Sunday, 21 January 2018

The SNP: Making the Case for Union


An edited version of this piece appeared in the Daily Record on 23/01/2018


By arguing for a soft Brexit, the SNP are doing a great job of making the case for Scotland remaining in the UK.

The SNP lost the independence referendum for many reasons, but the transparent dishonesty of their economic case was probably the biggest factor. They tried to sell Scottish voters a pipe-dream based not just on hopelessly unrealistic oil revenue forecasts and a non-existent currency solution, but also on fantastically optimistic assumptions about how Scotland’s economy would be affected by breaking out of union with the rest of the UK, our largest trading partner.

Now the SNP is making the case for staying in the EU single market by using arguments that apply four-fold to the merits of Scotland remaining in the UK single market. They’ve got themselves in a real guddle here, but then it’s hard to be logically consistent when “independence” is your answer to every question.

Let’s be under no illusions about why the SNP is dead set against a hard Brexit. It’s not because they think it’s best for the UK, it’s not even because they think it’s best for Scotland, it’s because they think it’s best for their all-consuming obsession of Scottish independence, for their defining political ambition of dragging Scotland out of the UK.

The simple truth is that the further the UK is from remaining in the EU single market, the more economically damaging Scottish separation would be. For those of us who oppose Brexit, this is the silver lining in what is otherwise a very dark cloud: if we suffer a hard Brexit, a future independence referendum means asking Scots to choose between the UK single market or the EU single market.

Scotland exports four times more to the rest of the UK than we do to the rest of the EU. Of course the EU market is much larger, but even after nearly 45 years of unfettered market access, our exports there are relatively small (16%) compared to those to the rest of the UK (63%)1. The reasons why are obvious: within the UK we’re transporting goods on the same island, we’re selling services to people who speak the same language, we’ve enjoyed over 300 years of free trade and of course we share the same currency.

Faced with this rather obvious point, supporters of Scottish independence either refuse to believe the Scottish Government's own data on exports1, or they adopt the quite astonishing position of denying that the UK single market even exists. That it does is self-evident. Since the Act of Union was signed in 1707, all parts of the UK have enjoyed free movement of goods, services, capital and people, there have been no customs borders, we’ve had common laws governing market regulation and we’ve shared a single currency. The Act of Union may have been signed 311 years ago, but the provisions within it that define the UK single market are still very much in force today2.

One of the arguments used by the SNP during the independence referendum was that Scotland could stay in the EU and so stay in the same market as the rest of the UK, thereby avoiding any trade disruption. This argument was always dubious, but following a hard Brexit it would fall apart completely. None of the benefits of being in the UK single market could be guaranteed for an independent Scotland.

Of course nobody’s suggesting trade with the rest of the UK would stop following a hard Brexit, any more than the arguments against a hard Brexit assume trade with the EU would stop. What we’re dealing with here is potential disruption to trade.

This is where the SNP’s latest arguments3 expose them as not just being logically inconsistent but also shamelessly hypocritical. When Sturgeon quotes economists at Strathclyde University’s Fraser of Allander Institute on the risk to Scottish jobs supported by EU trade, she neglects to mention that those self-same economists reckon that more than four times as many Scottish jobs rely on our trade with the rest of the UK4. When our First Minister quotes Treasury forecasters on the likely economic damage a hard Brexit would cause, she assumes we’ll forget that they’re the same Treasury forecasters Salmond accused of producing a “dodgy dossier” when they quantified the likely damage to Scotland’s economy that independence would cause5. It seems the SNP are rather keen on “Project Fear” when it suits them.

So the current arguments about Brexit highlight the greater relative importance to Scotland’s economy of the UK market compared to the EU – but they should also serve as a reminder that Scotland’s place in the United Kingdom is about so much more than free access to the UK single market.

Within the UK, Scotland is part of a UK-wide fiscal framework that currently allows approximately £10 billion a year of higher spending in Scotland than would be possible if we were “fiscally autonomous” (that is: than if we were simply “paying our way” within the UK)6. These annual transfers now can be seen as the quid pro quo for the fact that the economic benefits of “Scotland’s oil” were shared across the UK in the 1980s; that’s how pooling & sharing works over time.

But this UK-wide “pooling and sharing” is something that has no parallel in the EU. When Greece was in trouble, there were no fiscal transfers forthcoming from German tax-payers to bail them out. That these fiscal transfers occur within the UK but not within the EU illustrates a deeper truth that is rarely articulated: the bonds of moral solidarity that bind Scotland to the rest of the UK are stronger than those which bind us to the EU.

Whether one explains those bonds by reference to our history of shared endeavour, our shared values, our sense of national pride or some other aspect of shared British identity, the fact that such large sums of money are freely (and largely without complaint) moved between the UK nations is evidence that a deep bond exists. This might be best explained as a shared belief in social justice – we’re comfortable to share financial responsibility for the well-being of all our fellow UK citizens.

Hopefully we can agree that the arguments in favour of union aren’t all about things we can put a pound sign in front of, but we should at least consider what those billions of pounds of fiscal transfers mean in practice. They mean £1,900 annually for every man, woman and child in Scotland. That’s extra money the Scottish Government gets to spend on education, healthcare, free prescriptions, free elderly care, no tuition fees, toll-free bridges, business rates cuts and much more - stuff the SNP can crow about in a party political broadcast while still campaigning to leave the very union which makes that level of spending possible.

The SNP’s hypocrisy and intellectual dishonesty is laid bare when they argue for the benefits of union within the EU whilst simultaneously denying those same (but objectively larger) benefits of union within the UK. In terms of both market access and hard cash to support our higher public spending, Scotland’s place within the UK is objectively worth much more to us.

The economic case for union is often presented as something which is distinct from the emotional case. In fact these tangible economic benefits are simply a practical manifestation of the emotional case: they exist because of the deep bonds of moral solidarity that bind us.


Notes

1. Export Statistics Scotland


2. "The Act of Union 1707: An Economic Union"

3. "Scotland's Place in Europe"

4. Fraser of Allander: Employment supported by Scottish Export Demand 



5. A spokesman for the First Minister said: “Danny Alexander must ­apologise for the Treasury’s dodgy dossier on the finances of an ­independent Scotland"

6. GERS: An Inconvenient Truth
at

24 comments:

  1. Anonymous21 January 2018 at 09:14

    " These annual transfers now can be seen as the quid pro quo for the fact that the economic benefits of “Scotland’s oil” were shared across the UK in the 1980s; that’s how pooling & sharing works over time."

    What is the value in real terms of said 'Scotland's oil' shared across the UK?

    How much per head of population to rUK?


    Looking at alternative statistics excluding debt interest since 1999, Scotland has run up a deficit 6 times larger per head than England (excludes debt interest)

    Since 1999, accumulated deficit per head (excluding debt interest)

    Population share of N Sea
    £1,825 = England
    £31,018 = Scotland
    £53,144 = Wales
    £62,238 = N Ireland

    £8,395 = United Kingdom

    Geographical share of N Sea
    £3,041 = England
    £17,135 = Scotland
    £54,773 = Wales
    £63,840 = N Ireland

    £8,395 = United Kingdom

    https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/datasets/countryandregionalpublicsectorfinancessupplementarytables

    ReplyDelete
  2. Unknown21 January 2018 at 12:02

    Anonymous - If I was calculating this I would simply look at the UK government's income from oil since it was discovered in the North Sea and then compare this to how much Scotland's share would be for the same period based on a geograpical share. Finally compare this with the annual multi billion pound transfers we've seen in recent years due to Barnett.

    ReplyDelete
  3. Alastair McIntyre21 January 2018 at 12:17

    I know you are anti-Brexit Kevin but please remember that being in the EU does cost us more...

    India with its 1.2 billion population and 7% annual growth has 150% tariffs on luxury goods such as Jaguar cars (ironic given that Tata is Indian-owned) and Scottish whisky.

    The Customs Union may seem cosy and familiar, but in reality it is a malign protectionist fortress that hurts the poor inside and poor exporters outside the most: with 60% EU tariffs on Chinese and Vietnamese shoes, 45% on New Zealand lamb, 20% on bananas, 68% on chicken breasts, 100% on granulated sugar, 17% on sports kit, 12% on dresses, up to a whacking 375% tariff on sugar beet. They also drive up inflation.

    90% of world growth will come from outside the EU and that's why we need to look at the UK re-engaging with The Commonwealth which will become the largest trading block in the world.

    We also need to get a Free Trade deal with the USA and that means we need to get a state visit to the UK for Donald Trump. Hate him or love him he's important to UK trade and defense.

    The UK has effectively subsidised European security by $23 billion in the past five years.

    Oddly, the largest EU and Nato countries are the leading miscreants. France, ostensibly the alliance’s third-strongest military power, has short-changed Nato by approximately $24 billion over the past five years, meaning it has missed the alliance’s spending target by 9 per cent. Over the same timeframe, Germany, with all its vast trade surplus, has short-changed Nato by a whopping $142 billion. This means it has fallen short of its Nato spending target by 39 per cent. Italy, despite its economic difficulties, still a large and wealthy country of 60 million people, has short-changed Nato by $90 billion, or 43 per cent. Spain has short-changed Nato by $75 billion, which means it has failed to meet the organisation’s target by a colossal 54 per cent. And the Netherlands, smaller but still very affluent, has short-changed Nato by $64 billion, or 42 per cent.

    There is thus a lot to be said about the UK leaving the EU and thus The Commonwealth and the USA are great reasons to be optimistic for the future outside the EU. Scotland should be more realistic about remaining in the UK single market as that is where the growth will come from.

    ReplyDelete
  4. Peter Sellar22 January 2018 at 00:08

    From the 3 comments you have received, your plaudits/critics are going to be wide and varied! I think that you have captured well the constitutional/political/personal conundrum that has been forced upon us: do we choose the union that is the EU or the union that is the UK?

    Economically, for the sake of no-argument, I will accept your premiss that the UK is economically far more important than the EU. But then you raise another core point, that union is not just about pounds an pence but about values. And you alight on pooled resources and sovereignty as the cornerstone of our shared union.

    This is where I start to have a problem because of course that it but one aspect of the union. For example, I do not share the values of what apparently a rather large number of people down south exhibited and continue to exhibit vis-a-vis immigrants. I don't share their values on voting in Conservative austerity agendas (etc). I don;t share their values (expressed through their MPs) on the wars we have entered into or the need for Trident (etc).

    Am I to sacrifice my values on the alter or pooling? Do I, in other words, rate these values as more important than economic pooling?

    Short answer is yes I do. In full knowledge that if we are offered yet again a binary solution to a conundrum that demands subtlety of thinking and a range of nuanced answers, then I know where I will place my tick.

    But thinking of nuance, your argument would have force, great force, if you acknowledged that there are issues that need to be addressed way above beyond the too simplistic pooling example. We need to bring the Act of Union up to date; we need to create a far fairer system of representation at Parliament along the lines that most adult democracies enjoy (equal voting rights regardless how big you are: think US senate; think EU structures); we need to figure out how it is that the south east of England booms at the obvious and clear expense of the north of England and to a slightly lesser extent Scotland; we need to consider whether Holyrood should have more say over Scotland's external affairs (think EEA/EFTA...) such that, for example the half-cake-and-half-eat it economic and migrant option remains on the Scottish table (as difficult as it would be...) etc.

    Playing the binary game as, in effect, you are doing (it's UK v EU and that's it) is - for want of a better word - divisive and something that you often criticise the SNP for. Let's develop detailed, less binary thinking and funnily enough the majority that occupies the middle ground a s it always tends to do may well find a solution out of the nonsense that (political statement coming up) English voters have imposed on the rest of us (because even if the whole of Scotland had 100% voted against Brexit, we'd still be here - that's that lack of adult democracy thing I'm talking about, so no, that was not an anti-English thing to say..).

    ReplyDelete
  5. Kevin Hague22 January 2018 at 01:21

    Thanks Peter, I agree with much of what you say and appreciate thougtful comments

    There was so much misinformation about the economic case during the indyref that the “moral solidarity” debate has never really happened - and yore right that argument is far from straightforward. I’m writing a lengthier piece on that topic, so allow me to make a few observations and trust me I’ll be elaborating in a further blog:

    1. The research suggest attitudes to immigration are not that different between Scotland and England (I will assume for simplicity you’re referring to England) and are certainly more similar across the nations of the UK than the nations of the EU
    2. The “voting for Tory austerity” line is simply not one I buy — as the Tory vote has grown in Scotland, as the Tory majority was hammered in the last GE, to suggest that “Toryness” is a dividing line between the English and the Scots is to focus on short term party political fortunes to argue for a definitive constitutional divide. As I say - I don’t buy it (I don’t buy that had Miliband or Corby won the last GEs that you’d change your argument - and in a way that’s my point: if you believe in Scottish independence, neither should you, it’s not about the fluctuating trends of party politics
    3, wars and Defence are complicated subjects - but again the suggestion that attitudes to either create a fault-line that divides the union is not something that’s backed up by research - there are differences in attitude of course, but not a gaping divide

    I fear you’re painting an inaccurate caricarure of te English to give yourself permission to dismiss the moral solidarity that some of us fee - the UK wields significant soft power in an increasingly political environment, some of us belivev that matters - the UK is in absolute terms the third largest donor of international aid in the world; I feel a sense of pride that “we” share the moral values that make that so

    Re more nuanced arguments - couldn’t agree more - this specific post was written as a draft of something i need to get down to 800 tabloid friendly words so one has to pick ones topics. But see recent blogs here on iniquity of the Barnett Formula (which by the way has massively favoured Scotland over Wales) regional economic gaps within England and my more general musings on the need for the constitutional settlement to evolve.

    If some people would stop pursuing a dogmatic desire to tear up the UK and abandon our fellow UK citizens, maybe we could have that more constructive debate ;-)

    ReplyDelete
  6. Kevin Hague22 January 2018 at 01:23

    Garbled comments because on phone - I meant “increasingly unstable geopolitical environment”

    ReplyDelete
  7. Anonymous22 January 2018 at 04:08

    Peter Sellar , of course you dont share the mostly English view on migration because you live in a part of the UK that does not have millions of immigrants, feel free to pass judgement if and when Scotland gets millions of migrants.

    Your lucky that in Scotland you get a Block Grant based on population so the more migrants the more money you get but no such thing for England.

    ReplyDelete
    Replies
    1. Kevin Hague22 January 2018 at 07:04

      that’s a rather poor response to an intelligent contribution. fwiw there is no correlation between exposure to immigration (foreign born population) and attitudes to immigration (i’ve checked) - and Barnett benefits Scotland primarily because of population decline (only the *change* is spend is per capita allocated)

      Delete
  8. Peter Sellar22 January 2018 at 05:46

    Kevin - good reply back. I am guilty of dumbing down some of my arguments too densely. While of course there are different attitudes north and south, and different decisions may have been taken depending on the hue of government at the given time, at the end of the day (as Ruth D and Nicky S both said to each other once) we have more in common than that which divides us.

    That said, I don't see a distinction between those in Carluke, Carlisle or Carcassone. And that's where it gets tricky because it may very come down to that divisive, binary, non-nuanced referndum choice between one type of union over the other.

    And as for "Anonymous", I'll pass on your kind message to my French wife and to all my good friends in London - the world's capital of immigration - who voted remain.

    ReplyDelete
  9. John Stuart Wilson22 January 2018 at 06:29

    @Peter Sellar

    "a far fairer system of representation at Parliament"
    What could be fairer than every person having a vote of equal weight? Why should person's vote become more or less valuable because they move house and happen to now reside on a different side of an arbitrary line on a map of the UK?

    "we need to consider whether Holyrood should have more say over Scotland's external affairs (think EEA/EFTA)"
    It would be a waste of time to consider such things, because they are not possible, because EEA/EFTA membership is only available for sovereign states, and the people of Scotland don't want independence.

    Sorry, but in the real world, somethings really are binary.

    Norwegian politicians say Scotland could only join EFTA if independent
    https://www.holyrood.com/articles/news/norwegian-politicians-say-scotland-could-only-join-efta-if-independent

    Iceland: Scotland could not start applying for EFTA until after independence
    http://www.telegraph.co.uk/news/2017/03/16/iceland-scotland-could-not-start-applying-efta-independence/

    ReplyDelete
  10. Peter Sellar22 January 2018 at 07:07

    John - the system is not fair if the system is constituted by separate countries/nations however you wish to call them. The USA appears content to have 2 senators represent Wyoming with a tiny population and California with a massive population being represented by the same number. Wyoming is just as powerful in the Senate as California is as a result. Ditto in the EU where Malta has, at times, the same power as Germany. One (wo)man, one vote is too blunt an approach if I can put it diplomatically.

    Re Scotland and the EEA/EFTA, the law isn't as clear as you make it out (but the politics is as you do). It is theoretically feasible as a matter of law for a part of a country to enter into international agreements: Wallonia can, Bavaria can, Hong Kong can (amongs many other examples). But you'll spot the difference with the UK - their political and constitutional set up is utterly different. And that's where this issue re EEA/EFTA becomes virtually impossible because the current politics in the UK won't allow it. But if they change, then it becomes possible. The likelihood of that is not high in particular where the starting point is to ask for permission from a Parliament which has a massive majority of English MPs uninterested in this nuanced arrangement...

    ReplyDelete
  11. Anonymous22 January 2018 at 07:12

    "I'll pass on your kind message to my French wife and to all my good friends in London - the world's capital of immigration - who voted remain. "

    Seriously? your 'French' wife voted in a referendum that French nor any EU national could not vote in.

    Again you do not get to pass judgement on millions of people who live in a part of the UK that has millions of migrants while you reside in another part that does not experience the issues mass migration brings and it is beyond hypocritical to do so given the Block Grant you enjoy is population based.


    ReplyDelete
  12. Anonymous22 January 2018 at 07:18

    And Kevin you as well, you don't live in a part of the UK that has millions of migrants so you also do not get to pass judgement on those that are experiencing the problems associated with the same.

    Do you really think over 15 million people are racist and anti migration? does it not make more scene that they are experiencing the problems first hand so took the only option there was to stop mass uncontrolled migration?

    Are your seriously saying Barnet is not funded on the amount of people currently in Scotland? it really would be a bizarre state of affairs to dish out subsidy's without knowing how many people your dishing out too.

    ReplyDelete
  13. Peter Sellar22 January 2018 at 10:13

    Anonymous - no, she didn't vote because she did not have the right to but that is another debate for another time.

    You're twisting points to suit your own agenda. Will leave you to it.

    ReplyDelete
  14. Kevin Hague22 January 2018 at 10:17

    "Anonymous"

    1. I'm not "passing judgement" on anybody - Ivve merely observed that a/ attitudes to immigration are not that different throughout the UK (in every region including Scotland the majority would like to see immigration "reduced" - the main differenc eis between "a little" and "a lot") and b/ the attitudes to immigration are not correlated to experience of levels of immigration (again, a widely known fact - London being the most obvious but certainly not the only example of high immigration and high tolerance for immigartion)

    2. I have spent a lot of time understanding the dynamics of the Barnett Formula (try this for example http://www.these-islands.co.uk/publications/i271/what_is_the_barnett_squeeze.aspx - Scotland benefits massively, but mainly due to declining population - because only the change in budget is allocated based on population, so think through this example: no budget increase => no change to budget => no Barnett imapct => bulock grant stays the same ... but if Scotland's population declines (or doesn't rise as fast as rUK) then it's block grant per capita goes up. Trust me: Barnett Formula favours Scotland if slower population growth than the rest of the UK.

    Genuinely: I understand this stuff and I really think you should before offering such intemperate comments

    ReplyDelete
  15. Peter Sellar22 January 2018 at 10:21

    Kevin - your point raises another interesting one for me. If Scotland could increase its population, you're saying that it would lose more from the Barnett block grant. With the recent paper from the SG pointing out that immigrants contribute £xyz amount to the Scottish economy, could the negative effect of the mathematically reduced block grant be cancelled out/bettered simply by having more economically productive immigrants in the country (or a more economically productive growing population). Am I making sense?

    ReplyDelete
    Replies
    1. Kevin Hague22 January 2018 at 11:38

      yes that makes sense - immigration would i believe be net beneficial to Scotland (as all the analysis i’ve seen suggests it is for UK as a whole) - the Barnett effect at that point is pretty marginal compared to the broader benefits i believe immigration would bring (and i’d suggest Scotland’s economic policy shouldn’t be driven by quirks of the Barnett Formula anyway) - i’ve consistently said from back in indyref days, a desire for greater immigration and challenges of population decline are the strongest arguments i’ve heard for indy (not enough to change my view, but definitely on the “pro” side of the equation)

      Delete
  16. John Stuart Wilson22 January 2018 at 11:09

    @ Petar Sellar

    Our system is NOT constituted by separate countries/nations. Our system is one voter, one vote.

    The American Senate, which you criticise, is what you are also arguing for.

    Why wasn't Holyrood set up so that the Islands could outvote the Central Belt? Why aren't you complaining about that injustice?

    As soon as someone in a position of power in the EU says it is theoretically feasible for Scotland to join the EEA/EFTA, then I'll entertain your thoughts on this matter. Until then, you are just wasting everyone's time. The problem isn't Westminster. It is Brussels.

    ReplyDelete
  17. Peter Sellar22 January 2018 at 12:16

    And devolving immigration powers would be a good step, though for some, perhaps a dreaded first step.

    ReplyDelete
  18. Peter Sellar22 January 2018 at 12:25

    John - I wasn't criticising the Senate; on the contrary, I was using it as an example of how a different voting system can (at least appear to) be fairer than what we have in the UK at the moment.

    And we'll have to accept our differences on the qu of whether our system is constituted by separate nations if by separate I mean that there was and is a distinction between Scotland, England, NI and Wales.

    Re the EFTA point, non-UK commentators cannot say anything than what they have said until such time as internal politics in the UK makes the first move (e.g. gives Scotland external affairs competence.) But if Scotland (or NI, for example) were to get such powers, which NI appears it may do, you might see a change.

    N.B. Faroe Isles, which are still part of Denmark, are applying to become an EFTA member precisely because they have that external competence: Act no. 579 of 24 June 2005

    ReplyDelete
  19. John Stuart Wilson22 January 2018 at 15:23

    Peter,

    It is not "fairer" for one person's vote to count 20X more than another person's vote because their houses are one mile north and one mile south of a line on a map of the UK. The American system that you seem to admire gave us President Donald Trump, although he received 2.9 MILLION fewer votes than Hillary Clinton.

    We have always recongised a distinction between Scotland, England, NI and Wales; we have therefore said "therefore, Scottish votes count more".

    "non-UK commentators cannot say anything" - Oh good grief. They can, and they have. They have pointed out that the EU and the EEA are made of treaties among member states and there is no way for a non-sovereign state to join.

    The Faroe thing is nonsense, as was pointed out longly and loudly a year ago. Yes, they applied - 12 years ago. No, they were not accepted, nor will they be - because they aren't sovereign.

    Please, for the love of God - go outside the separatist information bubble every once in a while.

    ReplyDelete
  20. Peter Sellar23 January 2018 at 01:13

    John - point I was making is that "it is all politics". Law follows politics so whichever bubble you may be in, funnily enough you can find the law to suit. Whether that law works depends on the politics. And that is why I made my point that if things mover internally within the UK, externally things would follow; but it has to be in that order. Once that happens, the law will be found to assist on the way. Nothing is black and white, especially re international affairs.

    I wouldn't criticise the US way of doing things too much given that we have never had a popular majority government at Westminster since 1945.

    And the point remains that there are plenty of other examples of "differentiated options" within a sovereign state allowing for distinct external policies.

    ReplyDelete
  21. John Stuart Wilson23 January 2018 at 05:14

    @Peter
    "there are plenty of other examples of "differentiated options" within a sovereign state allowing for distinct external policies."
    This is meaningless waffle. EU or EEA/EFTA membership is not available to Scotland because:
    1) Scots decided they don't want independence; and
    2) The EU and the EEA/EFTA won't consider a non-sovereign state last a member.
    It has nothing at all to do with internal policies of the UK.

    "if things mover internally within the UK"
    No one has the mandate or the constitutional power to grant your wish of making our votes count 20X more than a votes cast in Northumbria. Now, maybe it would have been clever for the SNP to spend the last 11 year making THAT campaign their priority, and using their supposedly immense powers of charm and persuasion to convince the rUK to vote for changing Westminster in that manner, via a UK-wide referendum. But they didn't. And so your vote will continue to count the same as one cast in Berwick.

    ReplyDelete
  22. Anonymous31 January 2018 at 02:58

    I note that nobody mentions the very large numbers of Scots who are resident in England (and elsewhere) who are not allowed to vote in the independence referendum. If these Scots were included then the independence debate would have ended long ago.

    ReplyDelete