Effect of Scottish Independence Vote

incandescent

zagubov wrote: »

What would Scotland be asking for that would hard to deliver?

A currency union. Do keep up, it's been discussed to death already.

EU membership? The fact is, we simply don't know but it certainly looks problematic, and even if we do get into the EU what will the conditions be? Euro membership? A satisfactory number of MEPs/commissioners? The loss of the UK's legal exemptions and reduced contributions? We simply don't know.

Most of all: a financial settlement that leaves us in a position where we won't have to cut services and/or increase taxes. They'll need a magic wand to deliver that.

No big deal, mind. 10 % of Germany's oil and about 25% of Spain's fish, plus coal, gas, uranium (nobody remembers this out loud), 1/12 of the world's laptops etc, 5 of the top universities and one of the world's top four per-capita producers of cited scientific papers. Don't let anyone kid you this would be like Europe excising a tumour, it would be more like losing a hand.

5 of the top universities? I think that rather depends on your definition of "top" but I'd love to see your justification.

Uranium? And exactly how much uranium does Scotland produce?

Coal? How many working coal mines do we have exactly?

And 1/12 of the world's laptops? That might actually have been true once, but I'm afraid the electronics sector has long since withered here.

TCA

incandescent wrote: »

Most of all: a financial settlement that leaves us in a position where we won't have to cut services and/or increase taxes. They'll need a magic wand to deliver that.

Are you saying that the Barnett formula is overly generous?

On what basis are you predicting these costs that an independent Scotland couldn't afford? 40% of Scotland's current public expenditure is allocated by Westminster on a per capita basis. Obviously that would change.

For example, what figures are you using for defence costs (currently about £3 billion per year)? How have you costed your increases to the remaining £23 billion or so that the UK currently spends on Scotland?

incandescent

TCA wrote: »

Are you saying that the Barnett formula is overly generous?

On what basis are you predicting these costs that an independent Scotland couldn't afford? 40% of Scotland's current public expenditure is allocated by Westminster on a per capita basis. Obviously that would change.

For example, what figures are you using for defence costs (currently about £3 billion per year)? How have you costed your increases to the remaining £23 billion or so that the UK currently spends on Scotland?

Scotland currently runs a larger deficit than the UK, meaning we will have to find additional money to maintain the same level of services. As a new state, our credit rating would be lower and therefore borrowing would be more expensive (Citigroup suggested a premium of 1.25% over UK levels).

A separate currency would be extremely likely to reduce the profitability of a large proportion of our businesses, and that would impact the amount of tax revenue an independent Scotland would be able to raise.

And then there are the start up costs. We would need to spend a great deal of money setting up new institutions as an independent country - our own tax system, regulators, foreign office, defence etc. In the first years of independence these costs would likely be quite onerous, and the money would have to come from somewhere.

So where? Higher taxes? Cuts to other services? More debt at higher rates? You tell me.

TCA

incandescent wrote: »

Scotland currently runs a larger deficit than the UK, meaning we will have to find additional money to maintain the same level of services.

The deficit, as far as public spending goes, is created in part by a Westminster allocation amounting to 40% of Scotland's public expenditure. We wouldn't necessarily be spending the same amounts on the same things, so you can't assume we will. My quick example being on defence.

You've obviously costed all these things to be able to say that everything is unaffordable, so let's hear your estimates of an independent Scotland's public spending and by how much we'd have to cut it or increase taxes?

rpc

TCA wrote: »

You've obviously costed all these things to be able to say that everything is unaffordable, so let's hear your estimates of an independent Scotland's public spending and by how much we'd have to cut it or increase taxes?

I think when the treasury releases the paper covering this it will be rather interesting. Of course, it will be rubbished by Yes but the best way to rubbish it is to publish your own figures which would be rather welcome

If anything (other than Trident, which we know about) is planned to be cut post-independence as part of the vision, then I'd quite like to be told about it. House of lords only costs us £1.55 each so I'm not too bothered about it from a cost point of view. I rather hope that a second chamber will be set up (thus spending much of this saving), but my understanding of current Yes policy is that a unicameral legislature is desired with virtually no checks or balances to restrain the majority.

What we will definitely have is the cost of all of the apparatus of an independent EU-compliant state. You probably don't want to remove any of the bodies we already have, particularly the consumer-orientated ones. There are economies of scale, so it is folly to expect that we can run these using the same 10% (roughly) of the UK's running costs that we currently spend. HMRC, FCA, PRA, OFT, OFCOM, OFGEM, FOS, DWP, FSCS, TPAS, MAS, acronyms galore!

It doesn't mean that it is unaffordable, but with higher borrowing costs and a current account deficit it will almost certainly cost more than today. And that is without taking account of the costs of setting up these bodies. State-run IT projects always go so flawlessly it'll be just like the trams. Change like this is always expensive, and usually more expensive than you think. Expensive doesn't mean unaffordable (and I don't see where incandescent used that word) but we should be able to walk into it with our eyes open to the costs that lie ahead.


I am fairly convinced that income tax (basic and higher rates) will rise. We are told that control of this fiscal lever is required, but not what the vision for it is. It is one of the most important levers available and you don't demand control of them if you aren't intending to pull them. If tax cuts were affordable, Yes would be singing from the rooftops because it is a vote winner.

The only tax commitment that has been made is that while the SNP favour a top rate of 50%, Swinney has committed that they will not raise the top rate in an independent country if they are in government. They have made no such committment over the basic and higher rates. So it isn't going down (or they'd tell us), and it isn't staying the same (or they'd tell us)... The only conclusions left are that they don't know or that they do know, but their plans would be unpopular.

giffnockhibee

How much will iScotland's net contribution to the EU be? As one of the 10 richest nations (is that the right wording?) on the planet, it's bound to be a fair whack.


Has this been budgeted for?

incandescent

TCA wrote: »

You've obviously costed all these things to be able to say that everything is unaffordable, so let's hear your estimates of an independent Scotland's public spending and by how much we'd have to cut it or increase taxes?

I'm not the one proposing to change the spending arrangements, nor am I the one who has been promising to spend more on every random thing.

That's the SNP you're confusing me with. How about we see costs for everything they've proposed, along with where they think the money's coming from?

incandescent

TCA wrote: »

For example, what figures are you using for defence costs (currently about £3 billion per year)? How have you costed your increases to the remaining £23 billion or so that the UK currently spends on Scotland?

Just to put things in context, TCA, here is how much some of the nationalists' favourite countries spend on defence:

Norway - £4.5 bn
Sweden - £3.9 bn (and they plan to significantly increase it next year)
Denmark - £2.8 bn
Finland - £2.3 bn

TCA

rpc wrote: »

I think when the treasury releases the paper covering this it will be rather interesting.

I am fairly convinced that income tax (basic and higher rates) will rise.

Indeed. I'm looking forward to that paper too and how it is received.

I wouldn't bet against a UK government raising taxes either. Or stealthily through national insurance as is done at the moment. And I also wouldn't bet that the Barnett formula will be around indefinitely. There's enough noises at the moment from down south about the apparent unfairness, so continued austerity cuts and the prospect of Barnett being ditched isn't exactly a nice one.

I agree all these government departments (with the acronyms) would be replicated at a cost. I also think that there is quite a lot of the infrastructure there already, like HMRC in Scotland, and there are undoubted benefits and opportunities to redesigning the tax and welfare systems, which are now monstrous beasts and complicated beyond belief.

incandescent wrote: »

I'm not the one proposing to change the spending arrangements, nor am I the one who has been promising to spend more on every random thing.

Sorry. Doesn't work like that. You can't make bold statements about cuts to public services and/or tax increases if you have no idea what anything costs. That's very politician-like of you.

What other countries spend on defence is completely irrelevant to Scotland. One thing you can be sure of, is after independence it would be a lot less than it is now.

incandescent

TCA wrote: »

Sorry. Doesn't work like that. You can't make bold statements about cuts to public services and/or tax increases if you have no idea what anything costs. That's very politician-like of you.

What other countries spend on defence is completely irrelevant to Scotland. One thing you can be sure of, is after independence it would be a lot less than it is now.

Other countries are irrelevant to Scotland? Really? That's not the usual nationalist line. Why do you think Scotland is going to spend so much less on defence than pretty much any other country in Europe? And why do you think we can get away with that?

As for "that's not how it works" - I'm sorry, but that's exactly how it works. The nationalists haven't even attempted to prove they can meet their spending claims, but we've already demonstrated a number of issues which are almost certain to diminish our spending power:

• Our higher budget deficit
• Increased borrowing costs because of lower credit rating
• Start up costs required to create independent Scottish institutions and services - tax system, foreign ministry, a new currency etc
• The impact on tax revenue of currency transaction costs for businesses and individuals
• Our own EU contributions, minus the UK's rebate

I realise you don't want to admit that voting Yes is certain to cause higher taxes and / or spending cuts, but the nationalists will have to come clean about it sooner or later. If they had any decency at all, they would do it before the referendum.