Scotland's future: the economy

This week, the SNP published their plan for an independent Scotland. Here, two of Scotland's leading economists give their assessment.

Jim and Margaret Cuthbert
30 November 2013

Care was put at the centre of the SNP economic plans/wikimedia

All in all, a good start, but now there is more work needed. Great to pick child care. It gets to the heart of one of the major problems of modern life, and has far reaching effects on the economy – most for the good. The shift to looking at positive social benefits has the immediate effect of moving the debate away from the depressing tone of many commentators – that independence could be decided by a price tag of around £500.

There are two big mistakes on the negotiating positions on currency and Europe. Why place oneself in a position which depends on natural opponents saying yes. Overall, however, an impression of punches being pulled. Maybe this is tactical, to bring along powerful vested interests. But under independence, some things must change. What is the point, unless we alter, for example, the position where:

-Scotland has 80% of these islands’ oil, but only 45% of the related jobs. As regards, whisky, the direct benefit to Scotland is only 35% of turnover.

-Utility pricing models build in overcharging that affects what we pay for gas, electricity, water, etc.

-We have the most concentrated pattern of landownership in Europe.

  • -And so on.

Successfully managing change means disturbing people’s comfort zones: but this is not necessarily negative. It is not a question of hounding vested interests: it is a question of incentivising them towards a positive role in the new Scotland. So why shy away from this?

But in one particular respect, UK public sector debt, the White Paper is just inexplicable. On page 70, the White Paper notes excellent work by the Fiscal Commission estimating what Scotland’s fiscal position would have been if we had had control of our North Sea tax revenues, assuming no change in tax revenues or spending priorities. What this work showed is that Scotland would now have around £100 billion surplus, in their account with the rest of the UK, after eliminating Scotland’s per head share of original UK debt. So why have a negotiating position of taking on debt of between £100 billion and £130 billion as the White Paper suggests: instead, we should be demanding our £100 billion back.

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