The emphasis on Scotland’s share of the UK debt conveniently ignores the nation’s entitlement to a share in UK’s assets, writes Jennifer Dempsie
AS ANOTHER financial year draws to a close, I thought it would be a good idea to submit to my accountant information only on my liabilities. Forget about assets. I am sure that Her Majesty’s Revenue &Customs won’t notice…
You might think this little nationalist has let all the recent sun get to her head, but I am only taking my cue from political debate.
There has been much focus on Scotland’s potential share of the UK debt burden on independence, and some of the analysis has been very useful. But you would need a microscope to find any substantive independent economic analysis on, or column inches devoted to, Scotland’s share of the UK’s asset base upon independence.
There is a serious risk that we are launching into a constitutional debate which is severely skewed. If we are to have proper discussion about Scotland’s share of the debt, the discussions cannot have credibility without thorough and independent analysis of our share of UK assets. No accountant does their books with only a liabilities column, there has to be an assets one too.
Last week the David Hume Institute published a useful analysis of Scotland’s share of UK public debt after independence. But, again there was not much analysis of Scotland’s potential asset base other than headline figures. The report did calculate a suggested total UK asset base of £821 billion, with Scotland having an approximate £69bn share.
According to most recent National Asset Register 2007, the UK government owns about £337bn of fixed assets (not including stock and current assets), ranging from Buckingham Palace to Edinburgh Castle. It is a rather fun read, and for anoraks such as myself reminded me of playing the board game Civilisation in which you compete to build your own nation.
If we take the international precedent of dividing assets using the same formula as debt based on our population share, in theory we could receive 8.4 per cent share of UK’s £93,384.503 million defence assets, we could try and return our Lewis Chessmen home as part of our share of the British Museum’s £435.098m assets and create jobs and a booming broadcasting sector in Scotland with our share of the BBC’s £879.8m assets.
If you dream of landing yourself a job as a foreign ambassador in an independent Scotland then I thoroughly recommend reading the Foreign & Commonwealth Office (FCO) asset analysis, with a princely total of £1,520.983m assets. Fancy the Caribbean? No bother, you can head over to the Bahamas HQ in Bridgetown worth nearly £2m.
Paris office buildings and residences fit for a king are worth more than £80m and decked out in over £3m worth of antiques, silver and rugs. There are £40.6m of offices and residences in Hong Kong, £55.65m offices and residences in the US and, my personal favourite, there is the £5.3m official residence and £1.5m office in Buenos Aires. That’s an expensive way of keeping an eye on the Falklands.
All joking aside, the sort of FCO a sovereign Scotland would need is a very different one from the lavish approach adopted by the UK. Scotland won’t need luxury pads, but instead a working network that puts trade and growth as the top priority.
While the level of our asset base may not match the level of debt Scotland would inherit, the strategic use of our asset base to promote Scotland’s interests will be critical.
Internationally countries often share the diplomatic and consular load – thus raising the realistic prospect that a similar arrangement can happen post-independence particularly since Scotland has a share of the UK overseas properties. And we already have a network of Scottish Development International offices around the world which will be utilised under a Scottish Foreign & Commonwealth Office. And instead of paying for these services to be based in London we have them in Scotland creating jobs.
There are also many different types of assets to take into consideration, not just assets we have built up together as part of the UK such as the property portfolio or our £11 billion gold reserves (which would have been worth double that if Gordon Brown hadn’t sold them off on the cheap).
Then there are geographical assets like oil and gas. Oil &d Gas UK estimates that there is a wholesale value of £1 trillion left of North Sea oil and gas. Suggestions have been made that the UK may have a claim to the oil and gas under Scottish waters. This is as ridiculous as suggesting Scotland would be able to claim the coal under Yorkshire. Anyway, this argument is wiped out by the UN Convention on the Continental Shelf, published in Geneva on 29 April 1958.
On the nuclear issue, the David Hume paper raised the interesting point over who pays for things like nuclear decommissioning, which isn’t a simple calculation given some are privately owned.
Of course, it is right that we worry about debt levels, but it should be put it in perspective. On an internationally comparable basis Scotland’s population share of UK gross debt in 2010 would have been about 64 per cent of GDP – lower than the UK (76 per cent), eurozone (86 per cent), EU (80 per cent) and G7 (114 per cent) according to IMF and Government Expenditure and Revenue in Scotland figures. And also when you look at other small neighbouring countries gross debt (as a percentage of GDP) is lower in Norway, Sweden, Finland, Denmark and Austria.
And let’s not get too worried about the challenges of the process of dividing up assets and liabilities – it will be a challenge, but it is entirely possible. Hundreds of other countries have done it after all.
• Jennifer Dempsie is a communications adviser to the SNP and former special adviser to First Minister Alex Salmond.