Just after the election in May I spent some time reading various academic analyses of the 1979 and 1997 referendums. In 1979, the 'yes' campaign was badly damaged by the refusal of the political parties involved to co-ordinate their activities and unite in a single platform. In 1997, the 'no' campaign was seen as the Tory Party by another name and it was weakened by the refusal of Labour's primary anti-devolution MP, Tam Dalyell, to become involved. He said he would do his own thing. The lesson? Campaigns that were divided, and split along party lines, quite simply struggled.
Much of the fuss at the end of the Labour conference has been over Mr Miliband's apparent inability to remember the name of one of the candidates for the leadership of the Labour Party in Scotland. But the really interesting issue to emerge over this past week has been the difficulty Labour are facing over the prospect of sharing a platform with the Tories in a campaign against Scotland's independence. I think I know why - but more of that in a moment.
First though, some news. It seems that today, a Conservative councillor in Glasgow has launched a 'grassroots' campaign to save Westminster rule in Scotland (aka the Union), with an appeal for unity across party political lines. The organisation is called, rather confusingly, 'One Dynamic Nation'. I'd have thought that a pro-Union campaign would have recognised that there are in fact four dynamic nations in the UK, unless of course they are kick-starting their campaign with an implied slur against our friends and neighbours in England, Wales and Northern Ireland.
The call for a united approach is interesting. They clearly understand the lessons of Scottish referendum history. But unity in the pro-Westminster campaign also presents a challenge for the Labour Party, and the problem is fundamental.
In a modern variant of the Lorraine Mann question, I can see Scottish journalists chomping at the bit to ask Messrs Miliband/Murphy/Alexander et al, as they sit beside Messrs Cameron/Osborne/Clegg, whether or not they think a Tory government in London would do a better job of running our welfare state or our economy than a Scottish government in Edinburgh? A Scottish government that is actually elected solely by people who live here in Scotland, and therefore, will be more in tune with the social democratic values of our nation.
Would these Labour politicians rather have Tories taking decisions on the welfare support available to some of our most vulnerable families? Would they prefer that a Tory Chancellor was deciding how far and how fast to cut spending (too far and too fast it seems from Labour's rhetoric) than a Scottish Parliament with a clear majority in favour of an economic Plan B? Do they really prefer even more Tory rule to Home Rule with independence?
By the time of the referendum we are likely to have had a Tory government for pretty much 23 of the previous 36 years, that's about 2/3rds of the time. Not great odds for a social democratic Scot who sees those self-same Tories slashing into the social fabric of our nation, into the things we hold dear. And for those same social democratic Scots, who see on their TV news and in their papers what is happening to the English NHS and police, and to the UK welfare system at the hands of the Tories (and don't like it), will also come the realisation that as just 8.5% of the UK population, it is not their vote that will be crucial in determining whether there is yet another Tory government in the UK.
This, above all, is the reason why Labour politicians are so nervous about sitting beside the Tories on a pro-Union platform. As I said in a previous blog, that picture will be worth a thousand words. The choices for Scotland in the referendum will be many and varied, but perhaps one rises above the others: in one vote we have the opportunity to do what Labour promise at each and every election. We can get rid of Tory rule. Not just for a few years at a time, but for ever.
So if Labour sit with the Tories they will be putting up in flashing lights a core weakness of the Union case. And if they don't then experience tells us that lack of unity is an essential element of defeat. This is a political conundrum for Labour that puts Countdown to shame - but don't expect an answer any time soon.
Friday, 30 September 2011
Sunday, 25 September 2011
Facts are chiels that winna ding
I see from today's Independent on Sunday that "David Cameron is to go head to head with Alex Salmond in a bitter battle over the future of the Union" .
It seems, according to the article, that "the 'quad' - Mr Cameron, the Deputy Prime Minister, Nick Clegg, the Chancellor, George Osborne, and the Chief Secretary to the Treasury, Danny Alexander - have rejected a more positive campaign in favour of an aggressive response targeting Mr Salmond himself."
The meat of the article suggests that it is not only aggression that will be at the forefront of this campaign, but once again inaccurate and fear-mongering assertion. Lets take the two examples from the piece.
First, according to the IoS story, the Prime Minister "believes the First Minister has had an easy ride and not faced enough questions on how an independent Scotland would stay afloat - and bankroll its huge pensions and benefits bill without raising taxes". But as I wrote a few weeks ago, the facts show that Scotland spends a smaller proportion of its revenue on these items than the UK. Scotland is better able to afford welfare and pensions than the UK.
Here are the numbers from that previous blog post:
"A quick calculation from the figures in Government Expenditure and Revenue in Scotland 2010 shows that in the most recent year social protection expenditure (which includes all the elements of welfare spending reserved and devolved, the vast majority of which is the reserved benefits system) was 42% of Scottish revenues, less than the 43% for the UK. So on the basis of taxes raised, once our welfare payments are made, we actually have more left to spend on other things than the UK.
It seems, according to the article, that "the 'quad' - Mr Cameron, the Deputy Prime Minister, Nick Clegg, the Chancellor, George Osborne, and the Chief Secretary to the Treasury, Danny Alexander - have rejected a more positive campaign in favour of an aggressive response targeting Mr Salmond himself."
The meat of the article suggests that it is not only aggression that will be at the forefront of this campaign, but once again inaccurate and fear-mongering assertion. Lets take the two examples from the piece.
First, according to the IoS story, the Prime Minister "believes the First Minister has had an easy ride and not faced enough questions on how an independent Scotland would stay afloat - and bankroll its huge pensions and benefits bill without raising taxes". But as I wrote a few weeks ago, the facts show that Scotland spends a smaller proportion of its revenue on these items than the UK. Scotland is better able to afford welfare and pensions than the UK.
Here are the numbers from that previous blog post:
"A quick calculation from the figures in Government Expenditure and Revenue in Scotland 2010 shows that in the most recent year social protection expenditure (which includes all the elements of welfare spending reserved and devolved, the vast majority of which is the reserved benefits system) was 42% of Scottish revenues, less than the 43% for the UK. So on the basis of taxes raised, once our welfare payments are made, we actually have more left to spend on other things than the UK.
The second, is welfare spending as share of GDP - as a proportion of the size of our economy. Again, the figures for 2009-10 are illustrative. In Scotland, we spend 15% of our GDP on welfare, while in the UK they spend 16%. Quite clearly welfare payments in Scotland are more affordable on the basis of both government revenue and share of GDP.
This pattern is repeated from 2005-06 to 2008-09. For each of the last five years, Scotland has been in a stronger position than the UK on both counts, as we have been, also, in terms of overall budget position. That means Scots are better able to afford the current levels of social protection than the rest of the UK."
Second, the article tells us "the gap between public spending and taxes raised in Scotland stood at £14 billion in 2009-10, and the country receives subsidies amounting to almost 20% more per head than England."
What the article fails to say is that in 2009-10, when you include Scotland's share of its offshore revenues, our financial position is stronger than the UK. We receive 9.3% of UK spending, but contribute 9.4% of revenue. Scotland's deficit was 6.8% of GDP compared to a UK deficit of 7.6%. And in the four previous years, Scotland generated an absolute budget surplus of over £2 billion, at a time when the UK was massively in debt. On these actual figures the nation more likely to face what Mr Moore in the article calls a "Greece-style economic collapse" is most certainly not Scotland.
If this is going to be the quality of attack from the UK government, I say bring it on. They tell us we can't afford our welfare payments, but the numbers from a National Statistics publication - which means those numbers have to go through a rigorous process to ensure they are robust - show we are better able to afford these services than the UK. Those same UK ministers say we are burdened with debt, but our debt position is better than the UK, and our share of UK revenue is above our share of UK spending.
As the First Minister is often pointing out 'facts are chiels that winna ding' (or in English translation 'facts are fellows that will not be overturned'). That is the bottom line.
Scotland has moved on. When once we cowered, now we stand tall and confident, laughing at crude attempts to manufacture fear with phoney figures. And to the 'quad' - if you don't see that, you've already lost.
Friday, 23 September 2011
The tax twilight zone
It's not often that a newspaper article generates absolute disbelief (although sometimes irritation or disagreement with one or two aspects). But the articles in today's Scotsman and Herald (among others) alleging that an "£850 million" increase in business rates revenue is a tax increase (or tax bombshell) are pretty much twilight zone stuff. The £850 million figure is in itself wrong, the product of double and triple counting (an approach that was much derided when it became the tactic of choice of Gordon Brown to over-inflate his spending promises - it is a practice that rightly fell into disrepute). But that is not my main beef.
The articles are based on an analysis by the Centre for Public Policy for the Regions (who should know better - this is really rookie stuff). The Scotsman piece also has quotes from two business organisations, both of whom should also know better - but of course both may have been quoted out of context.
So let me explain why the articles are wrong.
First, if you have 1000 businesses paying £1000 each in business tax, you have revenue of £1,000,000. If over time you have new businesses starting up (perhaps because of the most competitive business rates relief package in the UK) and you then have 110 businesses paying £1000 each, the total tax take becomes £1,100,000. That is a 10% increase in tax revenue, but it is not a tax increase on business because those same businesses are all still paying that self-same £1000 each. This is what is referred to as buoyancy. It means more businesses (and presumably more jobs) and is a good thing.
Second, when the government publishes its estimate for business rates revenue it factors in the possibility that some businesses will appeal against their valuation. At the start of a new valuation period that estimate is based on few real cases and few appeal results. But again, over time, actual results come in and the estimate becomes more and more accurate. So again, as illustration, taking the 1000 businesses with their £1000 tax bill. The government might estimate that 200 will appeal and 50% of them will be successful. However, in reality only 100 of them do appeal and only 50 of these are successful. That difference results in 5% more revenue than anticipated. So revenues are higher, but the tax rate for business is not increased. Those who appealed are paying what is independently assessed as the correct and fair tax rate for their business.
These two elements (along with inflation) form the bulk of the extra £500 million revenue raised. It is revenue, therefore, that reflects buoyancy (new businesses), which is good, and the appeals results, which are independent and widely regarded as fair.
None of this might generate a good headline, but it is the reality. This is not rocket science and the leading figures at the CPPR, when they worked for Jack McConnell and Wendy Alexander, must have gained this basic understanding of how the system works.
In this budget, there are two tax changes. One is a public health levy on the largest supermarkets that sell tobacco and alcohol, with the money raised going to pay for preventative spending to try and reduce the impact of, for example, alcohol or poverty and improve people's life chances. This amounts to £30-£40 million a year and will be paid by a minuscule fraction of Scottish businesses (and for those businesses, will equal just 0.3% of their turnover). As some people have pointed out, these same companies will, under minimum pricing for alcohol proposals, be prevented from selling booze at pocket-money prices. This will generate additional revenue for them and so there will be no net loss - the difference is that some of the money they will pocket as a result of minimum pricing will come back to the public purse (to be invested in making Scottish society stronger, healthier and fairer).
The second, is reform of empty property relief, which results in an even smaller additional revenue (somewhere around £18 million). This measure has been welcomed by the Federation of Small Businesses who know that the current system means there is no incentive for landlords in some of our town centres to have property occupied. As a result they can keep rental levels high and opportunities for business growth and town centre regeneration are limited. The measure is designed to remove that perverse incentive. It will mean fewer properties lying empty for no good reason in our high streets, more businesses being formed and paying business rates, and yes, as a result higher business rates revenue. The change, as proposed, will still mean that empty property relief remains, but in a more effective form and the package on offer in Scotland will be twice as generous as that available in England.
As a final thought, the CBI, in the Scotsman article, suggest that this demonstrates what would happen if Scotland had responsibility for corporation tax. Yes, it does, but not in the way they are trying to insinuate. If the same approach was adopted on corporation tax as business rates what would happen? Rates would be lower than in England, as a result more businesses would be protected during economic downturn (and survive, protecting jobs) and more would grow in times of economic recovery (creating jobs). That means that there would be more businesses in Scotland - each paying a lower tax than their competitors elsewhere in the UK - but together contributing to higher tax revenues. And Scotland would have more jobs, more income for the government and more to invest in the things that really matter, which, together, will improve the lives and life chances of more Scots.
The articles are based on an analysis by the Centre for Public Policy for the Regions (who should know better - this is really rookie stuff). The Scotsman piece also has quotes from two business organisations, both of whom should also know better - but of course both may have been quoted out of context.
So let me explain why the articles are wrong.
First, if you have 1000 businesses paying £1000 each in business tax, you have revenue of £1,000,000. If over time you have new businesses starting up (perhaps because of the most competitive business rates relief package in the UK) and you then have 110 businesses paying £1000 each, the total tax take becomes £1,100,000. That is a 10% increase in tax revenue, but it is not a tax increase on business because those same businesses are all still paying that self-same £1000 each. This is what is referred to as buoyancy. It means more businesses (and presumably more jobs) and is a good thing.
Second, when the government publishes its estimate for business rates revenue it factors in the possibility that some businesses will appeal against their valuation. At the start of a new valuation period that estimate is based on few real cases and few appeal results. But again, over time, actual results come in and the estimate becomes more and more accurate. So again, as illustration, taking the 1000 businesses with their £1000 tax bill. The government might estimate that 200 will appeal and 50% of them will be successful. However, in reality only 100 of them do appeal and only 50 of these are successful. That difference results in 5% more revenue than anticipated. So revenues are higher, but the tax rate for business is not increased. Those who appealed are paying what is independently assessed as the correct and fair tax rate for their business.
These two elements (along with inflation) form the bulk of the extra £500 million revenue raised. It is revenue, therefore, that reflects buoyancy (new businesses), which is good, and the appeals results, which are independent and widely regarded as fair.
None of this might generate a good headline, but it is the reality. This is not rocket science and the leading figures at the CPPR, when they worked for Jack McConnell and Wendy Alexander, must have gained this basic understanding of how the system works.
In this budget, there are two tax changes. One is a public health levy on the largest supermarkets that sell tobacco and alcohol, with the money raised going to pay for preventative spending to try and reduce the impact of, for example, alcohol or poverty and improve people's life chances. This amounts to £30-£40 million a year and will be paid by a minuscule fraction of Scottish businesses (and for those businesses, will equal just 0.3% of their turnover). As some people have pointed out, these same companies will, under minimum pricing for alcohol proposals, be prevented from selling booze at pocket-money prices. This will generate additional revenue for them and so there will be no net loss - the difference is that some of the money they will pocket as a result of minimum pricing will come back to the public purse (to be invested in making Scottish society stronger, healthier and fairer).
The second, is reform of empty property relief, which results in an even smaller additional revenue (somewhere around £18 million). This measure has been welcomed by the Federation of Small Businesses who know that the current system means there is no incentive for landlords in some of our town centres to have property occupied. As a result they can keep rental levels high and opportunities for business growth and town centre regeneration are limited. The measure is designed to remove that perverse incentive. It will mean fewer properties lying empty for no good reason in our high streets, more businesses being formed and paying business rates, and yes, as a result higher business rates revenue. The change, as proposed, will still mean that empty property relief remains, but in a more effective form and the package on offer in Scotland will be twice as generous as that available in England.
As a final thought, the CBI, in the Scotsman article, suggest that this demonstrates what would happen if Scotland had responsibility for corporation tax. Yes, it does, but not in the way they are trying to insinuate. If the same approach was adopted on corporation tax as business rates what would happen? Rates would be lower than in England, as a result more businesses would be protected during economic downturn (and survive, protecting jobs) and more would grow in times of economic recovery (creating jobs). That means that there would be more businesses in Scotland - each paying a lower tax than their competitors elsewhere in the UK - but together contributing to higher tax revenues. And Scotland would have more jobs, more income for the government and more to invest in the things that really matter, which, together, will improve the lives and life chances of more Scots.
Tuesday, 20 September 2011
The attack of the dead sheep
Denis Healey famously described the experience of being attacked by Tory MP Sir Geoffrey Howe as akin to being "savaged by a dead sheep". In recent days I've begun to understand this description a little better. A weekend of assaults by the Lib Dems on the SNP has been the political equivalent of being savaged by a whole flock of deceased, and very woolly, ruminants.
This weekend I've also been reading Tony Blair's book, 'A Journey', and was struck by one particular passage on trust (something he knows about, given the loss of trust he suffered over Iraq, as he is painfully aware):
"the public are quite discerning, and discriminate between politicians they don't trust at a superficial level, i.e. pretty much all of them, and those they don't trust at a more profound level. This level of trust is about whether the public believe that the political leader is trying to do his or her best for them . . . This is the level of trust that really matters."
His words made me think about the contrasting approaches to the constitutional question on display in recent days. Today the latest Lib Dem 'broadside' on independence is the news that Scottish Secretary Michael Moore has asked his ministerial colleagues in every UK department to work out the costs of independence. What is the purpose of this request? Is it a genuine attempt to ensure the process of independence is as smooth as possible, if the people choose this path, or is it just designed to produce an eye-wateringly large figure which can be used to bash the independence case?
Most Scots won't pay any attention to the attack today or to the figures when they are eventually produced. They will just see them as part of the superficial, 'he said, she said', level of politics that they don't trust. As Lesley Riddoch correctly pointed out yesterday this is shadow boxing - most people will wait for the real thing. But some people will pay attention, those who have a particular interest in politics and who follow the day to day battles. They will focus on the detail of the arguments, and this is where the Lib Dem's approach has real risks on two fronts.
First, if there is the slightest weakness or inconsistency in their figures they will only serve to undermine the Unionist critique rather than the independence case. I reflect back to the widely used UK figures on the supposed cost of devolving corporation tax to Scotland, where the Treasury used different and less favourable methodology in their calculations for Scotland than they did for their calculations for Northern Ireland, in one case by a totally ridiculous factor of fifteen. When talking about the impact of lower corporation tax for the UK they included an assessment of the wider economic benefit, but for Scotland this aspect was ignored. And while the headline writers or the opposition benches may not care or may not notice, thoughtful others, in the real world, do.
Second, those same people who are following this debate will wonder why the Scottish Secretary is going all out to provide figures for the supposed costs of independence, when he can't provide figures for the potential reduction in Scotland's budget resulting from the income tax proposals in his own Scotland Bill, a measure which is going through Parliament at this very moment. They will quite rightly wonder why he is spending so much time and effort focusing on independence while ignoring the "beam in his own eye", the troublesome and potentially dangerous Scotland Bill income tax plans. There is a massive inconsistency in asking questions of the SNP when he can't answer the same questions on his own current plans. And linked to this, will people not also be wondering why he is asking UK departments to work on issues around independence but he hasn't asked them to work on sorting out the dreadful impact of welfare reform on some Scots families? Or demanded they bring the UK employment network more closely into alignment with the Scottish government's skills and training efforts so we can get more Scots into work or training right now, today, when it is so crucially important? One of my basic political philosophies is that people will judge you by what you do, not what you say (or what others say about you). And on this analysis, the Lib Dems are wildly out of touch with the mood of the people of Scotland today. It has to be all about action on jobs and recovery, nothing more and nothing less.
And this brings me to the second half of Tony Blair's trust equation: is the politician trying their utmost to do the best for the people? The SNP went into the Scottish election saying clearly that the first priority for a re-elected government was jobs and the economy, and the constitutional aspect of this was getting real job-creating powers into the Scotland Bill. The referendum and the detailed debate on independence would come in the second half of the parliament. And that is what the SNP is doing. While the opposition are trying to lay land mines for independence, the SNP government is getting on with the job as set out. And when the debate on independence does come, as it will, people will rightly assess what politicians have been doing over these years. I have no doubt they will be more inclined to trust politicians who have been working hard to create and protect employment rather than those who have been manufacturing dodgy statistics when they too should be focused first and foremost on economic growth, social progress and giving Scotland more economic powers through the Scotland Bill, although being in partnership with the Tories makes these last three an almost impossible task for Lib Dem ministers. In the slash and burn of current UK government policy, I can perhaps see why trying to divert attention away from their government's actions seems like the right solution.
Jim Mather has produced a series of slides which demonstrate just why real economic powers for Scotland are so important. The first shows Scotland's relative economic position 25 years ago (the three flags are Scotland, UK and Norway):
And the third, where Scotland will be if we don't break out of the restrictions placed on our economy within the current constitutional arrangements:
This is why the debate on economic teeth for the Scotland Bill and full financial responsibility (independence in terms of economic powers) is so important. We are growing, yes, but more slowly than we could be: we are not realising our full economic potential, with the impact felt by families across Scotland.
Mr Moore, and the other proponents of Westminster control (and, thus, Tory rule), may be happy devising new wheezes to try and frighten Scots, but that is not good enough in the face of these realities. Yes, Scottish government action has resulted in higher levels of business confidence and falling levels of economic inactivity (in contrast to the UK). It has meant rising employment and falling unemployment (again against the UK trend). Achieving this with the limited tools at hand is testament to what could be achieved with the normal powers of other nations.
The time to talk independence will come and it is a debate I am looking forward to. But today the focus must be on the immediate priorities of jobs and recovery. How politicians perform on this test is where that more profound trust will be forged. And it is a test that today the UK government is failing.
This weekend I've also been reading Tony Blair's book, 'A Journey', and was struck by one particular passage on trust (something he knows about, given the loss of trust he suffered over Iraq, as he is painfully aware):
"the public are quite discerning, and discriminate between politicians they don't trust at a superficial level, i.e. pretty much all of them, and those they don't trust at a more profound level. This level of trust is about whether the public believe that the political leader is trying to do his or her best for them . . . This is the level of trust that really matters."
His words made me think about the contrasting approaches to the constitutional question on display in recent days. Today the latest Lib Dem 'broadside' on independence is the news that Scottish Secretary Michael Moore has asked his ministerial colleagues in every UK department to work out the costs of independence. What is the purpose of this request? Is it a genuine attempt to ensure the process of independence is as smooth as possible, if the people choose this path, or is it just designed to produce an eye-wateringly large figure which can be used to bash the independence case?
Most Scots won't pay any attention to the attack today or to the figures when they are eventually produced. They will just see them as part of the superficial, 'he said, she said', level of politics that they don't trust. As Lesley Riddoch correctly pointed out yesterday this is shadow boxing - most people will wait for the real thing. But some people will pay attention, those who have a particular interest in politics and who follow the day to day battles. They will focus on the detail of the arguments, and this is where the Lib Dem's approach has real risks on two fronts.
First, if there is the slightest weakness or inconsistency in their figures they will only serve to undermine the Unionist critique rather than the independence case. I reflect back to the widely used UK figures on the supposed cost of devolving corporation tax to Scotland, where the Treasury used different and less favourable methodology in their calculations for Scotland than they did for their calculations for Northern Ireland, in one case by a totally ridiculous factor of fifteen. When talking about the impact of lower corporation tax for the UK they included an assessment of the wider economic benefit, but for Scotland this aspect was ignored. And while the headline writers or the opposition benches may not care or may not notice, thoughtful others, in the real world, do.
Second, those same people who are following this debate will wonder why the Scottish Secretary is going all out to provide figures for the supposed costs of independence, when he can't provide figures for the potential reduction in Scotland's budget resulting from the income tax proposals in his own Scotland Bill, a measure which is going through Parliament at this very moment. They will quite rightly wonder why he is spending so much time and effort focusing on independence while ignoring the "beam in his own eye", the troublesome and potentially dangerous Scotland Bill income tax plans. There is a massive inconsistency in asking questions of the SNP when he can't answer the same questions on his own current plans. And linked to this, will people not also be wondering why he is asking UK departments to work on issues around independence but he hasn't asked them to work on sorting out the dreadful impact of welfare reform on some Scots families? Or demanded they bring the UK employment network more closely into alignment with the Scottish government's skills and training efforts so we can get more Scots into work or training right now, today, when it is so crucially important? One of my basic political philosophies is that people will judge you by what you do, not what you say (or what others say about you). And on this analysis, the Lib Dems are wildly out of touch with the mood of the people of Scotland today. It has to be all about action on jobs and recovery, nothing more and nothing less.
And this brings me to the second half of Tony Blair's trust equation: is the politician trying their utmost to do the best for the people? The SNP went into the Scottish election saying clearly that the first priority for a re-elected government was jobs and the economy, and the constitutional aspect of this was getting real job-creating powers into the Scotland Bill. The referendum and the detailed debate on independence would come in the second half of the parliament. And that is what the SNP is doing. While the opposition are trying to lay land mines for independence, the SNP government is getting on with the job as set out. And when the debate on independence does come, as it will, people will rightly assess what politicians have been doing over these years. I have no doubt they will be more inclined to trust politicians who have been working hard to create and protect employment rather than those who have been manufacturing dodgy statistics when they too should be focused first and foremost on economic growth, social progress and giving Scotland more economic powers through the Scotland Bill, although being in partnership with the Tories makes these last three an almost impossible task for Lib Dem ministers. In the slash and burn of current UK government policy, I can perhaps see why trying to divert attention away from their government's actions seems like the right solution.
Jim Mather has produced a series of slides which demonstrate just why real economic powers for Scotland are so important. The first shows Scotland's relative economic position 25 years ago (the three flags are Scotland, UK and Norway):
The second shows our relative position 5 years ago:
This is why the debate on economic teeth for the Scotland Bill and full financial responsibility (independence in terms of economic powers) is so important. We are growing, yes, but more slowly than we could be: we are not realising our full economic potential, with the impact felt by families across Scotland.
Mr Moore, and the other proponents of Westminster control (and, thus, Tory rule), may be happy devising new wheezes to try and frighten Scots, but that is not good enough in the face of these realities. Yes, Scottish government action has resulted in higher levels of business confidence and falling levels of economic inactivity (in contrast to the UK). It has meant rising employment and falling unemployment (again against the UK trend). Achieving this with the limited tools at hand is testament to what could be achieved with the normal powers of other nations.
The time to talk independence will come and it is a debate I am looking forward to. But today the focus must be on the immediate priorities of jobs and recovery. How politicians perform on this test is where that more profound trust will be forged. And it is a test that today the UK government is failing.
Thursday, 8 September 2011
'Record' a key peg in the SNP's 'big tent'
Now that my dissertation is finished I've got a little bit more time on my hands. That's meant a flurry of blogging, but it's also given me time to explore in a little more detail some interesting recent polling and survey numbers.
The first example is this weekend's Mori poll (the one which gave the SNP a record 49% support for the Scottish Parliament and a significant lead in voting intentions for Westminster and which showed, in yesterday's Times, two-thirds of Scots backing new job creating powers for the Scottish Parliament). I've been to trying to get a better understanding of some of the factors underpinning the findings. One element stands out, the fact that the SNP topped the poll, not only on the headline figures, but also for respondents born outside Scotland (that is voters from England, Wales, Northern Ireland, the rest of the EU and elsewhere). The SNP has double the support among this group as the nearest challenger for Holyrood (the Labour Party) at 44% to 22%. Even for Westminster the SNP has almost 1/3rd more support among this group than Labour.
This shows the extent of the SNP's big tent - or big bothy as some have called it. The lazy assumption might be that the Scottish National Party would only appeal to people born here in Scotland, but that is clearly not the case. That is part of the 'narrow nationalists' misunderstanding and misrepresentation of the SNP that plagues the opposition parties - they believe their own propaganda and don't see us for who we really are.
But clearly new Scots can see the reality. These poll findings provide important new evidence of the breadth of the SNP's appeal. But what is the explanation?
Ultimately voters will judge the SNP, not on what others say about us, but on what we actually do. I believe the primary factor is the party's ongoing focus on the issues that matter to people (regardless of their country of origin). The Council Tax freeze, for example, shows we understand the current, significant pressures on family budgets.
But perhaps most important is the SNP's focus on the economy and creating and protecting jobs. That has to be the number 1 priority for any Scottish Government and, indeed, it is the driving passion of the First Minister at the moment. It is why, even on the constitution, our immediate focus is getting job-creating powers for the parliament.
Jobs and delivering new opportunities for young Scots were at the heart of this week's Programme for Government. On Wednesday, the First Minister had plenty to say about the steps we can and should take to help young Scots, in particular, into training and work, including a new guarantee on learning and training places for young Scots: 'Opportunities for All'. This will mean an offer of a place to every 16-19 year old if they aren't already in a job, modern apprenticeship or education.
People want a Scottish Government that is working hard for jobs and is doing what it can to protect family budgets and generally make Scotland a better place to live. These are the issues that speak to voters no matter where they come from. And that is what the people of Scotland see, and like. This is the reality of the SNP - a party for all of the people of Scotland - rather than the crude caricatures presented by the opposition.
And this brings me to the second set of numbers, the recent Scottish Household Survey, published a few weeks ago. This set of figures provides additional explanation for the scale of the SNP victory in the recent Scottish election.
In 2010 93.5% thought their neighbourhood was a fairly or very good place to live - up since 2007. The number who thought their local area had a problem with anti-social behaviour had fallen from 16.6% when the SNP took office to just 11.3%. 97% felt safe in their homes.
91% of parents were satisfied with the education provided to their kids and 86.4% of people were satisfied with their local health services (up from 81.3% in 2007).
This is how people perceived Scotland in the months running up to the election. They were, it seems, content with the devolved services delivered by the Scottish Government, and indeed thought key aspects of quality of life were improving. Is it any wonder the opposition parties' messages of calamity, failure and disaster had so little impact?
But, while both these sets of survey figures are encouraging, they are only the start for the SNP. We know we have to keep working hard to earn the trust and support of all Scots.
There is no sense of entitlement to govern, instead a clear understanding that we are only as good as our last decision. There must be a process of continuous improvement and a relentless ambition to make Scotland more successful. I believe our Parliament has used its powers well - and the people seem to agree. I also believe that to achieve even more, we need new tools. If people think we are delivering improving local health services and are satisfied with the education their kids or grandkids are getting, they are more likely to believe we will do just as well with responsibility for policies currently in the hands of the Tories in Westminster.
We never forget that the people of Scotland - no matter where they were born - are our only bosses. They will judge us on our record and that record will be an important part of their calculation when we ask them to trust us with more powers in the independence referendum.
The first example is this weekend's Mori poll (the one which gave the SNP a record 49% support for the Scottish Parliament and a significant lead in voting intentions for Westminster and which showed, in yesterday's Times, two-thirds of Scots backing new job creating powers for the Scottish Parliament). I've been to trying to get a better understanding of some of the factors underpinning the findings. One element stands out, the fact that the SNP topped the poll, not only on the headline figures, but also for respondents born outside Scotland (that is voters from England, Wales, Northern Ireland, the rest of the EU and elsewhere). The SNP has double the support among this group as the nearest challenger for Holyrood (the Labour Party) at 44% to 22%. Even for Westminster the SNP has almost 1/3rd more support among this group than Labour.
This shows the extent of the SNP's big tent - or big bothy as some have called it. The lazy assumption might be that the Scottish National Party would only appeal to people born here in Scotland, but that is clearly not the case. That is part of the 'narrow nationalists' misunderstanding and misrepresentation of the SNP that plagues the opposition parties - they believe their own propaganda and don't see us for who we really are.
But clearly new Scots can see the reality. These poll findings provide important new evidence of the breadth of the SNP's appeal. But what is the explanation?
Ultimately voters will judge the SNP, not on what others say about us, but on what we actually do. I believe the primary factor is the party's ongoing focus on the issues that matter to people (regardless of their country of origin). The Council Tax freeze, for example, shows we understand the current, significant pressures on family budgets.
But perhaps most important is the SNP's focus on the economy and creating and protecting jobs. That has to be the number 1 priority for any Scottish Government and, indeed, it is the driving passion of the First Minister at the moment. It is why, even on the constitution, our immediate focus is getting job-creating powers for the parliament.
Jobs and delivering new opportunities for young Scots were at the heart of this week's Programme for Government. On Wednesday, the First Minister had plenty to say about the steps we can and should take to help young Scots, in particular, into training and work, including a new guarantee on learning and training places for young Scots: 'Opportunities for All'. This will mean an offer of a place to every 16-19 year old if they aren't already in a job, modern apprenticeship or education.
People want a Scottish Government that is working hard for jobs and is doing what it can to protect family budgets and generally make Scotland a better place to live. These are the issues that speak to voters no matter where they come from. And that is what the people of Scotland see, and like. This is the reality of the SNP - a party for all of the people of Scotland - rather than the crude caricatures presented by the opposition.
And this brings me to the second set of numbers, the recent Scottish Household Survey, published a few weeks ago. This set of figures provides additional explanation for the scale of the SNP victory in the recent Scottish election.
In 2010 93.5% thought their neighbourhood was a fairly or very good place to live - up since 2007. The number who thought their local area had a problem with anti-social behaviour had fallen from 16.6% when the SNP took office to just 11.3%. 97% felt safe in their homes.
91% of parents were satisfied with the education provided to their kids and 86.4% of people were satisfied with their local health services (up from 81.3% in 2007).
This is how people perceived Scotland in the months running up to the election. They were, it seems, content with the devolved services delivered by the Scottish Government, and indeed thought key aspects of quality of life were improving. Is it any wonder the opposition parties' messages of calamity, failure and disaster had so little impact?
But, while both these sets of survey figures are encouraging, they are only the start for the SNP. We know we have to keep working hard to earn the trust and support of all Scots.
There is no sense of entitlement to govern, instead a clear understanding that we are only as good as our last decision. There must be a process of continuous improvement and a relentless ambition to make Scotland more successful. I believe our Parliament has used its powers well - and the people seem to agree. I also believe that to achieve even more, we need new tools. If people think we are delivering improving local health services and are satisfied with the education their kids or grandkids are getting, they are more likely to believe we will do just as well with responsibility for policies currently in the hands of the Tories in Westminster.
We never forget that the people of Scotland - no matter where they were born - are our only bosses. They will judge us on our record and that record will be an important part of their calculation when we ask them to trust us with more powers in the independence referendum.
Wednesday, 7 September 2011
Scotland uniquely incapable?
Little Britain is alive and well in HM Treasury. Instead of the computer saying no, we now have Treasury ministers saying no to any reasonable suggestion for enhanced responsibilities for Holyrood. And all this despite the most recent opinion poll, in the Times today, showing 2/3rds of Scots support a stronger Scottish Parliament with new job-creating powers.
The most recent Treasury 'no' has come from David Gauke, the Exchequer Secretary in London, setting out a series of reasons why Scotland can't have responsibility for corporation tax. They are all technical and ignore the powerful argument that lower corporation tax will lead to more jobs. But what is of greatest interest is the underlying assumption. Somehow, in the minds of Tories and Lib Dems, Scotland is uniquely incapable of dealing with the collection of corporation tax or the cross-border issues involved, despite the fact that every country in the world and indeed many sub-State nations or regions manage this task perfectly competently.
According to the press reports, Mr Gauke warned that corporation tax was a "complex matter", clearly concerned that the nation that produced the founder of the Bank of England, the cheque book and numerous financial innovations (yes, Scotland) lacked the intellectual capacity to deal with the collection of a tax. According to the Tory government such a task is beyond Scotland's wit. And yet, take a look across Europe where lower corporation tax is the policy of choice for a host of small countries sitting beside larger, economically weighty neighbours.
Lets look at Germany and some of its near neighbours - Finland, Estonia, Austria, Denmark and the Czech Republic. These countries all have lower corporation tax than Germany, ranging from between 4% and 9% below the German rate. This is a policy designed to increase these nations' competitiveness and it is a policy they have proved more than capable of managing.
But these countries, you might point out, are independent. Yes, but lower corporation tax is a policy lever chosen and successfully managed and delivered by sub-State nations and regions within larger states, a point I'll come back to shortly.
Mr Gauke also claims that Scotland's case is different from Northern Ireland's because our economy is more integrated into the rest of the UK, and to introduce the change would result in "significant distortions and frictional costs".
But no more integrated than the German, Spanish or US economies. In Germany, corporation tax is divided between a federal and local element, with each raising around half the total 'national' rate. And within Germany there is a variation of around 3% in these local rates. So different localities in Germany manage quite easily variable corporation tax rates.
Similarly, in Spain, the Basque Country and Navarre have lower corporation tax. But also important for this debate, they choose to exercise their responsibility not only by lowering the rate, but also by introducing specific allowances, for example to support and encourage R&D. This, indeed, has been part of their response to previous economic crises.
And, in the US, each State has different corporation tax arrangements. If you look at the figures the pattern is clear and it is not the 'race to the bottom' suggested by some. States with an inbuilt competitive advantage - New York, New Jersey, California and DC - have the highest rates. Because of their location, their position as governmental or financial centres, these States don't have to compete on corporation tax because they already have important advantages. However those away from the main centres of industry and commerce are the ones who must do something distinctive to attract investment, and so it is Arkansas, Ohio, Nevada, or South Dakota who choose the very lowest rates.
Corporation tax, for them, is a lever designed to level the playing field and allow their State to compete. And have no doubt we face the same inherent competitive distortions here in the UK with a clear cost advantage in place today which encourages companies to establish in and around London and the south-east rather than in Scotland, Wales, Northern Ireland or elsewhere. To do nothing, therefore, is to ensure distortion and cost - but it is distortion that damages Scotland and the cost is to Scottish jobs.
On the Westminster narrative, "complex" and "costly" corporation tax is such a damaging lever [for Scotland] and so difficult to manage [for Scotland] and yet all these other countries, autonomous nations, States and even local authorities manage to do it perfectly well. The Treasury position is not only insulting, it is pure nonsense.
But, you might argue, all these entities already have corporation tax as a lever. The problem is taking on responsibility for the tax. But across the UK, and indeed the EU, sub-state nations are queuing up to take on this power. We already know about Northern Ireland, but lets look at the argument - one from the left and one from the right - in two other devolved/semi-autonomous nations.
First, Catalonia where the former representative of the Socialist/ERC government in London, points out:
"In my old job I was trying to put forward proposals to international firms to come to Catalonia; it was very difficult for me to offer the same terms as an independent state. Basically, because we were not able to offer income tax or corporation tax reductions in the same way an independent state can do."
And second, where the main recommendation of the Welsh Conservatives' economic commission (yes, the Welsh Conservatives!) was a reduction in Wales' corporation tax rate.
So there we have it. As far as the UK government is concerned having or getting corporation tax is too complex for Scotland, too risky for Scotland. In their view we are uniquely incapable. We aren't as clever or as competent as the UK itself (which can of course manage all these difficult issues perfectly well). We aren't as good or deserving as Wales (according to the Tories' own economic commission), or Northern Ireland (where a lower corporate tax rate is supported by the Tory Secretary of State). What is manageable for Finland, Denmark, Austria, Estonia, the Czech Republic, the Basque Country, Navarre, every German local government unit and every US State (to name just a few - I could have added many more including the tiny British isles of Guernsey, Jersey and the Isle of Man) is beyond Scotland.
Scotland is fed up with being told we are too small, too poor, or in this case too stupid. But scratch the surface of the UK government's attempts at 'positive' Unionism and that is the anti-Scottish assumption you find. And they wonder why their parties in Scotland are in freefall and falling apart at the seams?
The most recent Treasury 'no' has come from David Gauke, the Exchequer Secretary in London, setting out a series of reasons why Scotland can't have responsibility for corporation tax. They are all technical and ignore the powerful argument that lower corporation tax will lead to more jobs. But what is of greatest interest is the underlying assumption. Somehow, in the minds of Tories and Lib Dems, Scotland is uniquely incapable of dealing with the collection of corporation tax or the cross-border issues involved, despite the fact that every country in the world and indeed many sub-State nations or regions manage this task perfectly competently.
According to the press reports, Mr Gauke warned that corporation tax was a "complex matter", clearly concerned that the nation that produced the founder of the Bank of England, the cheque book and numerous financial innovations (yes, Scotland) lacked the intellectual capacity to deal with the collection of a tax. According to the Tory government such a task is beyond Scotland's wit. And yet, take a look across Europe where lower corporation tax is the policy of choice for a host of small countries sitting beside larger, economically weighty neighbours.
Lets look at Germany and some of its near neighbours - Finland, Estonia, Austria, Denmark and the Czech Republic. These countries all have lower corporation tax than Germany, ranging from between 4% and 9% below the German rate. This is a policy designed to increase these nations' competitiveness and it is a policy they have proved more than capable of managing.
But these countries, you might point out, are independent. Yes, but lower corporation tax is a policy lever chosen and successfully managed and delivered by sub-State nations and regions within larger states, a point I'll come back to shortly.
Mr Gauke also claims that Scotland's case is different from Northern Ireland's because our economy is more integrated into the rest of the UK, and to introduce the change would result in "significant distortions and frictional costs".
But no more integrated than the German, Spanish or US economies. In Germany, corporation tax is divided between a federal and local element, with each raising around half the total 'national' rate. And within Germany there is a variation of around 3% in these local rates. So different localities in Germany manage quite easily variable corporation tax rates.
Similarly, in Spain, the Basque Country and Navarre have lower corporation tax. But also important for this debate, they choose to exercise their responsibility not only by lowering the rate, but also by introducing specific allowances, for example to support and encourage R&D. This, indeed, has been part of their response to previous economic crises.
And, in the US, each State has different corporation tax arrangements. If you look at the figures the pattern is clear and it is not the 'race to the bottom' suggested by some. States with an inbuilt competitive advantage - New York, New Jersey, California and DC - have the highest rates. Because of their location, their position as governmental or financial centres, these States don't have to compete on corporation tax because they already have important advantages. However those away from the main centres of industry and commerce are the ones who must do something distinctive to attract investment, and so it is Arkansas, Ohio, Nevada, or South Dakota who choose the very lowest rates.
Corporation tax, for them, is a lever designed to level the playing field and allow their State to compete. And have no doubt we face the same inherent competitive distortions here in the UK with a clear cost advantage in place today which encourages companies to establish in and around London and the south-east rather than in Scotland, Wales, Northern Ireland or elsewhere. To do nothing, therefore, is to ensure distortion and cost - but it is distortion that damages Scotland and the cost is to Scottish jobs.
On the Westminster narrative, "complex" and "costly" corporation tax is such a damaging lever [for Scotland] and so difficult to manage [for Scotland] and yet all these other countries, autonomous nations, States and even local authorities manage to do it perfectly well. The Treasury position is not only insulting, it is pure nonsense.
But, you might argue, all these entities already have corporation tax as a lever. The problem is taking on responsibility for the tax. But across the UK, and indeed the EU, sub-state nations are queuing up to take on this power. We already know about Northern Ireland, but lets look at the argument - one from the left and one from the right - in two other devolved/semi-autonomous nations.
First, Catalonia where the former representative of the Socialist/ERC government in London, points out:
"In my old job I was trying to put forward proposals to international firms to come to Catalonia; it was very difficult for me to offer the same terms as an independent state. Basically, because we were not able to offer income tax or corporation tax reductions in the same way an independent state can do."
And second, where the main recommendation of the Welsh Conservatives' economic commission (yes, the Welsh Conservatives!) was a reduction in Wales' corporation tax rate.
So there we have it. As far as the UK government is concerned having or getting corporation tax is too complex for Scotland, too risky for Scotland. In their view we are uniquely incapable. We aren't as clever or as competent as the UK itself (which can of course manage all these difficult issues perfectly well). We aren't as good or deserving as Wales (according to the Tories' own economic commission), or Northern Ireland (where a lower corporate tax rate is supported by the Tory Secretary of State). What is manageable for Finland, Denmark, Austria, Estonia, the Czech Republic, the Basque Country, Navarre, every German local government unit and every US State (to name just a few - I could have added many more including the tiny British isles of Guernsey, Jersey and the Isle of Man) is beyond Scotland.
Scotland is fed up with being told we are too small, too poor, or in this case too stupid. But scratch the surface of the UK government's attempts at 'positive' Unionism and that is the anti-Scottish assumption you find. And they wonder why their parties in Scotland are in freefall and falling apart at the seams?
Monday, 5 September 2011
12 miles apart, but a world away for some
It is a mere 12 miles (give or take) between the closest points in Scotland and Northern Ireland. On a good day you can see one country from the other, indeed I've stood on the closest point in Northern Ireland and seen for myself the Argyll coast in the middle distance. But for some, Scotland and Northern Ireland could be on different planets.
I've been reading with interest the weekend press reports of CBI Scotland's response to the Scottish Government's recent paper on the devolution of corporation tax, and comparing what the organisation is saying in Scotland with what it is saying in Northern Ireland.
Here's what CBI Scotland thinks of Scotland having responsibility for corporation tax: "the interests of the UK, including Scotland, are best served by a unitary corporation tax system, especially given the mobile nature of the underlying tax base."
Whereas, those dozen miles further west, CBI Northern Ireland suggests: "The result of lowering the corporation tax rate to 12.5% [for Northern Ireland] will lead to a transformational step change in the economic performance of the Northern Ireland economy."
The benefits, according to CBI NI, would be "a significant improvement in our international competitiveness", the "ability to attract 'profit centre' FDI [overseas investors] bringing a higher number and a higher quality (including various corporate functions) of jobs to Northern Ireland" and "an immediate improvement in the competitiveness of existing businesses, both indigenous and FDI, making Northern Ireland a more attractive location to retain jobs and to encourage more investment". These are the first three in a list of seven benefits.
Back in Scotland, the CBI argues instead that keeping the same rate as the UK "provides the simplest environment for UK and foreign investors to operate in" and "any potential benefit to Scotland of a different rate and or structure of corporation tax needs to be weighed against the impact of certain central costs, complexities and risks that would arise from devolving the tax."
Taking our journey one last time across that mammoth stretch of water, in Northern Ireland, the CBI argues that "the introduction of a low and competitive CT rate . . . is the simplest and most attractive marketing tool available" (my emphasis). Even the announcement of such a policy would, in Northern Ireland, "provide a game-changing environment" with the "benefits" commencing within a year. The words "risk" and "complexity" feature nowhere in the paper produced by the Northern Irish CBI.
But it is not just the CBI who view Scotland and Northern Ireland differently when it comes to corporation tax. I've been looking at the Treasury's response to the Northern Irish corporation tax proposal and comparing it with their recent paper on the supposed costs of devolving the tax to Scotland.
In the Northern Irish paper, the Treasury estimate the cost to the Exchequer of profit-shifting to Northern Ireland as a mere £70 million per annum. But for Scotland, that figures becomes a massive £1 billion to £1.1 billion each year. That's 15 times higher for Scotland than for Northern Ireland. Surely some mistake?
The Treasury paper also takes no account whatsover of any impact on economic growth in Scotland of lower corporation tax. Whereas, you guessed it, for Northern Ireland they suggest the dynamic effect "could recover 15-21 per cent of the foregone corporation tax receipts in each year". The Northern Irish themselves estimate that the policy would be cost neutral within a few years and be generating a surplus of revenues thereafter.
I have searched the internet for any sign that a Scottish media outlet has interrogated the Treasury's figures, but found not a single one. And yet, it has taken me 5 minutes and trusty google to find these clear differences of approach. They seem happy to have different standards and different accounting methods used, with the Treasury figures for Scotland clearly designed to over-inflate the supposed cost to Scotland of any change.
There are some important reasons why Scotland (and Northern Ireland) should have responsibility for corporation tax. Read the CBI Northern Ireland paper for just some of them. This is not about profit-shifting - the Scottish Government's paper makes clear that arrangements would take into account any attempts at 'brass plating' by companies trying to avoid tax. It is all about creating the conditions for indigenous economic growth. Over the next few weeks I will write separately about the positive case for the transfer of these crucial job-creating powers to Scotland, including what I believe is a powerful case for social democrats and the left to back corporation tax transfer.
For Northern Ireland, the estimated benefit is some 58,000 extra jobs (with one estimate as high as 90,000). Given the history and economic position of Northern Ireland those would be 58,000 crucial jobs. If in Scotland it were even just 10,000 or 20,000 (and of course the real figure would be many times more), is that not something worth securing? I certainly think so, and I have a funny feeling that most Scottish businesses, and more importantly, most Scottish people would agree. So lets get this job-creating power in the Scotland Bill where it belongs.
I've been reading with interest the weekend press reports of CBI Scotland's response to the Scottish Government's recent paper on the devolution of corporation tax, and comparing what the organisation is saying in Scotland with what it is saying in Northern Ireland.
Here's what CBI Scotland thinks of Scotland having responsibility for corporation tax: "the interests of the UK, including Scotland, are best served by a unitary corporation tax system, especially given the mobile nature of the underlying tax base."
Whereas, those dozen miles further west, CBI Northern Ireland suggests: "The result of lowering the corporation tax rate to 12.5% [for Northern Ireland] will lead to a transformational step change in the economic performance of the Northern Ireland economy."
The benefits, according to CBI NI, would be "a significant improvement in our international competitiveness", the "ability to attract 'profit centre' FDI [overseas investors] bringing a higher number and a higher quality (including various corporate functions) of jobs to Northern Ireland" and "an immediate improvement in the competitiveness of existing businesses, both indigenous and FDI, making Northern Ireland a more attractive location to retain jobs and to encourage more investment". These are the first three in a list of seven benefits.
Back in Scotland, the CBI argues instead that keeping the same rate as the UK "provides the simplest environment for UK and foreign investors to operate in" and "any potential benefit to Scotland of a different rate and or structure of corporation tax needs to be weighed against the impact of certain central costs, complexities and risks that would arise from devolving the tax."
Taking our journey one last time across that mammoth stretch of water, in Northern Ireland, the CBI argues that "the introduction of a low and competitive CT rate . . . is the simplest and most attractive marketing tool available" (my emphasis). Even the announcement of such a policy would, in Northern Ireland, "provide a game-changing environment" with the "benefits" commencing within a year. The words "risk" and "complexity" feature nowhere in the paper produced by the Northern Irish CBI.
But it is not just the CBI who view Scotland and Northern Ireland differently when it comes to corporation tax. I've been looking at the Treasury's response to the Northern Irish corporation tax proposal and comparing it with their recent paper on the supposed costs of devolving the tax to Scotland.
In the Northern Irish paper, the Treasury estimate the cost to the Exchequer of profit-shifting to Northern Ireland as a mere £70 million per annum. But for Scotland, that figures becomes a massive £1 billion to £1.1 billion each year. That's 15 times higher for Scotland than for Northern Ireland. Surely some mistake?
The Treasury paper also takes no account whatsover of any impact on economic growth in Scotland of lower corporation tax. Whereas, you guessed it, for Northern Ireland they suggest the dynamic effect "could recover 15-21 per cent of the foregone corporation tax receipts in each year". The Northern Irish themselves estimate that the policy would be cost neutral within a few years and be generating a surplus of revenues thereafter.
I have searched the internet for any sign that a Scottish media outlet has interrogated the Treasury's figures, but found not a single one. And yet, it has taken me 5 minutes and trusty google to find these clear differences of approach. They seem happy to have different standards and different accounting methods used, with the Treasury figures for Scotland clearly designed to over-inflate the supposed cost to Scotland of any change.
There are some important reasons why Scotland (and Northern Ireland) should have responsibility for corporation tax. Read the CBI Northern Ireland paper for just some of them. This is not about profit-shifting - the Scottish Government's paper makes clear that arrangements would take into account any attempts at 'brass plating' by companies trying to avoid tax. It is all about creating the conditions for indigenous economic growth. Over the next few weeks I will write separately about the positive case for the transfer of these crucial job-creating powers to Scotland, including what I believe is a powerful case for social democrats and the left to back corporation tax transfer.
For Northern Ireland, the estimated benefit is some 58,000 extra jobs (with one estimate as high as 90,000). Given the history and economic position of Northern Ireland those would be 58,000 crucial jobs. If in Scotland it were even just 10,000 or 20,000 (and of course the real figure would be many times more), is that not something worth securing? I certainly think so, and I have a funny feeling that most Scottish businesses, and more importantly, most Scottish people would agree. So lets get this job-creating power in the Scotland Bill where it belongs.
Friday, 2 September 2011
Who Benefits?
When I first started working for the SNP one of the first pieces of work I did was a report called 'Who Benefits from Britain?'. It was based on the groundbreaking investigation by George Rosie, 'Scotching the Myth', and looked at the question of public spending in the UK and the accusation, common then and, as we've seen from recent press reports, still dredged up now, that Scots are 'subsidy junkies'.
Burns wrote that it would be a gift to see ourselves as others see us, and this week we've been able to see clearly how the Daily Mail (their headline was "English taxpayers pay for Granny McTavish to live the high life") and Daily Telegraph (a former Labour Party adviser suggesting that Mrs Thatcher mollycoddled us) view Scotland.
There are two big deceits at the heart of these subsidy attacks. The first is that those who peddle this line look at only one half of the budgetary equation. They are happy to talk about spending but ignore the revenues, that is the taxes raised. The most recent figures show that Scotland contributed 9.4% of the UK's revenues and received 9.3% of the UK's spending. This pattern is repeated for each of the last 5 years, which explains why in each of those years Scotland's budgetary position has been stronger than the UK's.
The second deceit is that the spending figures are based upon an allocation to Scotland of our "share" of UK spending on areas like defence. And yet we know from figures provided by the MoD that there has been a massive underspend on defence in Scotland. In terms of actual pounds spent here, we get significantly less than our population share. This is important and should be part of any calculation because where the money is spent is also where the jobs are created. If Scotland got its population share of defence or Foreign Office or indeed Treasury spending then we would have more jobs, a stronger economy and even more tax revenue. MoD and other spending subsidises the economy of the south-east at the expense of Wales, Scotland and Northern Ireland and most of the regions of England.
George Rosie's original work took examples like the multi-billion pound investment in Docklands regeneration in London. Today we could include the Olympic Games. I have no argument against the London Olympics or the investment that is taking place (indeed I am looking forward to a great spectacle and a wonderful event for that city and these isles). Instead, I simply point to the fact that Olympic spending is classified as UK spending (and therefore added to Scotland's spending per head) whereas Commonwealth Games spending is Scotland only. The current regeneration element of that Olympic spending is also in clear breach of the Treasury's own Barnett Formula rules - but because they are judge and jury on this question the Treasury are able to get away with the sleight of hand, resulting in millions being lost to Scotland (and Wales and Northern Ireland).
The conclusions of my report, fifteen years ago, were twofold. First, that Scotland paid its way and that a move to full fiscal autonomy or independence would settle the question because Scots would raise our own money and spend it within those limits - there would be no question of who subsidised who, because whether England or Scotland we would each live within our own means. And second, it pointed out that the real winners were (parts of) London and the south of England and the real losers were the north-east and north-west of England. All these years later, both these conclusions still hold good. If Westminster politicians and press are so concerned about the subsidy Scot, why are they so keen to stop fiscal autonomy or independence, which would settle the matter once and for all? I wonder if it is because kicking the Scots gives them a useful excuse for not sorting out the dreadful inequality of funding in their own backyard?
This week has not only seen the return of the subsidy debate. We have also seen self-proclaimed 'positive Unionism' on display with a series of speeches and interventions by Tory government ministers, Michael Moore and Danny Alexander. From reading their comments I've struggled to work out what is meant by 'positive Unionism' but I think I have now come up with the answer - they are positive for Westminster, that is they are arguing, not for the benefit of Scotland, but instead, for the Westminster position.
Why does this matter? The reality is that Scotland is going to move to enhanced autonomy. If there is a two-option referendum the likelihood is that either fiscal autonomy or independence will win (of course I believe that independence will win). That means in a few years time there will be negotiations on a new settlement.
As part of a negotiation, even for fiscal autonomy, we will have to determine Scotland's share of oil revenues. Today UK ministers (and indeed the Labour Party) argue, despite international law, that Scotland would not necessarily be entitled to the oil and gas in our own waters. Will we have Mr Moore and Mr Alexander arguing then that Scotland should be deprived of billions of our own revenue? If so, they will be arguing against Scotland's national interest. Whose side will they be on?
As part of those same preparations, for fiscal autonomy or independence, we will have to settle Scotland's contribution to the repayment of the UK national debt. Today, the Tory government is offering a narrative on national debt that is grossly exaggerated, trying to pin more of the debt on Scotland than would be our equitable share. Will Mr Moore and Mr Alexander (and other Scottish unionist MPs) be supporting the Westminster position then? If so, they will be damaging the interests of their constituents, and working to prevent Scotland from getting our proper and fair allocation of any liabilities.
And if the people of Scotland vote for independence, will Mr Moore still be standing on the English constitutional interpretation of the Treaty of Union, as he did this week? His, is an interpretation designed to enhance Westminster and put Scotland into a subordinate position on questions of state succession. It flies in the face of Scots constitutional law and, indeed, the reality of international and EU law, which would see Scotland and England on an equal footing as we emerge as two independent states. At the point when these issues are actually important, will we have Mr Moore arguing that Scotland should not continue to be a Member of the EU? Will he be delivering speeches designed to influence the EU and effectively encourage them to throw Scotland out?
On all these three issues, when the settlement is being reached, will these two Scottish politicians (and all the others) still be arguing for positions that would damage their nation? If they do, they will be undermining their own constituents. And if they won't, if, at that point, they stand full square behind the Scottish position, the clear question becomes: why aren't they doing it now?
The challenge for 'positive Unionism' is that the case they are making isn't at all positive for the people of Scotland. It is based on arguments, trotted out once again this week, designed to undermine and weaken Scotland. And that is of crucial importance when the negotiations do come. So, if I were to ask today, 'Who benefits from positive Unionism?' the answer is clear. It is Westminster and certainly not the people of Scotland.
Through the fog of this particular debate a few clear signals, a few dominating impressions, will emerge. And here's just one of them - I have no doubt that people will see, as sharp as day, exactly who is and who isn't on their side.
Burns wrote that it would be a gift to see ourselves as others see us, and this week we've been able to see clearly how the Daily Mail (their headline was "English taxpayers pay for Granny McTavish to live the high life") and Daily Telegraph (a former Labour Party adviser suggesting that Mrs Thatcher mollycoddled us) view Scotland.
There are two big deceits at the heart of these subsidy attacks. The first is that those who peddle this line look at only one half of the budgetary equation. They are happy to talk about spending but ignore the revenues, that is the taxes raised. The most recent figures show that Scotland contributed 9.4% of the UK's revenues and received 9.3% of the UK's spending. This pattern is repeated for each of the last 5 years, which explains why in each of those years Scotland's budgetary position has been stronger than the UK's.
The second deceit is that the spending figures are based upon an allocation to Scotland of our "share" of UK spending on areas like defence. And yet we know from figures provided by the MoD that there has been a massive underspend on defence in Scotland. In terms of actual pounds spent here, we get significantly less than our population share. This is important and should be part of any calculation because where the money is spent is also where the jobs are created. If Scotland got its population share of defence or Foreign Office or indeed Treasury spending then we would have more jobs, a stronger economy and even more tax revenue. MoD and other spending subsidises the economy of the south-east at the expense of Wales, Scotland and Northern Ireland and most of the regions of England.
George Rosie's original work took examples like the multi-billion pound investment in Docklands regeneration in London. Today we could include the Olympic Games. I have no argument against the London Olympics or the investment that is taking place (indeed I am looking forward to a great spectacle and a wonderful event for that city and these isles). Instead, I simply point to the fact that Olympic spending is classified as UK spending (and therefore added to Scotland's spending per head) whereas Commonwealth Games spending is Scotland only. The current regeneration element of that Olympic spending is also in clear breach of the Treasury's own Barnett Formula rules - but because they are judge and jury on this question the Treasury are able to get away with the sleight of hand, resulting in millions being lost to Scotland (and Wales and Northern Ireland).
The conclusions of my report, fifteen years ago, were twofold. First, that Scotland paid its way and that a move to full fiscal autonomy or independence would settle the question because Scots would raise our own money and spend it within those limits - there would be no question of who subsidised who, because whether England or Scotland we would each live within our own means. And second, it pointed out that the real winners were (parts of) London and the south of England and the real losers were the north-east and north-west of England. All these years later, both these conclusions still hold good. If Westminster politicians and press are so concerned about the subsidy Scot, why are they so keen to stop fiscal autonomy or independence, which would settle the matter once and for all? I wonder if it is because kicking the Scots gives them a useful excuse for not sorting out the dreadful inequality of funding in their own backyard?
This week has not only seen the return of the subsidy debate. We have also seen self-proclaimed 'positive Unionism' on display with a series of speeches and interventions by Tory government ministers, Michael Moore and Danny Alexander. From reading their comments I've struggled to work out what is meant by 'positive Unionism' but I think I have now come up with the answer - they are positive for Westminster, that is they are arguing, not for the benefit of Scotland, but instead, for the Westminster position.
Why does this matter? The reality is that Scotland is going to move to enhanced autonomy. If there is a two-option referendum the likelihood is that either fiscal autonomy or independence will win (of course I believe that independence will win). That means in a few years time there will be negotiations on a new settlement.
As part of a negotiation, even for fiscal autonomy, we will have to determine Scotland's share of oil revenues. Today UK ministers (and indeed the Labour Party) argue, despite international law, that Scotland would not necessarily be entitled to the oil and gas in our own waters. Will we have Mr Moore and Mr Alexander arguing then that Scotland should be deprived of billions of our own revenue? If so, they will be arguing against Scotland's national interest. Whose side will they be on?
As part of those same preparations, for fiscal autonomy or independence, we will have to settle Scotland's contribution to the repayment of the UK national debt. Today, the Tory government is offering a narrative on national debt that is grossly exaggerated, trying to pin more of the debt on Scotland than would be our equitable share. Will Mr Moore and Mr Alexander (and other Scottish unionist MPs) be supporting the Westminster position then? If so, they will be damaging the interests of their constituents, and working to prevent Scotland from getting our proper and fair allocation of any liabilities.
And if the people of Scotland vote for independence, will Mr Moore still be standing on the English constitutional interpretation of the Treaty of Union, as he did this week? His, is an interpretation designed to enhance Westminster and put Scotland into a subordinate position on questions of state succession. It flies in the face of Scots constitutional law and, indeed, the reality of international and EU law, which would see Scotland and England on an equal footing as we emerge as two independent states. At the point when these issues are actually important, will we have Mr Moore arguing that Scotland should not continue to be a Member of the EU? Will he be delivering speeches designed to influence the EU and effectively encourage them to throw Scotland out?
On all these three issues, when the settlement is being reached, will these two Scottish politicians (and all the others) still be arguing for positions that would damage their nation? If they do, they will be undermining their own constituents. And if they won't, if, at that point, they stand full square behind the Scottish position, the clear question becomes: why aren't they doing it now?
The challenge for 'positive Unionism' is that the case they are making isn't at all positive for the people of Scotland. It is based on arguments, trotted out once again this week, designed to undermine and weaken Scotland. And that is of crucial importance when the negotiations do come. So, if I were to ask today, 'Who benefits from positive Unionism?' the answer is clear. It is Westminster and certainly not the people of Scotland.
Through the fog of this particular debate a few clear signals, a few dominating impressions, will emerge. And here's just one of them - I have no doubt that people will see, as sharp as day, exactly who is and who isn't on their side.
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