The pointless numbers in the Scottish referendum debate

The rows about Scottish independence – yes or no – are rather dragging on (six more “grinding months” to go, said one senior politician to me last week).

This week, a few more businesses have come out against it and a few more for it. But in an argument last week at an ICAS breakfast, and later at a lunch with a famous journalist up from London to take the temperature of the debate, the pointlessness of the whole conversation hit me anew.

As an ex-banker friend pointed out to me over dinner last week, (no one talks about anything but the vote in Edinburgh these days), most of the numbers we all use in our arguments have little or no accuracy to them. We talk about tax revenues in Scotland, about what the fiscal deficit in Scotland is and will be, what GDP is and what GDP per head is as though the numbers we use are real.

But they aren’t real. Take the numbers for individual tax revenue. They are no more than a proportional domestic average taken from the UK as a whole, and then adjusted for Scotland’s age profile.

Then take corporate tax revenues: these, again, are guesswork. Corporations aren’t required to define their tax liabilities in a geographically-defined way, so no one actually knows how much of the revenue or profit of a company operating in Scotland is Scottish and how much is not – particularly given that it is mostly collected on the English side of the border.

The point is that none of the numbers we use in the debate are findings in themselves – instead they are reflections of UK averages. That in turn means that the numbers we partly extrapolate from tax expenditures and revenues are also decidedly iffy.

As the Scottish government puts it, “the majority of public sector revenue payable by Scottish residents and enterprises is collected at the UK level. Generally it is not possible to identify separately the proportion of that revenue receivable from Scotland.”* Silly, isn’t it?

On the plus side, even if we did have accurate numbers for Scotland’s real tax revenues and GDP today, they wouldn’t help us much in forecasting what they might be in the years after independence. Because, on the individual side, we don’t know how many highly-paid financiers will move to Berwick, and on the corporate side, we don’t know how many firms will either move their headquarters or fiddle their revenues to the south.

Those who favour independence are always telling us that this is a vote that must be made on faith. They are more right than I think most of them really understand.

* You can find all the detail on the methodology used to guess the Scottish share of revenues here.

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13 Responses

  1. 01/04/2014, Romford_Dave wrote

    A question of faith for sure, but even Plato knew reason is a slave to the passion once the passion takes over.

    And talking of passion, anyone watching this clip will be in no doubt where the X is going if the shirtless fan in the posh seats is anything to go by as he sings along with the faithful.

    http://youtu.be/pN5DqlkjLHk

  2. 01/04/2014, Boris MacDonut wrote

    Typical house price in Scotland is about 60% of that in the rest of the UK. Typical income is about 80%. Population is 5 million out of 65 million. So 8%. Applying these proportions to GDP gives Scotland a potential GDP of well below £100 billion and Government debt of about £80 billion. With tax revenue of only £43 billion.
    Puts it in the minnow league,half the size of Portugal or Greece.

    • 02/04/2014, CKP wrote

      @BM
      Those are current figures, set to shrink drastically as companies and individuals head for the exit and become economic refugees south of the border. The people likely to stay put are the ones dependent on social welfare which will only accelerate the flight of the tax revenue generators.

      • 03/04/2014, Gorje wrote

        “The leading players on both sides accept that Scotland has all the ingredients to be a viable nation state.

        If its geographic share of UK oil and gas output is taken into account, Scotland’s GDP per head is bigger than that of France. Even excluding the North Sea’s hydrocarbon bounty, per capita GDP is higher than that of Italy. Oil, whisky and a broad range of manufactured goods mean an independent Scotland would be one of the world’s top 35 exporters.
        An independent Scotland could also expect to start with healthier state finances than the rest of the UK.”
        Source F.T. February 2nd. 2014

  3. 05/04/2014, peter444 wrote

    Why do you think the oil will stay with Scotland, in or out of the UK. The northern islands, Faeroes and Shetland, polled against leaving the UK and probably will want to remain in the UK even if mainland Scotland leaves.

  4. 06/04/2014, JamesH wrote

    Latest opinion poll on Scottish Independence.Panelbase.

    YES 41%
    NO 46%
    DONT KNOW 13%

    “The findings by the polling co.,which had been the first to identify an SNP lead ahead of Alex Salmond’s surprise landslide Scottish election win in 2011,give credence to private claims by Nationalists that the YES vote could be in front by July”
    THE SUNDAY TIMES today 6/4/2014.

  5. 06/04/2014, NeutronWarp9 wrote

    Do we really want this independence issue to go on and on ad nauseam? It is a bit like the angst over proposed removal of the Union Flag from the Australian and New Zealand flags? I’m past caring in some respects. If the Scots vote no this time, how long will it be before the issue is raised again?
    With a population of only 5 million, will the rest of the UK even notice an independent Scotland? Taken with the very real possibility of major companies re-locating to a safer location and it might even prove to be a net benefit to the rest of the UK by providing an opportunity to boost the North, Wales & NI.
    If only we could weaken the London-centric nature of the Oxbridge elite. A pipe dream, I know. Everything is stitched-up and that is why I, and many others, welcome the Salmond and Farage figures of this world in their quest to break-up the current cartel.

  6. 08/04/2014, John Morgan wrote

    I am Scottish and I want independence. I dont care what the aruguments are (loads of oil or no oil?, is George Robertson losing it or not?, will we run out of haggis in the first two weeks?)

    Get it over and done with so that Scottish people will finally have a choice when voting.

    All we have is the loony left triology of SNP/LAB/LIBS and the English Tories that nobody votes for.

  7. 08/04/2014, d2-d4 wrote

    I don’t think there are enough people who feel strongly enough to want independence given the day to day aggravation and upset it will cause.

    So I do agree that all the economic problems, visions, predictions and projections are necessary to the debate, but far from sufficient to sway it one way or the other.

    The idea that this kind of question will come down to better off by a few hundred quid, maybe..for a year…maybe 3..even 5, is a kind of mirage politicians have created to make them feel important or significant in the process.

    There are people who often seem somehow stuck in a somewhere located around 1250 to 1400 who do want it, and there’s a kind of patchwork quilt of history that is basically trying to transmute very real history book grievances into some fantasy of grievance supposedly real and compelling enough in the 21st century to compel people to try and unpick what has been an amazingly successful nation; is a decent enough one and could be heading towards being better than decent.

    Anything that doesn’t fit the purpose is airbrushed out in order to create some kind of homogenous view of a year zero idea… and so the historic differences between the Islands & Highlands AND the central belt..or the Borders, very real and pronounced in a way that makes the idea of Scotland actually a very restricted slice of historical time and that area are just ignored simply because they don’t fit properly.

    Such as the fact made obvious almost every day in ways large and very small, that Edinburgh and Glasgow cannot quite bury the hatchet of mutual suspicon and grievance even while supposedly under the yoke of a lowering and draconian Westminster rule; yet in the new millenium to come post independence it is carelessly supposed they will magically and suddenly discover a common purpose in a nation devoid of division and dissension.

    Ordinary politics strives to build the new state but once achieved ordinary politics will cease to exist, along with grievances, supposed or real, large or small.

    The fact is it is less a compelling idea of a response to grim oppression than a reverie born of wishful thinking.

    In the real world that shapes our lives the division between Scotland and England is illusory..there are not within these Islands fundamental differences between folk and Cornish people move North, Northerners move to Birmingham as easily as Glasgow, while a Welsh person can fit in, or indeed not, as easily in Norwich as Dundee, or Oban as Stamford.

    The real division is not between a Scotland and the England, Wales and N Ireland that separatists take so much care never to pronounce as such, preferring the mystification of ‘Westminster’ and idea laden with the load of inarticulate dread needed to try and create a case for the unnecessary and harmful division of a decent country in which to live… so decent that one of it’s mosst pressing problems is to try and find ways to manage people, often from truly oppressed lands, often simply wanting to come here because it is so attractive.

    It would be instructive to see what a Ukrainian from the Crimea or Donetsk would think about the supposedly oppressive British state and it’s actions in Scotland, as he he she watches the debate ongoing here..and the reality of the methods of both sides in his or her homeland.

    The real division in the UK, and the battle worth fighting to put right, is between a metropolitan city state grown bloated partly on hidden subsidies from tens of millions of pensioners, investors and savers from elsewhere..and the rest of us.

    Putting THIS right will not be achieved by recourse to needlework versions of a history that never was entirely true, to try and somehow disguise the flaws in a flawed vision in order to succeed in fooling just enough of the people for just enough of the time to have it accepted for the foreseeable future— by presenting reality through the prism of a history that never really existed outside the imagination of team working with an Australian actor and filmed largely in Ireland .

    It will be achieved by identifying the real problem in the UK, not creating illusory problems, and devising effective means of correcting that real problem..and that will be easier and better achieved by polling resources, democratic heft and energy and staying together.

  8. 09/04/2014, Mercian wrote

    If Scotland becomes independent who will protect them from a aggressor like Putin as we have seen in the Crimea.
    They will unable to defend “their” oil or coast line which threatens the future of all the United Kingdom.
    Business are already making plans to move south affecting the jobs market. While increased costs of transport and energy,Alex and the SNP will have to answer these question so or later. Better now and without the waffle!

  9. 10/04/2014, John Morgan wrote

    Scotland will defend itself against anyone.

    Remember Bannockburn, Wembley ’77, John Smeaton ??

    Who defends Norway and her oil, or Sweden or Finland. We will still be in NATO

  10. 11/04/2014, Ali Inkster wrote

    What about Orkney and Shetlands share of the oil and gas, the vast majority of Scotlands claimed reserves actually belong to the isles, and more than a few of us want clear of rule from Edinburgh. We even have a petition before the Scottish parliament to get a referendum, http://www.scottish.parliament.uk/GettingInvolved/Petitions/islandgroups
    67% of the revenue from the oil comes from Shetlands waters and roughly 12% from Orkneys waters.
    Neither Westminster or Edinburgh wants to give us a referendum because both fear the result, the Scots could stay with the UK and the Isles could go our own way. Westminster loses the oil but get to keep the Scots it would be like a perfect storm from the UK finances.

  11. 12/04/2014, EM99 wrote

    If we step back a moment from the figures, what is it that is driving anti independence feeling? What is stopping you from seeing two sides to the story (e.g. you make no mention of credit agencies’ views that Scotland would receive the highest recommendation). Is it emotions? Does it concern identity? I would love to know.
    Ed

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