Sunday, 26 June 2016

Brexit and the case for Scottish independence

OK, let’s all just calm down. Here are some things that we know as fact

  • The UK democratically decided to leave the EU. Lots of us don’t like that, lots of us don’t like the way that vote was achieved - but that’s democracy and there’s no point bitching about it now*

    * it's pointless but tempting; I might not always resist that temptation

  • It was a UK-wide vote for Leave within which Scotland, Northern Ireland and London voted in favour of Remain

  • Something has fundamentally changed since Scotland voted to remain in the UK. Many of us voted partly on the basis that we considered the best end-game was Scotland being in the UK in the EU; for us it was rational to vote No because only a No vote made that outcome possible. People struggle to intuitively understand probabilities - but right up until midnight last Thursday that still seemed the most likely outcome

  • The SNP manifesto included an explicit option to seek another independence referendum"if there is a significant and material change in the circumstances that prevailed in 2014, such as Scotland being taken out of the EU against our will"

So: in these circumstances it is completely reasonable that the SNP should explore ways of securing a separate EU deal for Scotland, up to and including revisiting the question of Scottish independence.

It's important to consider that some interesting options might be available for Scotland without becoming independent. We will hear much in the coming months about the Greenland and Faroe Island precedents, but frankly these are not overly relevant - the bigger point is that we are in uncharted territory for the EU so precedents are of limited value. At this stage we simply don't know what might be negotiable and it makes sense to explore all options (as Nicola Sturgeon is quite sensibly suggesting).

We live in extraordinary times. As I write this the Tories have a lame duck leader, the chancellor of the exchequer has gone to ground and the Labour party is in melt-down. Meanwhile nobody knows what Brexit is actually going to mean because negotiations with the EU haven't even started yet.

If ever there was a time to pause and reflect and just wait to see how the dust settles, it is surely now.

So let me just park a few inconclusive observations here.

One school of thought I'm hearing on Twitter can be characterised as follows:
  • "The UK had the courage to leave the EU, why shouldn't Scotland have the courage to leave the UK?"
  • "The economic case didn't stop the UK voting to leave the EU so why should it stop Scotland leaving the UK?"
This is an understandable emotional reaction, but the economic cost for Scotland leaving the UK - if you prefer, the courage required - is an order of magnitude greater than that for the UK leaving the EU.

Scotland currently receives an effective fiscal transfer from the rest of the UK of over £9bn pa (see chokkablogs passim and even the SNP themselves during the fiscal framework negotiations). If we scale that in UK terms it would be the equivalent to the UK receiving £90bn pa or £1.7 billion a week.

If you'd plastered "Vote Leave to lose £1.7bn a week" on the side of a big red bus you might have seen a different EUref result. The economic cases are not comparable1.

A more rationally structured question might be  
  • "Yes it may cost us to leave the UK, but might that be a cost we're willing to pay now if it keeps us in the EU and/or democratically uncouples us from a mass of population with whom we simply don't seem to agree anymore?"
In the immediate aftermath of the EUref result Sturgeon seemed to be framing another indyref as a chance for Scots to vote to "stay in the EU" as much as "leave the UK" -  but we don't yet know whether Scotland staying in the EU is even an option.

Would member states who have independence movements within their own countries want to create this precedent?

Scotland doesn't have its own stable currency and our stand-alone deficit (as % of GDP) would be larger than any existing EU country - so even if the EU made a remain option available for Scotland, it is likely to come with some pretty significant conditions. Are we ready and willing to join the Euro? Would we be willing to slash public spending by over 15% if the EU made this a condition of remaining?

Of course it's also the case that it's not clear what remaining in the UK looks like now. Will the fiscal framework that currently guarantees us that £9bn fiscal transfer survive the repercussions of Brexit?

If we voted to become independent now there can be little doubt that borders would be involved; borders between Scotland and the market where 64% of our exports go.

Currency remains a huge question - what EU deal could we secure if we planned to continue to use sterling? Do we really want to adopt the Euro if one of the implications of Brexit might be the meltdown of the Eurozone - would we be voting to jump out of the frying pan and into the fire?

I gave up fighting the label of being a "Unionist blogger" a while ago, but my position has always been that defending the Union was a position I arrived at, not one from where I started.  So until we know what options are on the table and - is it too much to hope for? - we've heard them honestly presented, I have no idea what my view on a possible indyref2 would be.


1. It's also worth observing that Scottish trade with the UK represents about 64% of our exports (the UK's trade with the EU represents about 45% of the UK's exports) whereas Scotland's trade with the EU represents only 15% of Scotland's exports. So the UK is four times as important to Scotland as an export market than the EU

Monday, 20 June 2016

Unity, Solidarity & Harmony: Why I'll be Voting Remain

Thursday’s EU Referendum allows us all to have our say on a very simple question: do we want to remain in the EU or leave?

When people are unhappy with their lot it’s tempting to vote for change because “things couldn’t be much worse than they are now”. This blog encourages a more thoughtful approach than that; things could easily get worse, so let’s think about the pros & cons of voting Leave.

Possibly the worst reason for voting Leave would be because you’ve heard that we send hundreds of millions of pounds a week to the EU and have been persuaded that we’d be better off spending that money on ourselves. It’s true that the UK’s net membership cost for being in the EU is about £9bn or £150 per person per year1. That’s a significant sum, but it’s dwarfed by the economic benefits that accrue to us as a result of membership. The vast majority of independent economic experts agree on this. The mid-range estimate is that we’d end up £30bn a year worse off if we left the EU2. So if your concern is about having more money to spend on ourselves, you should vote Remain.

If you’re inclined to vote Leave because of the issue of migration and a desire to control our borders, there are some facts worth considering before following that knee-jerk impulse.

Despite growth in EU migration in recent years, the majority of migration to the UK still comes from outside the EU. The EU doesn’t stop us addressing that. The UK has opted-out of the Schengen free travel area, so we have border checks on immigrants coming from EU countries. Take the refugee crisis as an example: there are refugee camps in Calais precisely because the UK’s membership of the EU allows us to prevent non-EU migrants from moving to the UK – we don’t need to vote Leave to achieve that.

Maybe what concerns you is EU migrants coming here and claiming benefits? The reality, as study after study has shown3, is that migration generally and EU migration in particular is good for the UK economy.

EU migrants tend to be younger people of working age who pay their taxes, consume goods and services and are net contributors to the economy. As the Institute for Fiscal studies rather succinctly puts it:
“immigration from the EU is good for the public finances”.
EU migration is not one of the causes of the economic challenges we face, it’s one of the solutions.

Maybe you have broader concerns about social cohesion and think we should reduce EU migration anyway. In this case it’s worth noting that Switzerland and Norway – who are outside the EU – have far higher levels of EU migration than the UK because in practice they comply with the EU’s free movement rules. Presumably they consider this a price worth paying for free trade agreements with the EU; a Leave vote doesn’t guarantee that the UK won’t draw a similar conclusion.

So the financial argument favours Remain, we already control non-EU migration and EU migration is something our economy actively needs - so why vote Leave? The standard answer to this question is something like “to get back control from the anti-democratic EU” or “to save us from EU red-tape”.

The EU may be a cumbersome, poorly understood and inevitably flawed institution, but it is – via the Council of Ministers and the European Parliament - undeniably a democratic one. But ultimately this is a question of values.

The EU stands for unity, solidarity and harmony among the peoples of Europe; you either believe in those principles or you don’t. In practice these principles lead to reducing red-tape by harmonising standards and regulation, breaking down trade barriers, ensuring a level competitive playing field, protecting workers’ rights, championing human rights, preventing armed conflict and much, much more.

Achieving these lofty aims of cause requires compromise, inevitably involves ceding some level of control in return for achieving a wider consensus. That doesn’t mean the EU can simply steam-roller us into agreement. Remember that the UK opted out of the Euro, we opted out of the Schengen Free Travel Area and we have effective power of veto over, for example, any new member joining. At a more pragmatic level, we may not like all regulations that emerge from the EU, but if we wanted to trade with the EU following a Leave vote we’d still have to comply with many of them.

So there are economic and pragmatic reasons why I’ll be voting Remain, but these reasons pale beside the most important one: I’ll be voting Remain because I believe in building and safe-guarding unity, solidarity and harmony across Europe.


1. What Does Our EU Membership Cost?
Our net membership cost is our gross payment (the £350m per week plastered on Leave posters) minus our rebate of about £100m per week less the £90m or so which the EU spends in the UK (mainly as payments to farmers and investment in poorer regions.) So the true net figure is about £160m a week or £8bn a year. This figure is forecast to rise next year, so £9bn is a reasonable figure for the cost of membership before taking account of the wider economic benefits (which are estimated to be over 4x that amount). See Thoughts on the EU Referendum for more details.

2. Why Would Leaving the EU Cost Us?
According to respected independent economic forecasters, the short-term economic costs to the UK of voting Leave would be caused by uncertainty: depressed foreign direct investment, lower consumer confidence, falls in asset values and exchange rate volatility. See Thoughts on the EU Referendum for more details.

3. Who Says EU Migration Benefits the UK Economy?
The Institute or Fiscal Studies (IFS), Royal Economic Society, London School of Economics (LSE), Office for Budget Responsibility (OBR), University College London (UCL), Institute for Public Policy Research (IPPR), Organisation for Economic Co-operation & Development (OECD), National Institute of Economic & Social Research (NIESR). Even, if you look closely at the figures, the anti-mass immigration body Migration Watch. See Immigration and the EU Referendum for more details

Sunday, 19 June 2016

Immigration and the EU Referendum

In my last blog post (Thoughts on the EU Referendum) I quickly skated over some of the immigration issues and was accused by some of not doing justice to the arguments. So let's look a little deeper.

I should start by being clear that my direct personal experience of EU migration has been overwhelmingly positive. As an employer I see the positive side of immigration: young productive people who come here to work, earn money, pay taxes and - in many cases - ultimately return home. The EU migrants that I see couldn't be further from the benefits tourists of tabloid mythology.

I'm well aware that I'm not somebody who is ever likely to perceive myself as competing with migrants for a job and I live in an area that nobody could describe as being "over-run with migrants". Both morally and practically I'm broadly in favour of  migration and my personal circumstances are such that that's a reasonably easy position to adopt.

The point I'm making here is that I'm aware that I risk being guilty of confirmation bias, of seeking evidence that supports my preconceptions. So with that potential bias declared, let's look at some practical realities.

First of all we should be clear that the refugee crisis has nothing to do with our EU membership. The UK was able to opt-out of the Schengen free travel area, so we have border controls and passport checks on immigrants coming from EU countries. That’s why there are refugee camps in Calais; the nature of the UK’s membership of the EU is such that we can prevent non-EU migrants from moving to the UK. Remain or Leave makes no difference to that - it won't stop there being asylum seekers desperate to reach the UK and it won't stop us being able to refuse them entry if that's what we choose.

Secondly a vote for Leave is not necessarily a vote to put a brake on EU migration. Both Switzerland and Norway – who are outside the EU – have far higher levels of EU migration (as a proportion of their populations) than the UK. They comply with the EU’s free movement rules, presumably because they consider this a price worth paying for free trade agreements with the EU.

Thirdly - as covered thoroughly by Full Fact - despite the growth in EU migration in recent years, the majority of migration to the UK still (just) comes from outside the EU.

The EU doesn’t stop us addressing non-EU migration, that is fully within our control.

Which brings me to the final point: the net economic impact of migration.

We’re living longer which means there’s upwards pressure on age-related spending such as pensions, healthcare and social care costs. Migrants tend to be younger people of working age who consume goods and services, pay their taxes and are net contributors to the UK’s public finances. Migrants from the EU are far more likely to have a job or be seeking work than those from outside the EU, so are of the "more likely to contribute" kind.

That's the logic, but what about the research to back it up? I've tried to avoid my own confirmation bias and done a trawl of available research which I summarise below (with links to the full reports in case you want to check if I've been selective with my quotes).

The bottom line is that there seems to be unanimity that EU migration specifically (as opposed to immigration overall which includes less economically productive non-EU migrants) is net positive to the UK's public finances. That's not to say that the freedom to fully control our immigration policies with respect to EU countries might not allow us to make immigration even more beneficial to us, but it shows up the argument that EU migrants damage the UK economy to be the populist nonsense that it is.

The Strongly Positive
"immigration from the EU is good for the public finances. Young people in work contribute, on average, much more in taxes than they take out in benefits and public service spending. [...] Without high net immigration the public finances would be in a worse state. If we were significantly to reduce the number of EU migrants, we would have to borrow more, raise taxes or spend less."
"Our findings indicate that, when considering the resident immigrant population in each year from 1995 to 2011, immigrants from the European Economic Area (EEA) have made a positive fiscal contribution, even during periods when the UK was running budget deficits, while Non-EEA immigrants, not dissimilar to natives, have made a negative contribution. For immigrants that arrived since 2000, contributions have been positive throughout, and particularly so for immigrants from EEA countries. Notable is the strong positive contribution made by immigrants from countries that joined the EU in 2004."
"EU immigrants pay more in taxes than they take out in welfare and the use of public services. They therefore help reduce the budget deficit. Immigrants do not have a negative effect on local services such as crime, education, health, or social housing"
"The migration scenarios illustrate that migration reduces upward pressure on debt over our 50-year projection period"
"European immigrants to the UK have paid more in taxes than they received in benefits, helping to relieve the fiscal burden on UK-born workers and contributing to the financing of public services"
"The IPPR is clear in saying that free movement within the European Union brings great benefits to all of its member states, including the UK."

The More Nuanced 
"Immigrants are thus neither a burden to the public purse nor are they a panacea for addressing fiscal challenges. In most countries, except in those with a large share of older migrants, migrants contribute more in taxes and social contributions than they receive in individual benefits."
"there is evidence that EU migration has net fiscal benefits for the UK, and these might counterbalance any positive fiscal impact from repatriating the UK’s net contributions to the EU.26 At the same time, it is at least conceivable that if the freedom to set migration policy were used optimally, then this might have some positive impact on productivity."
"... if post-Brexit the UK chose to adopt a restrictive migration policy  - that if it chose to use the newly won flexibility afforded by Brexit to significantly reduce migration – that this would significantly damage the UK economy. However, if the UK adopted a relatively liberal policy – that is if we allowed a substantial increase in non-EU migration to partly counterbalance any reduction in EU migration – that any negative impacts would be mostly mitigated and indeed, if sufficiently liberal, there would even be economic gains"
"The evidence suggests that the fiscal impact of migration in the UK is small (less than +/-1% of GDP) and differs by migrant group (e.g. EEA migrants vs non-EEA migrants, recent migrants vs all migrants)."
negative contributions by immigrants from the EU A10 group of countries and countries outside the EEA outweighing a positive contribution by immigrants from the EU15/other EEA countries [...] Estimates for the whole immigrant population residing in the UK in the fiscal year to end-March 2015 are that immigrants from EEA countries made a negative contribution of £1.2 billion in the year while those from non-EEA countries made a negative contribution of £15.6 billion, compared to an overall negative fiscal contribution by the UK-born population of £88 billion.

It's worth looking at the Migration watch figures a little more closely as it stand out as being the only analysis to suggest a negative contribution for EEA countries (i.e EU + Iceland, Liechtenstein & Norway).

A quick read of the report shows these figures are based on the "average cost" method - that is public expenditure costs are allocated to migrants whether or not the presence or absence of migrants affects these costs. For example, defence costs are attributed to migrants on a population share basis as are things like medical research and street lighting. Clearly (unless you think we'd cut these budget if we had less migration) this is at best a rather dubious way to look at the figures. Migration Watch deal with this themselves in their own Appendix B where they state
where these expenditures will not vary directly in proportion to the size of the population, a different approach is to say that the cost to be allocated to migrants should be reduced to take account of the fact that the increase in population resulting from migration does not increase these costs to the same extent. This is the marginal cost method.
They say "different", I say "better".

Below is a table summarising Migration Watch's  own analysis on both a marginal and average cost basis and - lo and behold - on this more meaningful basis even Migration Watch show EEA Immigrants making a net positive fiscal contribution.

*** UPDATE ***
I'm indebted to Jonathon Portes of NIESR for highlighting the distorting assumption Migration Watch make about business taxes. They use the incredibly pessimistic assumption that immigrants don't make any contribution to business taxes (corporation taxes, business rates, capital gains tax) until they have been in the UK for more than 10 years. As UCL have pointed out, this is counter to their own peer-reviewed, evidence based assumptions. We can safely say that Migration Watch have gone out of their way to paint the worst possible picture of the impact of migration - and even they struggle to show EU-Migrants being anything other than positive contributors to the UK's finances

EU migration is not one of the causes of the economic challenges we face, it’s one of the solutions to them.


Saturday, 18 June 2016

The Blame Game

Of course he wasn't Jesus, that would be ridiculous; Jesus was a guy who lived two thousand years ago. He was more like the reincarnation of Jesus, an apparently ordinary man who bore a huge burden, who was charged with solving mankind's problems. His problem - as Richard was at pains to explain to me - was that he didn't want this responsibility, it weighed heavily on him, he simply couldn't bear it.

He explained to me how it had happened. He'd been living in a hippy commune, experimenting with drugs and exploring his spirituality. One night - while astral travelling - he found himself inhabiting his girlfriend's body while she was being fucked by one of his friends. He was enormously disturbed by the experience and retreated into himself, he sought shelter in the library of his mind. But the library started collapsing around him; the books that contained all he knew where falling, spines breaking, pages tearing. Pillars of knowledge crumbled around him as he huddled trying to protect himself.

Then he was lost for a while; months of wandering, sleeping rough, living on scraps found in dustbins. He left the city and wandered the moors, eating raw chicken eggs stolen from farmyards. One day he was walking along an empty road when he was approached by an ethereal figure, a sort of avatar of Christ. The figure walked right up to him and - without pausing - passed into him.

Days later he was sitting at the roadside when a van pulled up and two guys jumped out. They spoke to each other;
- "Are you sure that's him?"
- "That's definitely him"
- "OK, if you're sure"

One of them turned to Richard;
- "It's OK, we know who you are, come with us, we'll look after you"

He was taken to a house; bathed, fed, cared for.

One evening he was watching TV with his new friends when the now famous Ethiopian famine report came on; he stared in horror at the severely malnourished child with flies crawling across her face. Suddenly he was transported through the TV, he found himself looking out through her eyes; the reporter, the glare of the lights, the camera lens. He looked back out at the watching world.

As he explained to me: "That's when I knew I had to do something. So I set about making Live Aid happen". When I politely pressed him to elaborate he explained that he achieved this largely by shouting at the telly, but really didn't want to speak about it.


That was my introduction to Richard - the latest man in my mother's life, and nominally my third step-father. I quickly came to understand that he was clinically insane: a paranoid schizophrenic with a messiah complex, almost certainly related to his experimentation with drugs, probably cannabis induced. I realised (far later than I should have done) that reasoning with him didn't help anyone, only served to make him increasingly stressed and anxious.

Better to agree with him that the watchers would be having a cold night outside tonight. Better to accept that we shouldn't have the TV on in case it exposed him to more examples of what he should be dealing with, in case it helped them find him and put him to work setting the world to rights.


I'm minded to share this story not because Bob Geldof has been in the news, but because two events in the last week have made me think about Richard.

Firstly - without wishing to sound sanctimonious - it's why I'm uncomfortable laughing at reports about the pro-indy campers' latest appearance at the Court of Session. If you missed it: Jesus Christ has returned to Earth and he wants a judge to stop the eviction of independence campaigners camped outside the Scottish Parliament, a court has heard.

I know nothing about the pro-indy campers other than what I've read, but it seems quite possible that some essentially vulnerable people have latched on to the issue that has dominated public discourse in Scotland. They appear to have among them people more in need of help and support than mockery.

Secondly - of course - there's been the awful, sickening news of the death of Jo Cox.

I've watched as various commentators have debated the significance of her alleged killer's apparent association with the far right - particularly given that today he gave his name in court as "death to traitors, freedom for Britain" - and the extent to which that is relevant or not given allegations about his mental state.

I make no judgement about his state of mind or motivations - it would clearly be inappropriate to do so - but I do think it's reasonable to react to this awful event by thinking about the environment that the current referendum has created. We can't ignore context if we wish to make sense of the apparently senseless.

Those with a tenuous grip on sanity are inevitably conditioned by the environment in which they live; sometimes they may end up literally interpreting and gruesomely magnifying the worst of what they hear. 

Richard was an inherently kind, gentle and caring man. The environment he chose to be in was one that exposed him to an array of religious ideologies; when he lost his grip on reality it was predictable that he would go the way he did. He became broken, but harmless.

Somebody with a different inherent nature, who is regularly exposed to rhetoric that focuses on who we should blame rather than who we should love, might be expected to fall another way.

Look at the environment we currently live in. Political opponents are routinely demonised for holding differing views. On social media words like "traitor" are casually bandied about.  Immigrants - whole bodies of humanity - are chosen by some as a focus for blame. Billboards are plastered with provocative images.

It seems there's something about the winner-takes-all, "once in a lifetime" nature of referendums that encourages the worst in political campaigners. But the people who should take the blame for this are not just those who stoop to using the cheapest language and most offensive rhetoric. Also to blame are those on both sides who stand by and let it happen, those who tolerate appalling behaviour from their own, those who turn a blind-eye to the rise of the malignant far right for fear of getting involved.

We all share blame, whether through our action or our inaction.

Tuesday, 14 June 2016

Thoughts on the EU Referendum

Referendums framed as binary choices can appear as if they offer us easy solutions to complex problem, and it's human nature to grasp for those. In an imperfect, uncertain and annoyingly complicated world, it’s tempting to take comfort in the apparent simplicity of these questions: Yes or No? Leave or Remain?

Those arguing in favour of change encourage us to invest our emotional energies behind the hope that one vote can transform our lives; those arguing for the status quo have to defend an imperfect reality and – at the risk of being accused of scaremongering - highlight the risks of change.

The choices are so stark that any debates quickly become polarised; nuance and reason are abandoned in favour of hyperbole and assertion. As a direct result, after each referendum just under half the electorate will be left nursing a grievance against the majority. The losers will sit in a funk, bitterly resenting the lost vote while taking comfort from the fact that whatever problems we now face, they didn’t vote for this.

If the status quo wins, the losers dream of a parallel universe in which their side won, a parallel universe where they’d be luxuriating in a land of milk and honey (presumably as opposed to a land of milk quotas1 and honey directives).

We still have this EU referendum hangover to look forward to; first there’s the small matter of the vote itself to consider.

I haven't been able to invest anything like as much time as I did during the indyref into investigating, analysing and understanding the EUref arguments, but given the two campaigns have followed remarkably similar paths so far, it seems sensible to consider how some of those arguments compare and contrast. I'll start with the more easily quantified arguments.

Cost of Membership

The first obvious thing to look at is the direct cash transfers that come from being a member of each union. This is the simple arithmetical view, before taking account of the (inevitably harder to quantify) broader economic and social implications.

For Scotland in the UK, under the current fiscal framework we effectively pool and share – that is we assume a population share of the deficit (and hence the national debt) even if we’re responsible for a smaller or larger than our population share of that deficit. As a result, Scotland currently benefits from being in the UK by over £9bn pa. or an amount equivalent to more than £1,700 per person per year2.

Of course there are other arguments to be made for independence, but on the narrow cash transfer question the arithmetic is clear and the Yes campaign were never able to find anything like enough credible "upsides of independence" to offset the prospect of losing this fiscal transfer.

We can similarly look at the net funds transferred to the EU by the UK. This is our membership fee less our rebate less EU spending on the UK (mainly in the form of payments to farmers and poorer regions). In 2014-15 this figure worked out at £8.5bn and it’s expected to average £9bn over the next 5 years (although it's forecast to spike up to £11.2bn next year)3.

The Leave campaign keeps being quite rightly chastised for using the misleading figure of £350m a week (the gross figure before our rebate and before EU payments made to the UK). The true net figure is in fact nearer £180m a week4.

[These figures have been extensively covered by Full Fact and the UK Statistics Authority]

To summarise: looking over a 10 year actual/forecast period it's reasonable to take a figure of £9bn or about £150 per person per year as the UK's net cost of EU membership.

So here’s the first big difference; Scotland leaving the UK would suffer a direct and immediate cash cost because we’d lose the fiscal transfer from the rest of the UK; the UK leaving the EU would see a direct and immediate cash benefit because we’d no longer be contributing to the EU.

The question can fairly be framed as follows: is a membership fee of £9bn or £150 per person per year worth it for the (net) benefits the UK gets from being in the EU?

Given that on the same basis Scots are currently paid over £1,700 per person per year to be members of the UK, it’s obvious that it should be relatively easier to make an economic argument for the UK to leave the EU than it was to make one for Scotland to leave the UK.

Logically, you vote Remain in the EUref if you believe the UK benefits from EU membership by more than this £150 per person per year membership cost; you'd have voted Yes in the indyref only if you believed that the hidden costs of Scotland's membership of the UK are greater than £1,700 per person per year. This is not to dismiss the intangible or hard to quantify factors (we'll come on to those), it's merely to explain what one logically needs to believe if you were to state the question in raw financial terms.

As an aside: Scotland receives a greater than our population share of EU spending, at least in part because the Highlands & Islands qualify as a “transition region”5. It’s hard to get robust figures for this but the most recent SPICe analysis I can find suggests the net cost to Scotland is in fact roughly half our per capita share of the UK’s cost, so nearer £75 per person pa. Of course were Scotland to succeed in becoming a stand-alone member of the EU our membership terms would likely be very different from those we enjoy as part of the UK – it’s hard to imagine we would retain our share of the £5.5bn rebate or be able to secure the same opt-outs that the UK enjoys - but what this analysis does show is that Scotland as a region of the EU benefits from proportionately more EU spending than the rest of the UK. It’s entirely logical (on this basis alone) that Scots should be more positively disposed toward the EU than the English.

I’ve often heard this £9bn / £150 per head figure dismissed (mainly by wealthy business people it has to be said) as not material in the context of the UK economy - "it's little more than a rounding error". I don't think it can be dismissed quite as easily as that.

To help understand the significance of £9bn, it's equivalent to
  • 0.5% of our total GDP
  • 1.2% of our total public expenditure
  • 7.0 % of the total value of our exports to the EU (i.e. equivalent to a pretty high average import tariff being applied by the EU) 
So even if you strip out the misleading Leave campaign’s hyperbole, the direct net cost of EU membership is undeniably a material figure.


This one’s quick and easy - there’s no currency problem for the UK leaving the EU because we have our own currency, whereas one of the big problems for Scotland leaving the UK was of course working out what currency we’d be using and under what conditions.

There are different arguments about what might happen to the relative strength of Sterling because of the wider economic impacts of Brexit (which we will come to) but there is no equivalent of the indyref currency problem.

So based on just the “membership cost” and "what currency we'd use" issues it’s going to be objectively far easier to argue for Leave in the EUref than it was to argue for a Yes vote in the Indyref. The fact that the SNP are against Leave but were Yes for Independence suggests they are managing to handle some pretty impressive levels of cognitive dissonance.

Trade & The Economy

In both referendums a lot was said about the risks to an economy of breaking from an existing union.

The obvious difference between the Leave and Yes economic cases is that the Yes campaign had to persuade us of an enormous upside from breaking out of the UK; the Leave campaign (in terms of the narrow economic case) only has to argue that there isn't much downside compared to the £9bn pa annual net membership cost we'd save.

Let's look at what Nicola Sturgeon said during the ITV Referendum Debate (see from 1:30:00):
"ask yourselves the question: is it better for jobs and the economy if we're trading in a market of 500 million people rather than 65 million people?"
She makes a reasonable point. Of course during the indyref we were asking whether it would be better for jobs and the economy if we were trading in a market of 65 million people rather than 5 million people - and she argued it wouldn't be!

But we know not to expect consistency from our First Minister. She was after all standing alongside Tory Amber Rudd as she said this and - lest we forget - this is the same Nicola Sturgeon who suggested during the recent Scottish election leaders' debate that Scottish Labour leader Kezia Dugdale should “apologise” for “standing arm-in-arm with the Tories” during the independence referendum. Still, at least she was doing the right thing now and I for one applaud her for it.

She was wrong to dismiss the downsides of creating trade borders during the indyref; she's right to recognise them now. The sixty-four thousand dollar question (well, OK, the £9bn question) is this: how much is being in that single market worth?

Spoiler alert: I'm not even going to attempt to answer that question myself. Instead I'll refer here to the work done by the highly respected Institute for Fiscal Studies in their report Brexit and the UK's finances. I choose this report partly because I've come to trust the IFS and partly because it summarises the work of others as well as their own analysis. The IFS say;
"there is an overwhelming consensus among those who have made estimates of the consequences of Brexit for national income that it would reduce national income in both the short and long runs. The economic reasons for this – increased uncertainty, higher costs of trade and reduced FDI (Foreign Direct Investment) – are clear. The only significant exception to this consensus is ‘Economists for Brexit’".
The "Cost of Membership" we've looked at above is referred to by the IFS as the "mechanical effect" of leaving the EU. They use a figure of £8bn pa rather than the £9bn we've shown. I think this is as a result of using a different period for the average and/or possibly that their figures were before the £11.1bn spike next year had been forecast - this difference doesn't materially affect the conclusion as we'll see.

The IFS's conclusion is strikingly clear and easy to understand in the context of the numbers we've already seen:
"It would not, however, take a substantial effect on future national income to offset this immediate £8 billion gain to the public finances. A fall in national income of just 0.6% relative to what it would otherwise have been would be enough. There is a wide range of estimates of both the short- and long-run effects of a Brexit on national income. The vast majority suggest a negative effect substantially in excess of 0.6% of national income."
Now. The future is uncertain and economists are fallible and often contradict each other, but that doesn't mean we should ignore what economists say. When the weather forecast says it's going to rain, it's sensible to take a jacket even though weather forecasters are often wrong. Knowing the future is uncertain doesn't absolve us from the responsibility to not act recklessly. The fact that there's such an overwhelming consensus that the net economic effect of leaving the EU would be negative is highly significant - only a fool would dismiss it.

But how significant? Again, here's what the IFS have to say:
Looking at the short term, and in particular out to 2019–20, which is the year in which we are supposed to reach budget surplus, forecasts for the effect of Brexit range from a reduction in GDP of 6% to an estimate from ‘Economists for Brexit’ of an increase in GDP of 1.6% – though the latter is an outlier in having a positive effect. The estimates of NIESR for a GDP hit of between 2.1% and 3.5% probably provide a good central range for the likely impact on GDP in 2019. Including the direct benefits of reduced budget contributions, these would lead to the public finances being between about £20 billion and £40 billion less healthy than in a scenario in which we did not leave the EU. Of course, the effects could be different from that and NIESR is explicit that most risk is on the downside – i.e. the hit to GDP is more likely to be bigger than in the pessimistic scenario than it is to be smaller than in the optimistic scenario
So there's considerable consensus that the short-term economic impact of a Leave vote would be negative, and if we want to scale that a figure of £20 - 40bn a year is realistic. To save my typing too many numbers let's take £30bn as the figure to try and get our heads around. If the cost of a Leave vote is £30bn a year, that's equivalent to;
  • 1.6% of GDP
  • 4.0% of total public spending
  • £460 a year for every man woman and child in the UK
  • £577m a week
So if you're influenced by the Leave camp's "the EU costs us £350m a week" you might want to contemplate the counter argument that - even after saving that figure (or at least the true figure of £180m a week) - leaving the EU is expected to net cost us over £500m per week.

The case isn't as bad as that for Scotland leaving the UK (because there is a definite "membership fee" saving before the broader economic considerations are taken into account), but there is a strong consensus that we would be materially worse off out than in.

This is a good point to take pause. If one accepts the analysis above, we can assume there will be a significant (short-term at least) economic downside of a Leave vote. If you consider all the other arguments are net neutral or positive in favour of being in the EU then of course you vote Remain; if you're voting Leave it's because you feel able to dismiss the economic analysis or you believe these other factors outweigh the narrowly defined economic downside. I'm too tired to try and be comprehensive so forgive me if what follows is little more than a stream of consciousness



The idea that EU immigrants come here to milk our benefits system is simply not supported by the facts. Again to quote the IFS:
The OECD notes that EU migrants in the UK have relatively high employment rates and make a positive net contribution to the public finances 
The economic effect of likely changes in migration as a result of leaving the EU is already factored in to the IFS (et al) calculations above - it's "in the numbers" already.

If your concern is that immigrants drive down wages, I encourage you to read the work of Jonathon Portes of the NIESR who concluded here;
Immigration may have some, small, negative impact on wages for some low-paid workers.  But  the idea that immigration is the main or even a moderately important driver of low pay is simply not supported by the available evidence
The sad truth is that we seek bogey-men to blame in times of austerity and rational economic assessments don't make headlines. Overall immigration may be required to fuel our economic growth, immigrants may on average be net contributors to our economy - but a Daily Express headline like bid to stop £55m benefits for migrants' children living abroad is what cuts through (despite it being a trivial sum in comparison to the other benefits of migration)

**** UPDATE ****
I've now developed a far more detailed view on the immigration questions
Immigration & the EU Referendum

"Taking Control of Our Country"

This is an argument those of us who lived through the indyref are very familiar with. It's a good sound-bite, but when you look a little deeper it's often little more than ill-informed scapegoating or simply a failure to understand how the political institutions actually work.

This piece addresses the parallels between "unelected bureaucrats in the EU" and civil servants. We have the House of Lords for heaven's sake. The fundamental questions for me here is this: do you believe in the value of political co-ordination at an EU scale?

I think realising cross-border economic benefits, co-ordinating environmental protection, workers' rights, human rights, maintaining peace, etc. are all areas which benefit from being co-ordinated at an EU scale. No political systems are perfect, but we seem to have managed our way around this one pretty well so far (look at the opt-outs we have).

**** UPDATE ****
I received an excellent comment in response to this blog which I repeat below in full;

Power in the EU starts and ends with the Council of Ministers. That is the elected heads of government of the 28 member nations. They meet in grand session twice a year to thrash out the forthcoming legislative programme.
Votes in the Council are of two forms:
1. Unanimous votes 
2. Votes by qualified majority
Qualified majority votes require 60% to pass. Votes are allocated on the basis of population (so the UK has more votes than Cyprus).
Once the legislative programme is agreed, the Commission draws up detailed legislation. This involves a lengthy consultation period with domestic governments and expert bodies such as the Food Standards authorities of nation states.
The detailed legislation is then proposed to the Council where it is voted on.
Note that many in the Brexit camp see the word 'proposed' as indicating the Commission is in charge of the process and is acting in isolation. This is a wilful misrepresentation.
Commissioners are appointed by the heads of government of the member states.
Once the Council has approved legislation it must be ratified by elected MEPs in parliament votes.
Most EU regulation comes as directives. These directives must be ratified by domestic parliaments. Most EU directives are put into UK law through statutory instruments. The UK could decide to put them I Acts debated in both the Commons and the Lords. As they did with the Consumer Rights Act.
The EU officials such as the President of the Commission are appointed through a vote in the Council of Ministers. Their appointment must also be ratified by the EU parliament.
There is significant democracy within the EU. Every bit as much as the UK which has an unelected senior civil service, an unelected upper house and a prime minister who appoints a cabinet. The UK prime minister is not directly elected by the people but as leader of his party.

"Stifled by Red Tape"

There's a common misconception (generally from people who aren't in business) that there's "EU red tape" that hinders small and medium businesses in the UK. I'm involved in several businesses and have never spent a minute of my time on anything I'd consider to be "EU red-tape". So I've challenged people to give me examples of what this received wisdom about red-tape actually means.

The responses were interesting and fell into two categories;

  1. Workers Rights:
    The fact that rapacious capitalists like me have to take care of employees affected when we buy and sell businesses (TUPE regulations) is apparently an example of EU red tape. Well if it is, I'm all for it.  Apparently the fact that I'm legally bound to offer my employees maternity rights and parental leave is an example of "EU red tape". Likewise.

    The idea that we might want to leave the EU so that we can relax these sorts of regulations chills me - "let's compete with the EU by being  a cheaper place to do business because workers rights aren't as well protected in the UK"?
  2. Standardisation: one of the benefits of the single market is single standards. It makes it simpler to manufacture and export to EU countries if you only have to worry about conforming with one set - so standardisation reduces red-tape if you're interested in selling to international markets.

    Things like the Clinical Trials Directive may make it harder and more expensive to carry out clinical trials - but if they're safer and more valuable as a result (by being more comparable across countries) it's not obvious to me that's a bad thing.

    If you're only interested in selling to the domestic market you might resent standards that were set by the EU rather than the UK - but we would (potentially) only replace one set of standards with another if we were outside the EU and surely any manufacturer of ambition wants to be able to export and so will need to comply with EU standards anyway. EU standards won't go away because we're not in the EU - we'll just lose our ability to influence them.

    The most compelling example of "unfair" EU legislation I've found is that cited by James Dyson who claims German manufacturers have biased EU regulations to favour the machines they make (because the power ratings are measured without dust in the bag). He seems right in this case - the problem is (assuming Dyson still wants to sell devices into the EU markets) that's not a situation that's going to be improved by no longer having a seat at the table.
I'm sure there's plenty I've missed and these latter points are not well developed - but in the spirit of this blog I'm putting this out there and - as ever - all comments welcome

I see net economic benefits for the UK from being in the EU, I see net positive impacts of wider EU co-ordination around the harder to quantify stuff, and I emotionally feel that being part of the European family is a better place to be than being outside it.

So that's why - on balance and after significant consideration - I'll be voting Remain.


1. Poetic licence - I know milk quotas have ended

2. This is covered in painful by the objective analysis in The Price of Independence (a report I authored). To summarise: Since 1980 (an arbitrary starting date that favours the Scottish perspective) it can be argued that, because of North Sea Oil, Scotland has cumulatively been a significant net contributor to the UK. Having said that, the Scottish Government’s own GERS figures show us that in 14 of the last 17 years we have been net beneficiaries, in the most recent year by about £8bn. Because of the loss of oil tax revenues, Scotland is actually likely to benefit from being in the Union by more than £9bn a year for the foreseeable future (and the recently negotiated fiscal framework guarantees us this).

3. I've not tracked down why our Gross Contribution is forecast to leap by so much next year and then decline. comment/link on forecast accuracy

4. Whilst they can make an argument about the extent to which we control the EU payments made to the UK, the rebate is netted off before any money leaves the treasury, so it really is unnecessarily disingenuous of the Leave campaign to keep quoting the gross £350m figure

5. Transition regions are those whose GDP per capita is between 75% and 90% of the average GDP of the EU-27