Sunday, 30 November 2014

BBC Bias and the Independence Referendum

“The only bit of the media that disappointed me during the referendum campaign was the BBC. There is a difference between being a public service broadcaster and a state broadcaster, and I don’t think the people at the top of the BBC understand the difference. That is a tragedy.”
- Alex Salmond (Daily Record, 17/11/2014)

"The BBC were pretty disgusting throughout all of it. You only have to look at the time given to the candidates, you only have to look at the fact that in the majority of cases the last word was given to a No campaigner. The BBC backed that."

Accusations of bias against the BBC were relentless during the referendum campaign and it appears the Yes camp are determined to keep that narrative running.  So I thought I'd look into it.

Long before the Independence Referendum campaign started it was clear that the Scottish people's respect and admiration for the BBC meant that a clear majority wanted to keep this UK institution;

This presented an obvious challenge to the Yes campaign. There were similar issues with the Royal Family and the Pound.  The Monarchy question was finessed by throwing a net over the Republicans in the Yes camp and saying "Scotland will be a constitutional monarchy for as long as the people of Scotland wish us to be so".  The currency question was to prove trickier; the best they could come up with was to adopt the (legally incorrect and ultimately unsuccessful) position of "it’s our pound and we’re keeping it". But what to do about the BBC?

The White Paper made assurances that viewers would still  be able to access EastEnders, Dr Who, and Strictly Come Dancing - but there were bigger problems;
  • As Severin Carrell said in the Guardian: "The national broadcaster is identified by critics of independence as a great unifier for the UK's nations and regions, an institution that helps bind Britain's citizens into a common family."
  • More pragmatically it could be argued that we could rely on the BBC to carry out the sort of thorough, impartial journalistic scrutiny that might expose any gaps in the SNP's economic case.

If you think that over-states the case in favour of the BBC's journalistic integrity, here are the words used by Alex Salmond himself in a Herald interview the week before the vote
  • “If the BBC were covering, in my estimation, any referendum, in any democracy, anywhere in the world, they would cover it impeccably, in a balanced fashion.”
Isn't that interesting?  He trusts the BBC to be impeccably balanced in any circumstances other than the one where he himself has the most extreme reason to be biased.

So the Yes campaign adopted a very straightforward strategy: consistently accuse the BBC of failing to be impartial and impugn the integrity of any journalist who asks difficult questions or highlights weaknesses in their arguments.  Cry foul frequently and loudly enough and you’re half way there. Well 45% of the way there as it turns out but you get my point.

Now none of this is to say that the BBC may not have been actually biased (we're coming to that); but it is to argue that the Yes campaign were - how to put this? - predisposed to find reasons to accuse the BBC of bias.

Of course this approach wasn't restricted to the BBC; take this interview with Sky News after the second TV debate. The interviewer is doing the job of a good journalist, questioning Salmond reasonably and firmly on his currency assertions (which I think most people agree deserved to be challenged). He reacts with spectacular petulance and ill-grace, resorting almost immediately to “you can’t play at being Alastair Darling” then - clearly stunned by the impertinence of an interviewer still pressing him for an answer -  “you cannot now impersonate the No campaign” before eventually resorting to condescension: “get with the debate man”.  It's only 3 minutes long - worth watching if you missed it at the time.

Arguing that any interviewer pressing him was tantamount to them working for Better Together - if you think about it an outrageously insulting thing to say to a journalist - became a standard tactic of Salmond's.

Which brings us to the now infamous press conference spat with the BBC's political editor Nick Robinson of the BBC. I promise this is the last anecdotal example before we look at more rigorous attempts to decide if bias existed - but the profile of this incident was so high it can't be ignored.

If you're curious these YouTube clips show the actual "evidence"

1. The actual 23 second news report that went

2. The full 7 minute 45 second exchange

It’s a little lengthy but I offer this summary.  Nick Robinson asked two clearly distinct questions (“two if I may”).  The first was a specific question about RBS moving their headquarters out of Scotland, the second: “And on a more general point; John Lewis’ boss says prices could go up, Standard Life’s boss says money would move out of Scotland, BP’s boss says oil will run out. Why should a Scottish Voter believe you, a politician, against men who are responsible for billions of pounds of profits?”

In Salmond's response he airily dismisses the second question:  “I think the people of Scotland have moved beyond these warnings and scaremongerings”, suggests some of the warnings were recycled from months ago (so this was in effect old news) before then addressing at length the specifics of the first (RBS relocation) question.

He also throws in a few digs at the BBC which - rather unusually for a press conference - are greeted with ripples of applause.  This was explained by the Huffington post: "Alex Salmond has been accused of "surrounding himself with Yes men" after hosting an "international press conference" where audience members clapped him as he responded to questions [...] The Yes Scotland pro-independence campaign admitted that "a small number" of supporters had been invited along with around 200 journalists"

Nick Robinson presses him to answer the second question but he simply repeats his answer to the first question and then (maybe not unreasonably) accuses Nick Robinson of heckling him.

The 23 second broadcast version was edited to only show the last sentence of the second question “Why should a Scottish Voter believe you, a politician, against men who are responsible for billions of pounds of profits?” and then Robinson’s voice-over “he didn’t answer, but he did attack the reporting of those in what he called the metropolitan media”

Now the question broadcast wasn't the best question a journalist has ever asked - it was really a rhetorical question posed to make a point rather than elicit a response - but the viewer can surely judge that for themselves. I've watched this several times and I think it's true (albeit hardly surprising) that Salmond didn't really attempt to answer the question broadcast.

Whilst I doubt there will be any Pulitzer Prize nominations heading Nick Robinson's way for this particular piece of reportage, surely only the most hyper-sensitive politician could take serious offense at this 23 second news clip.  Or a politician hell-bent on calling foul against the BBC at every opportunity.

You know the rest of course – extreme offence was taken, the outrage and grievance machine was set into motion.  Within a week protests were held outside the BBC with a massive printed banner calling for Nick Robinson to be sacked.

As reported in the Guardian , Alex Salmond backed the protests against Nick Robinson saying the BBC had been “unfair and unreasonable” in the way it edited the exchange.  The Guardian went on to report: “BBC sources disclosed that some political reporters have been repeatedly subjected to verbal and online abuse [...] Paul Holleran, the NUJ's Scottish regional organiser, said there had been an escalating series of incidents in which journalists in Edinburgh and Aberdeen had been abused [...] Alistair Carmichael, the Scottish secretary [ NUJ], urged Salmond to call the protests off. "These are serious, serious tactics to be adopted and really, the person who could stop it all and pull the heat out of this is Alex Salmond. But time after time, despite every invitation to do so, he just ignores it".  You might think Salmond's reaction was more likely to be "job done"; of course he didn't try to stop it.

As reported by the Telegraph he escalated the situation by subsequently saying to Allegra Stratton (political editor of Newsnight):  “You should have taken Alistair Darling’s place. You are doing much better than he did”.  You might not be surprised to read that this was in response to Ms Stratton pressing him on the currency question. The Yes campaign were nothing if not consistent in their tactics.

So let's step back a moment – Thousands of hours of news broadcasting, journalists working to tight deadlines and reporters and editors required to distill down lengthy exchanges into 30 second snippets (whilst providing a narrative commentary) and the 23 second news report by Nick Robinson is enough to create this level of backlash?  Is this really the case for the prosecution?

In the Herald interview during the days leading up to the referendum Salmond was asked “Is the BBC's referendum coverage biased?” his response was unambiguous:

  • "Yes, absolutely," he says. "Of course it is. The problem with Nick … I mean, don't get me wrong, I like these folk, but they don't realise they're biased. It's the unconscious bias which is the most extraordinary thing of all.

Take note: he’s not complaining about a specific incident or a specific journalist; he’s saying that “absolutely”, “of course” the BBC’s referendum coverage was biased.  In the quote at the beginning of this piece he accuses the BBC of behaving like a “state broadcaster”.  For the faithful followers of the Independence cause this is a self-evident truth, an article of faith; to question whether or not it was actually the case is considered heretical .  Trust me I know this.

I’m sure I could find plenty of examples where I could – were I to adopt the mind-set of a petty grievance-hunter – pick issues with the BBC’s reporting and argue that there were occasions where the No campaign was unfairly represented.  We could look at the airtime given to Business for Scotland; look how weakly presented the economic arguments were in Robert Peston's documentary; question the failure to pick up on the £8.3bn lie Salmond repeated in both live TV debates; challenge the failure to follow-up on the obfuscation and susbsequent back-tracking on the one-off cost of independence.  But I won’t because I recognise that there will always be occasions where one side feels hard done by; that individual journalists are human beings not automata and that a degree of journalistic judgement is applied in the reporting of any political story.  There are 2,000 BBC news journalists; they will have differing opinions and will inevitably apply some of their own spin to stories.  The question is not whether there is ever any bias - there will surely inevitably be some from time-to-time - the question is whether it is systematically in one direction or another.

So here we turn to assertions like Ken Stott's "you only have to look at the fact that in the majority of cases the last word was given to a No campaigner" which - if true - would suggest there was indeed systematic bias.  It would be interesting to know how Stott justifies asserting this as fact - there is no further source given in the Scotsman piece (that itself cites a Radio Times interview).

Allegations like this are certainly extraordinary given the BBC is a Trust governed public service broadcaster whose impartiality is under extremely close scrutiny.  There are clearly defined BBC Editorial Guidelines around impartiality (“Impartiality lies at the heart of public service and is the core of the BBC's commitment to its audiences”), relating to Elections and Referendums (“Special considerations apply during the campaigns for elections and referendums and, in some cases, the period running up to campaigns will involve greater sensitivity with regard to due impartiality in all output genres") and Broadcasting During Elections ("We should make, and be able to defend, our editorial decisions on the basis that they are reasonable and carefully reached, with due impartiality [...] news judgements at election time are made within a framework of democratic debate which ensures that due weight is given to hearing the views and examining and challenging the policies of all parties")

I appeared on a few BBC Shows (Radio Scotland’s Morning Call and a couple of John Beattie shows, Radio 4’s "Voter’s Voice" and BBC Breakfast News) and they were scrupulously balanced with presenters clearly trying to balance each side’s airtime and alternating who got the last word.

But of course this might be confirmation bias - I'm seeing the balance I hope to see and if the BBC's accusers are right I'm unlikely to think differently.  So where's the evidence to back the claims against the BBC?

In a strongly worded online piece published in January 2014 Derek Bateman stated: "The effect, as proved by the research, is the same…the public, a majority of whom have lost trust in the BBC, can now accurately say that the BBC is biased against independence". Derek describes himself in the article as a "recent long-term employee"; the reader can judge whether there may be some bitterness behind his post.  He admits "I can’t find a copy of the actual report " but is confident enough to say the case is "proved" and those who have lost trust in the BBC can "accurately say" the BBC is biased against independence.  If he was still an employee of the BBC one wonders if he would make such bold assertions without having read report the in question.

The report may not have been available when he wrote the piece but it certainly is now: there were two main phases to the work (Bateman was writing after the first) and in my search for analytical support to the question of bias in the BBC's reporting all the examples I found (eg. Open Democracy, MediaLens, The Conversation) lead point back to this same study.

The work was sponsored by the Yes campaigning website  and carried out at the Creative Futures Institute of the University of the West of Scotland by Dr John Roberston (who according to the Guardian "favours independence").  It would seem prudent be wary of the risk of some confirmation bias here.

The first Report covered BBC & ITV coverage from Sep 20132 to Sep 2013 from which the table below
Let's look at Ken Stott's assertion that "in the majority of cases the last word was given to a No campaigner".  Looking at "anti-pro" vs "pro-anti" order for BBC output (BBC1 + Reporting Scotland) the analysis shows that pro (pro Independence) was the second argument 79 times versus 43.  The narrative provided by the report suggests "this tends to normalise the No/anti-independence position and put the onus of the Yes/pro-independence position to justify itself". Well forgive me but that's as clear a confirmation bias spin as you can imagine - as Mr Stott highlights having the last word is generally seen as an advantage in theses situations; the data shows that Yes had the last word more often.  I think we can safely assume that had the data been reversed we would have seen that alternative argument deployed.

But what about finishing with "Anti-evidence unchallenged" out-weighing finishing with "pro-evidence unchallenged" by a ratio of 4;1 (40 vs 10)?  Well the definition used is "finishing a broadcast item with a clearly [pro or anti-] piece of evidence unchallenged.  The word "clearly" in there may give us a clue as to the subjectivity that has been applied. There are 192 BBC reports analysed and only 50 are attributed as "clearly" finishing with one side's evidence unchallenged.  I wonder if a different subjective assessment might decide some of those unclassified may finished with pro evidence unchallenged?

The rest of the analysis frankly gets a bit silly as it's predicated on the assumption that there is an equal amount of anti vs pro news or anti vs pro evidence to report.  It doesn't require the greatest intellectual leap to consider that it's just possible there may have objectively been more anti evidence emerging.

For example: the commentary states "Anti-independence statements were heavily concentrated on economic affairs such as alleged increased unemployment or closures after independence"; but if that was the news that was coming out - what the vast majority of economic experts and businesses were saying - it's hardly evidence of bias to report the fact.

The report carries on in the same vein :"there was clear tendency to use anti-independence over pro-independence evidence."; now I was pretty buried in the data and - to be frank - when it came to evidence there was simply a lot more anti-independence evidence than there was pro.  The job of the Yes campaign was to find or generate pro economic evidence- it was hardly the BBC's fault that the Yes campaign couldn't produce evidence in favour of their economic assertions.

Maybe it's easier to look at the current news to illustrate this point; the falling oil price is clearly anti the economic case for independence - to suggest that shouldn't be reported unless there is some balancing pro economic news is patently ludicrous.  This analysis would, however, suggest that to simply report this news would be evidecne of vias.

Similar argument apply to the "personalisation" judgements which are described in the text as "a heavy personalisation of the debate around the character of Alex Salmond".  That is surely a function of how the campaigns were run and/or the nature of the personalities involved: who is being put forward, what speeches and photo-calls are being arranged, how are they behaving (see above).  One could equally argue that this shows Alex Salmond was getting an unfair share of the limelight (or maybe the researchers arew implicitly suggesting that his personality was an electoral liability?).

Of course to really test the research one would need to see the raw data (which reports and incidents were score how). As Newsnet Scotland reported, when the BBC formally asked Dr Robertson "we wonder if you might be willing to share that with us?" the good Doctor's response was clear: "No."  Why on earth would you be unwilling  to share your back-up data if the evidence for bias was so unequivocal?

Enough on the first report - maybe if Derek Bateman had been able to read it he wouldn't have suggested his assertions were "proved" by the research - may be if Ken Stott had studied the data he wouldn't assert that in the majority of cases "the last word was given to a No campaigner".  The research certainly doesn't back up either of these claims.

The second report covered Good Morning Scotland during April 2014 from which the table below

The commentary states: "it must be pointed out that no imbalance in the crude number of statements favourable to the Yes campaign and of those favourable to the Better Together (BT) campaign is evident in these results. Indeed we get a ratio favouring the Yes campaign 7:6".  I love the phrase "must be pointed out" - the author is so disappointed at having to make that observation.

But of cause the report's author is undaunted, carrying on to draw the conclusion that the broadcasts were "unfair to the Yes campaign and favourable to the Better Together campaign".

Of course the argumentation for reaching that conclusion is built on the same obviously flawed assumption that to be fair, coverage must have equal positive and negative statements for each side, equal interruptions, equal good news / bad news stories appearing first.

The point is neatly summed in  Ofcom's defnition of "due impartiality”“Due is an important qualification to the concept of impartiality. Impartiality itself means not favouring one side over another. Due means adequate or appropriate to the subject and nature of the programme. So due impartiality does not mean an equal division of time has to be given to every view, or that every argument and every facet of every argument has to be represented.”

To offer a pragmatic example: if one side makes arguments that are error strewn or based on unsubstantiated assertion they probably deserve to be interrupted or challenged more than the other. That wouldn't be evidence of bias; it would be evidence of journalists doing their job.


So I've looked long and hard - I've tried to be objective - and I certainly can't find anything to justify the rabble-rousing statements that are still emerging from the Yes camp.

So how come the mud appears to be sticking?  Whilst writing this blog post I've realised there is a powerful irony here.  The organisation most damaged by Mainstream Media (MSM) bias is the BBC itself.  It's hard for the BBC to defend itself (because "they would say that wouldn't they") and other MSM players (including the print media in an increasingly digital world) see the BBC as a major competitor.  The people who it could be argued should be leaping to the BBC's defence are those who have most to gain from seeing the BBC weakened.  It may not be coincidence that the most supportive MSM quote I used above is from a report in the Guardian - itself Trust owned and independent of any proprietorial influence.  I don't imagine that the Murdoch press is losing any sleep over the beating that the BBC has been taking.

Smith Commission: A Simple Summary

The Report itself is very short so I do recommend anybody who is even vaguely interested just reads it (> Smith Commission Report).  I've also appended the published Vow at the foot of this article to remind those who seem to forget what it actually said.

To pluck out the highlights and their implications;

Permanence of the Scottish Parliament(21)

"UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions."

This was never seriously in doubt and to suggest it might be was one of the more bizarre arguments used by the Yes campaign. That argument is now dead.

Income Tax Powers (76/77)

"the Scottish Parliament will have the power to set the rates of Income Tax and the thresholds at which these are paid for the non-savings and non-dividend income of Scottish taxpayers [...] there will be no restrictions on the thresholds or rates the Scottish Parliament can set [...] other aspects of Income Tax will remain reserved to the UK Parliament, including [...] the personal allowance"

Some fuss has been made about the personal allowance point (the threshold at which people start paying tax) but all this means in effect is the Scottish Government can't lower the threshold (i.e. can't have lower earners paying tax in Scotland than England).  They can effectively raise it (lifting more people out of paying tax) by setting the initial tax rate to zero (or a nominal amount) and introducing a new threshold and rate to create the effect of a higher personal personal allowance.

Welfare Powers (49/53/54)

"Powers over the following benefits in Scotland will be devolved to the Scottish Parliament: (1) Benefits for carers, disabled people and those who are ill: Attendance Allowance, Carer’s Allowance, Disability Living Allowance (DLA), Personal Independence Payment (PIP), Industrial Injuries Disablement Allowance and Severe Disablement Allowance. (2) Benefits which currently comprise the Regulated Social Fund: Cold Weather Payment, Funeral Payment, Sure Start Maternity Grant and Winter Fuel Payment. (3) Discretionary Housing Payments.

The Scottish Parliament will have new powers to create new benefits in areas of devolved responsibility [...] will also have new powers to make discretionary payments in any area of welfare without the need to obtain prior permission from DWP."

The highlighted paragraph is possibly the most significant in the entire report.  Whilst it's unclear to me what the difference is between "benefits" and "discretionary payments", this appears to mean that although the Scottish Government can't reduce the reserved benefits they can effectively increase them through "discretionary payments".


These new income tax and welfare powers surely deliver against the "extensive new powers" element of the Vow.  Full control of income tax gives the Scottish Government direct control over the most powerful lever of wealth redistribution; the ability to make discretionary payments in any area of welfare (in addition to full control over the devolved benefit areas) means that the Scottish Government can increase welfare payments for the worse off (if they are willing to find the savings in other devolved cost areas and/or increase the overall income tax take).  When the Yes camp highlight that only a percentage welfare expenditure is devolved it's worth remembering that the only complaint they can really have is if the Scottish Government wanted to reduce certain benefits.  I don't think there are any examples in SNP policy but I could be wrong.

As an example: with these powers the Scottish Government could make Food Banks a thing of the past (if addressing the issue is a simple as the Yes campaign suggested).


Block Grant Adjustment (95)

"No detriment as a result of the decision to devolve further power: the Scottish and UK Governments’ budgets should be no larger or smaller simply as a result of the initial transfer of tax and/or spending powers, before considering how these are used"

This is just common sense, but I highlight it as it has caused some confusion (on social media at least).  All this says is the Block Grant is adjusted to reflect the initial transfer of tax or spending (i.e. so that on "day 1" there is no net value transfer).  There would be no impact oo the Block Grant as a result of the Scottish Government using these powers (e.g. raising more tax in Scotland wouldn't reduce the Block Grant).

VAT (84)

"The receipts raised in Scotland by the first 10 percentage points of the standard rate of Value Added Tax (VAT) will be assigned to the Scottish Government’s budget. These receipts should be calculated on a verified basis, to be agreed between the UK and Scottish Governments"

This one bugs me a bit as it seems to be a largely cosmetic exercise which introduces unnecessary reporting complexity for businesses.  The block grant will be reduced by a commensurate amount and (appropriately in my view) the Scottish Government will have no power to vary VAT - so the only benefit is to create a direct link between changes in VAT-able consumer demand in Scotland to Scottish Tax revenues.  I might be under-estimating the differential variability in demand for VAT-able goods as a result of Scottish Government policy but this seems like a rather second order benefit to me compared to the pain of UK businesses having to separate reporting of VAT-able revenue between sales made in Scotland and rUK.

Correction: Marek Zemanik (who sat in Smith Commission meetings) informs me on Twitter that they were clear there would be no additional reporting burden for business that instead but would use "agreed estimation methods".  I'm happy to be corrected but leave my initial interpretation to show how wrong I can be!

Minimum Wage

This remains reserved and is one of the SNP's main complaints. I was interested hear Nicola Sturgeon cite the Minimum Wage as one of the "job creating powers" she was disappointed not to see devolved.  Whilst there is an argument for raising the minimum wage to drive consumer demand and free up benefit subsidies (thanks @UnisonDave) I think there is a stronger argument for ensuring we don't create low-wage based competition within the UK.  [For what it's worth I'm in favour of controlled increases to the Minimum Wage on a UK-wide level.]

Corporation Tax

This remains reserved and the SNP are unsurprisingly unhappy given that the only tax policy they offered during the independence referendum was to reduce corporation tax.  The idea that we might start a race to the bottom on corporation tax within the UK (or create low-wage based competition within the UK) seems to me inconsistent with the Vow ("sharing our resources equitably across all four nations to secure the defence, prosperity and welfare of every citizen") and - more importantly -the outcome of the referendum.


The Party Political Implications

I tend to steer clear of party political issues in this blog but it strikes me there are some rather interesting implications of the Smith Commission Report.

Whilst the Vow is still on track it has of course not yet been delivered - it will be the job of the next Westminster Government to implement the agreement.

If the Conservatives gain power it is highly likely that the issue of English Votes for English Laws (EVEL) will become entangled with any implementation of the agreement; if Labour hold the balance of power it would seem implementation is likely to be far smoother (and there won't be an in/out referendum on Europe).

The implications for the SNP are somewhat intriguing. To guarantee delivery of these extensive new powers and to ensure we stay within the EU they should surely favour a Labour Westminster Government.

That the SNP's forecast electoral gains in Scotland will come at the expense of Labour (and increase the likelihood of a Conservative government at Westminster) should cause some head-scratching amongst more thoughtful Scottish voters.  Those interested in seeing more power devolved to a Scotland that remains within the UK and the EU (and arguably those who are interested in seeing social justice delivered through re-distributive policies) may find themselves more drawn to Scottish Labour than the SNP.

The SNP faces another new challenge of course: assuming the new powers are delivered they will surely need to stop blaming Westminster for all of Scotland's social ills and start demonstrating their conviction to actually do something about them; they will finally have to grapple with the difficult tax and spend decisions that they have been able to avoid to date.

We live in interesting times.

Appendix: The Vow

As published by the Daily Record and signed by the main party leaders this is the actual wording of "the Vow":

The people of Scotland want to know that all three main parties will deliver change for Scotland.

We are agreed that:

The Scottish Parliament is permanent and extensive new powers for the Parliament will be delivered by the process and to the timetable agreed and announced by our three parties, starting on 19th September.

And it is our hope that the people of Scotland will be engaged directly as each party works to improve the way we are governed in the UK in the years ahead.

We agree that the UK exists to ensure opportunity and security for all by sharing our resources equitably across all four nations to secure the defence, prosperity and welfare of every citizen.

And because of the continuation of the Barnett allocation for resources, and the powers of the Scottish Parliament to raise revenue, we can state categorically that the final say on how much is spent on the NHS will be a matter for the Scottish Parliament.

We believe that the arguments that so powerfully make the case for staying together in the UK should underpin our future as a country. We will honour those principles and values not only before the referendum but after.

People want to see change. A No vote will deliver faster, safer and better change than separation.

Friday, 14 November 2014

Business for Scotland & Smith Commission part II

It has been pointed out to me that my previous post on this topic was a critique of the Smith Commission from the Edinburgh chapter of Business for Scotland (here). That's right: they made multiple separate submissions, presumably on the basis that the more they ask the Smith Commission to read the more they will help the process.

So I have now read the main Smith Commission submission (reference B00246 on SC website).  It's written by Gordon MacIntyre-Kemp who is full-time CEO of Business for Scotland and clearly has a lot of time on his hands.  So here we go again - extracts and translations follow

  • "This makes Business for Scotland the largest and most active and influential business group that campaigned in the Scottish Independence Referendum. Our 3,000 members see independence as a both the optimum form of Government for Scotland and also the best way to grow Scotland’s economy, create jobs, address inequality and increase shared prosperity for the people of Scotland."

    Translation: We're kind of hoping you haven't read Chokkablog on "Who do Business for Scotland represent" and so will take this assertion at face value.  We see no reason why we can't assert "member" numbers based on email sign-ups to a pledge even though that means as well as members of the general public with no business interests that figure is known to include a number of family pets.  Please don't ask us how many are "stakeholder members" who've paid their £100; we don't answer that question.

  • "In the last week of the campaign public polls showed a dramatic shortening of the gap between the YES and NO options with one poll showing a YES lead. We understand that more extensive and reliable canvassing returns for political parties showed a sizeable and growing poll lead for YES."

    Translation: of the 100's of official polls only one outlier ever showed a lead for Yes and that wasn't statistically significant.  So we're going to assert a "sizeable and growing" lead based on what we "understand" was the case.  Please ignore all other polls.

  • "in the face of what seemed a likely Yes vote"

    Translation: you might think "what seemed likely" was what the betting markets or all the other polls were saying but actually we are happy to assert based on approximately no evidence that a Yes vote seemed likely (Ed: are we getting away with this?)

  • "for more powers to be devolved to an extent that can be defined as Devo Max/home rule and as close to Federalism as possible within the confines of the UK."

    Translation: look we know the vow only said "extensive new powers" but we've srambled around and have found the words "Home Rule" mentioned once by G Brown and once by D Alexander.  We're not going to give you the context of those quotes and we're going to simply elide them with the vow in the hope you won't notice.  We'll also just throw in the term "Devo Max" despite the fact it's not in the Vow and we can't even find any out-of-context quotes to support it.  (Ed: we're not getting away with this are we?)

  • "If the Commission fails to do this, or the Westminster parties seek to water down or fail to implement the Commission’s recommendations, then the people of Scotland may decide to challenge the mandate to maintain the UK gained by the offer of extensive new powers."

    Translation: in case the threats in our other submission aren't clear enough; agree with our warped interpretation of what No meant or "the people of Scotland" (who we feel mandated to speak on behalf of, apparently) will revolt

  • "A survey carried out by YouGov on March 24th for The Times, when compared to another YouGov survey on September 5th for The Sunday Times, demonstrates clearly both the growing support for YES 34 - 45% when compared to No change, which declined from 24% to 15% support."

    Translation: there were hundreds of polls carried out. We will select two from which to extrapolate wildly.

  • "Increased devolution maintained steady support, falling slightly from 40% to 38%, but as previously mentioned had the advantage of not being critically scrutinised."

    Translation: when even our cherry-picked examples fail to support our argument for increased devolution we will dismiss this as not having had the advantage of being critically scrutinised.  Please ignore this observation when it comes to the rest of our thesis which is that this unscrutinised option was overwhelmingly supported. (Ed: this is getting silly now).
  • "Assuming that the Yes supporter, given that independence is not on offer, will support maximum devolution then adding the support for increased devolution in these polls would indicate that more than 3/4 of the population at the very least (and a significant majority of  No voters) support the promised modern form of home rule, near federalism and extensive new powers on offer."

    Translation: If you cumulate our unfounded and logically disconnected assertions  and ignore the point we've just made about the fact that these options haven't been scrutinised (in fact they haven't even been usefully defined) then we think we can get away with claiming 3/4 of the population support home rule.  Whatever home rule means.

  • "The definition of extensive new powers is the responsibility of the Smith Commission, but the starting point cannot be the previously stated promises of the Unionist parties, which lacked detail and any real commitment to extensive change. Those proposals offered the Scottish Government no more than 20-30% control of taxes raised, and given they were offered prior to the rise in the Yes vote in the polls, they were therefore effectively rejected during the campaign as not extensive enough by the Scottish voters."

    Translation: the vow has to be honoured but we insist you ignore any other promises made by the winning side because we assert that they were "effectively rejected"  (Ed; huh?).

  • "The Smith Commission should therefore not start its consideration from the point of view of what new powers can the Scottish government justify, but from the position that all powers should be devolved unless there is a mutually agreed reason for not devolving that power."

    Translation: please assume the vote was Yes and work your way back from there.

Now to be fair at this point the submission does actually knuckle down to some arguments around fiscal powers that are at least relevant and on topic.  I disagree with the extent of fiscal powers they argue for for reasons outlined in my previous Thoughts on Smith Commission blog post.  But moving on;

  • "With full fiscal responsibility all future debt generated in Scotland should be allocated to Scotland and all sovereign debt generated outside Scotland should be allocated to the rest of the UK. Scotland cannot exercise full fiscal responsibility when it is possible that a situation may arise where paying a population percentage of the debt interest on debts generated outside Scotland may severally impact on Scotland’s budget in years when Scotland’s accounts might be in surplus. Likewise all historical debt and share of debt interest payments should be allocated to Scotland’s accounts on a contribution basis, not a population percentage basis. In this way Scotland does not start to manage its own finances either paying interest on less debt than it actually generated, nor would it pay more than it was responsible for."

    Translation: we want to continue to share a currency but we don't want to participate in the wider principle of pooling and sharing that's required to make this work.  We basically want to have "accounting separation" such that we can engineer the economic conditions of independence whilst maintaining currency union.  We don't care that this argues for economic separation which clearly goes against the will of the Scottish people as expressed through the No vote.

  • "The Scottish Government must have full control over oil and gas taxation, revenues and policy; this must include the ability to create a Scottish sovereign oil fund to invest for the future and also to plan for the transition generations hence from domestic oil and gas production to other sources of energy and alternative economic activity in the North East. It is also vital that the blocking of west coast oil exploration and extraction be lifted so that the west of Scotland can benefit from the reserves that potentially lie off the Atlantic coast."

    Translation: It's our oil and we're keeping it so please ignore the bit of the vow that says "We agree that the UK exists to ensure opportunity and security for all by sharing our resources equitably across all four nations to secure the defence, prosperity and welfare of every citizen".  Oh, and we think you're choosing not to exploit the untold wealth that lies within our grasp because you'd rather pursue deeply unpopular austerity measures than admit it's there. (Ed: really?).

  • "Given that (under the current system) the Chancellor of the Exchequer sets a budget for the implementation costs of applying Government policy in England alone and then the Barnett formula sets the budgets for the rest of the UK with an element to address extra costs. With full fiscal responsibility the Scottish Government would not be forced to react to cuts in the English budget but would set spending priorities on the basis of taxation raised, and as explained with the R&D example above bespoke policies could lead to increased taxation revenues and therefore increased spending ability for the Scottish Government."

    Translation: we're hoping you haven't read the vow so you missed the bit that refers to "the continuation of the Barnett allocation" because we'd rather scrap it and be fully economically independent.  So please don't keep this element of the vow either (Ed: are you sure about this?).
  • "Obviously the currency union will be maintained and the Bank of England will continue in its current role, but given Scotland’s greater fiscal responsibility and the more federal/modern home rule within the UK structure of the relationship then it would seem natural that the Scottish government be granted a seat on the Bank of England monitory policy committee and be represented on most regulatory bodies."

    Translation: although we've argued for a level of "accounting separation" (including balance sheet separation) between Scotland and rUK that is incompatible with effective currency union, "obviously" we assume it will be maintained.  Basically we just want independence whilst continuing to share a single currency; you know, like the option that was rejected by all Westminster Parties during the campaign?

  • "The interlinked and interdependent nature of economic and fiscal powers means that a slow and piecemeal devolution process will not work."

    Translation: It's really complicated so best to rush it.

  • "Playing the Westminster party game of trying to figure out what percentage of tax raising powers would slow the Scottish population’s growing support for independence would create a halfway house between what powers Scotland needs to thrive and ultimately become the worst of both worlds."

    Translation: Forget the Edinburgh Agreement and talk of "working together" - we don't trust "Westminster parties" and never will.

  • "The Scottish Government needs to have control over immigration policy. This would, of course, require border control security and policy to be set by the Scottish Government and in the spirit of extensive/full fiscal responsibility Scotland would be responsible for the costs of its own border security. Given the need to consider interconnectivity, this would also require coastguard and maritime protection services to be fully devolved to Scotland, as many of Scotland’s borders are maritime borders."

    Translation: Forget all that stuff we said during the referendum about talk of borders being scare-mongering; even our version of honouring the No vote will require separate Scottish borders to be maintained.

  • "We believe that, to be binding, a referendum on EU membership leading to the UK’s exit must not just generate a simple majority across the whole of the UK but have a majority in each home nation. "

    Translation:  Just because it's inconsistent to argue that Scotland could vote to leave the UK without the rest of the UK voting on the issue whilst arguing that the rest of the EU can't vote to leave the UK without the assent of Scotland ... that won't stop us arguing it.

  • "If the power to veto an EU exit is not granted, then the UK that the Scottish population voted to stay within on September 19th will be deemed not to exist anymore."

    Translation: We know we can't really argue that the risk of a UK EU exit wasn't widely debated during the referendum but let's just ignore that and pretend the Scottish people weren't smart enough to make a balanced assessment of that risk.

  • "We will work in good faith to suggest and define powers and policies that will help Scotland thrive within the UK, but believe that if the powers promised are not delivered the Scottish people will be extremely disappointed and may wish to revisit the independence question again."

    Translation: We have argued here for a wildly exaggerated version of the vow in some areas and to directly ignore it in others.  We know that what we've asked for can't possibly be delivered and we're simply preparing the ground to cry foul whatever you recommend.  We exist with the sole aim of pursuing independence - it is not a means to an end for us, it is the end itself - so we really hope we get another referendum soon because it's what we exist for.

  • "We cannot have a constitutional fudge and end up with the worst of both worlds, especially give that Devo Max was not allowed to be officially on the ballot paper and so it was not fairly and democratically examined in the way that no change and independence were."

    Translation: We recognise this Devo Max interpretation we've spent out entire submission arguing for has not been "fairly and democratically" examined but - er - please do as we say anyway.

Tuesday, 11 November 2014

"Business for Scotland" Smith Commission Submission

I've covered at length elsewhere in this blog the background to "Business for Scotland"; they are a thinly disguised SNP construct that - post referendum - seems to have given up any pretence of being apolitical.

I've observed before 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 attended their annual fund-raising dinner. We can now add to that the fact that Business for Scotland Director and spokesman Ivan McKeee - who made a very public show of outrage when I suggested in a public debate that he was aligned with the SNP - has recently announced he has joined the party.

Business for Scotland's Smith Commission submission is authored by David "an SNP and independence supporter all his life" Hood.  Before you read the following extracts you might need to be reminded that these people actually lost the argument and the vote.  Extracts follow, highlighting and translations are my own;

  • "any major change to Scotland’s place within the UK requires only the domestic Scottish-based representatives of Scotland and the assent of it’s people to make it so in terms of a democratic process and decision"

    Translation: let's ignore the fact that the sovereign will of the Scottish people has just been shown to be to remain in political union with the rest of the UK; instead let's assert that the rest of the UK should have no say whatsoever as any major change in Scotland's relationship with the UK has nothing to do with them

  • "This Commission should be viewed and conducted in line with the spirit of the Edinburgh Agreement; that is, to work to remedy the fact that ‘promises and pledges’ made in the Referendum campaign period by the main UK political parties (including the ‘purdah’ period) are meaningfully delivered as a baseline foundation from which to deliberate further. Anything less than that will be an effrontery to democracy and justifiably render this Commission and its findings or recommendations void and justifiably precipitate legitimate political, legal and moral action on behalf of the people of Scotland, to deliver full independence."

    Translation: if you don't deliver what we interpret the vow to have meant we'll just declare your recommendations void and become independent anyway (because we didn't like the actual referendum result).

  • "The ‘No’ vote that prevailed in the referendum does not sanction or mandate the UK government to consider adding a minimum level of further self governance, to the existing devolution structure. It if anything, the vote sanctioned the opposite. It was given in anticipation of a maximum level of powers and capabilities and must therefore be seen as endorsing a position as close to independence as possible"

    Translation: although the electorate answered the very clear and simple question "Should Scotland be an independent country" with a resounding No, you should interpret that as they really meant Yes.  Because - you know - when an electorate says no they really mean yes...

  • "Everything should be devolved apart from specific, agreed, reserved items – but those items must be expressly agreed with, and by, the democratically elected representatives that are elected in Scotland, and hence must reflect the ultimate sovereignty of the Scottish people. It is not for those that populate London, Westminster or Whitehall to limit, decide or confer. Nor indeed is it within their competency. Again, anything less than a true reflection of will, that results in an express and sanctioned agreement will be a travesty of democracy, a stitch-up and a lost opportunity to produce something of profound and lasting merit"

    Translation: in case you missed it earlier, let's reiterate that despite the will of the Scottish people being to remain in political union with the rest of the UK we urge you to ignore that because any politicians outside Scotland are incompetent.  In fact we're already preemptively whipping ourselves into a fervour of outrage - we can't resist using words like "travesty" and "stitch-up" - because let's be honest we don't really care what you come up with; we'll cry foul if it's anything other than de-facto independence and this submission is just letting you know that.

  • "The current ‘democratic deficit’ is of course debatable, depending on perspective; yet what is clear is that things on both and all sides are not as they should be and any deficit needs to be addressed convincingly and completely. If that democratic deficit is not reduced to the point that most of the Scottish people would wish it (that is, the aspirations of the overall majority of the electorate, whether they voted Yes or No in the Referendum), then it should be clear to the Commission that the only way to resolve this would be when, and how, Scotland chooses to take the step to full independence unilaterally"

    Translation: If the implied threat earlier wasn't clear enough let's be explicit about this - if we don't like your answer we'll just make a Unilateral Declaration of Independence.  It doesn't matter whether people voted Yes or No in the referendum; we're going to claim they're on our side either way.

  • "There are an infinitive number of permutations that the Commission could consider whether as a starting point or end, but the simplest of all hypotheses is one where Scotland is already 
  • independent, and this starting perspective prevents discourse and deliberation becoming unnecessarily complexLooking at where there are existing and likely competing agendas, aspirations and desires between the Nations making up the UK, is a fantastic and logical place to start"

  • Translation: Don't go troubling yourself with any complex discourse or deliberation or worry that Independence was resoundingly rejected by the Scottish people; just pretend the vote was actually Yes so your recommendations have to be as close to independence as possible.

I can't begin to imagine how helpful the Smith Commission will find this submission from this self-styled "political party neutral business and economic policy think tank"

Wednesday, 5 November 2014

Thoughts on The Smith Commission

I have been involved in a number of Smith Commission discussions and helped pull together a submission that was backed by over 60 business people.  That process helped me crystalise some thoughts which I may as well share here.

  • Although the Commission is tasked with progressing “the vow” we should not lose sight of the fact that the referendum  was not a vote “for the vow” but a vote answering the question “should Scotland be an independent country”
  • The referendum showed definitively that a significant majority of the Scottish people favour retaining the Union (and polls consistently showed this was the case before the formal vow was made)
  • When interpreting how the vow should be interpreted and translated into action, the over-riding principle of retaining the Union should therefore take precedence over devolving more powers (if such devolution jeopardises the sustainability of the Union)
  • It can be argued that the bed-rock of support for the No vote was built more on the language of “pooling and sharing” than “devolving more power”.  It would be interesting to see how often the phrase “pooling & sharing” was used  during the campaign; it is a principle that must surely remain at the heart of any recommendations

Pooling & Sharing
If we accept that these principles must underpin any future settlement then the Commission must consider what test should be applied when assessing whether any solution achieves equitable sharing. It appears to me there are three broad options;

  1. Ensuring minimum standards of living are achieved nationwide before allowing any surplus to remain where it is generated
  2. Ensuring as far as possible an equal standard of living nationwide, independent of where the wealth is generated
  3. Allowing wide standard of living disparities nationwide based on where the wealth is generated by matching public expenditure to tax revenue generated

It is worth noting that (by lucky chance) the current Barnett Formula and current levels of oil & gas revenue are such that (broadly speaking) both 1 and 3 are simultaneously achieved.

This meant that during the Referendum campaign any arguments about e.g. food banks and child poverty could be credibly countered by showing that these issues were no more prevalent in Scotland than rUK (so 1 is being achieved) whilst at the same time any “we’d get to keep our oil” arguments could be credibly countered by the observation that Scotland effectively does already in the form of higher public spending (so 3 is being achieved).

Any new settlement must recognise that these two principles are not sustainably compatible.  The oil & gas boom of the 80’s meant that Scotland “lost out” in terms of principle 3 during that period. Perhaps more pertinently; as oil & gas revenues decline, applying principle 3 would lead to Scotland losing out in terms of principle 1.  This was crucial to the more considered economic arguments during the referendum: looking back as far as the 80’s we’d have been better off as an independent country but looking forwards now many of us believe independence would have made us worse off. This realisation was surely an important factor in the No vote.

Whether from a selfish “Scottish self-interest” perspective or a desire to respect the vote in favour of the principle of "pooling and sharing", principle 1 (equalisation of base living standards as the first priority) must surely underpin any solution proposed.

The Business Perspective

From the narrow business perspective I would argue for the principles of minimum friction costs and a level playing field across the UK.

Given the high proportion of businesses trading UK-wide, allowing differential corporate taxation rates is likely to be value destructive.  The friction costs associated with accounting separation and/or tax avoidance motivated accounting policies (manipulating where profit is reported) would be net value destructive to the whole UK.  It is important that the constitution is not hijacked as a crude tool for addressing regional development needs; regional development initiatives should be subtle and targeted to ensure any corporate reward is closely linked to true value/job creation.  Regional need is not a uniquely Scottish issue so should not be addressed with a uniquely Scottish solution.

The same argument applies for Capital Gains Tax; we don't want to create tax avoidance reasons to manipulate where in the UK capital gains are realised.

Employment legislation should also be a level playing field.  For example: allowing differential minimum wage levels within the UK would be value destructive - a higher minimum wage in Scotland would damage competitiveness of Scottish businesses and cause some businesses to move South at the expense of Scottish jobs; a lower minimum wage would be be potentially damaging to social welfare by encouraging a regional low-wage economy.

VAT rates should remain harmonised.  For online retailers and national retail chains, differential VAT rates would increase retail price management complexity (different price files for North and South of the border, differing retail pricing online based on delivery address) create additional reporting costs (separation of revenue reporting) as well as creating tax tourism opportunities for consumers.  Changes to VAT rates are a significant burden to retail businesses.

Given common language and small travel distances, talent is relatively mobile within the UK (compared to across Europe where language is a barrier or across the US where distance is a greater issue).  Relatively small differentials in personal taxation levels are therefore likely to have a material impact on senior talent location; this can of course be a good or bad thing depending how it is managed.  But the bigger issue arguing against full devolution of personal taxation is of course that of EVEL (English Votes for English Laws).  Given the dominance of England within the UK economy, English taxation policies would massively influence the wider UK economy - to lose influence over English taxation would be to lose influence over the wider economy and our shared currency and ultimately our capacity for social welfare spending.

So I conclude that whilst "more powers" is a superficially attractive concept, the devil as always is in the detail.  "More powers" could - if not carefully calibrated - lead to the dismantling of the very benefits of Union that the Scottish people voted so overwhelmingly in favour of retaining.