Bill Jamieson: Flying blind into the referendum

WE ARE hurtling head first into a vote on independence with no guidance from any reliable source, writes Bill Jamieson

So here we are aboard Air IndyRef. Among the passengers the mood is assuredly mixed. Some are bubbling with excitement. Some were grumbling before they even boarded. And then there’s the rest, whose fear of flying Air Indyref already has them gripping the arm rests. But the captain’s in jocular mood. The engines tick over as we wait on the tarmac for take-off. But here’s something the passengers don’t see. In the flight deck there are no dials. The altimeter’s missing, the fuel gauge absent and the compass blank. If we knew this, would we happily stay on board, lunge for the drinks trolley or demand to be let off?

Air IndyRef is like no other plane. And this no ordinary journey. This is its maiden flight. The route’s uncertain, the destination new to us and the skies overhead bubbling with turbulence. All the more reason, then, for Air IndyRef to be kitted out with a little more than tartan clad seats and a Saltire on the tailfin.

Across business, I hear one common and growing refrain. No-one knows where this flight is headed. The tax and regulatory framework for business is a blank. Neither the transition period nor the final terrain is clear.

We do not even know what the government’s spending and borrowing plans will be, or even the terms on which we will share a common currency and monetary policy with the rest of the UK – assuming there is agreement to share a common currency and central bank. The flight crew assures us all will become clear once we’re airborne and the landing date of autumn 2014 is closer.

We hope – and wait. It is odd, to put it no stronger, that Scotland is approaching a major constitutional decision so poorly informed. There is no independent agency to which we can turn for assessment. How might the various income and corporation tax policy options work? What trustworthy guidance is there on the costs and implications of tax and spending changes? Life beyond Barnett and those mind-numbing Consequentials is a tabula rasa already prompting urgent and searching questions.

On this perspective, Scotland is sorely lacking an independent, non-aligned research and policy body that can provide vital guidance and analysis on the choices we will be compelled to face.

Even were we not confronted with so profound a decision on independence, the business of government in Scotland is of sufficient substance and consequence as to merit its own Institute for Fiscal Studies and independent Office for Budget Responsibility before now. The absence of similar bodies to those in London is already marked. To board Air IndyRef without them multiplies this gap a hundredfold.

We best know the work of the IFS through its regular assessments of macro-economic policy and studies of tax policy impacts and implications. But its 35-strong full-time staff, augmented by a network of research fellows, provide a constant stream of papers on issues such as oil and energy tax, council tax benefit, poverty studies and labour market changes.

When cabinet secretary John Swinney announced plans to change the housing stamp duty regime, where was the independent assessment of potential winners and losers? Scotland is now in sore need of just such an institution.

The most recent guide to the costs and of tax reliefs and universal welfare benefits in Scotland was the excellent Crawford Beveridge budget review produced in 2010.

But by the time of the independence vote, the data on which it relied will be some six years out of date. We surely need an update. And to allow for the time it takes for such research to be undertaken, checked, reviewed and prepared for publication, such an independent body really ought to be up and running by now.

Scotland does not lack good economists. There is the respected Professor Brian Ashcroft, who has made the Fraser of Allander Quarterly Bulletin an authoritative and widely quoted pulse-take of Scotland’s economy.

There is outstanding work by Professor David Bell, at Stirling University; by public finance economist John McLaren; the Bank of Scotland and RBS assessments from Donald MacRae and Andrew McLaughlin respectively; and the invaluable monthly updates from Inverness-based Tony Mackay.

There are distinguished members of the First Minister’s Council of Economic Advisers. But collectively it is widely seen as an Amen Chorus to the baritone of Bute House.

Nor is there a shortage of bright minds at out universities. In the past fortnight I have sat in on two outstanding conferences. The first, on European Union governance, was organised by Dr David Howarth, Jean Monnet senior lecturer in politics and international relations at the University of Edinburgh.

I may not agree with every jot and tittle of the Jean Monnet school of European thought (that’s not quite true: I agree with every jot and tittle, it’s the wadge in between I struggle with) but the excellence of the papers presented and the research undertaken deserved a wider audience.

The second conference, on sovereign wealth funds, hosted by the University of Edinburgh Business School this week, was a platform for insightful analysis, not least from the university’s financial market guru Gavin Kretzschmar. There really is a wealth of academic talent on which to draw.

As to funding, the IFS (executive chair Professor Frances Cairncross) relies on grants to fund its research. The Economic and Social Science Research Council funds macro-economic research work. In addition to grants for specific projects, the IFS derives income from individual membership subscriptions (£50 a year) and corporate subscriptions ranging from £5,000 to £10,000. It is thus not inconceivable that a Scottish IFS could raise an initial £1 million to get it off the ground.

A Scottish IFS, together with a much-needed independent Office for Budget Responsibility (or enlarged Audit Scotland) would play a crucial role in informing and enriching public debate on what might lie in store and the consequences – in particular the unintended consequences – of policy put forward by the political parties. We need analysis where at present there is a partisan cacophony.

But here we are, on board a flight towards what by common description is the biggest constitutional decision in Scotland for 300 years. That we have boarded a plane with no flight details and flying blind is beyond extraordinary.