Sunday, 22 March 2015

SNP/Tory Coalition - Think It Through

Back in February there was an intriguing tweet from Lord Ashcroft (erstwhile Deputy Chairman of the Conservative Party and provocative pollster) saying that "Of course there could be a Tory/SNP coalition #thinkitthough"


I tend to focus on economic facts in this blog but I also like a challenge so - having discussed this with a few people who know a lot more about the realities of political deal making than I do - here's my attempt to think it through;

What would the SNP do if they were offered Full Fiscal Autonomy (FFA) in return for supporting a Tory government in Westminster?

Why would the Tories offer that deal?  If it comes with a commitment from the SNP on English Votes for English Laws (EVEL) and keeps the Tories in power why not? It's economically beneficial to the rest of the UK (to the tune of £7-8bn on current figures) and the hardship that would result in Scotland isn't going to affect any Tory seats. From Cameron's perspective - a man surely now starting to consider how history will remember him - he can claim saving the Union as his legacy.

Why would the SNP accept such a deal?  It's true that Nicola Sturgeon has stated unequivocally that the SNP wouldn't support a Tory government but she has also made clear the SNP's desire for FFA. Remember that with Full Fiscal Autonomy we get to keep "our oil" and have total control over tax and spend (with only defence and foreign affairs remaining reserved). It's not a massive leap to see Sturgeon arguing that saving Scotland from the Tories and achieving FFA in return for supporting a Tory Westminster government is an acceptable political compromise.

Surely though the SNP know that FFA would cause economic hardship for the Scottish people?  Here we have to remember that the SNP's raison d'etre is not improving the lot of the Scottish people. It is - as defined in the SNP's constitution - independence for Scotland.  They don't actually say "at any cost" in their constitution but it's implicit; no caveats are given.



So how does FFA serve that over-riding objective?  Again let's think it through.

With FFA the Barnett Formula is scrapped.  Scotland no longer experiences the benefit of economic shocks being smoothed out across the UK.  We get to keep "our oil" (which may or may not prove to be a massive economic boon again some day) but in return we accept we will not benefit from any similar geographic windfalls that may lie elsewhere in the UK.  If - for example - the Home Counties turns out to be the source of a shale gas boom, under FFA Scotland would not share in any of the spoils.

The GERS numbers show us that in the short term Scotland would certainly be worse off under FFA. Indeed unless there's another oil boom it's hard to see why we wouldn't continue to be worse off for at least many decades to come.  Most of the benefits of Union would have been discarded but we would still be under some fiscal constraints (due to our shared currency) and decisions around defence spending and international affairs would still give the SNP plenty of reason to still complain about those bastards at Westminster.  We would have many of the downsides of independence without the full freedom that independence would offer. Under that scenario it's fairly easy to see how the SNP could still argue for independence. By then - frankly - what would we have left to lose? All the SNP would need to do is succeed in continuing to blame Westminster for our woes (anybody who has watched how the SNP operate knows that even with FFA that wouldn't be beyond them) and come up with a credible currency solution.

It seems to me that if - as Lord Ashcroft advises - you think it through, the SNP might be delighted to support the Tories at Westminster if FFA is the "prize".  Not because they believe this in itself would benefit the Scottish people - you would need to be an economic illiterate or a border-line certifiable optimist to believe that - but because they would see this as a step on the road to full independence.

Many believe independence for Scotland is the right answer no matter what the short, medium or long-term economic cost and they should of course be voting for the SNP.  But anybody thinking of voting for the SNP believing they are voting for an SNP influenced Labour government might be taking a bigger gamble than they realise.


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24/03/2015: Addendum (for the doubters)
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For those who (perhaps understandably) scoff at my hypothesising: since I wrote this post there have been a few mainstream commentators taking a similar line


Iain Martin (political journalist with the Telegraph) seemed to like this logic


Even Guido Fawkes seemed to think I was on to something




22 comments:

Craigie Watson said...

I've said more than once that among the more full on supporters of independence is a group who would gladly watch Scotland burn as long as it's a separate Scotland.
They might not be "financially illiterate", but the reintroduction of a separate Scottish state with living standards set at 1707 levels would be a price worth paying for them.

fork boy said...

Not even you really believe that the SNP would do a deal with the Tories now. Not for anything. Do you really believe that you are going to persuady one single reader of this blog with that line. You're not.

Its a shame because FFA is a good 'long term goal' for Scotland. Barnet is causing a lot of division now, and not just with the English and Welsh. As a Scot I am not happy to see this country subsidised. I would rather the self respect and confidence that comes from powering industry ourselves. Of course this would be far easier given all our economic levers. But it will take time and vision.

It seems Unionsts have taken the default Anti-SNP line against FFA. Their argument framed, very simplisticly as a cost defined as the loss if Barnet.

Anyone who truly wants to save the Union, should start thinking smarter. FFA is a far more stable and comfortable position for the UK than the mess that is being proposed by the Smith commision. Proposals that leave nobody happy.

As well as ending a lot of the resentment that comes from sharing a wallet. Many of the democratic discrepancies would be softened by delegating the bulk of revenue raising decisions to Scotland. No more blaming westminster for buget cuts. West Lothian and EVEL simply would not be as contreversial as UK and Scottish issues would be much more clear cut.

If we can move slowly towards FFA. We will move towards a UK the whole islands can be happy with. Shared defence and foreign affairs, the BBC and the pound (with simple agreements on borrowing.) But with different internal political microsystems. Systems that can learn from each other and bolster each other.

One thing the YES side has in spades is VISION. Why can't some diecast NO voters show some for once and take up the cause of FFA?

Martin said...

Interesting.

I could just about see, if the numbers in parliament meant that the SNP could abstain to keep the Tories in confidence/supply, this argument having a little merit.

The SNP could say that that they weren't supporting the Tories, merely ensuring that Scotland wouldn't be affected by austerity/NHS cuts etc.

However I think the major flaw is the effect this would have on the 2016 Scottish election. I think the backlash against the SNP would be comparable, maybe worse to that facing the LibDems right now from erstwhile Labour voters, especially since the SNP are making such a big deal of how 'safe' a vote for them is. I think this would even happen if the SNP were only abstaining in confidence/supply. They'd try and spin it, but the narrative would be they were propping up the Tories.

Also, it really would expose the SNP as being only interested in independence, or a path to independence. The GERS figures next year before the election will be worse, and a rush to FFA will look like the worst idea ever. The only thing positive would be the fun in seeing how crazy an argument they would be making to counter the inevitable "You'll be X quid worse off if these idiots get back in" posters from Labour.

So respectfully I disagree. A more likely scenario in my opinion (assuming the SNP hold the balance of power) is that the SNP offer Labour supply/confidence in return for some kind of 'supported' transition to FFA which Labour either accept (and hurt themselves hugely in England) or reject, which leads to another election and allows the SNP to play the victim card as well as they usually do.

Edward Witney said...

I have spoken to a few "intelligent" people who voted yes. They are almost totally unaware of the GERS figures or are hiding what they know. Scots have an almost messianic belief in their own abilities which is very dangerous because it was that belief that led to the Darien project which then led to Scotland becoming bankrupt which has in turn led us to where we are now.

Salmond and Sturgeon know this and play to the crowd. They know that the giant chip on the shoulder that all Scots are born with regarding the English will stand them in good stead.

Martin said...

fork boy,

Your vision of being "given all our economic levers" is , from what I understand, incompatible with "simple agreements on borrowing".

Any agreement on borrowing could not be Full Fiscal Autonomy.

I'm happy to be corrected. I'd really like to see a vision of how such an arrangement could work in practice. Carney's comments a year ago when Currency Union was being discussed suggested one framework, but it wasn't one that the SNP could accept as anything like FFA.

scottishscientist said...

Without deficit spending powers it would not be true "full fiscal autonomy" - more like "faux-full fiscal alleged-autonomy".

Deficit spending is a critical fiscal power for financial independence for any country and such a power would have to be agreed with Scotland as part of the arrangements with the UK to set up full fiscal autonomy.

Presumably the agreement to share deficit spending powers would define limits to the amounts which could be spent by each party to the agreement, the two governments, of Holyrood and Westminster, of Scotland and the UK.

Exactly what those limits would be, would have to be negotiated between the parties.

If I was negotiating for Scotland, a forlorn hope admittedly, I might suggest a very ambitious limit to deficit spending for Scotland.

I might ask for £200 billion a year as a deficit spending limit.

Deputy First Minister John Swinney might ask for only £3 billion a year in deficit spending limit, a pathetic amount, which would keep Scotland in austerity, I don't know?

My point is that it really matters who negotiates for Scotland and what kind of deal they can hold out for as to whether the full fiscal autonomy proposal is workable or not.

Kevin Hague said...

As a general response to comments here - when I mentioned having "talked to those who know more than me about political deal making" you can safely infer from that that I have a little more than idle speculation to back up my belief in this scenario being at least discussed

DB said...

If the Tories offer a deal to the SNP, then surely Labour would have to match it?

There is no getting away from it.
In a hung parliament, if the SNP end up as kingmakers, there will be immense pressure/competition within the UK parties to offer the best deal to Scotland.

Labour in particular know they could be out of power for the next 10 years, as the economy improves.

There is also no reason that Barnett needs to completely disappear - if parties can agree on a new transfer formula based on 'need'.
If the UK is to be preserved, then surely the same arguments for 'pooling and sharing' would still apply?
Such a formula maintains a common link between the nations.

If the intention for conceding Devo-Max/FFA is to maintain the UK, then surely consideration would have to be given to this?
Otherwise, as you seem to imply, the pressure towards full independence would be unstoppable.

Anonymous said...

Turn this on its head slightly, would the SNP top brass be happier with the Tories or Labour in 10 Downing Street?

Now whilst Labour might be ideologically closer, they are direct competitors in Scotland in the way that the Tories aren't - Labour will not hesitate to screw over the SNP if they can. Whilst the SNP might spout platitudes about fairness in tax, the Scottish economy is far more fragile than England's, and if Balls does anything drastic it will be Scotland's financial/manufacturing/oil industries that feel the effect first. And as for a formal coalition, do you think that Salmond and Sturgeon really want to go the way of the Lib Dems? I think not.

Now with the Tories in 10 Downing Street, the SNP leadership have a growing economy in steady hands, and, as you suggest, there's a chance that they can negotiate further independence in exchange for concessions such as the Barnet formula, perhaps some other goodies such as consent to boundary reform in England. Of course they'll also have a wonderful bogeyman that they can rail against, and blame when things go wrong, or they just can't make a change. Likewise, if the Tories are depending on the SNP not getting in the way, their leadership will have a wonderful excuse for implementing progressive (but vote-winning) policies and ignoring what the hard-right of the party wants, just as they have done with Lib Dems.

But, whilst the SNP might prefer the Tories to be in Downing Street, there's very little chance that they'd actually enter into a formal coalition, again, they've seen what the compromises of Government did to the Lib Dem's, it's way outside most of their MP's comfort zones and besides, the Scottish electorate would doubtless crucify them for having "Sold out".

So, what might happen? I really don't know, but I shouldn't be surprised if Salmond and Sturgeon haven't at least contemplated how they could sell SNP consent to Tory Government to their electorate.

JoeCro said...

If you accept the premise that Scotland is in receipt of lavish English subsidy via the Barnett formula, what guarantees do you have that this arrangement will continue indefinitely? Funding decisions are taken in Westminster where Scottish MPs of all persuasions are a small minority.

JoeCro said...

If you accept the premise that Scotland is in receipt of lavish English subsidy via the Barnett formula, what guarantees do you have that this arrangement will continue indefinitely? Funding decisions are taken in Westminster where Scottish MPs of all persuasions are a small minority.

James said...

Well done for misrepresenting the SNP constitution.

As you say, the first clause says that independence for Scotland is a driving force.

But what you don't say is that the second clause is "the furtherance of all Scottish interests".

If a "FFA" proposal forced the Scottish Government to significantly reduce public spending, that would clearly be inimical to "Scottish interests".

Kevin Hague said...

James

a/ it's a secondary point in the constitution
b/ so why do Salmond and Sturgeon say they want FFA given an immediate reduction to Scotland's income is an inevitable conclusion?

James said...

Kevin, thanks for your reply.

I don't really accept your premise that the first clause (independence) is given higher priority than the second clause (furtherance of interests), but I'll play along anyway.

Any FFA deal would have to satisfy at least one of the clauses, i.e. making independence more likely or being of obvious benefit to Scotland.

If you had a FFA deal that clearly put Scotland in a worse position than at present (i.e. it would have to raise taxes, cut spending or borrow by itself), I think this would most likely damage the prospects of achieving independence. People would associate gaining greater powers with some additional cost or burden.

Therefore I think that a "bad" FFA deal would go against both key points of the SNP constitution.

Kevin Hague said...

James I agree with your logic.

The SNP leadership however appear not to - have you not noticed their calls for Full Fiscal Autonomy?

Ron Sturrock said...

Must admit betwixt and between on this one.

A Conservative/SNP deal re FFA certainly has a lot of Conservative commentators, well, commentating pro the idea. Certainly has not been the talk of the steamie where I am.
It would appear that these comments are more for English Conservatives.

I cannot for the life of me see how an SNP grouping could accept an FFA deal and yet vote for (unlikely) or abstain (most likely) a Queen's speech which contains the very policies the SNP are so resolutely opposed to.
S. Hosie today again stated the SNP position vis a vis the Conservatives.

If the SNP agreed to an FFA deal, it would probably be on a piece by piece arrangment, vote or abstain against our bills and we give you a bit more towards FFA.

Not that I think the SNP would go for it, the simple reason being that FFA is unaffordable/unsellable in the present climate for the medium term (& possible longer term) and they know it.

The other fly in the ointment, is that the Holyrood elections are 1 year later.
Would any CON/SNP deal mean no mention for a referendum in the 2016 manifesto?

Any CON/SNP deal would be manna from heaven for the Labour party.
You could write the headlines now.
We told you so, the SNP and Conservatives in bed again.

And this is before any detailed implications of FFA.



Anonymous said...

The SNP will muck up any chance of a single UK wide majority BREXIT referendum put to the public.

The SNP are happy with SEXIT from Westminster as long as they stay ruled from somewhere else. Independence? I don't think so. The SNP seem to confuse the EU with the 'Auld Alliance'. How wrong could they be?

Surely the Scots are more canny than that? I hope so, I am part Scot.

Kevin Hague said...

For the doubters: see the addendum I have posted above

Martin said...

Kevin,

I don't doubt an SNP/Tory coalition is possible. But I think it would be such a bad idea in the medium-to-long term for the SNP, I'm not sure they'd be that dumb to do it. Far better to screw up Labour with their poisoned chalice offer of support if they are in a kingmaker position.

More importantly, it seems obvious to me that the SNP's real game is to hurt Labour (via statements that back up the Tory poster that Miliband would be in Salmond's pocket) so much in England that the Tories win enough seats that they don't need the SNP's help to form a government. That would be the perfect result for them.

The SNP have long known that their best chance at independence is to cause as much division as possible between Scotland and England. They need a government that "Scotland didn't vote for".

Ron Sturrock said...

"think that question has now been comprehensively answered - see your nearest news outlet !"

Reply from my SNP MP when I asked him about a CON/SNP deal.

Anonymous said...

One other Redline for the SNP hierarchy, not mentioned so far, is the presence of nuclear weapons on the Clyde. There are three sides to this argument.
Firstly the economic benefit to Glasgow from the employment and Westminster spending above Barnet/FFA: I suspect the SNP would be willing to accept the continued presence of NW for that alone.
Secondly, if the Trident Missiles (which carry the nuclear weapons) were removed: what would happen to the nuclear powered, but conventionally armed submarines ( the Astute Class)? I suspect that they would remain (see point 1). The 'forced' unilateral disarmament would also free some cash for the Tories austerity plans, but also give them money to spend on conventional arms to support the 2% NATO target. I see creative accounting here.
Thirdly the general anti nuclear stance of the SNP is showing signs of moderation. While there are 'no plans' for replacing the power generation capacity at Hunterston and Torness, recent announcements by the Head of Scottish Renewables acknowledged that nuclear power would be part on the low carbon power generation mix. And in the future will be a useful export to England and northwest Europe.
In summary - I thnk SNP Con alliance is entirely credible.
One last caveat: May 16 Holyrood elections. If the SNP sold out to the Tories - would they be punished by loosing power to Labour?

Anonymous said...

You will no doubt have noticed Stewart Hosie on Daily Politics-30 March-rowing back from the demand for FFA too soon,or-as he didn't say-until the oil price improves.