Comments on Scottish Unionist: Swinney, Spinney or Swindley?

Uh huh. Take an example: they argued for independ...

2009-08-09T02:35:59.093+01:00

Uh huh. Take an example: they argued for independence on the grounds that interest rates in the Euro-zone are lower than in Britain - but when interest rates in the UK fall below those in Europe, we apparently have no journalists who possess a memory and so don't call them on this. Or make the point that to discuss constitutional arrangements on such emphemeral economic conditions is intrisically absurd. Or make the point that membership of the EMS doesn't require independence... It's a bit like refuting conspiracy theorists: to engage in the argument feels a bit like accepting their irrational terms of reference. Simpler to point out that the nationalist argument isn't based on economics at all? How they get away - post credit crunch - with suggesting otherwise is beyond me. Perhaps because at base, most people simply aren't that interested in economics?

I dare say people in the past could not fathom how...

2009-08-05T15:23:28.498+01:00

I dare say people in the past could not fathom how we could make money out of oil either.

And right enough we didn't (couldn't resist that).

All energy sources are valuable because not every country has them.

Smee Rather than put up with my flippant attitude...

2009-08-05T09:16:19.909+01:00

Smee

Rather than put up with my flippant attitude you could find out just how vital fresh water is to the rest of the world, clearly you take it for granted...

http://news.bbc.co.uk/hi/english/static/in_depth/world/2000/world_water_crisis/default.stm

http://www.globalchange.umich.edu/globalchange2/current/lectures/freshwater_supply/freshwater.html

In an economic sense, the fact that we have such easy access to the water means we don't have to pay for it. I'm sure someone somewhere could quantify that saving for you, then you could just pretend your clean running water is the filthy lucre.

Jim

Wardog, I don't think that Scotland running a ...

2009-08-05T00:08:32.342+01:00

Wardog, I don't think that Scotland running a deficit per se is evidence that we're being subsidised by the UK generally, since clearly the UK is deeply in deficit as well at the moment. A more searching analysis of the figures would be required to analyse the subsidy aspect.

But I think the point for SU's and SM's recent analyses is that with the public finances being in such a precarious position and that unlikely to change significantly in the near future and/or under an independent Scotland then it's a case of 'Swinney the snake oil salesman' re the oil fund.

As regards the long term oil price, as pointed out earlier Scotland was in deficit even when the oil price was at its peak, and with the world economy likely to remain subdued for some time then a demand-led oil price boom seems unlikely in the near future, and that's despite the growth in demand from the likes of India and China - recall that the rise in the oil price was more of a bubble than based on fundamentals such as increased world demand - and to that extent the danger of over-dependence on an oil-based economy should not need underlined.

Technological advances and the political climate should accelerate the move towards renewable energy sources and all that, and to that extent help keep the oil price in check.

Which indeed points to an overarching paradox in the SNP's vision of Scotland's future - an increasing drive towards renewables while to a large extent basing our economic future on an economically-volatile fossil fuel.

"You've still not explained how we as a n...

2009-08-04T21:51:06.698+01:00

"You've still not explained how we as a nation would make money out of "fresh water"...."

Smee, we'd drink it, we'd add it to our lovely whisky made from fresh water more than a few years earlier, we'd use it to make beer, feed it to our livestock and perhaps even irrigate our crops. It's Nature's bounty already, why do you want to turn it into money?

Jim I concluded some time ago that if I were a Na...

2009-08-04T21:38:40.190+01:00

Jim

I concluded some time ago that if I were a Nat, I would also be against EU membership, and in favour of an EEA status like Norway.

That would protect the fish, although there would then be the costs of runnning a separate currency (or keeping the GBP with no influence over decisions about it.)

You've still not explained how we as a nation would make money out of "fresh water"....

Thank goodness I didn't fall into the trap of ...

2009-08-04T21:36:53.937+01:00

Thank goodness I didn't fall into the trap of discussing how Scottish fishing rights have been bartered away for our fair share of that union dividend then ;-)

Was just thinking about Smee's line
"That list of yours actually adds up to a crap economy based on low-tech, low-value-add, basic commodities."

It wasn't intended as exhaustive, but as it is I don't really see how it's much different to the economies of Australia or New Zealand - well apart from the fact that Australia has been in drought for the last decade I suppose (real lack of fresh water down there you see!)... but they do seem to bob along rather nicely down under... with what you might call an enviable lifestyle I suppose.

Why blame the Westminster government? Richard Lochhead, 4/3/08: “There is a lot we can learn from Norway who are not subject to the constraints of the common fisheries policy.”

Erm, that just might have a loose connection with their non-membership of the EU.

Report of a public meeting in the European Parliament, 10/2/09: “Some MEPs were concerned about the impact if Iceland joins the EU. They mentioned the "cod wars" of the 1970's in the rich Icelandic fishing grounds and wondered if Iceland would ask for an opt out of the fisheries policy. Mr Borg said that as fisheries is a "common" EU policy Iceland wouldn't be able to opt out.”

So-called “independence in Europe” would make opting out of the CFP (if that’s what you would want) impossible.

"starting with water (eh? how are we supposed...

2009-08-04T20:08:09.991+01:00

"starting with water (eh? how are we supposed to make money out of that?) and fish (which we seem to be running out of, aren't we?)"

smee, my boy! When the last fish has been eaten and the last lake poisoned will you finally realise that you can't eat money ;-)

Of course, you'll be expecting me at this point to raise the ugly spectre of how the Westminister government have squandered away our fishing rights, which alongside the utterly bonkers quota system, have decimated our fishing industry... I'll not fall for that one though!

I don't share your pessimism. Human ingenuity ...

2009-08-04T20:04:35.769+01:00

I don't share your pessimism. Human ingenuity trumps political ideology. The key deficiencies are, as you say, in innovation and entrepreneurship. Well-defined problems inevitably yield solutions. It's a good time to be alive!

Jim Not that I'd have you not take SU's w...

2009-08-04T19:51:41.301+01:00

Jim

Not that I'd have you not take SU's word for it, but have a look at

http://www.scotland.gov.uk/Publications/2009/06/18101733/10

and

http://www.scotland.gov.uk/Publications/2009/06/18101733/11

for the detail of the GERS revenue and expenditure methodologies.

"Scotland with it's rich set of resources, such as fresh water, the marine harvest of our coastal waters, the arable farm land of the central lowlands, our whisky production and the tourist attractions would make Scotland PLC a particularly decent company"

You'll have to forgive me a smile as there's a particularly bonkers Hootsmon cybernat who regularly trots out a very similar list, starting with water (eh? how are we supposed to make money out of that?) and fish (which we seem to be running out of, aren't we?)

That list of yours actually adds up to a crap economy based on low-tech, low-value-add, basic commodities.

I'm actually fairly pessimistic about the long-term economic future of Scotland. We seem to be locked into the failed corporatist Butskellite consensus of the past, anti-innovation and entrepeneurship.

And I don't believe that "independence" or the SNP are any answer to that, because they're locked into it perhaps more than anyone else. Oh I know they're happy to talk about cutting corporation tax when they don't have the powers to do it, but we know from the numbers that tax-cutting is not possible without cutting spending.

And in the meantime, they boast most often about making, or keeping, things "free".

Such as the universities, which are gradually being pauperised by the refusal to face up to the fact they need to be able to charge fees, and that it's right for graduates to pay them.

Economic research that there is nothing to do with "smallness" that helps economies grow. "Openness" is far more important. And of course one of the main themes of "independence" would be to raise barriers and increase differences between Scotland and its main trading partner and market. Companies don't like differences much.

Which is why my personal response to the additional tax powers in Calman would be to welcome the increased responsibility inherent in the fact that the Scottish Parliament has to make a positive decision about tax rates, but make it absolutely clear that I would only propose different rates from the rest of the UK if it were absolutely demonstrably clear that this would produce significant benefit.

Which would probably require at least a 3p cut in rates, with the consequent effects on spending. "Courageous, Minister."

Ramble over.

RBS Group and RBS plc are still headquartered in E...

2009-08-04T15:32:32.518+01:00

RBS Group and RBS plc are still headquartered in Edinburgh. Ulster Bank is based in Belfast. Direct line has its headquarters in Croydon. Natwest and Coutts are London companies. Make of that what you will.

I’m a conviction unionist, both in respect of Scotland in Britain and Britain in Europe. On a personal level, the economic argument – while significant – isn’t as important as less objectively measurable aspects such as social identity. I’d like to see more unionist-initiated debate on those aspects, rather than waiting for the likes of Christine Grahame to have a pop at cricket on TV or John Mason to kick up a fuss about schoolkids being allowed to support the English World Cup football team.

Do I think a well managed Scotland might prosper independently? Actually, a well-managed independent Fife could probably do pretty well! The key question isn’t “could we” but “should we”?

Thanks for your answer to the accountancy question...

2009-08-04T15:08:16.323+01:00

Thanks for your answer to the accountancy questions, I thought it might just be a wee bit tricky. I had a lot of issues about that RBS bailout being something Scotland couldn't have done, when in fact, RBS is a London based corporation anyway... It vexed me!

Pleased to see your acknowledgment that Scotland is indeed a resource rich country that currently isn't faring as well a other less blessed (or should I say less well endowed) countries.

It's funny though, because it's not the SNP's rhetoric that has me convinced of the possibilities for Scotland. Are you actually a Unionist or just anti-SNP? Do you think a well managed Scotland might prosper independently?

Sorry, I didn’t provide even a partial answer to y...

2009-08-04T14:37:38.839+01:00

Sorry, I didn’t provide even a partial answer to your actual question.

It depends on the corporate structure. Under independence, if a company were headquartered in Scotland, group accounts would be paid to the Scottish exchequer.

But business units of companies like RBS, HBOS, Standard Life and Abbot Group that were incorporated outside Scotland would pay corporation tax to Scotland only in respect of the comparatively small proportions of their operations that were actually based within Scotland.

This is a serious issue. Take the (pre-nationalised) RBS, for example. Subsidiary units like NatWest, Ulster Bank, Direct Line and Coutts are all based furth of Scotland.

There are lots of thorny issues like this, which perhaps goes some way towards explaining why refining GERS is an ongoing and contentious process.

Another example is VAT on whisky and fuel exported to the ‘rump UK’. VAT is charged on hydrocarbon fuels as soon as they leave the refinery gates, except in the case of exports. It isn’t an issue within the UK of course, but in an independent Scotland, Grangemouth-refined fuel exported to be sold south of the border would pay VAT only to the ‘rump UK’ exchequer.

Jim: It isn’t a case of “just no possible”. Nati...

2009-08-04T14:25:52.158+01:00

Jim:

It isn’t a case of “just no possible”.

Nationalists often claim that the economic argument which I’ve presented above is akin to saying that Scots are “too wee”, “too poor” or “too stupid” to “run their own affairs”. That’s yet more rhetoric, intended to portray anyone challenging the SNP’s claims as being “anti-Scotish”.

So I’ll be clear. There are plenty of countries with lesser natural and human resources than Scotland which do pretty well for themselves. I’m not saying that Scotland “couldn’t” be independent. What I am saying is that the SNP’s portrayal of independence as a credible solution to every actual or perceived economic weaknesses has little or no basis in objective fact.

In the medium-to-longer term, as Scotland’s economy continues to recover from its post-industrial doldrums, it would be my fervent hope that we would no longer have a fiscal deficit – either with or without oil! And there’s no reason why that shouldn’t be possible.

The actual point of my post is encapsulated in its title. Either John Swinney actually believes what he’s saying (in which case he’s economically illiterate) or he’s in spinning/swindling territory. Either way, we can’t trust the SNP’s economic arguments.

Can I ask a question to you economic experts? When...

2009-08-04T11:43:26.055+01:00

Can I ask a question to you economic experts? When a company, like the RBS or a hotel chain like the Marriot with hotels in Scotland, reports a profit, is that considered Scottish or UK? How is the money generated in Scotland from such businesses attributed?

I've never believed it's just about the oil, but I've always believed that Scotland with it's rich set of resources, such as fresh water, the marine harvest of our coastal waters, the arable farm land of the central lowlands, our whisky production and the tourist attractions would make Scotland PLC a particularly decent company with a fairly healthy set of books, but you boys seem very sure that it's just no possible.

Thanks SM. To be fair to Wardog though, I think he...

2009-08-04T11:33:37.843+01:00

Thanks SM. To be fair to Wardog though, I think he referred only to exporting oil and gas.

"Can you confirm what the typical trend over ...

2009-08-04T11:27:28.653+01:00

"Can you confirm what the typical trend over the last 25 years for oil prices has been and how this will affect Scotland's surplus?"

Certainly, Muttley.

Even with oil prices in 2008 reaching their highest real-terms level since 1864, the Scottish publid budget remained in net bottom-line deficit to the tune of £3.8bn.

Happy with that formulation, are you?

Meanwhile, oil & gas production has fallen at over 5.5% a year since the peak in 1999, and the rate of decline is forecast to accelerate to 6.5%.

Moreover, vague waffle of Scotland becoming an exporter of green energy to Europe remains unrealistic, as anyone with any knowledge of the matter knows that moving large amounts of electricity across long distances is much harder and more expensive than for gas, oil or coal. That is, indeed, the reason why relatively small amounts of power do move across long distances.

Furthermore, it is even harder to see how any such power exports could become a source of government revenue for Scotland, since the renewable technologies themselves require subsidies from the state and from consumers, and attempting to add on long-distance transport costs on will make the economics even worse and require even more subsidies.

OK?

I always know I’ve hit the mark when Wardog seeks ...

2009-08-04T11:24:11.172+01:00

I always know I’ve hit the mark when Wardog seeks to spam the thread. Briefly —

“is by no means representative”

For revenues, see the DECC link above. The downward production trend is of course clear.

“Britain has 3.6 billion barrels of proven oil reserves.”

You are correct about renewables. But those technologies can be developed whether Scotland is within or separate from the rest of Britain.

“GERS 2008, for example”

I agree that GERS doesn’t show the ‘settled state’ within an independent Scotland but it does give a fair idea of the ‘fiscal inheritance’, the starting position.

“fiscal deficit for Scotland of £3.8 billion”

Your attempt to strip out capital investment and claim a surplus is desperate stuff. If you reckoned your household budget on such a basis you’d go bankrupt.

“Q. Is this equitable and sustainable for the union? ”

It’s nothing to do with the union. Everyone recognises that R&D investment and entrepreneurship in post-industrial Scotland leaves a lot to be desired. Also benefit dependency in Glasgow, for example. We do face challenges, but addressing them certainly doesn’t require major constitutional change.

“Are you suggesting that the key union dividend is still the economy?”

I am suggesting that we cannot trust SNP pronouncements on such matters.

“the method of calculating GERS was significantly altered to rectify systematic mistakes”

GERS methodology has always been freely published and has been open to criticism. What you call ‘systematic mistakes’ have been being eliminated since 1996-97, to such an extent that Dr Victor Hewitt said in 2006 that “most people accept that it is pretty much at the cutting edge of this sort of work in unified fiscal systems” and Prof Hervey Gibson said that “the final numbers from GERS are probably now within the couple of hundreds of millions of pounds needed for broad economic policy considerations.” No doubt it will continue to be improved.

“I'll leave McCrone to somebody else.”

M’learned friend SM753 has already dealt with it.

"Nobody is ‘desperate to suppress’ tax statis...

2009-08-04T11:10:12.403+01:00

"Nobody is ‘desperate to suppress’ tax statistics"

Can you explain why only after the SNP rose to power in Scotland the method of calculating GERS was significantly altered to rectify systematic mistakes in accounting and attributing?

I'll leave McCrone to somebody else.

Smee "Sometimes the conclusions are not plea...

2009-08-04T11:04:56.433+01:00

Smee

"Sometimes the conclusions are not pleasant"

How do you propsoe we make the Uk a fair union and avoid scotland's 'oversubsidy' then?

Or is it the case that Scotland has always requried 'bail out' by the UK Exchequer.

How can Scots expect to have free higher education, lower council taxes, no bridge tolls and free hopsital parking when we're patently using soemone else's money and to the detriment of communities just south of the border who not only don't get the same per capita funding but don't have the above benefits?

Go on Smee, set out your policies.

How do you propsoe to remedy the enquity that you have highlighted in the union / barnet formula?

A few clarifications if you will AM2? "is by...

2009-08-04T10:28:44.987+01:00

A few clarifications if you will AM2?

"is by no means representative"

Can you confirm what the typical trend over the last 25 years for oil prices has been and how this will affect Scotland's surplus?

"Britain has 3.6 billion barrels of proven oil reserves. Norway has almost double that: 6.7 billion. Norwegian oil production is about 75% higher than the UK’s. Norway still has sizeable oil exports whereas Britain is now a net importer"

You seem to be conflating a UK population of 60 million with that of two nation's with crica 5 million.... Scotland is a net exporter of energy and with the right renewables policy could be an exporter of gas & oil in the future just like Norway.

"GERS 2008, for example"

These figures are an attempt to show revneue and expenditure of Scotland WITHIN the Uk and do not tell the whole story of what an independent Scotland might be or indeed will become with the drive towards a low carbon scoiety.

"fiscal deficit for Scotland of £3.8 billion"

yes, because of capital expenditue, sometimes referred to as 'investment', GERS concluded that Scotland was actually in surplus.

"huge fiscal gap"

So what your saying is that with Scotland's current spending committments incluidng predominantly public sector expenditure, Scotland is being subsidised by the rest of the UK and I would argue to the detriment of some parts as the grant funding is not yet linked to need.

Q. Is this equitable and sustainable for the union?

If not, what are the scottish unionist parties answer to this "circle which, however hard the unionists might close their eyes and wish, simply couldn’t be squared."?

You can't have it both ways AM2.

On a more general note, I thought you'd moved away from the 'scotland canna dae it' mode of unionism and that it was now about political prinicpal?

Are you suggesting that the key union dividend is still the economy?

PS Nice to see that your atleast being reasonable in your style of argument these days and acknowledge that 'doing down scotland' will not win the unionists friends given what has just transpired on the global economic stage.

Excellent stuff. "Spinneys" is, of cour...

2009-08-04T08:28:58.156+01:00

Excellent stuff.

"Spinneys" is, of course, a rather pricy supermarket chain found across the Middle East.

On the numbers side, I'd point out that the Grant Thornton forecast is also likely to be hopelessly optimistic. Sure, oil revenues were up at £13bn, but every other tax revenue was down and spending - including bank bailouts, for example - was massively up. My guess is that the £3.8bn bottom-line deficit for 2007/8 will turn into one of £2.8-3.3bn for 2008/9.

Now you and I are about to be accused of "too wee" syndrome, glorying deficits and failure, etc etc.

This is, of course, not the case. We are simply shining the cold light of day and applying hard-headed reason to the facts of the matter. Sometimes the conclusions are not pleasant, but that's better than gambling the future of the country on a load of optimistic-sounding but fundamentally duplicitous moonshine.