Business for Scotland comments on the Scottish Conservatives’ report on the cost of independence which we believe shows a “childlike” and “amateur” understanding of economics”.
“This report smacks of desperation. It’s almost as if the Conservative Party in Scotland is desperate to draw attention away from the double disasters of George Osborne’s unraveling amateur budget, and the No Campaign’s disintegrating project fear claims. This is an amateur blogger report that demonstrates a kindergarten level understanding of economics and contains assumptions and calculations that fall apart with the slightest inspection”.
“Scotland’s illustrative deficit referred to in the report, and many of the expense lines in the GERS figures, relate to the additional cost to Scotland of UK membership and would reduce significantly and possibly even disappear completely with independence.
- For example, defence spending in 2014/15 was £3bn and that is the cost to Scotland for the UK’s power projection agenda, including nuclear warheads Scotland wouldn’t have and the cost of action in the Middle East that Scotland wouldn’t support. A Scottish Defence Force modelled on Denmark’s would save about £1.2bn a year.
- Civil service costs (salaries, rent and rates are lower in Scotland than London) would fall, likewise there would be lower costs for tax collection, border protection, security services and even not having to pay for Westminster and the House of Commons could save between £600m and £800m per year.
- Highly conservative calculations on low pay in Scotland show that full-time workers receive welfare payments that amount to between £800m and £850m a year in Scotland. The extra Income Tax and National Insurance contributions from implementing the Living Wage would also generate between £220m and £250m of additional revenue. This means that implementing a Real Living Wage would benefit the Scottish budget to the tune of £1bn extra a year.
- Finally, the Scottish Government offered to take a population share of the UK’s debt mountain if there was an agreement on currency. Legally, a newly independent Scotland would not be responsible for that debt and the Treasury actually confirmed that fact in 2014. Without a currency union, an independent Scotland would therefore not have the debt interest payments in its expenditure, which in the 2014/15 GERS amounts to £2.76bn.
“So the savings from independence amount to a nearly £3bn change to the deficit, if a deal had been done on currency and up to £5.5bn if it hadn’t.
“This would radically improve the deficit to GDP ratio and makes a mockery of the findings in the amateur blogger report commissioned by the Conservatives.
“Had Scotland been independent for the years leading up to 2014/15 the figures would have had an entirely different starting point and, like Norway, we would now possibly be able to dip into a sovereign oil fund to smooth over the impact of oil price volatility and invest in future growth and prosperity, instead of reeling from the impact of the failed Tory austerity which is slowing our economic growth.
“Of course the Conservative party’s report could have drawn a comparison between Scotland as part of the UK and Norway in its main deficit graph but despite listing 27 countries as different to Scotland, such as Germany and Malta, they deliberately missed out Norway.
“This is simply a Conservative smoke and mirrors tactic to distract journalists from the party’s woeful economic record and consistently broken promises.”
Better Together’s broken promises open the door to independence https://www.businessforscotland.com/better-togethers-broken-promises-open-the-door-to-independence/