Friday 17 July 2020

How £21 million = £800 million in Scotland

Almost everything that is wrong about Britain today can be attributed to the Labour election victory of 1997 and Tony Blair. After 18 years of Tory Government Scottish Labour and the Lib Dems were determined that at least they would rule Scotland come what may. It is this that gave us the muddle that is devolution.

While England is ruled by Westminster on everything apart from those matters that are controlled by a few mayors, Scotland, Wales and Northern Ireland have various degrees of devolution and various combinations of tax raising powers and Central Government funding.

 One of the major problems is that the whole thing is so complex that even financial experts struggle to understand who pays what, who gets what and how much.

This is why we have unedifying disputes and no consensus at all about the fundamentals of Scottish politics. Some Scottish nationalists still maintain that Scotland is a cash cow that subsidises that rest of Britain. They think that this is why England is so desperate to hold on to Scotland because if Scotland were independent the cash cow would be slaughtered, and England would starve.

On the other side of the argument are those who think that Scotland is running a 7% deficit and that we receive more from the British Government than we raise through taxes and that therefore Scottish independence would involve years of tax rises and spending cuts so that it could be afforded.

Some Scottish nationalists think that this austerity would be worth it, while others think that Scottish independence would immediately lead to an increase in revenue for Scotland as our cash cow would only be giving milk to us.

The points of view on Scotland’s financial situation are so divergent even amongst supporters of Scottish independence that it is impossible to even have a rational debate because there are no longer any agreed facts in Scotland.

It is in this context that £21 million can equal £800-900 billion.

Last week there was a mini budget by Rishi Sunak. The SNP Finance Minister Kate Forbes immediately complained that the Scottish Government would only get £21 million. But this is to miss the point.

Earlier this year when Rishi Sunak bailed out the British economy and provided support for jobs and businesses in Scotland, it was discovered with disappointment that the Scottish Government was squirrelling away the money and not using it to actually support Scottish businesses and jobs.

It is for this reason that Sunak’s budget was designed to bypass the Scottish Government as much as possible so as to directly inject finance into Scotland without Kate Forbes or rather her big sister being able to use it for her own purposes.

This is why the report by the Institute of Fiscal Studies says

Add that to the £21 million and you get the £800 million the UK government says the Scottish Government received as a result of all the spending confirmed last week. Although, as with the Scottish Government’s figures, it is worth noting that this excludes the additional funding as a result of the stamp duty holiday, which mean the final overall figure will probably be nearer £900 million. 

So, Scotland will get nearly £900 million as a consequence of Rishi Sunak’s budget but only a small fraction of it will be controlled by the SNP. This isn’t a fault; it is a feature.

It is unedifying that trust has so broken down in British politics that Sturgeon is at times excluded from meetings because she previously leaked the results and that Kate Forbes complains about the supposed pennies thrown to her on the floor when she is getting free board and lodgings that she refuses to acknowledge.

BBC Scotland could provide a service to Scottish politics if it commissioned a series on Scotland’s finances made by people who were obviously impartial and from abroad so that we could all have shared facts about our true financial situation.

I don’t think that finance is the whole argument. I don’t even think it is the most important argument. But it is part of the argument. Finance is complex, but good writers can make it easier for us all to understand.

At the moment in Scottish politics 21 = 800 and a cash cow = a 7% deficit. There is not even shared truth in Scotland let alone shared opinion. It is this that divides more even than Scottish nationalism.