Euan McColm: FFA could be an expensive business

IT’S all about momentum. Scottish politicians are forever insisting they have it. In fact, with all that momentum, it’s a surprise they can stop to tell us about it.

Its not hard to see why Sturgeon is suddenly cautious over FFA. Picture: Getty
Its not hard to see why Sturgeon is suddenly cautious over FFA. Picture: Getty

When the Yes campaign was losing in the polls before last year’s independence referendum, former SNP leader Alex Salmond dismissed this reality, saying that the important thing was that it had momentum.

And when Scottish Labour – facing an almighty gubbing from the nationalists in next month’s general election – recently saw a little lift in its pitiful roll ratings, the party’s spinners exclaimed “momentum!”

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By and large, then, we can assume that when politicians claim to have momentum they probably don’t.

The SNP, though, most certainly does have momentum, just now. But momentum is not always such a good thing.

Remember when you were a kid and you started running down a hill?

At first, it was exhilarating, wasn’t it? As you picked up speed, you’d imagine you were Steve Austin or Superman. Surely, you were the fastest six-year-old on Earth?

And then, halfway down the hill, you’d realise that you were running faster than your wee legs could handle. You’d picked up so much momentum that stopping seemed impossible. You had no option but to hope for the best.

You might have made it to the bottom and remained upright but you were just as likely to pitch forward, into a world of staved thumbs and torn corduroys and cross mums.

Fortunately, we – except for those idiots in Gloucester who run after that big cheese and break their necks – grow out of running too fast down hills. We learn that momentum can be risky.

In order to maintain its momentum after defeat in the referendum, the SNP made a series of demands of the Westminster government. This was a perfectly sensible thing to do, as we’ve already seen. Chief among the SNP’s demands – and the focus of the party’s campaigning in recent weeks – has been full fiscal autonomy (FFA) for Scotland.

Under this system, rather than receiving a block grant from Westminster, the Scottish Government would fund public services by retaining all taxes raised in Scotland. The United Kingdom would remain but in the loosest possible arrangement, with Scotland paying the Treasury for shared defence and foreign affairs.

First Minister Nicola Sturgeon has been quite clear in interview after interview over recent months that, after the general election, Nationalist MPs would be pushing hard for FFA for Scotland.

And, with the sort of momentum the SNP is currently experiencing, it would appear that she’s on pretty solid ground to make such a demand.

Both sides in the referendum debate have recognised that, regardless of the result last year, there is an appetite in Scotland for a more muscular Holyrood. Full fiscal autonomy sounds just the sort of thing to satisfy that hunger, doesn’t it?

But, while FFA might sound like a smashing thing, a great compromise that would bring the country – Yes and No, alike – together. It doesn’t stand up to much scrutiny. Not at the moment, anyway.

Full fiscal autonomy would mean the end of the Barnett Formula, the mechanism by which public funds are allocated to Scotland. Under Barnett, every penny spent on public services in England triggers the release of cash to Scotland.

The thing is, Scotland does rather well out of this arrangement.

The most recent government expenditure and revenue figures – produced by the Scottish Government – show that Scotland gets back around £800 per head more from the Treasury each year than it pays in.

The removal of Barnett, along with a low oil price of around $50 a barrel – rather than the $110 which the SNP included in its white paper on independence – would mean a black hole in Scotland’s finances of around £7.6 billion pounds, around a quarter of the annual budget.

And this huge reduction in funding would not be a one-off hit. It would repeat year after year and, in order to maintain front-line services – hospitals, schools, policing – at their current levels, the Scottish Government would have to raise taxes, or make huge cuts elsewhere.

Someone would have to pay and, with no political party especially keen to hike taxes, it would appear inevitable to unfashionable but vital services (social work? community centres? libraries?) would take the pain. Suddenly, the idea of Scotland having greater control of its own finances looks like a dangerously expensive business.

During First Minister’s question time on Thursday, Sturgeon was curiously reluctant to say whether she would be pushing for FFA during the Westminster reading of a home rule bill, which Labour has pledged to bring forward within 100 days of election day on 7 May.

Instead, she said SNP MPs would be happy to support any bill that transfers powers from Westminster to Holyrood. What’s more, her party would seek to strengthen any bill.

It’s not hard to see why Sturgeon is suddenly cautious. It’s widely accepted, now, by senior SNP figures that independence would come at a price. For believers, that would be a price worth paying.

But moving closer to, but shy of, independence while paying the same price doesn’t have quite the same “let’s do this thing” ring to it. It has all of the pain for nowhere near the same gain.

SNP sources tell me that FFA (or sweet FFA as one Labour staffer suggests) is still the aim but that a powerful group of nationalist MPs would be in the position to determine the timetable (FFA when it’s not a financial disaster).

That sounds well and good but, let’s say the next prime minister of the UK calls the SNP’s bluff and offers FFA straight up on a plate.

Winning full fiscal autonomy now – or at any point in the near future – might be the point at which Nicola Sturgeon and the SNP come clattering down.