Ian Swanson: It's Indie economy, stupid

Nationalists and Unionists alike have so far failed to address the issue likely to become central to the independence debate, explains IAN SWANSON

MORE powers for Holyrood, a new national anthem, resisting "interference" in the Scots justice system - some of the many of the themes to grab the headlines since last month's election have underlined Scotland's distinctive place in the world.

The UK Government is under pressure to go further than the package of extra responsibilities for the Scottish Parliament proposed in the Scotland Bill; Alex Salmond has declared The Corries' Scotland Will Flourish sets out a "positive and forward-looking vision" for the country; and the SNP has made strong attacks on the UK Supreme Court for allegedly undermining the independence of Scotland's courts.

It's no accident that the SNP's stunning victory last month has been followed by mood music to highlight cross-border differences, boost national pride and encourage collective ambition.

For their part, Westminster politicians have said they are not persuaded by the case for some of the SNP's demands and claimed their own mandate from last year's Westminster elections for sticking with the extra powers already on the table.

Some have urged the UK Government to pre-empt the Nationalists by calling its own referendum at an early stage, while Scottish Secretary Michael Moore argued two referendums would be needed before Scotland could become independent.

But in the past few weeks there has been little discussion from either side about what must be one of the central issues in the debate about independence - the money.

How viable would an independent Scotland be economically? What about those familiar old claims that Scotland is subsidised by the rest of the country? How much of the North Sea oil revenue would come to Scotland? What share of the national debt would Scotland have to shoulder? And what would happen if there was another banking crisis?

During the election campaign, Labour produced figures claiming to show a 13.75 billion "black hole" in the SNP's independence plans. The SNP dismissed the claims as "complete garbage from start to finish" - a taste, perhaps, of the exchanges we can expect when the economic debate on independence does get under way.

The SNP says the most recent official figures show that for the four years to 2008-09, Scotland had a surplus of 3.5bn while the UK had a deficit over the same period totalling 72.3bn.

The Nationalists also argue that with most of the UK's North Sea oil in Scottish waters, a geographical share would give Scotland more than 90 per cent of the oil revenue.

And when it comes to the national debt, one SNP insider says it would be "fair and equitable" for Scotland to accept a pro-rata share based on population, though some may argue it should be worked out based on Scotland's GDP and the insider adds that it could be argued Scotland should not pay anything since "we were not party to the decisions that created the debt".

Other parties have argued the banking crisis and the 470bn rescue mounted by the UK Government for the Royal Bank of Scotland and HBOS shows how an independent Scotland could not have survived. But the Nationalists say countries around the world designed their own solutions and several countries like Belgium, the Netherlands and Luxembourg came together to do so.

In a recent magazine article, Professor John Kay, who has been on Mr Salmond's council of economic advisers, argued an independent Scotland would "clearly be economically viable" but went on to question whether the country would be any better off.

"In the short run, that would depend on transfers and subsidies to the Scottish Government from the rest of the UK.

"In the long run, the issue is whether independence would promote economic dynamism in Scotland - or lead it to sink into the partisan petty corruption that for so long characterised Scottish politics."

The SNP's victory last month was not a mandate for independence, but that doesn't mean it won't happen. Mr Salmond has always been clear that his intention was for the SNP to perform well as a devolved government and then try to persuade the voters to go the extra step.

He and his colleagues obviously did a good enough job to get re-elected with an unprecedented overall majority of seats at Holyrood.

And between now and the promised referendum towards the end of the five-year term, he has the task of laying the ground for the vote he hopes will deliver independence.

After 2007, the SNP moved quickly to create the feel of a "normal" country by renaming the Scottish Executive the Scottish Government.

Mr Salmond's demands for more powers in the wake of last month's election are part of the same process, building up Scotland's position.

The SNP's one-seat advantage in the 2007 election was enough to persuade the other parties to agree to more powers for Holyrood. It should not come as any surprise to the other parties that Mr Salmond feels the overall majority he now has in the Scottish Parliament should now lead to more concessions.

But sooner or later both sides are going to have to set out the economic arguments for and against independence. It's certain to be complex and controversial, but it will also be crucial to Scotland's future.