Peter, I am at one with you on all these issues, but I still truly fear for Scotland's future if we make the break, which I agree with you, looks likely, because the average man and woman in the street is seduced by a romantic myth - Shakespeare (Prospero in The Tempest) prophetically comes to mind!
Our revels now are ended. These our actors,
As I foretold you, are melted into air
Into thin air.
And like the baseless fabric of this vision... etcetera!
I live in hope that come the result of the general election in 2015, I may see david Cameron exiting 10 Downing Street reflecting on yet another Prospero quote;
"By telling of it, made such a sinner of his memory, To credit his own lie, he did believe he was indeed the duke"
On September the 18th 2014, Scotland will have a referendum on independence.
Though polls currently suggest otherwise, more than three centuries of union between England and Scotland could end.
Some Scottish people have strong views on this and I don’t want to get into the politics but there is an emotional context there that is outside the factual argument.
However with the Conservatives perennially unpopular north of the border and a weak Labour leadership making the case for continued union, it is as well that the “Better Together” campaign is in the safe hands of Alistair Darling.
Like many elsewhere in the UK I don’t want Scotland to go, but Scots must have the right to decide.
There is, however, a strong economic dimension to the debate - many Scottish voters say they will be swung only by the economic arguments.
Several recent assessments have been published on the economics of independence, from the Institute for Fiscal Studies (IFS),
The National Institute of Economic and Social Research (Niesr)
and the Westminster Government.
To sum these up:
Scottish public spending per head is significantly higher than the UK average.
Allocating Scotland a 90% geographical share of North Sea revenues would make it easier for Scotland to pay for this higher spending initially, but with those revenues set to decline rapidly, tough spending decisions would be needed.
Scotland’s need for spending cuts would be made greater by having to pay more to borrow, and by some revenue losers, for instance Scotland could no longer discriminate against UK students by charging them tuition fees.
The central issue is Scotland’s higher public spending, £12,629 per head in 2011-12 (in today’s prices) according to the IFS, 11% higher than the £11,381 for the UK as a whole. On the basis of population, Scotland’s public spending in 2011-12 was 50.6% of gross domestic product, five percentage points above the UK average.
Proponents of independence will argue that if most of the North Sea is allocated to Scotland, public spending is lower, relative to GDP, than the UK average.
But this does not get Scotland off the hook.
Under projections from the Office for Budget Responsibility, the IFS points out, “Scotland’s budget deficit may be 2.2% of GDP further into the red than that of the UK as a whole in 2017–18.
To fill this hole would require a further £3.4bn of tax rises or spending cuts.” This is as well as the £2.5bn of cuts already planned.
The National Institute (Niesr) was no more comforting. In Scotland’s Currency Options it highlighted one important monetary consequence of independence, a Scottish economy dependent on the variable price of oil would not be suitable for a one-size-fits-all monetary policy operated by the Bank of England.
An independent Scotland would also face the task of issuing a huge number of bonds to fund the share of UK government debt it would acquire on splitting. Such debt issuance would threaten Scottish market stability.
Scotland’s borrowing costs would be between 0.72 and 1.65 points higher than for the UK, Their broad message is that, fiscally, it would be cold out there.
“The baseline scenario ... indicates that a very tight fiscal adjustment would be necessary for Scotland to achieve a 60% debt to GDP target in 10 years,” it says. “The greater the share of debt and the smaller the share of assets (primarily oil and gas) which Scotland receives at independence, the greater the fiscal adjustment necessary.”
The UK government, quoting the Centre for Public Policy for Regions, also knocks down the idea that an independent Scotland could use oil revenues to establish a Norwegian-style sovereign wealth fund. Scotland will need all the revenues it can get, and more, to fund annual outgoings.
So the fiscal prospect for an independent Scotland looks grim, even compared with the less than rosy prospect for the rest of the UK.
This should make Scottish voters pause, but so should what in my view is even more important; a significant fall in bilateral trade.
In the end, the success of an economy depends on its ability to create wealth, through private sector businesses.
The Westminster government’s latest Scotland analysis has useful background on the border effect; how separation leads to a drop on bilateral trade.
Prior to the break up of Czechoslovakia 20 years ago, 22% of what are now Czech Republic “exports” went to Slovakia. Within five years it was less than 10%. The effect for Slovakia was even more dramatic, a drop from nearly 45% to 15%.
Ireland saw a drop over decades from 90% of trade with Britain to around 25%.
So Scottish businesses will face the challenge of replacing a likely loss of trade with the rest of the UK.
Nine in 10 customers of Scotland’s financial services industry are in the rest of the UK; as are 60% of its business services exports and a third of the exports of its key food and drink sector.
Behind these dangers lies what is perhaps a bigger challenge for Scottish businesses. There are just not nearly enough of them. I am not rubbishing Scottish entrepreneurial talent when I say Scotland is one of the least entrepreneurial parts of the UK. But, since the heady days of the British empire, many Scots have been entrepreneurial only outside Scotland.
Scotland has long been the natural home of the public sector.
The number of private businesses per 10,000 adults is just 735 in Scotland, compared with;
1,231 in London,
1,098 in the rest of the southeast,
1,096 in the southwest,
1,080 in the east of England.
The Scottish figure is lower than in Northern Ireland (798), Wales (769) and every other region of the UK except for the northeast.
The yes lobby will say Scottish entrepreneurs have been held back by Westminster’s southern bias. I cannot think of a single reason why this should be so except for anti English sentiment.
Scotland has enjoyed greater prosperity than most English regions, as well as Wales and Northern Ireland.
Would independence rekindle the entrepreneurial spirit in Scotland? Some pro-independence business people argue that it would but they are in the minority.
Certainly, if the intention of a Scottish government would be to keep public spending high, thus requiring high rates of taxation, on and offshore, it is hard to be optimistic about prospects for the country’s brave band of entrepreneurs.
It would be somewhat fanciful in such circumstances, to be optimistic about the economic prospects for an independent Scotland
Wow! You have done your homework, John, and have answered all Peter's questions with interest! I may just add that all the wealthiest Scottish entrepreneurs will be concentrating their efforts, as they have always done since the evolution of the New World, on where the market will reap them the highest returns. I doubt if Scotland would figure in their top 50!
Peter, I think John has answered the Westminster questions by implication! However, I suggest these are questions only Westminster can answer, and as you can see, they are not exactly being very forthcoming are they? What's new?!!!
A1. The Government of the United Kingdom has an inherent duty to try every possible measure to preserve the Union for the wellbeing of all the peoples of the union, this is especially true for the future, if the UK leaves the EU it will need all the power of the British economy which is linked to the union of two Kingdoms, one principality and one province, together we are stronger, divided all of our peoples are more vulnerable to the forces of the international money markets and the nations we compete against for trade.
Q2. Why if Scotland is such a burden on the Westminster treasury , why is Westminster so much wanting to keep Scotland in the Union?
A2. The answer is contained within A1.
Q3. Why did Westminster agree to the Barnett formula that would give Scotland £1,502's per head more than the English?
A3. The Barnett formula was designed as an interim measure to ease the financial burden of devolved government in Scotland, Wales and Northern Ireland, originally conceived to last just 12 months, no one in any political party thought to end this anomaly that has lasted four decades.
Q4. How does Westminster square this with the English people, who have more anti-Scottish resentment due to the "Myth" the English keep the Scots with there taxes, it was English MP's who could have voted down the Barnett formula but your own English MP's voted it through........ Why?
A4. A “Myth” is a commonly held view for which there is no proof it existed at all, the Barnett formula is a “Fact” the North Sea Oil & Gas rebate from the treasury Scotland fund is a “Fact”, without those “Facts” the Scottish Government would have found it impossible to provide FREE university education for Scottish students or fund Scotland’s consistently higher public spending bill.
Peter I have answered your questions as best I can utilising all available fact that I can find and with a degree of what I hope is common sense, I hope you will find my answers of help.
I should have included a chapter on the question of taxation in an independent Scotland in my post, this would require a professional team of tax experts conducting a feasibility study, once decided upon, there would have to be research into an effective computer system that could assess and disseminate between the tax liabilities of the employed , the self employed,the retired and those not employed, S,M,E's large Businesses and corporations, inheritance tax, capital gains tax, corporation tax and Vat.
This would require property acquisition, appropriate staffing, setting of wage scales, pension schemes, employee in work insurance, security, etc.
The best estimate of the start up cost for a totally new tax collection program in year one has been assessed by HMRC at a minimum of £600-£700 million extra public sector expenditure.
An independent Scotland would also have to construct its own National Health service,National defence force and diplomatic service including overseas embassy's and consulates I cannot even begin to estimate the cost of constructing such a complex national public service infrastructure but I would be surprised if the cost was less than £50 billion in the first year.
Let us assume for a moment that Scotland votes to leave the Union (which was formed by the acceptance of the English throne by a Scottish king out of desperation, because Scottish entrepreneurs in a failed bid to take control of the Isthmus of Panama for Scotland had virtually bankrupted his country), A Scottish Government must maintain all public services at their current levels which means increasing personal and corporate taxation or make substantial cuts in public expenditure.
Either way the Scottish people loose out.
The problem with the Scottish independence debate is conflicting propaganda from both sides, however the spin from Westminster pales into insignificance when compared to the farcical claims of the SNP.
Lets look at some of the claims that have been spun to the Scottish people;
1, Energy. That by 2020 Scotlands wind power campaign could see wind turbines producing 100% of Scotlands Electricity! Well in an article from the Scotsman:
SCOTLAND’S long hot and balmy summer (2013)has left wind farms struggling to produce enough electricity to make more than a few cups of tea, it was claimed yesterday.
Output from wind farms dropped dramatically as warm, settled weather dominated the country over the summer. On 16 August the green energy masts in Bilbster, near Wick, could only muster up enough energy to boil about 180 kettles, according to figures from German power company RWE.
Wind farms in Wales fared even worse, with the Trysglwyn wind farm in Anglesey, which has an energy capacity of 5.6 megawatts, produced just 21 kettles worth of electricity (64 kilowatts) on the same day.
The Scottish Government has a goal of generating the equivalent of 50 per cent of the country’s electricity from renewable sources by 2015 and 100 per cent by 2020.
But critics called for a change of official government policy with fears of higher consumer prices and less energy as new figures have revealed output from wind farms changed dramatically day-to-day over the summer.
So far this month wind turbines have contributed 667MWh (megawatt hours) into the national grid, or 5.1 per cent of the total input.
Dr John Constable, director of the Renewable Energy Foundation, said the margin between generated and consumed electricity in the next few years will be “uncomfortably tight”.(I suspect this was said Tongue in Cheek)
UK Energy minister ‘blocks negative report’
A UK Government report on renewable energy and the rural economy is being blocked by the Energy Secretary, it has been claimed.
Ed Davey has blocked the report carried out by the Department for the Environment and Rural Affairs (Defra) over fears it could expose shortcomings in his department’s renewable energy strategy, according to newspaper reports.
The Daily Telegraph claims that Defra sources have revealed an internal battle of wills between Liberal Democrat Mr Davey and Conservative Environment Secretary Owen Paterson, who is known to be a wind-farm sceptic, regarding publication of the report.
The report states: “It is claimed that figures in the Decc (Department of Energy and Climate Change) are concerned that the report, which has not been completed, could include negative conclusions about how renewable energy affects the rural economy.”
Yesterday a government spokesman said: “We need to ensure that energy is generated in a way that is sustainable and understand the effects that different technologies have on the environment and on communities across the country.
“Decc and Defra are working together on this report, which is not yet complete, to ensure that it meets the usual standards and quality assurances that you would expect from any government publication.”
The SNP make great play of possible benefits for an independent Scotland of ownership of Northern North Sea oil and gas reserves, however it totally ignores the projected costs of decommisioning 500+ old tecnology drill sites or the cost of repacing this old platforms and sea bed piplines.
It is also keeping very quiet about the EU policy of pushing ahead with sovereignty not only of the UK territorial waters to ensure access of fishing rights for all EU nations but also of the UK seabed and all of its mineral and chemical assets contained therein, which is still an initial debate stage in Brussels, but that has been given the tacit backing of a number of influential EU commissioners.
The SNP insistance that it would persist in the use of the £ sterling as it currency of choice which would see the Bank of England as Scotlands lender of last resort, it would also mean the the B of E would be in total control of an independent Scotland's interest rates, What price independence?
Essentially the SNP is a rabble rousing party acting in a manner resembling a National Socialist Movement which seeks to blind the people of Scotland by the use of highly emotive propaganda that incites blaming another race for all that is wrong in Scottish society, by playing on the antipathy that has existed towards the English, ever since Scotland's incredibly brave but very poorly lead army of Highland and lowland clans which actually outnumbered the opposing English army, foolishly abandoned it tactically safe position on the high ground to descend in a mad rush of bravado into the bogland below in the valley to achieve the vane ambitions of the pretender Charles Stuart, where it became stuck and unable to maneuver, and where it was totally devastated on the field of Culloden at the hands of German George's Hessian mercenaries and which was followed by the cruel measures enacted against the people of Scotland and the Scottish culture on the sadistic dictates of the house of Hanover to kill off the spirit of the Scots forever.
History is the past, time to put the past to rest, or else we risk perpetuating the bi-partisan conflict that has so devasted Ireland and persists today just below the surface in Ulster.
Time for common sense, there is strength in numbers and safety in unity.
I am most certainly biased against wind farms, the data used in my post came from an article in today's Scotsman and was utilising data provided by the power generator itself, not from a journal that may be funded by the renewables industry.
I have made a request under the FOI Act for an efficiency report on Scottish&Southern power including down time because of damage from the recent storms that did such damage to electricity supplies in December 2013,
You appear to have ignored the absolute necessity for a generating back up system for periods when there is insufficient or too much wind to safely operate the wind turbines, this is normally provided by Gas powered generation or where this is not practical by diesel generators which almost doubles the user price per kWh.
You claim operational efficiencies for wind turbines that could only be achieved by means of a guaranteed wind speed that would be constant within a speed profile of 20- 35 mph that in nature simply does not exist in my experience, certainly not in the UK.
Moi? I have never entered into the wind power debate, since I consider it a wasteful irrelevance on the energy scale, as well as an unwelcome eyesore scarring our beautiful countryside. My preoccupation lies much more with solar power on a grand scale in desert areas, which could, if implemented and converted and transferred to the grids of the world, satisfy the entire world's energy needs... the sun, as I keep reminding folk, is our prime mover - ergo it makes ultimate sense to achieve maximum benefit from it, and safeguard our environment in the process. All the competitors, wind power, wave power, hydro electric power, combustible fuel power, nuclear power (with all its short and long term hangups), geothermal power - all have nothing to touch our sun!