THE Chartered Institute of Public Finance and Accountancy’s plans to assess the arguments over public finance are very welcome. The Scottish Government’s response to this announcement is “the information it has provided in its Scotland’s Future white paper is based on official statistics and demonstrates public spending would be more affordable under independence”.
The problem is not the statistics, but the spin the government has put on them.
Its claim about affordability of public spending is based on an average net fiscal surplus of 0.2 per cent of GDP, compared to an average net fiscal deficit of 3 per cent for the UK.
This is a misleading interpretation, as this result is a reflection of the exceptionally high level of North Sea revenues in 1980-85, and the low level of GDP. In cash terms, Scotland has been in fiscal deficit since 1990, as recorded in the Scottish National Accounts Project Data.
In the 1980s, Scotland’s cumulative surplus was £39.5 billion. Since 1990-91, Scotland has been in deficit every year but one, with a cumulative deficit of £89bn. Overall, since 1980 our net deficit is an average of £1.5bn a year – not a surplus at all.
Professor Brian Ashcroft has shown that the balances as a percentage of GDP were exceptional in 1980-85, ranging from 5 per cent to 17 per cent. Since 1990, the net fiscal deficit is slightly above 3.2 per cent of GDP.
What the SNP claims is Scotland’s strong historic fiscal position ended in 1985.
(Prof) Arthur Midwinter
The Barnet Formula which we have at present means that 11 per cent more is spent per person in Scotland than in England.
The independent reports available to us indicate that if we collected our own income tax, inheritance tax and capital gains tax we would be less well off .
If we chose to raise all our taxes in Scotland in return for keeping oil revenue it would turn us into an oil economy, doing well only if the price of oil is high.
Of course, this fluctuates and the only certainty is that Scotland would have to pay out £30 billion (or whatever currency we then have) in decommissioning costs when the wells are closed down in about 35 years’ time.
I agree with one element in Lesley Riddoch’s article (Perspective, 10 February) – Labour should come out with a view on devo-max. It could say that we should use the Scotland Act to show us what separate tax-raising powers would actually mean before blundering into more tax changes.
Also, our Westminster MPs are not “jobsworths”. At present they give Scotland real influence over UK policy. If there is more devolution the rest of UK will insist we have fewer MPs and so our voice will possibly not be heard.
If it was not for our Scottish representatives at Westminster we would be involved in military action in Syria, and the Scottish Labour Party should be pointing this out.
ELLIS Thorpe (Letters, 10 February) reminds us why the Nationalists are so very keen to focus on the economic arguments.
No matter how wildly optimistic their claims, they will always be able to find at least one economic analyst who will support them – or, at the very least, refuse to rule out their fanciful projections.
Their tactic brings to mind a quip, a quote and a joke: “Ask three economists, get five different answers”; “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.” (Laurence J Peter); and “What do you call an economist with a prediction? Wrong.”
All the Nationalists need do is keep making optimistic predictions while encouraging us to ignore or dismiss the pessimists and the realists.