IN the third of a series of four articles on the Union and how to save it, Tom Miers explains how SNP dishonesty on the economy is part of a wider political strategy of division and intimidation that has all the unpleasant hallmarks of nationalism. Instead, the SNP should embrace a more honourable approach that would benefit Scotland whichever way the debate goes.
IN THIS series of articles I have so far avoided detailed discussion of the economic arguments around Scottish nationalism. This is not because they are unimportant, but because they are mostly so familiar to readers that I would risk being unnecessarily repetitious.
Just two observations, then. The first is that it is puzzling that the various elements of the economic argument – the fiscal transfer, trade, the currency and so on, are rarely talked about in aggregate. Instead we go through a cycle, year on year, of discussion of these items in isolation. It is almost as if the magnitude of the economic implications of breaking up the UK is too great to contemplate as a whole. Unionists perhaps fear that if we tot them up the public will find the composite story incredible. So the net fiscal transfer from the rest of the UK to Scotland (calculated annually in the GERS exercise by Scottish Government statisticians) is worth about 8 per cent of GDP. Meanwhile, on the SNP’s own methodology, the trade benefits from the UK single market to Scotland are worth about 6 per cent of GDP.
You can see where I’m going with this. Add in the start-up costs (the SNP themselves asked for £200m just to set up a welfare agency), energy subsidies, currency transaction costs, currency depreciation, financial sector flight etc etc and you start to get some really startling numbers that make the coronavirus crisis or the financial crash look like picnics in the park. I think it’s time for some economist to do some serious aggregate modelling here – even if based just on the more concrete figures that we have.
For, as far as can be the case in economics, the main elements of the debate are pretty rock solid. And indeed, on the individual issues, when pressed, the SNP admit to the validity of GERS, the trade figures and so on, not least because they are collated at its own behest.
Yet you won’t know this from the SNP’s public utterances. Instead, the SNP approach to the economics of independence is an extraordinary exercise in deception. Senior figures in the nationalist movement routinely deny the obvious economic problems with independence, even though they clearly know the detail to be true. After all, its own officials collect the data. The tactics are now familiar: using the impartiality of media figures and academics who feel under obligation to give a balanced narrative, Sturgeon, Salmond and their teams pretend that the obvious problems don’t exist using a mixture of evasion, obfuscation, diversion and outright denial. It is quite different from anything in normal mainstream politics where philosophical differences exist on policy which are difficult to prove either way. Here the facts are as clear as they will ever be. The deception is deliberate and blatant to any objective observer.
A good recent example of this was when Ian Blackford, the SNP’s leader at Westminster, tried to pretend that Scots’ state pensions would be paid for by the remaining UK after independence. The implication was that Scotland would continue to receive a transfer of £8bn plus from our neighbours even though we were no longer contributing to that particular fund.
To mask the deceit, he drew a false analogy with British expats receiving the state pension, and then, when pressed, declared the partial truth that everything would be up for negotiation, knowing that such discussions would apply only at the margins. Blackford knows that and the idea he was peddling – that a foreign country would pay a large part of Scotland’s welfare bill – was absurd. Sturgeon and other senior nationalists supported him and refused to admit the deception. Some media and academics duly gave a ‘balanced’ account of the row, reinforcing the false notion that the SNP had a case, presumably muddying the issue for many voters who had little inclination to go into the detail of the matter.
Sturgeon and the SNP leadership know that pensions payments won’t be paid for by the rest of the UK. They know that Scotland would face a very large additional deficit (some £12bn) on independence that would have to be funded by a mixture of tax rises, big spending cuts and extra borrowing. They know that leaving the UK will put up much bigger barriers to trade than will be eliminated through EU membership, because they have commissioned studies to examine this very issue. They know that Scotland has no easy currency options, and that independence will cause either a depreciation, or inflation, or higher borrowing costs, or a default on liabilities, or a combination of all of these. And yet they refuse to admit any of this to the Scottish public.
This persistent campaign of misinformation is part of a broader picture of behaviour by the nationalists. They also run, or endorse, or encourage (it is always hard to tell which) an unpleasant campaign of intimidation of their opponents through social media, ‘spontaneous’ public protests, implicit threats to businesses and public figures that their careers depend on quiescence towards the nationalist project. Meanwhile nationalist supporters conduct ostentatious displays of their loyalties – waving flags, and banners, using the pseudo uniforms of car and window stickers, badges, arranging noisy street demonstrations in a way quite at odds with the rather restrained British traditions of political symbology. Worst of all is the national trope of identifying an outside bogeyman, with whom internal opponents can be associated and accused of collusions. In the case of Scottish nationalists this bogeyman is the ‘Tory’ or ‘Westminster’, which is really code for the Englishman, bigged up beyond political caricature with all the bogus stereotypes of selfish individualism, arrogance and racism. Internal opponents are routinely denounced as being closet (or ‘red’ or ‘yellow’) Tories and offered a choice – you’re either pro Tory (ie English and foreign) or you’re with us.
It’s not difficult to recognise all the hallmark playbook elements of a typical nationalist, even revolutionary movement. The SNP is like Sinn Fein without the bullets. Its behaviour and tactics are typically Marxist, with all the norms of decent behaviour and policy nuance subordinated to the ultimate objective.
Its approach has created the poisonous atmosphere that blights public life and, to an extent, society in general in Scotland today.
This approach damages Scotland whichever way the contest eventually goes. Within or without the Union, Scotland’s society and politics have been embittered and divided. And should the SNP achieve its objective, the country will be woefully unprepared for the economic chaos that would follow.
This is so sad because an honest nationalist approach is possible. The SNP could and should prepare Scotland for independence properly by acknowledging the hurdles it faces and addressing them. This preparation is best done within the union. For example, the core economic challenge posed by independence is the fiscal one, which interreacts with the currency issue. If Scotland left the UK with its colossal fiscal deficit in place, a new currency would be impossible without it falling in value, leaving Scotland with the unpalatable choice of partial default on liabilities such as pensions, or paying much more for them. Instead, the SNP could close the deficit within the UK over a period of, say, ten to fifteen years. Current public spending could be brought down to the UK average, with the Union Dividend delivered by GERS instead invested in assets or even given back to the people in the form of tax cuts.
Meanwhile, the policy of re-joining the EU is clearly an exercise in political tokenism that would in practice damage Scotland’s trade and thus its economy considerably. The SNP could and should abandon the EU idea and pledge to stick closely to the rest of the UK in terms of trade and commercial regulation. Doing so would necessitate an entirely different attitude towards the UK – one of positive friendship rather than vitriolic hatred, which would of course have beneficial repercussions in all sorts of other fields – social, diplomatic and military.
Such an approach would take years of preparation and would reduce without eliminating the economic costs of independence. But it would go some way to preparing Scotland positively for a future on its own as well as assuaging the divisions caused by this bitter campaign.
The Bargain is published by Birlinn this May. Follow Tom Miers and The Bargain on Twitter @TomMiers1
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Photo of Ian Blackford ©UK Parliament/Jessica Taylor/ Stephen Pike – https://www.flickr.com/photos/uk_parliament/48935423596/in/photostream/, CC BY 3.0, https://commons.wikimedia.org/w/index.php?curid=85763245
