will change. External events will have an impact and the political landscape may yet look very different in 2020, 2021 and 2022. But for now the question remains this: if the Scottish people were not prepared to embrace independence when it promised them additional wealth, why should they do so when it guarantees, at least for a while, undoubted impoverishment?

As Ms Sturgeon admitted this morning, the GERS figures present ‘a challenging picture for Scotland. True enough, but it’s a more challenging picture for the SNP.

Traditionally, the party has reacted to bad news by arguing that this simply demonstrates the fierce urgency of independence (good news, naturally, shows that independence would be a skoosh). Well, maybe. But the reverse also applies: good news (thin on the ground these days admittedly) shows there’s no great need for independence; bad news confirms that divorce, as the old slogan had it, is an expensive business. So why risk it? Why not, instead, muddle along?

That’s not, it is true, an inspirational hymn for Unionism to sing but it has the merit of being based upon real figures, not fantasy. Facts are stubborn chiels and some of them will not ding.

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