Could Scotland afford full fiscal autonomy?

[Dave1987]

With the current talks being held between Cameron and Sturgeon about increased devolution to the Scottish parliament, could Scotland actually afford the full fiscal autonomy that Sturgeon and the SNP want? Considering that Scotland is a net benefactor of the Barnet formula it could result in huge tax rises or spending cuts north of the border. Considering how left leaning the SNP are it is more likely to mean tax rises. IMO the SNP should realise that Scotland benefits from the Barnet formula, and accept the devolution that is on offer from the Smith commission.

 

[Tetchytyke]

There isn't an issue with the Burnett formula: the cost of providing services in rural areas is more than in urban areas, and Scotland is predominantly rural. Dividing any expenditure per capita throws up similar results. Compare rural England with urban Scotland and you'd say England did better. It doesn't show that Scotland is profligate.

As for "fiscal autonomy", it depends how you divvy up the income. Conveniently the UK government chooses to account for Scotland's biggest income generator- oil and gas- as a centralized source of income not a Scottish one. Now the price of oil and gas is volatile, as Russia are currently discovering for themselves, but if you account for gas and oil income as a Scottish income the country looks a lot more self-sufficient.

There's no reason why Scotland couldn't stand on its own two feet.

 

[ainsworth74]

Of course Scotland can afford full autonomy or full independence, I don't see how any reasonable person can argue otherwise.

My issue is that I'm far from convinced by the SNPs view that Scotland could afford everything on its shopping list at the same time as not putting up taxes to pay for it all.

I have similar issues with Unionists that seem to claim the opposite that Scotland would end up being some third world hell hole and completely broke if it left the UK.

 

[Dave1987]

There isn't an issue with the Burnett formula: the cost of providing services in rural areas is more than in urban areas, and Scotland is predominantly rural. Dividing any expenditure per capita throws up similar results. Compare rural England with urban Scotland and you'd say England did better. It doesn't show that Scotland is profligate.

As for "fiscal autonomy", it depends how you divvy up the income. Conveniently the UK government chooses to account for Scotland's biggest income generator- oil and gas- as a centralized source of income not a Scottish one. Now the price of oil and gas is volatile, as Russia are currently discovering for themselves, but if you account for gas and oil income as a Scottish income the country looks a lot more self-sufficient.

There's no reason why Scotland couldn't stand on its own two feet.

Scotland would be entirely dependent on revenues from North sea oil and gas, which are a finite resource. If the price stays low or you take oil and gas completely out of the equation Scotland could not afford its current levels of public spending. That would pave the way for tax rises as I cannot see the SNP ever cutting spending.

 

[Bletchleyite]

I have similar issues with Unionists that seem to claim the opposite that Scotland would end up being some third world hell hole and completely broke if it left the UK.

In my view it would end up very similar to the Republic of Ireland. It'll cope, but it won't be a world power.

 

[radamfi]

Look at the map of regions in the EU:

http://en.wikipedia.org/wiki/Regional_policy_of_the_European_Union

Scotland has no regions classed as "less developed"' whereas England and Wales have one each. Most Scottish regions are classed as "more developed" which means they have a GDP per capita over 90% of the EU average.

 

[Johnuk123]

There isn't an issue with the Burnett formula

No probably not, but there is an issue with the Barnett formula this is what Lord Barnett himself said last year.

"It is unfair and should be stopped, it is a mistake. This way is terrible and can never be sustainable, it is a national embarrassment and personally embarrassing to me as well.

It was intended to be a temporary measure 30 years ago but now the wealth gap between England and Scotland has diminished so much it's now ridiculous and should be scrapped.

 

[laseandre]

In my view it would end up very similar to the Republic of Ireland. It'll cope, but it won't be a world power.

Who'd want to be a world power in this day and age anyway?

 

[DaveNewcastle]

. . . . full fiscal autonomy . . . .

Considering that Scotland is a net benefactor of the Barnet formula it could result in huge tax rises or spending cuts north of the border. Considering how left leaning the SNP are it is more likely to mean tax rises. IMO the SNP should realise that Scotland benefits from the Barnet formula, and accept the devolution that is on offer from the Smith commission.

Just to be sure that I understand your question correctly, are you asserting that the united nations of just Northern Ireland, Wales and England will hugely benefit financially from the separation of Scotland from the UK?

And if not, why would independence necessarily lead to tax rises or spending cuts?

Of course Scotland can afford full autonomy or full independence, I don't see how any reasonable person can argue otherwise.

My issue is that I'm far from convinced by the SNPs view that Scotland could afford everything on its shopping list at the same time as not putting up taxes to pay for it all.

I have similar issues with Unionists that seem to claim the opposite that Scotland would end up being some third world hell hole and completely broke if it left the UK.

I agree, though I have never, and will not in the future, feel any urge to make a connection between a political aspiration and reality. Their 'shopping list' is impressive, and some of their achievements to date are equally impressive (such as the speedy enactment of the Adults with Incapacity Act). What I would need to see before making any comparitive assessment is England's realistic 'shopping list' and its adjustments following Scottish independence.

 

[Noddy]

We all know that in present UK economic circumstances a fiscally autonomous Scotland would face a significant budget deficit.

For Scotland to accept fiscal autonomy without inbuilt UK-wide fiscal balancing would be tantamount to economic suicide.

George Kerevan. SNP MP for East Lothian.

http://www.thenational.scot/news/ge...mandate-now-goes-far-beyond-smith-powers.2787

 

[Dave1987]

I suppose the real question should be how much would Scottish taxes have to rise if Scotland had full fiscal autonomy and the SNP was determined to continue with their spending plans even without the Barnett formula.

 

[AM9]

George Kerevan. SNP MP for East Lothian.

http://www.thenational.scot/news/ge...mandate-now-goes-far-beyond-smith-powers.2787

It was a characteristic of the SNP's optimistic arguments in the referendum that certain key issues would all go their way even though it would not be within their powers to make it that way. Those issues included automatic EU membership without Schengen or Euro obligations, lifestyles like Norway following exploitation of the oil from the north of the UK's seas, National Rail providing them HS links as if they were still a part of the UK etc..
Their current assumptions about the Barnett Formula continuing to give them support even after they have fiscal autonomy seem to be of the same ilk.

 

[overthewater]

I suppose the real question should be how much would Scottish taxes have to rise if Scotland had full fiscal autonomy and the SNP was determined to continue with their spending plans even without the Barnett formula.

Since the Scottish government underspends nearly every year. I doubt it will need to raise.

 

[St Rollox]

If there's a difference between FFA and the Barnett Formula then Westminster should cough up the difference.

 

[Metrailway]

With FFA, the IFS forecasts that Scotland would have a £14.2 bn (8.6 % GDP) deficit. This is despite all Oil revenue being kept in Scotland.

To just match up with the UK deficit of 4% GDP, Scotland would need to find an additional £7.6 bn of extra tax revenue / spending cuts. This is on top of the £3 bn cuts in Scotland planned by Westminister.

 

[Dave1987]

If there's a difference between FFA and the Barnett Formula then Westminster should cough up the difference.

No way! If they want FFA then they pay for their spending plans themselves. See how long it is before businesses relocate when tax rises have to be made.

 

[CC 72100]

No way! If they want FFA then they pay for their spending plans themselves. See how long it is before businesses relocate when tax rises have to be made.

I agree - you can't have your cake and eat it.

If Scotland want full financial devolution, responsible for their own spending and raising money then that is fine in my book. But I don't see why the other 3 members of the UK should pay for a Scottish deficit in such a situation.

If it gets to such a stage where the rest of the UK has to step in to assist Scotland, then at that point for me the financial powers have to be taken away from Scotland and centralized again - you can't have a party with somebody else's money.

 

[Johnuk123]

If there's a difference between FFA and the Barnett Formula then Westminster should cough up the difference.

I assume this is a wind up because nobody could hold such a view and be taken seriously.

 

[GaryMcEwan]

I'm certainly not wanting FFA up here! I don't mean to be biased but I think we get an extra £1200 per head due to the Barnett Formula.

This country (Scotland) will soon be looking like a banana republic, and I'm not certainly wanting that.

 

[St Rollox]

Don't really see what the problem is with London handing over a few billion extra to Scotland for a few years.
Nobody seemed to mind the Falklands or Northern Ireland getting kept afloat financially.
What money did they ever bring to the table.
Scotland would only be getting it's own oil money back that was ripped off us in years past.

 

[Dave1987]

Don't really see what the problem is with London handing over a few billion extra to Scotland for a few years.
Nobody seemed to mind the Falklands or Northern Ireland getting kept afloat financially.
What money did they ever bring to the table.
Scotland would only be getting it's own oil money back that was ripped off us in years past.

Your comment makes me want the PM to give Scotland and Sturgeon FFA on the proviso that their is no going back once its done. The English bailed out Scotland in years gone past when it went bankrupt and has propped it up since, yet their seems to be little in the way of gratitude from Scotland for this.

Have your FFA if you want it, but the rest of the UK will not hand over money to prop up you extremely high public spending.

 

[St Rollox]

Your comment makes me want the PM to give Scotland and Sturgeon FFA on the proviso that their is no going back once its done. The English bailed out Scotland in years gone past and has propped it up since, yet their seems to be little in the way of gratitude from Scotland for this.

Have your FFA if you want it, but England will not hand over money to prop up you extremely high public spending.

Sorry Dave, i didn't realise part of the deal was to bow down before our imperial masters.
Better Together and all that.

 

[Dave1987]

Sorry Dave, i didn't realise part of the deal was to bow down before our imperial masters.
Better Together and all that.

As an Englishman I was quite happy to see Scotland vote for independence. I remember the massive shopping list the SNP claimed North Sea oil was going to pay for. If Scotland wants to go it alone then that fine by me but you can not expect the rest of the UK to prop up Scotland in the future if you can not afford you grand spending plans from the taxes you get in.

 

[St Rollox]

As an Englishman I was quite happy to see Scotland vote for independence. I remember the massive shopping list the SNP claimed North Sea oil was going to pay for. If Scotland wants to go it alone then that fine by me but you can not expect the rest of the UK to prop up Scotland in the future if you can not afford you grand spending plans from the taxes you get in.

Makes me wonder how Denmark survives with only butter and bacon to export.
The poor people of Denmark must be starving.
No hold on, doesn't Denmark have one of the highest standards of living in the world.

 

[Dave1987]

Makes me wonder how Denmark survives with only butter and bacon to export.
The poor people of Denmark must be starving.
No hold on, doesn't Denmark have one of the highest standards of living in the world.

Then surely you are confident Scotland could survive on its own with FFA and continue the high public spending, without any cash from London at all. I remember during the up to the independence referendum Mr Salmond said he expected to keep the pound backed up by the BoE. So even if you had full Independence you would STILL require the rest of the UK to support your economy by guaranteeing your currency! If Scotland was that confident it could survive on its own you would have proposed to create your own currency not backed by the BoE.

 

[St Rollox]

Then surely you are confident Scotland could survive on its own with FFA and continue the high public spending, without any cash from London at all. I remember during the up to the independence referendum Mr Salmond said he expected to keep the pound backed up by the BoE. So even if you had full Independence you would STILL require the rest of the UK to support your economy by guaranteeing your currency! If Scotland was that confident it could survive on its own you would have proposed to create your own currency not backed by the BoE.

I don't think asking for money that has been ripped off by successive British governments is such a big deal.

 

[Dave1987]

I don't think asking for money that has been ripped off by successive British governments is such a big deal.

What money is this you keep on about? You seem to be forgetting that Scotland had to join the Union because it was bankrupt. So the rest of the UK bailed Scotland out.

 

[cjmillsnun]

There isn't an issue with the Burnett formula: the cost of providing services in rural areas is more than in urban areas, and Scotland is predominantly rural. Dividing any expenditure per capita throws up similar results. Compare rural England with urban Scotland and you'd say England did better. It doesn't show that Scotland is profligate.

As for "fiscal autonomy", it depends how you divvy up the income. Conveniently the UK government chooses to account for Scotland's biggest income generator- oil and gas- as a centralized source of income not a Scottish one. Now the price of oil and gas is volatile, as Russia are currently discovering for themselves, but if you account for gas and oil income as a Scottish income the country looks a lot more self-sufficient.

There's no reason why Scotland couldn't stand on its own two feet.

Most of the oil and gas is gone. Give it 5 years and Scotland will be broke.

 

[HilversumNS]

I don't think asking for money that has been ripped off by successive British governments is such a big deal.

So Scotland wanted to be part of the union, but not share it's oil revenues? Cake anyone? Please have some and eat it all at the same time.

My personal view is that the recent general elections (with regard to the SNP in Scotland anyway) were similar to a by-election. Mostly a protest vote but when it comes down to the real vote (Scottish Parliament and the vote for independence) sanity prevails.

If they choose for independence the next time, let them have it, but not supported by the Bank of England. It's all or nothing, sink or swim, and the best of luck.

 

[Noddy]

Makes me wonder how Denmark survives with only butter and bacon to export.
The poor people of Denmark must be starving.
No hold on, doesn't Denmark have one of the highest standards of living in the world.

We all know that in present UK economic circumstances a fiscally autonomous Scotland would face a significant budget deficit.

For Scotland to accept fiscal autonomy without inbuilt UK-wide fiscal balancing would be tantamount to economic suicide.

George Kerevan. SNP MP for East Lothian.

http://www.thenational.scot/news/ge...mandate-now-goes-far-beyond-smith-powers.2787

It appears this SNP MP doesn't agree with you!