Category Archives: consequencesofunion

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.

The Three Hundred Year Night

Holberg, a photo by JsonLind on Flickr.
If you read Norwegian texts from the period when Norway was ruled from Copenhagen (1397–1814), you don’t get the impression that Norwegians were terribly unhappy about their plight. In fact, they didn’t take any steps towards independence until Denmark had to hand Norway over to Sweden after the Napoleonic wars. It’s quite possible Norway would have remained part of Denmark if Denmark-Norway hadn’t been on the losing side in those wars.

However, after Norway became independent again in 1905, it became popular to refer to the years of Danish rule as firehundreårsnatten “the four hundred year night”. With hindsight, they suddenly realised that Norway could have done so much better if it had been run by Norwegians for Norwegians in Norway all along, and they were kicking themselves for having put up with Danish rule for so long, even though at the time it seemed like a reasonable set-up.

Will Scots in the same way talk about the period from 1707 to 2016 as the “three hundred year night” in a generation’s time? Will people be shaking their heads in disbelief at what their forebears thought was an acceptable state of affairs?

PS: The photo shows a statue of Ludvig Holberg, who lived from 1684 to 1754 and is often considered the father of Danish literature. He wrote in Danish because Norwegian had ceased to exist as a written language, in the same was as Scots is now often seen as an English dialect. Although he was born in Norway, he studied in Denmark, worked in Denmark and lived in Denmark because Denmark didn’t see any need to build a university in Norway. It’s quite lucky the Scottish universities were founded before 1707.

Is Fife a kingdom, and is Scotland a country?

Scotland ~ Fife
Scotland ~ Fife, a photo by e r j k p r u n c z y k on Flickr.
Fife is a bonnie part of Scotland, but obviously when it’s called the Kingdom of Fife it’s just a way to commemorate the fact that it was a Pictish kingdom many centuries ago. The word “kingdom” thus has a ceremonial meaning in the collocation “Kingdom of Fife”, but a real, current meaning when we say “the United Kingdom of Great Britain and Northern Ireland”.

The reason for this brief introduction to the meanings of the word “kingdom” is that I wonder whether something similar is true with regard to Scotland’s status as a country.

Most Scots — and definitely everybody on the Yes side — see Scotland as a real country, which just happens to have formed a political union with England, Wales and Northern Ireland.

However, I wonder whether some people on the No side mean something completely different when they say that Scotland is their country, for instance when they insist that they love their country just as much as the Yes campaigners. Do they interpret “country” in a ceremonial fashion, just like the meaning “kingdom” has in the “Kingdom of Fife”? So do they actually mean that they love their region (Scotland), presumably as part of a real country (i.e., the UK)?

This is important because it relates to the representation Scotland gets in Westminster.

As Wings over Scotland put it recently:

If you’re claiming “my country” as being Scotland, then it’s a country [that] only gets the government its people vote for around 40% of the time. The argument from the No camp is that Scots have a vote in electing UK governments like everyone else does, and should just shut up and accept it if their wishes get over-ruled by the much larger population of England, because that’s democracy and people in Newcastle get Tory governments they didn’t vote for either.

But that only works if you’re saying that your “country” is the UK. The minute you identify Scotland as being a country in its own right, that argument disintegrates. Regions of a country have to accept the overall will. Countries should get the governments they vote for.

In other words, if Scotland is a country, then the UK is a union and Scotland should get many more seats in the House of Commons. It’s also logical that Scotland has a parliament, a separate legal system and even its own football team.

However, if Scotland is just a region which is ceremonially called a country, then the current representation in the House of Commons is completely fair, but it’s then a bit strange why Scotland needs a parliament when other regions don’t (in this world view, four regions have parliaments — Scotland, Northern Ireland, Wales and London — but eight don’t: NE England, NW England, Yorkshire and The Humber, East Midlands, West Midlands, East of England, SE England and SW England), and there’s absolutely no justification for Scotland having a separate legal system and its own football team.

I’d like people from the No campaign to tell me what kind of country they consider Scotland to be.

Independence as a protection against NHS privatisation

Jeremy Hunt is Privileged
Jeremy Hunt is Privileged, a photo by Feroze Alam on Flickr.
Most people are hopefully aware that the Scottish NHS and the English are almost completely separate, sharing little more than the name. I have often argued that the Scottish Government ought to rename the Scottish NHS in order to emphasise this fact.

Because of the existing independence of the Scottish NHS, it will hardly be affected at all by Scottish independence (just as the education system and the other fully devolved policy areas). When some unionists say that independence is a threat to the NHS, they are clearly scaremongering.

On the other hand, remaining in the UK is a big threat to the Scottish NHS as we know it.

This is because the English NHS is undergoing privatisation at an alarming pace.

So far, the changes in the English NHS have not affected us too much in Scotland, but if large amounts of expenditure now move from the public to the private sector, it’s likely to lead to huge Barnett consequentials, which means that Westminster’s block grant to Scotland will fall if the English public sector spends less money.

If the block grant decreases, it’s likely to force the Scottish Government to privatise the Scottish NHS along the same lines as what is already happening in England.

Better Together and the unionist parties need to tell us how they are planning to allow the Scottish Government to maintain the Scottish NHS. Will they ensure that the changes to the English NHS won’t affect the block grant?

If they won’t guarantee this, they should admit that the Scottish NHS is safer in the hands of an independent Scotland.

Thatcher on Scottish independence

Baroness Thatcher portrait
Baroness Thatcher portrait, a photo by Downing Street on Flickr.
In Margaret Thatcher’s “The Downing Street Years”, she has this to say about Scottish independence:

If [the Tory Party] sometimes seems English to some Scots that is because the Union is inevitably dominated by England by reason of its greater population. The Scots, being an historic nation with a proud past, will inevitably resent some expressions of this fact from time to time. As a nation, they have an undoubted right to national self-determination; thus far they have exercised that right by joining and remaining in the Union. Should they determine on independence no English party or politician would stand in their way, however much we might regret their departure. What the Scots (not indeed the English) cannot do, however, is to insist upon their own terms for remaining in the Union, regardless of the views of the others.

Until I read this, I had been puzzled about why David Cameron agreed to a referendum so readily (to the extent that I’ve been known to joke that Cameron surely must be an undercover agent for the independence movement); however, it’s now clear to me that he’s just following his bible to the letter.

Apart from explaining Cameron’s behaviour, what I find interesting about this paragraph is that I don’t think many people in the pro-independence camp will find much to disagree with. We are in favour of independence exactly because we don’t believe we can insist on our own terms for remaining in the Union, so we want to move to a situation where we are in charge of our own destiny. On the other hand, I think many Scottish Labour politicians will have problems with this Thatcher quote — the way they think they can promise more devolution after a No vote without prior approval from all major UK parties seems to imply they believe Scotland can pick and choose freely from the devolution shelf while remaining in the UK.

Did the creation of the BBC go against the Acts of Union?

The Acts of Union went to great lengths to guarantee the separateness of Scotland. In the words of Wikipedia, “[it] guaranteed that the Church of Scotland would ‘remain the established church in Scotland, that the Court of Session would remain in all time coming within Scotland,’ and that Scots law would ‘remain in the same force as before’.” Although a separate education system wasn’t explicitly mentioned, I presume it was an automatic consequence of keeping an independent church and a separate legal system.

In other words, the Acts of Union did a decent job at establishing a monetary and fiscal union while keeping the nations culturally distinct.

In this light, it’s natural to wonder whether the establishment of the BBC under a Royal Charter in 1927 was contrary to the spirit (if not the words) of the Acts of Union. Even its original motto, “Nation shall speak peace unto Nation”, seems bizarre for a union of four nations.

There’s not much we can do about it now (apart from voting Yes in 2014), but it seems obvious that the UK would have looked very different at the moment if there had never been British radio and TV channels, but only separate ones for each nation.

Population growth in independent countries and Scotland

Two weeks ago, the Better Nation blog published an article by Jeff Breslin which contained the following passage:

Perhaps the saddest aspect of Ireland’s current difficulties is the number of bright young things leaving the country for better prospects abroad. One could argue that this isn’t a road that Scotland would want to go down through independence and, yet, that is precisely what is happening now. (I know this from experience as I moved to London strictly because Scotland couldn’t provide the PhD that my partner wished to study. Wales, incidentally, could).

The Irish population in 1961 was 2.8m. The population today is 4.5m.

The Norwegian population in 1961 was 3.6m. The population today is 5.0m.

The Icelandic population in 1961 was 179,000. The population today is 318,000.

The Scottish population in 1961 was 5.2m. The population today is 5.2m.

There is clearly only one stagnant, problem child in the above list and that is because there is an historic, corrosive brain drain taking place in Scotland that is damaging growth from both a population and an economic viewpoint. It is little wonder that ‘London-based parties’, to use an unfortunate phrase, are championing the continuation of the UK when it is London that is the prime beneficiary of this very brain drain.

Kids wanting to get away from it all in Sweden move to Stockholm, kids wanting to get away from it all in Norway move to Oslo and kids wanting to get away from it all in Iceland move to Reykjavik but too many kids wanting to get away from it all in Scotland move to London, and we are haemhorrhaging talent and creativity as a direct result.

I decided to have a closer look at this. Using figures from Wikipedia (look for the articles called Demographics of …), I’ve made two graphs.

The first one (top right) shows the populations of Scotland, Ireland, Denmark and Norway from 1900 to 2010. In 1900, Scotland was by far the most populous country of the four, with almost as big a population as Norway and Denmark combined. Scotland and Ireland had almost stagnant populations for the following decades, while Norway and Denmark grew rapidly. A while after Ireland became independent, the Irish population suddenly exploded, and it has now almost caught up with Denmark. Scotland seems to have experienced modest growth after the introduction of the Scottish Parliament in 1999.

The other graph (on the left) adds Sweden and England, but instead of using absolute numbers, the graphs are relative to the populations in 1900.

The second graph clearly shows a difference between non-independent Scotland and pre-independence Ireland on one hand, and the independent countries (or the dominant part of the union, in the case of England) on the other.

If Scotland had experienced the same relative population growth as Denmark since the year 1900, the population in 2010 would have been around 10.1m instead of 5.2m. Would this have happened if Scotland had regained her independence under Queen Victoria, or are there other reasons why Scotland would never have been as fertile as Denmark?