Friday 30 April 2021

Only England can afford independence


There is something odd about independence movements in the UK. They are all in parts of the UK that can’t afford it. The one part of Britain that makes a profit, the South of England, has no secession movement at all and England as a whole shows minimal desire to ditch Scotland, Wales and Northern Ireland, though it would save money if it did so.

The Institute for Government recently published some figures which tell us that the English taxpayer subsidises the other three parts of the UK.

But somehow this is either not believed or not taken into account when voters in those parts express a desire to leave. The figures available are for 2018/19, which is the year before the pandemic began. They will be much worse for 2020/2021 during which the Treasury has massively subsided all of us through furlough and support for businesses that could not open due to lockdown.


The public sector deficit per person is:

Northern Ireland    £5,118

Wales                    £4,412

Scotland               £2,543

England                £91


This means that England was making a slight loss, Scotland rather a large loss and Wales and Northern Ireland were making a huge loss.

One of the reasons for this is that Scotland, Wales and Northern Ireland spend much more per person than England does.

Public spending per person is:

Northern Ireland   £15,182

Scotland                £14,850

Wales                   £14,032

England                £12,864


If either Wales, Scotland or Northern Ireland were to leave the UK then it would have to make up the loss of UK money either by borrowing, taxing, cutting spending or growing the economy. It’s hard to see how the standard of living of people living in these places could be maintained. Independence by itself brings in no money at all.

Public spending makes up a lower percentage of GDP in England than the other parts of the UK. Public spending is higher in Scotland and much higher in Wales and Northern Ireland.

But this makes these economies more dependent on Government expenditure which would be the one thing that would have to be cut if they were to leave the UK. It’s much easier for a country to make a profit if it has lots of private companies making a profit. The Welsh and Northern Irish state sector looks in particular looks unsustainable if either left the UK.

While Scotland and England raise a similar amount in taxation (around £12,000 per person), Wales and Northern Ireland raise considerably less (slightly less than £10,000). Scotland’s problem if we want to become independent is primarily that public spending is too high. Any party that was serious about independence would be trying to reduce spending while growing the economy. But the SNP are doing the opposite to this and intend to increase spending massively in the years ahead. It may win support this way and may even win support for independence, but it is simply increasing Scotland’s deficit and making us ever less ready for independence by making us ever more dependent on the UK taxpayer.

If the idea of independence is to make a country richer then the only part of the UK that would actually end up richer is England.

Surplus deficit 2018/2019

England                 surplus 2.3%

Scotland               deficit 5.1%

Wales                   deficit 14.3%

Northern Ireland   deficit 15.8%

These figures will be considerably worse now.

Scotland’s position is financially rather worse than it was in 2014 and independence would involve considerably more difficulty now that the UK has left the EU and independence would most likely involve a hard border.

The SNP are in effect asking Scots to accept large public spending cuts, higher taxes, the problems involved in using the pound unofficially or perhaps creating a new Scottish currency, plus trade barriers with our largest trade partner the former UK in order that all decisions would be made in Holyrood rather than some of them continuing to be made in Westminster. Initially at least Scotland would have to be poorer because the fiscal transfers from the Treasury would cease. If you deny that there are such fiscal transfers then you deny that the Institute for Government knows what it’s talking about.

For Wales independence is at present simply a nonstarter. It is extraordinary that it has increased in popularity as it has become less and less practical. Wales is already poorer than both Scotland and England and would become massively poorer if it chose independence.

Northern Ireland is unlikely to seek independence which puts it in a different situation. Clearly independence for Northern Ireland is no more possible than for Wales. It depends too much on UK money. But if Northern Ireland were to leave the UK it would be in order to join the Republic of Ireland. In that case either Northern Ireland would have to see huge cuts in public spending, increases in taxation or the Republic of Ireland would have to take on the burden of subsidy.

The UK pays over £10 Billion per year to Northern Ireland, but that’s more than Ireland spends on Education at present and would amount to about a tenth of the Irish budget. It’s one thing for more than 60 million people to subsidise Northern Ireland, it’s another for less than 5 million.

We have seen lately that some Protestants in Northern Ireland are willing to riot because of a nominal regulator border down the Irish Sea. Would they be liable to behave better or worse if a close border poll saw a united Ireland without their consent? How much would it cost Ireland to police any Troubles that arose from unity. Would the Irish Army have the resources and the skill to control such Troubles? How much would that cost?

In economic terms only England can afford independence and particularly the South of England, which would become one of the wealthiest parts of Europe if it could only ditch the rest of us. England would lose the reputation and soft power that is associated with the UK and would gain neighbours that would initially at least be much poorer than it. It would be the equivalent of Russia losing the less productive parts of the Soviet Union. The re-emergence of England might be no more beneficial than the re-emergence of Russia.

But in the case of each part of the UK prosperity after secession would depend on the decisions of future governments. The most likely route to prosperity is small state, low taxation, low regulation free market capitalism, which might be possible in an England dominated by Tories. It is the rejection of this and the SNP’s desire for high public spending that would keep Scotland poor until it rediscovered Adam Smith.

The loss of the United Kingdom would be devastating for those parts that at present depend on UK subsidy. Scottish independence can only happen with massive spending cuts, but if that is what Scots want why do we vote for the SNP that gives us spending increases? Northern Ireland can only viably leave the UK if Ireland can pick up the tab, but that depends on Ireland introducing tax rises and spending cuts to pay for their northern cousins some of whom might pay them back with bombs. It’s hard to see how sensible Welsh people can even contemplate independence. Who would pay for Wales?

The only part of the UK that can afford independence is thankfully willing to stick with the rest of us even when large numbers of us bite it. But there is no serious England Independence Party perhaps because English people can see how the UK has benefited not just them but all of us. The loss of being British would diminish us in ways that cannot be added up on a balance sheet.