All posts by thomas

The UK as a cartogram

A cartogram of the UK.
A cartogram of the UK. From Views of the World.
When you look at a standard map of the UK, Scotland takes up a lot of space. The BBC’s weather maps reduce Scotland and enlarge southern England, but Scotland still looks like a significant part of the UK.

I sometimes wonder whether the physical size of Scotland is making Scots blind to the fact that Scotland’s influence in the UK is based on population, not on landmass: Scotland has only 59 out of 650 seats in the House of Commons.

To avoid this pitfall I often find it instructive to look instead at a cartogram, such as the one on the right. The size of the blue squares depend on the population living there, so London is a huge circle full of big squares. Sparsely inhabited areas are so small that they look like white lines instead. For instance, the white border around London means very few people are living in this “border area”.

From a Scottish perspective, we can see that Scotland is separated from England by a lot of white lines. In other words the Borders are almost empty, and this creates a very real border between the two countries. (We see a similar situation in Wales, and to some extent in Cornwall.)

More importantly, Scotland is clearly much smaller than London on this cartogram. This explains why the UK is increasingly being run by and for London, while Scotland struggles to get its voice heard.

Three hundred years ago, when the Union was formed, a cartogram would have shown a much more balanced map. Unfortunately, people (and money) have gradually gravitated towards the capital.

We need to rebalance the map, and the best way to achieve that is to vote for independence next year.

The IFS report and population growth

Yesterday’s IFS report is quite interesting. It’s basically confirming that an independent Scotland will do well at first, but they have some worries about the longer-term sustainability of the Scottish economy once the oil has stopped flowing.

However, these worries are due to the fact that the IFS are simply projecting current trends into the future. Because Scotland is currently part of the UK, economic policies are broadly identical, so the only real difference between Scotland and the rUK is the projected population growth.

Basically, if two countries have similar economies, but one is growing rapidly and the other one isn’t, of course the former will end up with fewer pensioners per worker than the latter.

So what are the population projections the IFS are using?

Between 2012 and 2062, in the ONS’s ‘low migration’ projection, the population grows by 22.8% in the UK compared with 4.4% in Scotland. In addition, in Scotland, all of this population growth arises from growth in the population aged 66 and over, while in the UK there is projected to be growth in the population at all ages. The median age of the Scottish population is projected to increase by six years from 2012 to 2062 (from age 40 to age 46), compared with an increase of four years (from 39 to 43) for the UK. [p. 13f]

In other words, they think Scotland will have a static population, and probably a continuation of the current situation where dynamic young people feel they need to move south to further their careers, whereas England will grow by more than 10m people.

Population growth 1900-2010.
Population growth 1900-2010.
This would indeed be a continuation of past trends. The graph on the right shows how England’s population nearly doubled over the past century, while Scotland hardly grew at all. (Interestingly, Ireland seems to have suffered from Scotland-style stagnation for a few decades after independence, and then their growth rate started to mirror other independent countries.)

However, is a continuation of current trends really likely? I hear English politicians going on about the need to cut down on immigration, and I hear Scottish politicians talking about the need for more immigration here.

If an independent Scotland starts growing at a faster rate than the rUK, the fiscal gap will be smaller here in fifty years’ time than down south.

It would have been nice if the IFS had highlighted this instead of talking only about the need for higher taxes and/or lower spending.

Scottish foreign aid and East Kilbride

Danida funded toilets in Parakou
Danida funded toilets in Parakou, a photo by profbury on Flickr.
One of the most recent scaremongering stories to come out of Westminster is Justine Greening’s threat to make the DFID’s employees in East Kilbride redundant: “Development Secretary Justine Greening told MPs on the international development select committee that the future of her department’s headquarters in Scotland which employed around 600 people and is worth £30 million to the East Kilbride economy, would need to be reviewed and would probably be moved if Scotland becomes a foreign country.”

While I agree that it would be odd for the rUK to keep a large part of their employees in Scotland after independence, the real question of course is whether the East Kilbride staff will be able to transfer into an equivalent job for the independent Scottish Government.

Fortunately, Humza Yousaf has promised to increase spending on aid: “With independence we will legislate to enshrine the UN’s 0.7 per cent aid target in law, effectively future-proofing the aid budget. That contrasts to the UK’s record on aid, which is one of missed targets.”

He has also promised to try to protect the jobs in East Kilbride:

The Department for International Development (DFID) currently employs just under 50% of its staff in East Kilbride.


Last month Mr Yousaf told the same committee the SNP would “look to preserve employment” for the 550 permanent and 50 contract staff who worked for DFID at Abercrombie House in East Kilbride.

It’s interesting to contemplate the details of this. If Scotland commits to spending 0.7% of GDP on foreign aid, and if we assume Scottish GDP is £27,732 per person (PDF), the yearly Scottish aid budget would be roughly £1028m.

According to Wikipedia, “[i]n 2009/10 DFID’s Gross Public Expenditure on Development was £6.65bn. Of this £3.96bn was spent on Bilateral Aid (including debt relief, humanitarian assistance and project funding) and £2.46bn was spent on Multilateral Aid (including support to the EU, World Bank, UN and other related agencies).”

The DFID seems to place the higher-paid jobs in London as a rule:

If you looked at Abercrombie House five to 10 years ago, it was dominated, probably 90+%, by corporate and transactional work. That’s changed quite a lot now. We’ve moved policy jobs, we’ve moved some of our bilateral aid programme management jobs, some research jobs; some of the multilateral work is done from there. The balance of work in East Kilbride has moved that office from what it was originally set up as—effectively a transactional and corporate support function—to one that’s much more part of the core headquarters of the Department. […]

However, although policy posts are being moved to East Kilbride, the majority of posts there are at Band B1 or below (295 out of 463). In contrast the majority of posts in the London office are at Band A2 and above (451 out of 756).

My guess is that this means that after independence, the job descriptions will change in East Kilbride. There will be more highly paid jobs, but probably fewer corporate and transactional jobs.

Of course, the UK’s aid budget is more than twice the size of what an independent Scotland will be spending, so it’s likely that we’ll need a slightly smaller foreign aid department. On the other hand, Scotland will also need many other government departments that are currently not devolved (foreign affairs, tax and benefits, etc.), so it should be easy to place enough of these jobs in East Kilbride to ensure nobody will face unemployment there as a consequence of independence, and many people will actually get a more important and better-paid role.

I really wish the Westminster politicians wouldn’t default to scaremongering so easily. Of course there’ll be changes in East Kilbride after independence, but obviously creating an independent government apparatus in Scotland will lead to more jobs in Scotland, not fewer, so why pretend these people will face redundancy when they’re more likely to get a promotion?

The Economist’s “domestic problem”

"Looking for a future".
“Looking for a future”.
The Economist’s special report this week is about “the big decisions ahead for Britain”, which is trying to conflate the Scottish independence referendum, the future EU referendum, the English attitude to immigrants and a couple of other issues. Perhaps tellingly, the cover photo shows three cricket players searching for a lost ball.

The Economist used to be an intelligent magazine with an internationalist outlook, but it seems recently to have become the local newspaper for the City of London, and their latest report is quite typical in that respect.

The leading article introducing the report demonstrates how parochial this publication has become:

On Scotland, Mr Cameron and Mr Miliband are on the side of Great Britain. But it is a decision for Scots. Although a Hibernian [sic!] state could more or less pay its way to begin with, assuming that it was able to hold on to most of the North Sea oil- and gas-fields, that resource is drying up. An independent Scotland would be too small to absorb shocks, whether to oil prices or to its banks. And the separatists cannot say how the country could run its affairs while keeping the pound. For their own sakes, Scottish voters should reject their political snake-oil.

I’m sure there are many people who are not aware of the difference between Hibernian and Caledonian, but if you want to give the impression that you’re highly knowledgeable about the Scottish independence referendum, it’s perhaps not the best start. (And the rest of this paragraph is of course poorly researched scaremongering sound-bites. As Business for Scotland recently wrote: “This is solid proof that oil price volatility isn’t a problem, for if it was, then at least once in 32 years Scotland’s revenues would have dropped below the average for the rest of the UK but it never did.”)

The rest of the leader isn’t much better. Bankers in London might think that “[i]n many ways Britain has a lot going for it right now. Whereas the euro zone’s economy is stagnant, Britain is emerging strongly from its slump. The government has used the crisis to trim the state”, but this is hardly the consensus view elsewhere.

Their provincial outlook is also making them see the prospect of Scottish independence purely from a London point of view. For instance, the leading article contains this:

The most straightforward way Britain could shrivel is through Scotland voting to leave the United Kingdom next September. At a stroke, the kingdom would become one-third smaller. Its influence in the world would be greatly reduced. A country that cannot hold itself together is scarcely in a position to lecture others on how to manage their affairs.

The Kingdom of Scotland wouldn’t become any smaller, and our influence in the world would be greatly increased. I’m not saying they should present it like this, but perhaps they should just once try to imagine how the referendum looks from the other side of the border.

It gets worse on page 4 of the report:

The country also needs to deal with a domestic problem. Ten years ago Scottish nationalism was in headlong retreat, but in a mere ten months from now Scotland will vote on whether to become an independent country. If it opts to leave, what remains of Britain will cut a greatly diminished figure on the world stage. Together with the referendum on EU membership, which may take place in 2017 or even sooner, the vote could set the country on a path to serious isolation.

A domestic problem? A domestic problem?!?! One of the two founding members of the Union leaving is now just a wee annoyance that needs to be dealt with?

Finally, on page 13 they write:

If Scotland votes for independence, what remains of Britain will be shaken. The state will be slimmed mathematically, as 8% of its economy and population disappears, together with 32% of its land and almost all of the North Sea oil- and gasfields. It will be diminished militarily. The Scots supply more than their fair share of uniformed men, and Britain’s nuclear-armed submarines are parked in a deep Scottish loch, with no decent alternative berth. It will also be humiliated. A country that cannot hold itself together is greatly diminished in the eyes of the world. Scottish independence would give succour to Welsh nationalists and would cause an existential crisis in Northern Ireland, where many unionists have Scottish roots.

I put this quote on Twitter two days ago together with this comment: “Is that supposed to be a reason to vote No?” and it got retweeted 68 times, so it must have touched a nerve. As Tweeter @CyberBrat1320 replied: “Stopping British militarism, encouraging Welsh nationalism, and creating an existential crisis in NI? Bring it on!” (I realise that it can sound a bit harsh to relish the prospect of causing an existential crisis there, but perhaps the disappearance of political Britishness could make them agree peacefully on a path for the future, either as part of a united Ireland or as an independent country in its own right, and surely that’d be a good thing.)

I really despair in The Economist. If they can only see Scotland from a London perspective, they shouldn’t be surprised if we complain that London isn’t representing us well on the world stage any more.

If they want to get their heads round what’s happening up here, they need to stop limiting their research to watching the BBC. Ideally, they should hire a Scottish journalist to explain the referendum campaign to their international audience. What they’re doing at the moment is frankly embarrassing.

TV channels after independence

Some typical cable TV channels in Denmark.
Some typical cable TV channels in Denmark.
In Denmark, people in southern Jutland and Funen have been able to tune in to the standard German TV channels for decades, and for a similar amount of time Copenhageners have been able to watch Swedish telly.

When cable TV was introduced, the typical package therefore included the main German channels (ARD, ZDF, NDR, Sat1, RTL), the Swedish ones (SVT1 and SVT2) and the Norwegian one (NRK), and this is still frequently the case, I believe.

Something similar happens in most other countries. It’s generally the case that viewers can watch the main TV channels from neighbouring countries.

We would expect to see something similar in Scotland after independence.

Of course, before this can happen, Scotland will need to get its own TV channels. I reckon BBC1 Scotland, BBC2 Scotland and BBC Alba will become independent of the rUK BBC in 2016 and be renamed to something along the lines of SBC1, SBC2 and SBC Gàidhlig. At the same time, STV will probably continue more or less as before, except that its coverage will be extended to include all of Scotland. Channel 4 and Channel 5 are a bit trickier — they could either continue as before, or be made to set up Scottish subsidiaries.

The Scottish channels will surely do their best to broadcast what Scottish viewers want to watch, and this will include buying rUK programming (such as Eastenders, The X Factor, The Apprentice, and nature programmes). Sometimes they might want to create a Scottish version instead, such as a Scottish Big Brother.

What’s important to understand here is that the purchasing of programming is a commercial negotiation, and as such, it’s expensive to reveal your hand. In other words, if the Scottish Government guarantees that the SBC will broadcast Eastenders, the price is likely to double. We should therefore not expect to see the details of SBC programming to be fleshed out in details in advance.

Once these new channels have been created, it’s likely that many Scots (at least those with satellite or cable TV) will get the option to receive the rUK BBC channels, perhaps at a modest fee. What this means is that many households will get twice as many TV channels as they do now.

Broadcasting is one of those areas where independence will lead to change, but on the whole it’ll be a change for the better.

Regional GDP and HS2

Regional GDP and high-speed rail.
Regional GDP and high-speed rail, based on a map from this article.
As far as I know, the calculations showing that London will benefit from HS2 and Scotland will lose out are based on the idea that improved infrastructure will lead to more business in the places that are now better connected, and as a consequence one will see a drop in business in those places that are now suffering from connectivity that is worse in relative terms.

In other words, if you want to make areas north of London more competitive compared to the UK capital, you improve infrastructure elsewhere, you don’t simply link them up to London (because this will help the capital, too, which means the relative advantage of placing your business in London won’t be reduced).

From a Scottish point of view, better infrastructure would be wonderful, but it’s really not a high-speed railway to London that will make the difference.

If we look at a map of regional GDP, it’s clear that it’s the Highlands that need help, so direct trains from Inverness to the central belt and perhaps also to Aberdeen would do wonders. In fact, a Scottish high-speed railway (SHS on the map) connecting all of Scotland’s cities would probably transform the Scottish economy. (Proper high-speed trains might not actually be necessary — the physical distance from Glasgow to Inverness isn’t that great, so a relatively straight track and trains driving 100mph would be a huge improvement to the status quo.)

Once SHS was in place, the poorest regions in the north of England could then potentially be connected to it (SHS-E on the map), which would create a lot of growth there, and importantly not just London-driven growth, which would help to stabilise the English economy.

However, Westminster aren’t likely to ever invest in SHS — their tendency to see everything from a London point of view is just too strong, and it’s too expensive to finance through the ordinary block grant. A project like this is something that can realistically only be realised in an independent Scotland.

Denmark recently slapped an extra tax on North Sea oil extraction in order to pay for improvements to the railways. Perhaps something similar could be done here after independence.

Warning taxes could go up 21% after No vote

Tax Form
Tax Form, a photo by 401(K) 2013.
The Herald has today published an article about the new IFS report:

The IFS also makes clear a ­breakaway Scotland would probably need to undertake some fiscal tightening.

“But to give a sense of possible scale,” the report says, “previous IFS research has found £2 billion of tax rises or spending cuts would be needed during 2016/17 and 2017/18 to match the UK Government’s plans. If a Scottish government also wanted to offset the decline in oil revenues by 2017/18 as forecast by the Office for Budget Responsibility, another £3.4bn would be needed.” This would mean an independent Scotland would begin life needing to find £5.9bn.

The report continues: “We estimate a one percentage point increase in all rates of income tax, or in the main rate of VAT, would raise around £430 million in Scotland,” and adds: “Making a substantial contribution to a possible fiscal tightening would require significant tax increases.”

Mr Adam calculated filling the fiscal gap by tax hikes alone would mean a rise of 13.7%.

Andy Lythgoe has used GERS figures to repeat Mr Adam’s calculations and done the same for the UK. The results are very interesting:

Scotland Revenue incl. North Sea £56,871m
Scotland Total Public Sector Expenditure £64,457m
Fiscal Deficit -£7,586m
Fiscal Deficit as % of Revenue 13.34%
UK Revenue £572,636m
UK Total Public Sector Expenditure £693,599m
UK Fiscal Deficit -£120,963m
Fiscal Deficit as % of Revenue 21.12%

An independent Scotland will thus only need to put up taxes by 14% in the same sense as the UK will need to put taxes by 21%.

In other words, an independent Scotland will be able to lower taxes by about 7% compared to the taxes we will incur if we remain in the UK.