Merryn's Blog

Scotland should show Western leaders an example – by telling voters the truth

It turns out that an independent Scotland would have a hard time paying for itself. But this provides a golden opportunity for Scotland's politicians to do something truly radical – telling voters the truth.

I wrote last week about the way in which the union argument has finally begun to be made in the Scottish press. That the argument is well made on both sides is absolutely vital, so I was pleased to see that the piece was pretty well read. It has now become one of our most commented onblog postsever! So I thought you would like to know what the press were saying on the arguments last weekend.

First up, the Mail on Sunday, which makes the point about passports. According to the SNP, "Scots will continue to be British citizens even if the country votes to leave the UK." They would still travel on British passports and use all the UK's diplomatic services abroad although over time, the government expects them to take dual citizenship and eventually be Scottish citizens.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Labour politicians in Scotland weren't, as you might imagine, particularly impressed by this. What is the point of separation, they asked, if nothing is to change? And why would the British government be happy for Scots having voted to leavethe UKtousethe "facilities of any British embassy or consulate around the world, while the Scottish government would contribute nothing for those services?" Yet another example, everyone agreed, of the SNP not being much fussed about detail.

Next up, The Times, which noted that, under current calculations as part of the UK, Scotland is estimated to make contributions to the EU of around £124m. But under independence, assuming most of the North Sea oil is attributed to Scotland (as the SNP assumes), that contribution would rise to more like £378m. But even that calculation assumes that Scotland would continue to get the UK's rebate.

Advertisement - Article continues below

The problem? There is no reason why it would. Instead, say the experts, there is "little chance". The result? The cost of the EU to Scotland would rise to £673m. A total increase of £549m "more than the entire spending on hospitals and GPs in Fife."

The Sunday Times was worried about something else: poll fatigue. So many voters have "tuned out" of the debate that Sir John Farmer, one of the SNP's big backers says he can't see more than 40% of the electorate turning out for the vote that's particularly the case given the practical difficulties of getting 16 and 17-year-olds interested and on the register. If he is right, we do have a genuine disaster on our hands. Huge decisions such as this need full participation.

This week in the Falklands, over 90% of theelectorate turned out to vote, and 99% of them voted for the same thing. There is no doubt there about the view of the people. Scotland needs to make sure that thisis also the case in its own referendum.

The next thing the papers focused on is just as serious: Scotland's finances. A leaked report has, says Gillian Bowditch, "revealed the naked truth on Scotland's post-independence economy." And it isn't a pretty sight.

Last summer, John Swinney produced a report that made it clear that whatever the SNP might say in public, they expect Scotland to have a slightly larger deficit than the UK by 2016/17; that running an economy dependent on volatile oil revenues is tricky stuff and that an independent Scotland will have little choice but to have a go at cutting its welfare and pensions bill. It also recognises the extent of the set-up costs of a new country (think £500m-plus to create a new tax system).

Advertisement - Article continues below

Hamish MacDonell picked this story up in the Mail. Swinney's leaked document has, he says, at one stroke "changed the entire atmosphere of the independence debate." How? By putting the truth out there.

The SNP might say that these numbers aren't valid anymore, but this report wasn't put together very long ago, so there is little reason to think that anything has really changed. The fact is that Scotland would "have less to spend after independence...would have to obey strict rules laid down by the UK Treasury" and would have to cut both defence and welfare (pensions in particular) to have a hope of financial survival.

But MacDonell makes an excellent point on all this. This isn't a Scottish problem. It is a Western problem. All governments "have been spending more than they earn for years now and it cannot go on." So, instead of backtracking and pretending he said none of this stuff, Swinney would be a million times better offby confronting it.

He should say in public what he clearly says in private: that unless we do something soon, we will slide into an irreversible position of debt and depression. We have to earn more and spend less. Then, says MacDonell, he should go further.

He should say that an independent Scotland would start with massive financial problems. But that independence would give it the chance to do what no one else appears to "have the guts to do" having a real go at cutting the spending it just can't afford and living within its means.

This would be something of a risk of course, but there is a chance that an unexpected outbreak of honesty paired with conviction might actually attract voters to the independence cause. "It may seem odd to some politicians, but what voters actually want is to be told the truth."

Advertisement - Article continues below

PS -Some good news the Lonely Planet has just announced that Scottish food has improved so much that it is now "among the best in Europe". Edinburgh is a veritable "connoisseur's delight" and Glasgow isa treasure trove of "quality cafes and restaurants". So that is nice.




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019

Will Britain close its doors to immigrants post-Brexit?

Details have not yet been forthcoming, but Britain will soon have a new immigration policy. What will that mean for businesses and investors?
8 Feb 2020
House prices

Is the jump in house prices just a Brexit bounce, or is it more durable?

UK house prices rose sharply in January. Some of that is down to the end of Brexit uncertainty – but not all. There is a real risk that prices will ke…
7 Feb 2020

Most Popular


Here’s why the Federal Reserve might print more money before 2020 is out

The Federal Reserve wants to allow US inflation to run “hot” for a while. But that’s just an excuse to keep interest rates low – and possibly print mo…
10 Feb 2020
Investment strategy

The secret to avoiding being panicked out of your portfolio

With the coronavirus continuing to occupy headlines, investors still aren’t sure how to react. But the one thing you mustn’t do is panic. Tim Price ex…
11 Feb 2020

Money Minute Monday 10 February: lacklustre growth in the UK and Europe

Today's Money Minute looks ahead to the week's GDP growth estimates for the UK and the eurozone, plus inflation figures for the USA.
10 Feb 2020

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019