I don’t understand economics. I don’t find it easy to get to the truth of the economic arguments for and against an Independent Scotland. I have read so much about the economics of Independence that it makes my head hurt and yet here I am, writing about it.
When I said I was writing about the economy my husband laughed a bit more than I felt was justified. In fact you might have called it a snigger if you were just a tiny bit huffy – which of course I wasn’t. Well – maybe just a bit. I was actually scribbling in my notebook – by hand. It seemed less presumptuous to write it out rather than type it. That’s unusual for me – usually I just sit down at the computer and get on with it, but that’s when I am talking about a subject that I feel I understand well, or I have a strong opinion about. It’s a lot more daunting to sit and write about something which, I have said many times, I don’t understand.
So what on earth am I doing writing about the economy when I don’t really have any right or qualification to do so? Well, as per usual, I have something I want to say. I have been researching and discussing the economy for weeks now – ever since the referendum was announced – ever since the seemingly distant days when I was undecided about independence and trying to be as objective as I could. I have stuck to the idea that the economy isn’t going to change anyone’s mind about Independence and that other things – apart from the economy – would make the difference. I made my mind up to support independence and, in speaking and writing about why that is, I have, to my surprise, found that part of the reason for my decision is actually the effect Independence will have on the economy.
The economy is so much more than the pound in your pocket. It is a massive subject and as far as Independence goes it is a complex and terribly conflicted area to try to understand. Each side gives a point of view which they support through the use of experts and academics; Professor this of that; Minister this of that. They wheel out the experts to support their views on every percentage rise or fall, every dip or double dip, every GDP figure and austerity or growth measure that goes across the table or appears in the papers. It’s a bit like an old fashioned pantomime joke – “Oh yes it is” roars the Yes campaign and “Oh no it isn’t” roars the No campaign. And as with the old panto joke there are villains and good guys on both sides. The difference is that the economy isn’t actually funny, it is serious and complicated. The good guys are not always easily discernible and the bad guys don’t wear silly hats and have pointy noses or hiss a lot. In a panto its clear who is right and who is wrong – the economy isn’t that transparent and so, it is almost impossible to know definitively which way is the right way.
Of course you might be ideologically committed to an Independent Scotland or the continuation of the Union. If you are an ideologist then you will have no need for an economic argument – you will just know. There are many people like my husband, who would vote for independence regardless. If the powers that be knocked on our door and said to my husband “You can have an Independent Scotland but you will have to be taxed at 95% of your income for the rest of your life” his response would be “Where do I sign?”. However, I am different. I am not a Nationalist of the heart. Not for me the ‘Freeeeeedooom!’ of Braveheart or the unquestionable loyalty to the Queen, either of which have been sneered at by both sides of the argument over the last few months. I am, however, not happy with the Status Quo. (I always write that with capital letters – it took me ages to figure out why. Status Quo are… well… Status Quo! It’s hard to write that phrase without thinking about Francis, Rick and the guys rocking all over the world but I digress – not difficult to do when you are writing about the economy!) So I’m not happy with the way society is right now. I want a fairer society where everyone is valued and children can have the best chance of reaching their full potential – a society where government policies focus on people, rather than money. I see a desperate need for change and I believe that an Independent Scotland offers us the best chance of changing the society we live in, and that ‘opportunity for change’ is the driver for my own decision making.
The way it works right now as I understand it, is this – revenue collected in Scotland goes to the UK treasury and they then give Scotland an amount back in a block grant calculated using the Barnett Formula. Scotland then uses this block grant to pay for the stuff Scotland needs to pay for. This grant is calculated to reflect the priorities of the UK government and not those of the Scottish Government, and thus is ever reducing as the UK government continues its deficit reduction plans. Scotland has severely limited borrowing capabilities just now and few tax raising powers and so remains reliant on the amount that the UK government hands out to us to fund any initiatives that the Scottish Government decides are necessary. This may change with the Scotland Act (2012) but it is no where near enough.
It seems to be that Scotland contributes more than its share to the Revenue of the UK. The arguments that Scotland isn’t financially viable as an independent nation – that it is too poor, too wee and too stupid to survive – are starting to disappear from the newspapers and the mouths of politicians. Even David Cameron acknowledges that Scotland could go it alone, although you might have to dig a bit to find it. Boris Johnson suggested otherwise recently on the Channel 4 news but does anyone take Boris’s views on Independence seriously? There are issues which still raise their heads as unaffordable – defence for one – although despite Philip Hammond’s sabre rattling last January, the SNP’s U-turn on NATO and their ideas for defence in Scotland have had a broadly positive reception. Welfare and pensions are another area where disagreement is rife but once again it’s hard to know who is right and who is wrong.
It looks like the idea that we will be spending Euros is dead in the water – the economic crisis in Europe and the instability of the euro within very different economies has been clearly demonstrated in the last year. The idea that Scotland would take on the Euro at such a time is a nonstarter. The pound is a different matter. There are sound financial reasons for an Independent Scotland to keep the pound. There are plenty of unionists arguing that we cannot be truly Independent and still keep the pound but it seems to me that we don’t have to keep it forever. At some point I would expect that Scotland will move to its own currency but that needs to be when the time is right for Scotland and not because our hand is forced by sneering economists, pushing the unionist agenda. The other unionist argument trotted out regularly is that an Independent Scotland would not have been able to bail out the banks. I don’t like these ‘what if’ arguments because they go nowhere. If we use the same ‘What if’ approach then IF Scotland had been Independent we could argue that the banks wouldn’t have failed in the first place because an Independent Scotland would have proper scrutiny in place to ensure that the problems besetting the banks wouldn’t arise. However, if we answer their point seriously then as RBS has 90% of its operations in England we would have been required to fund 10% of the bailout which we would have been able to afford. Again there are those who argue both ways and both have experts which support their arguments.
And then there is oil. If you read the reports, there is between 1 day and a million years’ worth of oil sitting beneath the North Sea. Some would almost have us believe that the oil will run out the day after Scotland becomes Independent, plunging Scotland into an economic decline which will see us all homeless and toothless, queuing for bread and burning our furniture to keep warm. I know the oil will run out. I am sure that all those people who are cleverer than me know it too. What I don’t understand, is why people think that the economy will stand still, that industry will not change. If we look at industry over the last fifty years then we can see that there is little resemblance between today’s industrial landscape and that of our fathers or grandfathers. The opening ceremony of the Olympics highlighted some of the many changes and so we can expect and indeed, we should strive to change the landscape over the next fifty years. Whether it is renewables, or another digital or scientific revolution or a return to heavier industry, an Independent Scotland can work to ensure that we are prepared for the demise of the oil industry so that well before it runs out Scotland no longer needs oil.
There are a whole lot of other issues – welfare for example – and the health service, social care and defence. The economics around these complex issues cannot be decided until after the referendum. Whenever people try to pin politicians down over policies for after independence they fail to understand (or choose to ignore) that we will have no policy decisions for an Independent Scotland until the people of Scotland vote for the party that will lead the country into Independence. Lots of parties and people have ideas and policies which will eventually appear in their manifestos. The defence policy of the SNP is one, announced a couple of weeks ago, it includes information on spending plans. Other parties also have their own The Scottish Green Party website details key points on the economy although it is short on detail. Parties in waiting – like the Scottish Democratic Alliance have also got a section on their economic policies with a bit more detail. The Unionist parties will refuse to discuss any policies for an Independent Scotland. So we are left with quite a lot of ‘maybes’ and ‘what ifs’. In fact that is all there seems to be – maybe and what if.
I did, however, find one unassailable fact about the economy. In all my endeavours to understand the economy, in my failure to comprehend the finer details of the economics of independence, I only found one thing that is true whichever way you look at it. It is one argument that even I can follow and, perhaps the only truth we need if we are to vote Yes. It is this – In an Independent Scotland the revenue raised in Scotland will be spent on Scottish priorities decided by a Scottish Government. That is it.
Taxes collected, borrowing and revenue from any other source will be kept in Scotland and spent on Scottish needs. Whoever wins the election will get to implement their manifesto. The priorities of the Scottish government will be, in fact, decided by the people of Scotland through their vote and so the Scottish government will reflect the views of the Scottish electorate. This is actually a bit of a change from what is happening today. Today we have a Tory led government in Westminster when we only have one elected Tory MP in Scotland. The priorities of this UK government are not those voted for by the Scottish electorate and yet, we have to fund them through our taxes – trident, the high speed rail link from London to Birmingham and so on. In an Independent Scotland, the money we have would be spent by our own elected government. That is what is important, that is the one thing – the only thing – that makes change possible. It doesn’t matter whether we use the pound and are therefore tied into the Bank of England’s rules; it doesn’t matter whether the oil runs out or not. In an Independent Scotland whatever money we have will be spent on Scottish Priorities. Surely that is the economic point of Independence – that what we have, we spend on doing the best we can for Scotland’s people, in a way that we are unable to do as part of the Union.
And so there you have it. Not much substance and not many answers but that’s the economy for you – or rather that’s the economy for ME. If you are struggling to decide about Independence then it might help to decide if you are happy with the status quo. If you are, then maybe it’s a NO vote for you. If you are not, then there is only one truth we can extract from all the millions of posts, arguments, pieces of paper circulating on the subject of the economy. If Scotland is Independent then the money raised in Scotland will be spent in Scotland on Scottish priorities. Surely that’s something worth voting for.