You Read it Here First

This is shamelessly self-congratulatory - but it's been an interesting week and I feel my Blogging activities have been somewhat vindicated.

1. Business for Scotland

On June 17th I blogged at length about the reality of this group, highlighting that they were a thinly disguised SNP construct with few significant employers and no businesses who trade with rUK   > Who do Business for Scotland Represent.

On August 31st Andrew Gilligan used my blog (supplemented with his own research and an interview with me) to publish this excellent piece in the Sunday Telegraph

2. Dunleavy & Start-up Costs

On June 25th I wrote an angry blog.  Our First Minister and the Yes campaign were claiming one-off costs of independence would be £200 - 250m and rubbishing treasury estimates of £1.5 - 2.7bn.  Alex Salmond went as far as demanding a retraction of HM Treasury's "highly misleading briefing".   Citing a report commissioned by the Sunday Post the First Minister wrote: "Professor Dunleavy’s report this weekend has vindicated the Scottish Government’s position and demolished that of the UK Government".

I analysed Dunleavy's report and concluded "no matter how hard you try you can't disguise the fact that the true cost will be significantly more than £1bn and in fact look to be closer to the Treasury estimates than Alex Salmond's" > Dunleavy & The Costs of Independence

On August 31st the Sunday Times published specially commissioned work by the Centre for Economics and Business Research (CEBR) which concluded: "The set up costs for an independent Scotland would run to nearly £2.5bn"

3. Independence threat to jobs in companies who rely on Trade with rUK

On May 18th I wrote at length (> Independence and Scotland's Trade with rUK) about the fact that businesses who trade with rUK would be damaged by independence and jobs would inevitably leave an independent Scotland as a result.  I concluded: "This is not a marginal issue, the businesses I can speak for are not unusual.  This is not about making threats or protecting the interests of a few rich shareholders [..]  there are wider implications for employment and the economic success of an independent Scotland that I feel should be understood by anyone wishing to make an informed decision as to how to cast their vote on September 18th".

On August 13th the Scotsman reported: "Around one in ten Scottish jobs depend on trade with the UK and would be “in danger” after a referendum Yes vote,according to Treasury analysis."

4. Misleading Conclusions from GDP/Capita Data

On May 20th I wrote about the ridiculousness of concluding that Scotland is a wealthy country based purely on the single GDP/Capita measure (> Look at our GDP/Capita; Look at Ireland).  I pointed out that Ireland has an even higher GDP capita but is in no meaningful way a "more wealthy" country and suggested GNP as one of the measures that should be considered (as it measures the wealth that falls to the citizens of a country as opposed to that owned by overseas companies)

On May 29th the Guardian published an article (New doubt cast over Alex Salmond's claims of Scottish wealth) which drew attention to the issue of foreign ownership of production, highlighting GNI / GNP measures and observing: "Alex Salmond’s claim that Scotland is one of the richest countries in the developed world has been challenged [..] it is a middle-ranking economy with high levels of foreign ownership. The domination of non-Scottish firms, particularly in key industries such as North Sea oil, financial services and banking, whisky and salmon, means a significant amount of Scotland’s wealth is exported to the rest of the UK and overseas"

5. Scotland and the EU

On May 16th I wrote about the realities of the negotiation hurdles that Scotland would face to remain within the EU (Independent Scotland & The EU).

On August 29th Professor Adam Tomkins published this definitive article on the subject (Scotland and the EU).  He makes his case with far more logical rigour and authority than I do - but I would venture his conclusions are wholly consistent with my own.

6. The "£8bn Better Off" Claim

On August 12th - responding to our First Minister Alex Salmond's claim in the first Live TV debate that an independent Scotland would have been "£8bn better off" over the last 5 years I cried foul and wrote this blog > The £8bn Misdirection.  When it was defended by Business for Scotland and I saw they were using the same claim I followed up with this blog (August 16th) to try and simplify the point > £8bn Better Off.

On September 2nd I appeared on John Beattie's Radio Scotland Lunchtime show where I was able to clarify the issue for a wider audience.  Business for Scotland sent along a representative to try and defend it - listen for yourselves and decide if he succeeded*

Listen from 35:30 in > John Beattie Show

*He didn't

****************

I reckon that's not a bad track record.

It's Not About The Numbers

Here's the thing: I don't think the independence debate should be about the numbers.

My heart tells me that the Union works, that being part of the United Kingdom makes us stronger, that sharing with our neighbours makes good sense and is - frankly - a morally sound way to behave.

I recognise of course that there are many decent and rational Yes voters who don't share my view.  At the heart of the difference between us is that they see a constitutional problem that needs fixing and I don't.

You see: I have no problem with "us" being the people of the United Kingdom, so I believe that we already get to decide who governs us.

I accept that the party I vote for won't always be the party in power and I know that will still be the case in an independent Scotland because that's how representative democracy works.

I recognise that politicians sometimes disappoint us, sometimes make mistakes - but I don't see that as a problem confined to Westminster; I don't believe that the Scottish political elite are in some way immune from these human failings.

I also recognise that Scotland faces demographic and economic challenges that mean our priorities will sometimes differ from those of the rest of the UK.  I see the devolved parliament as an excellent way to address those differences whilst retaining the benefits of Union (of which having a shared currency is but one powerful example).

I do understand that some Yes voters believe that - as the rest of the UK lurches to the right -  an independent Scotland could cast itself free and become a shining beacon for social justice.  I don't doubt that this is a view held with heartfelt conviction by many; but I wonder if some of these voters forget that for 13 of the last 17 years we had a UK Labour government that Scotland voted for. Disenchantment with New Labour and the Blair years is not a uniquely Scottish phenomenon. Similarly, just because the Tories are in power now doesn't strike me as sufficient reason to discard 307 years of Union.  Some - few in my experience, but some - Yes voters rise above the party political distractions and argue instead that (implicitly) Hadrian's wall defines the optimal trade-off point between economic scale and getting what "we" want all the time. I question whether the Scottish electorate will turn out to be as politically different from the rest of the UK as this view implies, but that is by-the-by.

So from these diametrically opposed starting points (gut feelings that we should either stay together or go it alone) each side views the evidence through our own prisms, refracting away unhelpful truths and drawing focus on the arguments that support our prejudice.  I don't claim to be immune from this tendency but I try very hard to maintain objectivity. I have spent the last three months immersed in the arguments of the Yes camp and consciously avoiding Better Together literature.  I wanted to face the counter-arguments and challenge my intuition rather than seek the reassurance of evidence that reinforces my beliefs.

I have been shocked by what I've found, particularly with respect to how oil & gas revenues are shared.

I expected to have to make the argument that within a Union it's only right and proper that you share resources; I expected to use the tortured analogy that if you were to discover after you'd been married for a few years that you'd had a winning lottery ticket in your back-pocket all along, it would be morally indefensible to argue you shouldn't share it with your partner. Particularly if you'd already been married for 270 years; I mean - do you ever wash those jeans?

I've covered the detail elsewhere on this blog: the numbers are all there, sourced directly from the Scottish Government's own GERS report (and presented in full and using most up-to-date figures) > £8.3bn Better Off?

I offer the following as a fair summary:  Scotland receives "back" from the Treasury as much in additional public spend per head as we contribute in additional tax per head if you attribute all "our" oil & gas income to us on a geographic basis.  It's remarkable how well this balances out; the average annual per capita difference shows Scotland making a £2 per person net contribution over the last 7 years if you assume we should keep all of "our" oil & gas income. Over the last 4 years we were in fact net beneficiaries to the tune of £156 per person and last year  by £512 per person.

Pause for a moment.  Isn't that an incredible observation?  What a wonderfully well balanced Union this is. Despite the fact that the rest of the UK could quite reasonably lay claim to "keeping" their per capita share of oil & gas income, in fact we in Scotland get a higher level of public spending per capita that almost exactly matches "our" higher tax contribution.  Indeed in recent years being part of the UK smooths the volatility of Oil & Gas income; we're able to maintain our level of public spending even when our Oil & Gas tax income (hopefully temporarily) dips.  You'd think even the most hardened Nationalist must look at that and - begrudgingly perhaps - accept that we get a pretty fair deal.

But of course we don't hear the Yes camp admitting that. Instead we hear - from the likes of First Minister Alex Salmond and the risible Business for Scotland - that we would have been "£8bn better off" if only we'd had our "fair share".   That is a frankly ludicrous statement.  They attempt to justify it by saying we should have had an even higher percentage of expenditure than we actually did - the implication being that we should have spent £8.3bn more than we actually did resulting in an even higher per capita deficit (as a result of which of course we would have been responsible for far more than our per capita share of UK debt).  If you're the sort of person who thinks running up a bigger credit card debt makes you "better off" then you may buy that argument; I'm not and I don't. The detail is all here > The £8bn Misdirection

Of course if you're a committed Yes or a committed No then the numbers frankly make no difference to you anyway; but if you've been swayed to vote Yes because you believe we're hard done to by the Treasury you really should think again.

Go back 25 years and the story is broadly the same ... but it's only fair to observe that if you go back even further (to the 1980's when we benefited from the main Oil & Gas boom) then - not surprisingly - you find a decade during which Scotland was a significant net contributor to the UK.  If we were voting to rewind to 1980 - and if you took a purely selfish view - then you could make a case that Independence would have made "us" better off.  But of course we were part of a Union then and - not to put too fine a point on it - we're not voting for a time-machine.

We can only change what's ahead of us and nobody is predicting another 80's style boom. At current public expenditure levels and keeping all "our" oil and gas we in Scotland run a very significant deficit (£2,268 for every Scottish man, woman and child last year).  Its worth noting that before the fabled Oil Fund can be created we need to at least be running a surplus (as per the Scottish Government's own criteria) and that's not forecast to happen in any of the projections I've seen.

So how would an independent Scotland address the deficit? The data show quite clearly that the current run-rate structure of UK tax and spending is in fact beneficial to Scotland (neutral at worst).  Voting Yes doesn't make us wealthier - but of course it facilitates different tax and spending decisions than Westminster might make.

So what tough choices would an independent Scotland make to address the reality of the deficit?  Well if you want to get past glib statements like "by investing our enormous wealth for the benefit of future generations" I'm afraid you're out of luck.

There are some examples given in the White Paper - primarily centered around Trident and defence spending - but famously the figures simply don't stack up. Don't take my word for it; the highly respected and impartial Institute for Fiscal Studies had a very close look and concluded Spending cuts or tax increases would be needed to pay for Independence White Paper giveaways.  Specifically they concluded the specified tax increases & spending cuts would save £500m p.a. but that spending increase and tax cuts would cost around £1.2bn p.a. in the short term and potentially considerably more in the long term. I am not aware that the Yes camp have even challenged this IFS analysis.

So we have to look beyond the White Paper and see what both sides are saying.

The Yes camp suggest that independence will allow us to avoid the austerity measures and spending cuts imposed by "Westminster" - without of course suggesting how an independent Scotland would address the very real deficit problem.  They argue that remaining in the Union and taking our share of the necessary cuts is somehow unfair - whilst simultaneously arguing that we should keep the pound.

As for the Yes camp's argument about the risk to Scotland's NHS caused by creeping privatisation in England ... well that is possibly the most cynical ploy of the lot.  They are relying on successfully obfuscating the difference in voters eyes between privatisation of provision (which is happening North and South of the border but does not imply spending cuts) with a move to a "patient pays" private healthcare model (which would  lead to spending cuts but is not happening and would be electoral suicide for any party to pursue).

At the risk of stating the obvious: if UK spending cuts are required to address the deficit and debt problem (and protect the value of our currency) then of course Scotland should have to take our fair share of the pain. But devolution means we already make our own decisions about where that pain is felt - we can prioritise protecting the NHS for example - but we can't escape the harsh economic realities.  The same would of course be true for an independent Scotland: independence is not a Get Out Of Jail Free card.

We've got this far without discussing currency or EU membership.  I've covered both at length before (Currency Union & Economic Asymmetry  and Independent Scotland and the EU) and nothing from the recent debates has changed my conclusions;

• Currency Union is arguably the least worst option for Scotland but even if it could be achieved our relative scale means it would mean de-facto sterlingisation - we would inherit monetary policy designed for rUK that would be increasingly inappropriate for an independent Scotland aspiring to pursue a divergent economic path.  Whatever happens with currency it is a clear downside of independence
• There are significant risks to at least the terms of our membership of the EU and quite possibly to our membership at all  (given the need to achieve unanimous approval from all 28 member states and the very real risk that we won't be able to satisfy the requirement of having a stable currency).

So where does all that leave us?  Well for me - after covering all of this ground - I'd like to leave this debate at the point where I came in.

Jobs.

I am a founder, investor, shareholder and Director in businesses that employ over 300 worldwide, 220 of them in West Lothian (I've laid out my bona fides for all to see).

As I have explained elsewhere (Independent Scotland and rUK Trade) the dot.com businesses I run would change overnight  from being domestic businesses to being businesses that export 90% of their turnover to rUK. This exposes us to new costs, risks and uncertainties; it would place us at a competitive disadvantage to our competitors based South of the border.   In addition to the obvious currency and EU membership uncertainty (which includes the risk that we will have different VAT regimes or that one of Scotland or rUK is in the EU while the other is out) we are faced with practical issues such as changing shipping costs: the Royal Mail Universal Service Obligation survives privatisation but won't survive separation and we can expect couriers to vary pricing across national borders.

Of course there is a simple but deeply painful solution to those problems; we would move our warehouse operations South of the border and make people redundant as a direct result.  

We are not unique; we're not even unusual.   Scotland exports 4x as much to rUK as it does to the whole EU.  To put it another way: independence shrinks our domestic market by 90%.  Are my employees just an unlucky few? Let's see what other businesses think;

• Bibby Financial Services' SME Survey found "Over a quarter (26 per cent) of Scottish small and medium-sized businesses fear they will lose business if there is a ‘yes’ vote in the referendum and some 70 per cent have rejected the idea that independence would be a positive step for the nation"
• A Federation of Small Business Survey of 1,800 small Scottish Businesses observed (note the question was not directly asked): "In the comments section of this question, 134 members volunteered that they would consider or would definitely be relocating their business outside of an independent Scotland, while a further 51 stated that they would look to close, downsize, sell, or retire early. This totals 185 respondents (10%) who would consider withdrawing their business from the Scottish economy"
• Working for Scotland have assembled testimonials and public statements from a wide range of businesses and Unions voicing their fears and concerns for businesses and jobs in an independent Scotland.  Not suprisingly the defence and financial services sectors feature heavily

• The Treasury estimate that 270,000 jobs are on the line: that's 10% of all employment in Scotland

It's clear to me that - even if you assume the Treasury is over-stating the case - the impact of a Yes vote on employment in Scotland would be little short of devastating.  I certainly believe over 100,000 jobs would be lost.  Of course that has an impact in terms of GDP, tax income and welfare spending all of which negatvely impact  the deficit.  

But it's not about the numbers.

It's about the people who will lose their jobs, their livelihoods, their families.  Ten's of thousands of people, ten's of thousands of households.

For those who'll react to this blog and accuse me of scare-mongering:  I'm one of those who'll have to look people in the eye and explain why I'm making them redundant - I've had to do it before and I can assure you that focuses the mind; it was the worst day of my professional life.  If I have to do it again I at least want to know that I did what I could to avoid it happening; I don't want anybody to turn round to me and say "I wish you'd told me that before I voted".  I won't hide the truth from my employees simply to protect myself from the abuse I will inevitably receive for speaking out.

Thank you for reading.

The Business View on Independence

There has been a flurry of recent activity around a question that followers of this Blog will know is close to my heart: Is Independence good for Business?

In the last couple of days we have seen;

• The Scotsman Published this List of  Businesses Backing a No Vote
• The Herald published this List of Entrepreneurs Backing a Yes Vote

This has to be added to

• The Yes campaigning body Business for Scotland
• The No campaigning body Working for Scotland
• The CBI in Scotland (1,900 members) who came out as No but were effectively silenced because there was not unanimous acceptance of that position from it's membership

And various pieces of research (this list is not exhaustive)

• Bibby SME research: "Over a quarter (26 per cent) of Scottish small and medium-sized businesses fear they will lose business if there is a ‘yes’ vote in the referendum and some 70 per cent have rejected the idea that independence would be a positive step for the nation"
• Federation of Small Business Survey: of 1,800 small Scottish Businesses (note the question was not directly asked): "In the comments section of this question, 134 members volunteered that they would consider or would definitely be relocating their business outside of an independent Scotland, while a further 51 stated that they would look to close, downsize, sell, or retire early. This totals 185 respondents (10%) who would consider withdrawing their business from the Scottish economy"
• Treasury Research: "Around one in ten Scottish jobs depend on trade with the UK and would be “in danger” after a referendum Yes vote,according to Treasury analysis. Among the 270,000 jobs on the line are 40,000 in financial services and 180,000 people in the services industry like tourism and hospitality."

The point is not that there will be many businesses who aren't harmed by independence but that there are many who will be.  Just because one business won't have to move employment out of Scotland doesn't mean it "cancels out" another that does.  Jobs will still be lost to the Scottish economy

So to be clear:  I don't doubt that from the small (hairdressers, corner-shop owners, architects, marketing consultants) to the large (local care-home groups or social-housing builders) there will be plenty of parochial Scottish businesses who will favour independence - some of them will see independence as a good thing, few of them will see direct harm to their business.

I have tackled this issue before when I asked the question: Who do Business For Scotland Represent - my research was painfully thorough and showed (at that time at least);

• Their claimed membership figure is not backed up by any evidence and it appears (at best) it is simply people who register with an email on their website.  I tested it - my dog's a member and gets regular emails from them
• As I've said elsewhere on this blog: "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."
• Their named members at that time (June 17th 2014) could be summarised as: 
• 30 "business professionals"
• 28 people who have Small Company directorships; businesses with no declared turnover or employee figures.  These are predominantly consultancies, property companies and service companies; I can't identify any material trading links with rUK and none can be considered major employers
• 6 People who have or have had larger scale business experience: A one-time retail entrepreneur; the founder of a £5.6m turnover domestic Scottish property preservation company (with no declared employee figures); the founder of an £8.7m voice and data solutions company  focused on the domestic Scottish market (with no declared employee figures); a Director of a £6.6m turnover software business that employs 75 staff but has only £443k turnover in the UK (including Scotland) ; the founder of an (exclusively Scottish) property development company with a turnover of £47m and 233 employees, the founder of an (exclusively Scottish) care home group with £22.1m turnover and 879 employees

I don't have the time to run through the latest list of businesses for Yes and frankly profiling them probably misses the broader point.  I am confident from a quick scan that my conclusion when profiling Business for Scotland is likely to still stand - they will not be representative of the Scottish businesses who rely on trade with the rest of the UK (and who are responsible for roughly 1/3 of all employment in Scotland).  For what it's worth I also doubt very much that the businesses arguing for Yes employ anything like as many Scots as those arguing for No - but I'm not going to waste my time proving it this time.  Because: 

Even if the businesses - and I mean the businesses, not the retired or ex-pat business people who may have founded businesses that they no longer own or run - who were arguing for Yes employed as many people in Scotland as those arguing for No that doesn't mean they would "cancel each other out".  

If business A says independence means they will shed Scottish jobs, that isn't cancelled out by business B saying they won't.  The net effect is still for jobs to be lost, for households to suffer and for the economy to be severely damaged. 

So I would argue strongly that it's not about "how many are for and how many are against". The issue is that in absolute terms there are a very large number - representing huge swathes of Scottish employment - who see independence as a genuine threat.

They should be listened to by any voter who is genuinely trying to understand the implications of a Yes vote.

Guest Blog: Bank Bailout Myths

Would you be surprised to hear that the biggest bank bailout of a British bank was Barclays and not RBS? Or that the USA contributed more to the bailouts of British banks than the UK? Finally did you know that banks are not bailed by the country in which they are headquartered?

Given all the newspapers, books and numerous investigations into the financial crisis have come to an opposite conclusion it was very surprising to read these points in “Scotland: Destroying Darling’s Bank Bail-out Myth” by Gordon MacIntyre-Kemp in the Huffington Post.

Before diving into the details it is worth just taking a moment to understand how banks were supported during the crisis. A big part of banking is about changing liquid assets (say a deposit in a bank account which can be withdrawn at any time) into an illiquid asset (say a 20 year mortgage where the bank cannot get the money back earlier).

Banks very rarely have an exactly balancing number of deposits and loans so they borrow and lend to each other on the markets. During the financial crisis these markets froze completely and had to be replaced by the central banks under schemes called Liquidity Support.

The US Federal Reserve’s rules for Liquidity Support loans were they had to be paid back within 90 days and banks had to pay a good rate of interest. The banks also had to supply security in case they were unable to repay. As a result the Fed made $14bn of profit from these loans, which went to US taxpayers [Financial Times, 31 August 2009].

Unfortunately some banks had made bad lending decisions or suffered actually losses. They did not have a liquidity problem, they had a solvency problem. These banks needed to receive bailouts, which have generally not been repaid. Rather than making profits for the taxpayers the bailouts have saddled us with huge national debts.

So in summary: Liquidity Support was profitable and safe to taxpayers; bailouts were risky and generally loss making.

The key claim in the article comes from this graphic (source given as Business for Scotland):

Bail Out at Barclays – an English-registered bank
US Federal Reserve:   £552.32bn
Qatari Government:   £6bn
UK Government:   £0

It is not at all clear what this table is showing. If it is about bailouts then it would be correct to show the UK Government at zero but then the US Federal Reserve should also be zero. If it is about Liquidity Support then the UK Government number should not be zero as Barclay’s participated in a £200bn Bank of England liquidity operation.

The author is trying to present the US Federal Reserve’s profitable short term loan to Barclay’s as a bailout and also conveniently avoids disclosing the reason for it. Barclay’s had just spent £1.75bn buying a chunk of the US bank Lehman Brothers and the Fed was keen to support the rescue.

Barclay’s had in fact wanted to buy all of Lehman Brothers but Alistair Darling blocked the deal on the grounds of risk to the UK [Darling ‘blocked’ Lehman takeover, Financial Times, 30 January 2010].

To present a UK partial rescue of a US bank as the reverse is really quite astonishing.

Another surprising table from the article is this:

UK government and US Fed Contributions to British bank Bail out packages
UK:   £124bn
USA:   £640bn
The source is given as “Business for Scotland”.

The only mention of £124bn I can find is in the National Audit Offices Update on the support schemes 15 December 2010 which stated that the amount of cash borrowed by the government to support the banks had declined from £955bn to £124bn on that date.

As already discussed the US Federal Reserve did not spend a cent on British bank bailouts. A more accurate table would be UK £955bn and USA £nil.

The irony is that the fund flows were actually in the opposite direction to the claim in the article. The UK’s largest bank bailout was RBS, which was triggered by losses on US subprime mortgages and the ABN Amro acquisition. The real flow of funds was from the UK out to the USA to repay these mortgage losses. Subsequently, huge losses emerged from property loans in the Republic of Ireland that once again landed with the UK taxpayer.

It really is a shame that the author’s central proposition is untrue. If banks really were bailed out based on where their operations are then the UK tax payer would have been landed with a much smaller bill.

Guest Author: Andrew Veitch

Viewpoint: Scottish Referendum

I was asked to write 450 words for the UK readers of Direct Commerce Magazine (the Trade Magazine that covers the dot com retail sector). I found the enforced brevity challenging but thought I'd share it here as an antidote to my normal rather stodgy and bloated posts

Viewpoint: Scottish Referendum

On the 18th of September the Scottish people will exercise their right of self-determination, voting either “Yes” to become independent or “No” to remain part of the United Kingdom. The Union has existed for 307 years and this is a one-way ticket: if the Scots vote for Independence there’s no going back.

Of course I have views as a Scottish citizen, but in this publication I’ll constrain myself to offering my perspective as founder and CEO of M8 Group (comprising petplanet.co.uk and greenfingers.com – two Scottish based online retail businesses).

These businesses have thrived serving the UK market from a Scottish base.  We employ 98 people, have featured as a Sunday Times Fast Track 100 company and are currently enjoying another year of record sales and profitability. Would Independence provide us with greater opportunities or present us with new challenges? 

A simple factual observation: if Scotland becomes independent then the remainder of the UK (rUK) becomes an export market; our addressable domestic market shrinks by 90%.  It is of course a corollary that for rUK based retailers the addressable domestic market will shrink by 10%.

Now I have no fear of export markets - I’m a shareholder and NED of Endura, a business that exports more than half of its sales – but export trade (particularly B2C trade) involves complexities and contingent risks that domestic trade is immune from.  Two obvious headline examples are currency and trade barriers (EU membership).

There isn’t room here to cover all the arguments but having researched in depth I can offer a fair summary: there is a risk that over time an Independent Scotland will end up using a different currency than rUK and/or that one of Scotland or rUK may be in the EU and the other out.

There are other issues (e.g. the loss of Royal Mail Universal Service Obligation) but you can guess where this is going.  To protect our businesses against these risks we would relocate our operations to where 90% of our sales go; jobs would move from an independent Scotland to rUK.  We are not unique in this regard; a recent Treasury report estimated that 10% of Scottish jobs dependent on rUK trade would be “in danger” (with Financial Services and Defence sectors particularly affected).

So these downsides for business and the Scottish economy are clear, but I’m an entrepreneur so I seek opportunities.  I was recently able to ask Blair Jenkins (leader of the Yes campaign) to describe the business opportunities that Independence would create. The best he could offer was to downplay the risks. It would appear that – like me - he is unable to see any tangible upside from Independence.

The Wee Blue Book (of Lies)

Everybody's favourite Bath based cybernat,  the "Reverend Stuart Campbell" - erstwhile computer games reviewer and custodian of the separatist cheer-leading site "Wings Over Scotland" - has published a document entitled the "Wee Blue Book: The Facts the Papers Leave Out (Don't vote in the independence referendum until you've read this)". He is embarrassingly pleased with himself.  It feels a little mean to burst his bubble but - well - he deserves a little of his own medicine.

The Wee Blue Book is so riddled with errors, untruths and logical fallacies that it's honestly hard to know where to start a critique.  I think the most glaringly piss-poor section is the one entitled "The Economy": so I'll focus on that one with this post.

Much of his fevered ranting appears predicated on the assumption that a vote for independence will allow us to re-run the 1980's (when the UK experienced it's main economic boost from Oil and Gas).  Going back 30 years to focus on a particular 10 year period (out of 307 years of Union) is a text-book example of selective retrospection (actually I might have just made up that expression - if it's not in a text-book it should be).  After spending two of his three pages of text pointlessly crying over the spilt milk of the 1980's he experiences a fleeting moment of coherence when he states "There's no point crying over spilt milk - that's all in the past". Well quite.

But let's look at the numbers; the "Facts" that the Rev is so keen to clarify.  I include below a table summarising the GERS numbers that he cites as his source (and colour code references in the text to help you find them in the table). I have spent a lot of time with these figures and - trust me - this table is correct. The figures reconcile with statements made by the pro-independence camp (including the ridiculous "we would have been £8bn better off over the last 5 years" claims from the First Minister and Business for Scotland). The numbers here are not in dispute; it's just that the Rev seems to struggle to understand them.  I suspect he's not somebody who knows his way around a spreadsheet.  Let's take this specific statement where he attempts to justify his assertions with data;

• "On average, UK spending is round £1,200 higher per person in Scotland than in the UK as a whole. But on average Scotland sends £1,700 more per person to the UK in taxes. We only get back around 70% of the extra money we send to London" p.13
  

First of all we should be clear that all of these figures allocate a geographic share of oil & gas revenues to Scotland using the Scottish Government's (i.e. most favourable) definition of geographic share. Fair enough.

We have to form a view as to what time period he is taking for his "on average" statement.  The GERS figures go back 5 years so it seems reasonable to assume he is talking about 5 year averages - certainly to go back any further is hardly going to give us a representative view of the "run-rate" that we're taking into an independent future.  Just in case; I've added an extra 2 years to the data so that we can see a slightly longer-term perspective.

Sure enough on this basis it's true that on average Scottish spending is £1,200 higher per person than the UK.  Where he veers away from the "Facts" is when he asserts that "on average" we send £1,700 more per person to the UK in taxes.  The actual figure is £1,200 (7 or 5 year average) and more recently £1,100 (4 year average).  

How could he be so far out?  I've been around these figures long enough to know where the £1,700 comes from because it's widely quoted. In the previously reported GERS figures (published 03/13) the Scottish Tax contribution for the then most recent year (2011-12) was £1,688 higher than the UK per capita average.  As is the way with these things, when the most recent numbers were published (03/14) corrections were made to prior years and hence that figure is now more accurately reported as £1,515 - and the most recent year now available (2012-13) actually shows a figure of £797.  It probably shouldn't surprise anybody that the Yes camp continue to quote the £1,700 figure when the most recent figure is actually £800.

So the £1,700 figure has subsequently been corrected (by the Scottish Government) to £1,500 and is for the year before last. The equivalent figure for last year is actually £800. The figure Stu uses is out of date and certainly isn't is any sort of "average".

Now because I'm fussy like this: we should really compare Scottish figures to rUK figures (ie. excluding Scotland from the UK figures so we are comparing "us" versus "them").  On this basis we are remarkable well balanced (remember these analyses all assume we get to "keep our Oil" and not share the tax revenues with the rest of the Union.). Over the last 5 or 7 years we can say that - on average - we generate £1,300 higher tax receipts per person and receive £1,300 higher public spending per person. In fact if you look at the most recent 4 years whilst we still receive £1,300 per head higher expenditure we actually contributed only £1,100 per head higher taxes (or - to use the Rev's phraseology - we get back 15% more than we send to London). 

So not to put too fine a point on it: his statement is bollocks.

Now we've established the correct base figures we can pretty quickly tear through his other attempts to use data;

• "Scotland's deficit is in fact considerably smaller than the UK's" p.14

This statement is simply wrong.  It was £260 per person smaller in 2011-12 but £510 higher in 2012-13 and averages at the same level over the last 7 years, £160 higher over the last 4.

• "Scotland can't afford to keep paying ten's of billions of pounds over and above its fair share" p.12 
• "Scotland subsidises the UK by billions of pounds every year" p.10

As is clear from these numbers that's not whats happening. They are quite simply ludicrous statements.

• "The extra spending isn't a generous gift from the UK - It's borrowing, taken out by the UK government in Scotland's name" p.13

Errr... yes that's right Stu; when you run a deficit the money to fund it comes from debt. That would be true for an independent Scotland as well.

There is plenty more Bunkum in the Economics chapter (and indeed every other chapter) but I'll leave those to another day.  Frankly anybody who reads this post and still trusts anything the Rev writes needs to have a wee word with themselves - he shows no integrity and lacks any credibility.

***

If you need more convincing then I offer the following antidotes to a couple of the Rev's other poisonous chapters.

• EU - he's way out on the nature of the negotiation required and the caveats that Graham Avery actually made. For a more thorough account of EU issues try this > Independent Scotland and the EU
• Currency - he completely misses the point that any currency solution (including the already-ruled-out Currency Union) is a least-worst option, is a major downside of independence.  For detail on currency issues try this > Currency Union & Economic Asymmetry
• Principles & Politics - his logic is all over the place here, arguments are tautological (we're a country, countries are independent therefore we should be independent) and he appears to fail to understand the basic principles of representative democracy. This was one of the first posts I ever wrote > We should Decide Who Governs Us
• Oil - his section on oil is very short but - of course - mentions the Oil Fund which I've already covered here > Oil & Gas Part II: The Oil Fund.  He doesn't mention that the Scottish Government's *worst case* projection for Oil and Gas revenue turned out to be around 25% over-optimistic for 2013-14.  
• Other
• He mentions the McCrone report (of course he does): I've looked at that > The McCrone Report
• He appears to have ignored the massive issue of jobs under threat due to disruption of trade with rUK. I cover those issues in detail here > Independence & Scotland's Trade with rUK

£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.

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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.

Have we paid £8bn more in than we've had out?

When I initially made this post I wrote: "No.  The First Minister lied."  Since then I have received two helpful clarifications (see comments at the foot of this post) and am happy to apologise and retract the accusation of lying.

I think however that you'll agree - if you wade through the following logic - that the First Minister's statement was intentionally misleading.  While appearing to say we paid £8bn more to the UK than we got back over the last five years he was effectively suggesting that over the last five years Scotland should have been running an even higher deficit than we were to the tune of £8bn. Remarkable.

[A briefer summary o this logic can be found here > £8.3bn better off?]

To elaborate:  there was a statement made by Alex Salmond in the STV debate that bugged me; I managed to source the exact wording and Mr Salmond is quoted as saying

• "In each one of the last 33 years, Scotland has paid more in tax per person than the average of the UK. Over the last five years we have [paid] 8 billion pounds more into the Treasury than we have had out of it, in relative terms. That is 1,500 pounds a head for every man, woman and child in Scotland."

Now I think I known the GERS numbers pretty well by now and I simply couldn't see how on earth that statement could be justified.

Taking first of all what most people watching will have thought he was referring to: in fact

• In the last 5 years public expenditure in Scotland (what we've "had out of" the Treasury) exceeded our tax receipts (What we have "put in" to the Treasury) by £51.3bn¹ .. or over £9,000² a head for every man woman and child in Scotland.

These figures of course assume we keep "our" geographic share of oil using the Scottish Government's most favourable definition of geographic share.  We run a deficit.  The UK runs a deficit. Of course we get more back from the Treasury than we put in.

Of course the subtlety in our First Minster's statement comes in the use of the phrase "in relative terms".  The BBC suggested this explanation:

• "Alex Salmond said Scotland had contributed £8bn to UK finances. According to Scottish government figures, Scotland has contributed more to the Treasury per head than the UK average, if you assume a geographic share of North Sea revenues. In 2011-12, it was £1,500 more per head (the figure Mr Salmond quoted) and, if you multiply that by the Scottish population, you come to £8bn"

With apologies to the BBC: whilst that explanation fits the numbers unfortunately it bears no relation to the First Minister's words.

• The figure quoted is for 2011-12 - not the last five years
• The figure represents tax contribution (what's "put in") and takes no account of the public expenditure received (what's "taken out") - the First Minister said the figure represents an amount "more into the Treasury than we have had out of it"

So I turned to the raw data.  I chose to go back 7 years (there is normally a reason why a figure is quoted over a particular time period so I wanted to check the sensitivity to longer as well as shorter periods). As well as comparing Scotland to UK total (as GERS and IFS do) I compare to rUK (the rest of the UK excluding Scotland) which would seem to me a more helfpul comparison.  I show the full table of data below for those who (like me) prefer to see an audit-trail of the figures.

Before I received the steers as to how the figure was arrived at I applied the implied BBC methodology (grossing per capita differences to full year figures by multiplying by the Scottish Population).

To correctly describe the figures the BBC use to explain the First Minister's statement (highlighted in yellow in data table);

• In 2011-12 (the year before last): assuming a full geographic share of oil (and using the Scottish Government's definition of geographic share) Scots contributed £1,500 more per capita to the treasury than the the UK average (before taking account of how much more we received back in the form of public expenditure).  In absolute terms that is equivalent to £8bn

To fill in the figures for the statement our First Minister made as I would interpret them (highlighted in light green)

• "Over the last five years we have [paid] £1.4bn pounds more into the Treasury than we have had out of it, in relative terms. That is £270* a head for every man, woman and child in Scotland."

* Using 5 year average and multiplying by 5

To make what I might humbly suggest is a more fairly representative statement (figures in green)

• In recent years Scotland gets more back from the Treasury than we put in, even applying the most favourable assumptions around keeping "our" geographic share of oil revenue.
• If you want to be precise in the numbers; looking at this on an average annual per capita basis relative to rUK;
• Over the last 7 years on average we've paid £2(!) pa. more in than we've had out
• Over the last 5 years on average we've paid £54 pa. more in than we've had out
• Over the last 4 years on average we've received £156 pa. more out than we've put in
• Last year we received  £512 more out than we put in to the Treasury

So we can see why the 5 year time period was chosen; take a longer or shorter time period and the picture changes dramatically.  I have neither the time nor the inclination to go back even further than 7 years - we should really be discussing the future after all.

But hold on; we still haven't explained the £8bn figure.  It was at this point that I initially concluded our First Minister and his script writers must have simply lied - I accept now that I was wrong and am happy to put the record straight.  I'm indebted to Ivan McKee of Business for Scotland (and another Anonymous contributor) for giving me a steer on this.

The figure can be arrived at if you assume over the 5 year time period Scotland should have received the same share of expenditure as its share of tax contribution.  Sure enough you can get to the £8bn figure on that basis (highlighted in blue).  There is a massive and - once you've thought it through - fairly obvious problem with this approach; it would mean our share of the deficit would become the same as our share of tax contribution - we would be disproportionately responsible for the deficit and the debt associated with it.

Let me offer a narrative interpretation of the figures (figures not already quoted above are highlighted in the table in orange.)

Assuming Scotland keep "our" oil money on a geographic share basis (and taking the Scottish Government's most favourable definition of geographic share);

• The higher levels of public spending we currently receive mean we run a very similar per capita deficit to the rest of the UK (although in recent years Scotland has been running a significantly higher per capita deficit)
• Over the last 7 years £2(!) per capita per annum lower
• Over the last 5 years £54 per capita per annum lower
• Over the last 4 years £156 per capita per annum higher
• Last year £512 per capita higher
• If our share of expenditure was the same as our share of tax contribution (the First Minister's hypothesised case) we would run a higher deficit (as our share of deficit would become the same as our share of tax contribution).  
• Over the last 5 years Scotland's share of deficit generated (8.2%) is very similar to our population share (8.4%); over the last 7 years its identical (8.4%) and over the last 4 years its higher (8.9%)
• Under the hypothesised case we would have spent an extra £8.3bn; of course that means our deficit would also have been £8.3bn greater
• Under the hypothesised case Scotland's 8.4% of the UK population would have been responsible for 9.5% of the deficit (i.e. debt requirement) - that's an additional £1,332 of debt for every man woman and child in Scotland

So what can we conclude from all of this number crunching?  Funnily enough the same as when I looked at these figures nearly 3 months ago here > Oil & Gas Part I: For Richer for Poorer;

• Scotland receives back in higher expenditure about the same amount as we contribute in higher tax if you assume we get to keep "our" oil and gas
• On this basis Scotland historically runs a similar deficit/capita as the rest of the UK (although last year it was £470/capita higher)
• A corollary of this would be that we are (at least over the period I've analysed here) responsible for our per capita share of debt even if we are allowed to retrospectively  keep "our" historical oil & gas revenues

To account for the First Minister's statement we can add;

• If we decided that Scotland should have produced a higher per capita deficit than rUK because we contributed a higher share of tax (assuming we keep "our" oil) then we would indeed  have needed to receive an extra c.£8bn over the last five years ... and our deficit (and hence implicit share of debt) would be £1,332 per capita higher than our per capita share

1. 5 year average deficit of £10.3bn x 5
2. 5 year average per capita deficit of £1,949 x 5

Currency Union and Economic Asymmetry

When discussing the Currency options facing an independent Scotland an important point is often lost in the fog of debate: the options being discussed are alternative solutions to a problem - a problem caused by independence. By focusing the debate on the "best option" we risk missing the point that we are in fact discussing what is the "least worst" option.

To understand the pros & cons of alternative currency options we need to understand the nature of the problem that independence causes.  There are many learned articles on the subject and I strongly suggest you visit my "Who can We Trust" section for background reading on the topic. What follows is my best efforts summary.

Let's start with the Scottish Government's Fiscal Commission Working Group (FCWG) Macroeconomic Framework report. Put simply:

1. The  report recommends a formal Currency Union (CU) as the best (least worst) option. Each of the main rUK political parties have ruled this out which some argue is simply political posturing - but let's not get distracted by that argument here
2. The FCWG also highlight the obvious problem with this option: "a monetary union means that there will be one interest rate and exchange rate for the entire economic union. This requires broad alignment of business cycles (close enough to enable fiscal policy to smooth any divergences) and similar economic structures so that changes to the common monetary policy have similar effects across the monetary union."
3. The FCWG also address the "informal" Currency Option and its downsides: "As an aside, there is the option for Scotland to adopt Sterling through an informal process of ‘sterlingisation’. While this option would retain some of the benefits of a formal monetary union there would also be some additional drawbacks. In this instance, the Scottish Government would have no input into governance of the monetary framework and only limited ability to provide liquidity to the financial sector - this would depend on the resources and reserves of the country. The amount of currency available would depend almost entirely on the strength of the Scottish Balance of Payments position"

To understand the implications of these three points we need to get our heads around the nature of the problem that independence causes; what is changed by independence?

A. The Scottish Economy is about about a 10th the size of the rUK.  

• This is not saying it's "too small"; it's simply saying that the relative scale of the two economies potentially involved in this CU are hugely different
• This matters because the central bank is the ultimate provider of liquidity (the "lender of last resort").  The effect of a formal Currency Union would be for the rUK to effectively provide "lender of last resort" capacity to an Independent Scotland ... but the relative scale is such that an iScotland could not provide such support to the rUK.  This particular asymmetry is one of the main reasons why all the major rUK political parties have ruled out a formal CU. It's an understandable position.
• This point is highly relevant given the scale of the financial services and banking sector in Scotland.  As highlighted recently by the ratings agency Standard & Poor's: "S&P said it counted the existence of a Scottish central bank, the Scottish government's attitude towards helping struggling banks, changes to financial regulation and independent Scotland's currency among crucial factors that could impact its ratings on the country's banks.  It added that its ratings on British banks currently assumed that the UK government would provide extraordinary support to systemically important banks under stress. 'The willingness and ability of the Scottish government to support its banking sector appears challenging,' S&P said, highlighting that the Scottish banking system's assets are currently a high 1,254 percent of Scotland's GDP. This compares with 880 percent for Iceland in 2007, just before its banking system collapsed, the ratings agency said."  This is why many expect to see a large-scale movement of banking & financial services firms out of an Independent Scotland to the rUK (where this government support can be guaranteed).  As an side this also means a significant chunk of corporation tax that is currently attributed to Scotland's GDP would likely move - but that is for another debate on another day.
• This relative scale point also explains why any Currency Union would in fact be "de-facto Sterlingisation" and incur the downsides highlighted by the FCWG under point 3. above. This point is argued clearly in the NIESR paper Monetary Union & Fiscal Constraints: "we show that a banking union between two countries of such different size may not be sustainable as there is no incentive to participate. Allowing for cross-border banking and the usual Lender of Last Resort arrangements for foreign banks in the UK, the next best response may be to avoid any special arrangements which could invite the perception of joint bail-out responsibility.  Following this argument, a monetary union between two sovereign states of such different size may not warrant fiscal constraints or a banking union. The currency arrangement for an independent Scotland would resemble an informal currency union or ‘dollarization’ using sterling"
• This relative scale point is highly relevant to those citing the Euro-zone to argue that Sterling Currency Union could work.  Putting aside the question as to whether or not the Euro-zone has in fact worked - and at the risk of stating the obvious - there is no one country that accounts for 90% of the Euro-zone economy.

B. Independence *Creates* Economic Divergence

• Many of the arguments for an Independent Scotland hinge around us having the ability to take a divergent approach from rUK with respect to public spending, fiscal policies and deficit management. This is starkly illustrated by recent statements from John Swinney that in the first 3 years of independence an independent Scotland would actually be increasing borrowing by billions (£2.4bn in 2018-19 alone).  That is hardly consistent with maintaining the "similar economic structures" the FCWG describe under point 2. above.
• Critically, separating Scotland from rUK creates a new asymmetry relating to the two economies' exposures to oil & gas price fluctuations.  I'll explain this carefully as it is an important but apparently extremely poorly understood point
• Under independence Scotland would become a net exporter of oil & gas but rUK would of course become a net importer
• Oil & Gas would represent about 20% of Scotland's GDP (in the short to medium term). When oil & gas prices rise an independent Scotland's economy would benefit significantly but the rUK's would not; conversely a fall in Oil & Gas prices would materially damage an iScotland's economy but be beneficial to the rUK's. This is a new economic asymmetry introduced by independence
• This means that there is an increased likelihood of an independent Scotland's economy having different monetary policy requirements than rUK (e.g. Scotland my need interest rate cuts to drive its economy at the same time as rUK requires interest rate rises to slow its down)
• As an aside: I find it strange that the FCWG point to historical evidence of the similarity of the Scottish and rUK economies to provide support for the CU option without apparently addressing these points.  They do recognise the differential impact of changing oil prices in the context of "Fiscal Framework Design options" (p.165) but don't appear to mention it in the context of the CU issue. Maybe I missed it.

Combining points A and B above increase the "de facto sterlingisation" argument. If (for example) the interest rate requirements of an independent Scotland and rUK are different but there is only one interest rate to set, clearly it will be set for the benefit of the 90% not the 10%.


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I can hear the screams already: "Who are you to say the Fiscal Commission Working Group - with its two Nobel laureates - is wrong?"  Well: what I'm saying is they addressed their brief by identifying what they considered to be Scotland's best currency option under independence.  All I'm highlighting is that this can also be described the "least worst" currency option and it has many downsides compared to the current situation - it's a massive downside of independence.

OK that's not actually *all* I'm saying.  I'm also suggesting that - for the reasons above - Currency Union with rUK is not the best long-term solution (not least because it has understandably been ruled out by the rUK political parties). Others who are far more qualified than me share this view, for example

• The NIESR in their Scotland's Currency Options paper state"In our view, the Treasury and FCWG analyses place too much emphasis on the marginal gains that currency stability may have on trade flows and not enough on avoiding a financial collapse, which cause a far greater loss of welfare. We conclude that a sound case can be made for an independent Scotland having its own currency because it minimises the risk of such negative outcomes"
• Blackrock in their Investment & Independence: The Scottish Referendum report state"A currency union with rUK looks infeasible, and would bring risks to both countries. Entrance into the eurozone does not appear to be a near-term option. The best of the (few) choices: Scotland launches its own currency, perhaps linked to the currencies of its main trading partners (sterling would feature prominently) and the price of oil"
• In Today's Times (which annoyingly I've just seen after writing this) Sir Martin Jacomb and Sir Andrew Large conclude: "Thirdly, a new Scottish currency could float. This may compromise Scottish independence least and be Mr Salmond’s best option but he doesn’t want it. Given the enormous risks it’s not hard to see why. Speculators and lenders to Scotland would be looking for any weakness."

Maybe the SNP realise that launching our own currency or joining the Euro are the only workable long-term solutions ... but they choose not to share that with the Scottish electorate because they know that would be a vote loser?

Surely they wouldn't be that cynical?

Michelle Thomson: A Response

I was quoted in a recent article in the Sunday Post (as was my business partner Jim,  the CEO of Endura).  You can read the full article here > Uncertainty Principle - Convincing Captains of Industry is Vital.

As is the way with these things the journalist seeks a counter view.  There aren't many who could reasonably disagree with our position so the usual suspect emerges to offer a 'balancing' view.  Those who follow the debate will know what's coming; yes it's our old friends Business for Scotland.

This is the "balancing view" response that was offered

• But Michelle Thomson, Managing Director of Yes group Business for Scotland, pointed to a survey by accountancy firm KPMG which showed four-fifths of Scottish businesses had no plans to consider whether they should move or not if there is a Yes vote.  She added: “It’s not sensible for businesses to try to scare their staff to get them to vote one way or another; after independence when the scare stories are shown to be just scare stories the bond of trust between employer and staff members will have to be rebuilt.”

[counts to ten] ... OK, let's take this step by step

Michelle Thomson, Managing Director of Yes group Business for Scotland

If you've missed it (how could you have?) I have looked closely at this group and they appear to be an SNP construct (founding director is an ex-SNP Minister for Enterprise, economics "expert" is a failed SNP councillor candidate) and they do not have any "members" who employ significant numbers involved in material trade with rUK (see Who are Business for Scotland).  As for Michelle herself: aside from Business for Scotland Ltd, Michelle has one active directorship: Your Property Shop Ltd (SC451292) - founded 05/13 and yet to file any accounts. She is also a Director of Edinburgh Global Property Investments ltd (SC342421) which ceased trading in 2011 and was dissolved in 2013; the balance sheet suggests this business never traded materially. She is also a Director of Michelle R Thomson Consulting ltd (SC377063) which is non-trading. By way of contrast: the companies that Jim and I have built from scratch are succesfull medium sized enterprises employing about 300 people in West Lothian alone.

pointed to a survey by accountancy firm KPMG which showed four-fifths of Scottish businesses had no plans to consider whether they should move or not if there is a Yes vote

I'm guessing she is taking this from a Scotsman article (as KPMG have not yet released their 2014 survey and the 2013 one does not mention that statistic : Scotland Business Instinct Survey).  The specific quote she is relying on appears to be: "Almost 84 per cent of Scottish firms that were questioned in the latest KPMG Business Instincts Survey said they had not yet considered a continuity plan for how to deal with changes if there is a Yes vote on September 18."  Let's have a wee think about this shall we?  This is not saying those businesses are saying they won't be negatively affected, simply that they have "not yet considered a continuity plan". This may be because they are a business focused only on the Scottish market (like the vast majority of Michelle's members), because they don't believe a Yes vote will happen or because they simply didn't feel there was enough information available at that point (presumably May given the press release was June). Even if we assume that the statement can be taken at face value:  20% of businesses feeling they have to make contingency plans is a very significant issue and (I would argue) likely to be weighted towards the larger employers.  A quick glance at the testimonials collated by Working for Scotland illustrates this point - there are clearly 10's of thousands of jobs impacted by those statements.

"It’s not sensible for businesses to try to scare their staff to get them to vote one way or another; after independence when the scare stories are shown to be just scare stories the bond of trust between employer and staff members will have to be rebuilt.”

This statement  is quite breathtaking in both its arrogance and ignorance. We can probably agree that Michelle's CV doesn't qualify her to comment so grandly on what is "sensible" for businesses to do (to my knowledge she has no employees of her own and certainly has no experience of building a material business).  To accuse us of trying to scare our staff is deeply insulting (she uses the word "scare" twice) and implying we are breaking the "bond of trust" between us and our employees is outrageous.  She clearly has no relevant experience in this regard: if she did she might understand that in fact that "bond of trust" is what we are reinforcing by sharing our plans with our employees (despite the fact that we know we become exposed to the sort of ill-informed comments that she indulges in).


I recognise this has not been my most finely crafted blog post but I'm angry: forgive me.