Scottish Independence: £200m to be ‘initial cost’

Professor Patrick Dunleavy said: "Scotlands immediate set-up costs are likely to be constrained - we suggest around £200 million in one-off costs." Picture: TSPL

Professor Patrick Dunleavy of the London School of Economics (LSE) has been held up by both sides as the foremost expert on the likely transition costs an independent Scotland could face.

In a new analysis, the academic said that initial set-up costs to duplicate core Westminster functions would be £200m but warned that hundreds of millions of pounds more would be needed to build the government IT systems needed by an independent state.

The Treasury has previously estimated that this would cost £900m, which Dunleavy said “does not seem implausible”.Prof Dunleavy also suggested that it could take ten years to negotiate Scotland’s departure from the UK, in a blow to First Minister Alex Salmond’s claim that an independent state could be created by March 2016.

He said that the 2016 date was “demanding but just achievable”. He added: “I suspect Salmond might be prepared to trade on dates but this one [2016] is tricky because of election timing.”

The UK and Scottish governments have repeatedly clashed over the projected start-up expense of independence, with the Treasury initially claiming it would lead to a cost of up to £2.7 billion, and both sides have previously attempted to cite Prof Dunleavy’s work on the subject.

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A spokesman for the First Minister yesterday said the Treasury’s £2.7bn figure had been “blown out the water” by the academic, while a UK Treasury spokesperson said the Scottish Government was “refusing to come clean” on the cost of independence.

Prof Dunleavy states an independent Scotland could face up to a decade of transition to independence and continue to share some UK government agencies such as the Driver Vehicle Licensing Authority up until 2022.

The LSE expert warned full power to vary taxes and welfare could take years to transfer from Westminster. Prof Dunleavy also concluded that a bigger Scottish Government would require 27,000 civil servants, though fewer than 60 new departments or agencies would be needed.

He said: “We can say with some confidence that Scotland’s immediate set-up costs are likely to be constrained – we suggest around £200m in one-off costs to create its own versions of a few, but big and important, existing UK department capabilities.

“The UK Treasury has suggested Scotland could also face IT and new administration costs in taxation and benefits, of perhaps as much as £900m. But these would be systems that come on line only in 2018 to 2021, and they would endure for many years. The two absolutely critical influences on Scotland’s likely overall transition costs are the realism of Scottish Government planning for independence, which generally seems high.”

A spokesman for Mr Salmond said Prof Dunleavy’s findings “totally vindicate” the Scottish Government’s position as he stated the Treasury was “caught red-faced and red-handed” with its claim about start-up costs.

He said: “Their figure of £2.7bn has been blown out of the water by Prof Dunleavy. The Treasury estimate has been exposed as a total and utter fabrication, and we now demand an immediate retraction.

“This was much more than mis-briefing, and it is unprecedented to have the Treasury caught red-faced and red-handed.

“There will be repercussions for the No campaign on this – it is game, set and match for Yes.

“The No campaign’s arguments have been totally and utterly demolished, and we now need a retraction both from the Treasury and the No side.

“These are the figures on which they based their campaign. We now find they were exaggerated by a factor of 12.”

The anti-independence Better Together campaign welcomed the report, saying it shows hundreds of millions of pounds would be “wasted” recreating things that already exist.

The UK Treasury claimed Prof Dunleavy’s analysis boosted the case for a No vote in the referendum on 18 September.

A spokesman said: “The Scottish Government has refused to come clean with its own number on the cost of independence and only the UK Government is providing the facts.”

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