Sunday, April 22, 2007

The Hidden Cost of the SNP

Having been ordered to take the day off by the boss (he also forbade me from going anywhere near the computer, so please don't tell him) I was looking around for a new laptop. I went on one well known site and saw what I thought I wanted at a reasonable price. By the time I'd got through all the extras, the cost had pretty much doubled.

It's a bit like that with the SNP. They can talk but they sure can't count. If all their spending pledges were implemented, you'd have to put income tax up by around 9p to pay for it. Frankly, it's just not worth the pain.

Just as an aside, does anyone else find that countdown thing on their website and on their broadcasts irritating. You'd think they'd have made it more exciting but it's all a bit scary and looks like it's counting down to some huge explosion or something.


Richard Thomson said...

Hi Caron,

After Menzies Campbell denied on Radio Scortland a few months ago that his party wanted to increase road tax on a Ford Mondeo to £850, in direct contrast to their just published 'Fairer, Simpler, Greener' document, I'm afraid I struggle to believe a word the Lib Dems say about tax any more.

That said, though, you seem like a trustworthy person. On that basis, can you explain for me how you arrive at that 9p figure, please, since it's not one I've heard from a Lib Dem before?

Many thanks,


Caron said...

Thanks for this, Richard. I understand from a source who pays meticulous attention to detail that every pledge they committed to throughout the last Parliament would mean income tax would have to rise by around 9p.

As far as their current manifesto is concerned, there's a 2.6 billion black hole according to the Centre for Public Policy for the Regions who today pointed out that both Labour and the SNP are relying massive - for the SNP £1.34 bn plus £1.33 bn of cuts (Edinburgh Airport Rail Link, Edinburgh Trams) – savings that CPPR “question the ability to deliver them without having a detrimental effect on service level”.

An independent Scotland would be a fiscal nightmare.

• Scotland has a significant fiscal deficit, and even with the most optimistic estimate of take from North Sea oil revenues could it barely break even. The latest Government Expenditure and Revenue in Scotland report shows an £11.2bn hole in SNP plans and shows that oil money wouldn’t even come close to filling it.
• Professor Arthur Midwinter has described the SNP’s “Scotland in Surplus” document as based on £4.5 billion of “dubious assumptions and unexplained assertions”.
• The director of CBI Scotland described SNP economic policy as “not fit for purpose”
• The SNP’s oil policy is based on an inflated and unsustainable price. Oil is not a stable or sustainable resource - prices only five years ago were under $10 a barrel. There has never been a stable oil price. Independence based on oil revenue would make Scotland one of the most economically unstable countries in the world.
• The Nationalists know that oil prices can go down as well as up. That is why when the price of oil was low they didn't produce a budget for five years.
• Alex Salmond used to trumpet the fact that "Scotland stands to benefit from our North Sea resources to the tune of 1 trillion dollars in the future." That ambition has been scaled back over the past year—unlike some of the SNP's spending plans—from $1 trillion to £90bn.
• In an independent Scotland, the SNP chancellor would have to wait anxiously every day to see the spot price of oil on the markets before telling schools how many teachers they could employ the next day and hospitals how many operations they could carry out.

Richard Thomson said...

Thanks for your reply, Caron.

The ‘spending pledges’ thing is always something of a moveable feast, since opinion always seems to vary between the parties about what constituted a pledge and how it should then be costed. It’s good, knockabout stuff, but also quite dishonest, since it takes no heed of the other savings that a party might be pledging to make, whether through efficiencies or not renewing existing spending commitments. Frankly, you could pull the same stunt with any party and come up with a similarly fantastic figure.

As for the Centre for Public Policy for the Regions report, I haven’t yet had the pleasure of seeing a copy, but I find your interpretation hard to stack up against the following BBC report, which states that the SNP was likely to have the most money available for uncosted spending - £1.821bn compared with the £1.163bn available to the Lib Dems. Having £1.8bn ‘free’ does appear to contradict your assertion of any ‘black hole’ existing in the SNP’s devolved commitments.

Regarding GERS, did you know that the Scottish Executive’s Chief Economic Advisor, Dr Andrew Goudie, admitted to a recent meeting of the Holyrood Finance Committee that he had considered not publishing the report this year due to the errors which others had found in some of the raw data used to compile the figures? That error amounted to at least £0.5bn of English-only spending being allocated mistakenly to Scotland.

There are also significant difficulties over corporation tax allocations, and the headline ‘borrowing requirement’ (which, incidentally, Goudie explicitly states should be ‘treated with caution’), takes no heed of oil revenues. And even if Scotland did have an £11.9bn deficit, since the current UK deficit is sitting at c. £35bn, surely this would render any subventions from Whitehall to Scotland impossible except through international borrowing – something which any independent country can do for itself?

Goudie also repeated his belief that GERS ‘tells us nothing about the situation under Indpendence’. In fact, far from being a ‘nightmare’, the University College London Constitution Unit estimated that between 1979 and 1994, Scotland was in surplus to the tune of £30bn, while the rest of the UK trailed along behind with a debt of nearly £400bn.

In actual fact, the last SNP budget document I saw which mentioned oil, was using exactly the same forecast as are available in HM Treasury’s ‘Red Book’. The only one which demurred from this was an earlier version, which made a better job of forecasting the actual revenues than did the Red Book which was current at that time.

I’m sure there are lots of good reasons why Scotland would be better off politically, socially and culturally in the union. The economic ones, though, don’t really stand up to much scrutiny. Why is no-one making the case that Scotland more than pays her way in the union in economic terms, and giving us reasons why she should continue to do so?




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