Saturday, 16 August 2014

£8.3bn Better off?

An independent Scotland would definitively not have been £8.3bn "better off" over the last five years.  The only argument offered by the Yes camp to justify this figure is that we could have run an even higher deficit and increased Scotland's debt by a further £8.3bn.  That's like saying I could have been better off over the last five years if only I'd been allowed to run up a higher credit card debt.

This follows on from two previous posts: The £8bn misdirection and Independence & Economy "Facts": A Response which address both our First Minister's use of this fabled £8bn figure and the risible Business for Scotland's use of it within a video presentation.

Business for Scotland refused to explain how that figure was arrived at when I posted queries on their site (they take a rather censorial approach to any comments that question their analysis or seek clarification: they simply don't publish them).  They were however spurred into action when I posted that - when this figure was used by our First Minister - it represented a blatant lie.  You can follow the detail if you like here and see how Ivan McKee of Business for Scotland leapt valiantly to our First Minister's defence.

Now obviously Business for Scotland is a non-political organisation - they make that very clear on their website. It's true that one of their founding Directors (Jim Mather) is the former SNP Minister for Enterprise, their CEO (Gordon MacIntyre-Kemp) is a failed SNP local council candidate and the First Minister is fond of using them for photo-opportunities and is attending their annual fund-raising dinner - but I don't think one can necessarily conclude from that that they're some sort of poorly disguised SNP campaigning vehicle designed to give the Independence case a veneer of business credibility.  I imagine Ivan McKee of Business for Scotland simply felt he should intervene out a sense of civic duty rather than because somebody suggested he should.

It's true also that Business for Scotland's membership appears to lack any businesses involved in material trade with the rest of the UK (I looked very closely as you can see here): perhaps that's unsurprising as those are the businesses (employing over a third of the Scottish work-force) who will be most badly impacted by Independence.

Anyway: having now finally received an explanation of the £8.3bn figure I looked again at the slide in Business for Scotland's bizarre Video Presentation - I include it in all it's glory below.

Now knowing how they calculate that figure (you can follow the painful detail here): it certainly doesn't demonstrate that "Independence would have made Scotland £8.3bn bettter off over the past 5 years".  That is a blatant lie.

They arrive at that figure by saying that if our percentage of UK public spending had been the same as our  percentage of UK Tax contribution then we'd have spent £8.3bn more.  Think about that for a moment. The argument is that we (Scotland) should have been running an even higher per capita deficit than we did; we should have been increasing our debt levels even more.  This is like me saying "I could have been better off over the last five years if only you'd let me run up a bigger credit card debt". It's sheer lunacy.

For completeness: if you go back 7 years (as far as I could be bothered to go) our share of deficit generated is 8.4%, exactly in line with our share of population (i.e. this level of "deficit contribution" is consistent with us receiving a per capita share of debt incurred over that time).  The implication of spending an additional £8.3bn over the last 5 years is that our share of the deficit over that period would have been 9.5%; we'd be responsible for significantly more than our per capita share of national debt.

To believe the statement on this slide you'd need to believe that Scotland would have been "better off" if we'd have spent more, run an even higher deficit and incurred even more (hypothesised share of) debt. That's palpable nonsense.

For those who care about the detail (and have time on their hands) I repeat my workings below.  I wish Business for Scotland were so open: it would save me a lot of time.


Anonymous said...

Very good work, what worries me though is that this £8 billion figure has been rammed down our throat so much by the Yes side that it now seems to be kind of just accepted as fact,there's not enough people getting the truth out there.

Anonymous said...
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Anonymous said...

Business for Scotland ia/was a non political organisation ?

How can that be said when at least two of their members are now SNP MP's ?
Michelle Thomson and Richard Arkless...i've not looked for more yet.

Anonymous said...

Kind of like "£350 million a week to spend on the NHS". Proof that any made up "fact" can become true, at least as far as the idiot majority is concerned, if you repeat it enough times, or write it in big enough letters (somewhere around Sun banner headline size does the job)

Anonymous said...

I believe there may have been a little irony inferred.