Sunday, 26 February 2017

And another thing

I was meant to be working this weekend. I've just finished a big, year long case on Tuesday past and I'm meant to be doing the account. Trouble is, it will be an incredibly boring job. So for the moment, I've put it off. But it will need to be done sometime. For my staff won't wait to be paid or my landlords wait to demand their rent. Never mind that, my stomach will not wait to start rumbling. Accordingly the account will have to be done sometime. You can't spend money you don't have.

Anyway, what's all this got to do with me, I hear you, my loyal band of readers, ask?

That lies in the final sentence above. You can't spend money you don't have.

More specifically, the Scottish Government couldn't spend money it wasn't going to have.

According to the Scottish Government's own GERS figures, there is currently an annual £15 Billion shortfall in funding public spending undertaken in or on behalf of* Scotland. £6 Billion of that is our share of the interest on the UK's National debt but the remaining £9 Billion is spent on Welfare Benefits, Pensions, Health, Education and other public services.

Not all of this spending is of course currently undertaken by the Scottish Government. Particularly, the first two big ticket items remain administered directly from Westminster. At least for the moment. But most other public expenditure in Scotland is routed through Holyrood, albeit then being passed on to local government, health boards, NDPBs etc to bring about the actual delivery. And in the process we are receiving, as I say, £9 Billion more to actually spend than we are earning.

Now, £9 Billion is a big figure and people's eyes sometimes gloss over when faced by big figures so I'll try and give that big figure some context. Excluding our share of the interest on UK national debt, the total figure for public spending in Scotland is £62.6 Billion, so that £9 Billion "gap" is more than 14% of the total spent. Put the debt back in and the gap becomes £15 Billion and the overspend percentage jumps to 22%. The total spending managed by Holyrood is £37.1 Billion, so the £9 Billion gap is about one quarter of total Holyrood spending. Total spending on the NHS in Scotland (Holyrood's single largest area of expenditure) is £12.9 Billion, so the £9 Billion gap funding pays for just about three quarters of that total.

But the £9 Billion, although starting as a big figure doesn't remain that. It is not paid out in Billions, And it is not paid out for abstract "public services". It is overwhelmingly paid out in relatively modest amounts as wages, pensions and welfare benefits. And the vast majority of its beneficiaries, even if they are being paid to deliver essential public services, need that money to feed themselves and their families, to pay their rent or their mortgage and to provide heating and lighting for their homes.

After independence that money wouldn't be there. It wouldn't be the abstract Billions that wouldn't be there, it would be the money to pay the wages, pensions and benefits that wouldn't be there. Sure, some of it could be produced by increased borrowing but, even assuming a willingness of the markets to lend, borrowing on that scale, including borrowing to service our share of UK Debt, at 22% of revenue, would never be sustainable. Indeed, for a new State with no credit history, it probably wouldn't even be possible.

So taxes would need to rise (a lot) or spending would need to be cut (a lot). Indeed probably both.

The trick the Nats pulled in September in 2014 was threefold. Firstly they took as the starting point a wholly untypical historic point in Scotland's finances, Secondly, they proceeded on a ludicrously optimistic estimate for the future price of oil and the tax revenues that would consequently produce. But their third prong was the masterstroke. Nothing was to happen immediately. By their hope, by the time the electorate realised the trick that had been pulled on them it would be too late to turn back. The economic consequence of independence would only become clear once we were actually independent. Until then our funding would continue as before.

But why should the residual UK agree to go along with that this time? Why, until they actually left, should they agree to continue to subsidise people who had, by majority at least, decided they wanted nothing more to do with them? If you earn much more than your husband and he announces his intention to leave you for somebody else, you don't keep paying for his fancy car until he actually goes. Not unless you are an idiot.

So why should the taxpayers of England be idiots? They shouldn't.

If there is to be another vote, the immediately preceding UK budget should indicate what Holyrood would receive under the "pooling and sharing" status quo until the vote and indeed in the event of a unionist victory. Separately however it should state what Holyrood would receive on the basis of "you only get what you've earned" in the event of a separatist vote and until actual Independence. And they should state that the second formulation, in terms of actual payment, would start on the day after the vote.

Holyrood couldn't of course be expected to cope with an immediate 25% cut in its revenues, so the Scottish Finance Minister would be given the obligation to specify in advance, so far as competent, in the Scottish Budget and, as required, in the UK Budget what income and other tax rates he or she wished to apply in Scotland from the day after the referendum and what levels of pensions and benefits he or she wished paid. The UK Government would undertake to facilitate that in terms of collection and payment and, to be fair, on the revenue side, cash flow.

Finally, of course, Holyrood would need to be given the right to attempt to set up borrowing conditional on a separatist victory. Although good luck with that if they didn't set a budget even attempting to deal with the deficit.

Holyrood in turn would have to produce a budget setting out expenditure plans in the event of either outcome in the knowledge of what they would have to spend in each eventuality.

There wouldn't be any way of them dodging this because otherwise there literally wouldn't be the money to pay public sector wages in full from the first pay day after a separatist vote. For the Scottish Government couldn't spend money it didn't have. And people would know that when they voted.

So, on polling day, people would vote knowing what their tax rate would be under either outcome: what their pension would be and/or what other benefits they would still be receiving.  Not at some abstract point in the future. At the very next payday.

Who could possibly object to that?

*On behalf of refers to defence; overseas aid, central government administration, consular services and most importantly, interest onthe national debt.

Sunday, 19 February 2017

Over to you, Section 30.

It is clear that Nicola has so raised expectations that, at the SNP March Conference, she will have to do something rather than just say (lots) about a second Independence Referendum.

Fortunately for her there is something she could actually do and that is to request Westminster once again cede power to Holyrood under to hold a second Independence Referendum.

Much of the press simply ignores that necessity but buried away in their Brexit paper of October even the SNP concede that point (again).

So it will be over to our Westminster Government to respond.

And that's the thing I want to talk about a bit.

De facto this will be largely Ruth Davidson's call. She is clearly, and reassuringly, the Prime Minister's principal consigliere on all matters separatist.

And there are those who are encouraging an Edinburgh response "You'll have had your referendum."

I see the force to that argument. A second defeat won't stop the SNP arguing for Scottish Independence any more than defeat in the Brexit vote would have stopped Nigel Farage arguing for Britain to leave the EU. Given the opportunity, in the aftermath of a second defeat, there would undoubtedly be nationalists arguing almost immediately for "third time lucky". A blanket concession to the second vote might even be cited as justification that there could be no denying a third!

Yet I think a blanket refusal would be a mistake.

One continuing delusion of Scottish Nationalism is that the Scots are denied self determination. Yet we have actually had self determination as recently as September 18th 2014. They just don't like the way we self determined.

Nonetheless, grievance is the raison d'etre of Nationalism and the refusal of a second vote would feed that grievance in spades. You only need to look at a substantial part of the nationalist's activist base to perceive that this might come with the price of peace in our civil society. Only this past week, the leadership of the SNP were not sufficiently confident of internal support as to be able to deny a woman with tartan terrorism links admitted in court the right to stand for office as an elected SNP representative.

And anyway, a refusal might actually give the SNP leadership exactly what they want. A  perception that they want a second vote without the unfortunate consequence of having (and losing) one. For while grievance is usually why bands break up, in this case it might prove the (only) way of keeping the band on the road. Unless something dramatically changes, that objective is certainly not going to be brought about by relying on the SNP record in Government.

But this does not mean that there should simply be a surrender to nationalist demands.

Firstly, and most importantly, on the franchise.

In 2014, voting was based on the local government franchise. That should be a non starter this time. Only British citizens should have the right to vote. And then, more importantly still, it should be all British citizens living in or born in Scotland. In 2014, with the assumption both Scotland and England (sic) would remain in the EU, free movement was not an issue. This time it would be. And no-one should have the right to return to the country of their birth without a passport removed without having a say in that process. That would obviously involve the compilation of a register of ex pats but in this online age that should be reasonably easily done with the requirement to provide your name, national insurance number and birth certificate reference making you entitled to a postal ballot. 750,000 Scots born people currently live in England. More than live in any single place in Scotland. Who knows what they think of the Country breaking up?  I'm sure the SNP  will make their argument to them.

Secondly the question.

There was a failure to grasp the importance of this the last time. By the time of the Brexit vote however the importance of a neutral choice of options was much better appreciated. Regrettably for my preferred outcome of that vote. Scotland's choice this time however should be on a similarly neutral basis. I'd settle for leave or remain but I'm open to suggestions.

Thirdly, the trigger.

In some way Holyrood would need an express mandate to have a vote. That would, most obviously, be in the form of a requirement to dissolve the current Scottish Parliament with the requirement that a majority Parliament then be elected on a manifesto commitment, or combined commitments, to having a vote. Alternatively we could have a referendum about whether to have a referendum. Scotland loves referendums. They are civic and joyous events.

Fourthly, the democratic process.

Apparently, no less than 42% of the Scottish electorate went to the polls in September 2014 believing that there were secret oil fields, the existence of which would only be revealed after a vote. This was in fact a complete invention by the nationalist side. Not a difference of opinion, or interpretation. A complete invention. And it was by no means the only one. Since then we have seen similar exercises in the Brexit Referendum and, perhaps most calamitously, with the Trump campaign.

The internet age makes "fake news" of this nature impossible to prevent from being disseminated. And those who benefit from it don't need to endorse it, they just have to remain silent.

That right to silence should be removed. There should be independent monitoring of the campaign with a legal requirement in the eventuality of a falsehood becoming sufficiently prevalent that the respective official campaigns place prominently on their campaign websites a refutation of it.

Finally, Section 30 should be repealed altogether......

And it should be replaced with a right in the Scotland Act for the Scottish Parliament to have the direct right to hold a referendum on Independence, conditional on that referendum being no sooner than twenty years after any previous poll.

All of these things should be essential requirements of a s.30 negotiation.

And if the Nats say they don't want a vote on that basis? Then. but only then, the words of the late Windsor Davies should come into play. "Oh dear, how sad, never mind."