Scotland

The SNP’s dodgy dossier on growth has been forensically discredited

BY Gerald Warner   /  23 July 2018

Today the pro-UK think tank These Islands publishes a peer-reviewed paper that forensically dissects the SNP’s Sustainable Growth Commission Report and its “optimistic” assessment of the prospects for the Scottish economy under independence. For all but the most fanatical, blue paint-daubed separatists it should induce a pause for reflection.

To put this latest contribution to the Scottish debate in context, there has been a history of deeply flawed economic assertions by the SNP, going back to the 1970s when the emergence of a North Sea oil industry transformed the constitutional debate. Prior to that time, Scottish nationalism had been essentially a cultural movement: kilted, romantic and often led by charming people who cheerfully acknowledged independence would mean Third World status but regarded it as worthwhile to regain national sovereignty.

Understandably, that vision was hard to sell to Scottish families. The arrival of oil changed that: it offered separatists an opportunity to claim that this new asset made it possible for Scots not only to maintain their standard of living under independence but even to improve it. The separatist debate moved on from Jacobitism to economics. By the time a majority SNP government secured an independence referendum in 2014, however, the oil industry was in rapid decline.

As today’s paper from These Islands points out, in 2014 the SNP’s Independence White Paper forecast oil revenues of £6.8bn to £7.9bn for 2016-17; in the event, the actual figure was £0.2bn. Even allowing for oil market volatility, a margin of error as wide as that leaves a question mark over any economic predictions or assessments produced by the SNP government.

Eventually the SNP became aware that its strategy, which largely consisted of assembling saltire-waving loons on the anniversary of the Battle of Bannockburn and implementing totalitarian initiatives such as merging Scotland’s eight police forces into one, with all that that implies in terms of political control, or trying to nationalize children by subjecting them to the authority of a state monitor (“Named Person”) with powers exceeding those of parents, was inadequate.

Something had to be done to reassure business, beyond sporadically and offhandedly courting it on the rubber-chicken circuit. The result, in 2016, was the establishment by the SNP of the Sustainable Growth Commission, which was expected to make the economic case for independence by producing sophisticated fiscal analysis pointing the way ahead for the Scottish economy.

Its recently published 353-page report was intended to make an unanswerable case for Scottish prosperity under independence. It read more like a letter to Father Christmas. Laced with virtue-signalling pieties such as setting up a commission on gender pay equality – to tackle an issue that has not been properly analysed and understood in public debate – there were some recommendations, such as a Productivity Commission, a strategy to improve international competitiveness and a focus on economic long-termism, that were commendable (apart from the likely bureaucratization of problems).

However, as These Islands points out in its new paper: “The Commission also fails to consider which of its recommendations for growth could be pursued without the need for the trauma of separation from the UK.” Indeed. In fact the more practical and realistic suggestions put forward by the Growth Commission could, in many cases, be more easily achieved under the status quo.

The paper forensically discredits the SNP thesis. It claims that the proposed model is not at all “anti-austerity”: “If the Commission’s first Fiscal Rule [to get below a 3 per cent deficit within a decade] had been applied over the last decade, Scotland would have seen spending reduced by c.£60bn.” Try out that tempting policy on your client voters in the tower blocks of Dundee next time you go canvassing, Mrs Sturgeon. Specifically, by that formula, Scottish public spending in 2016-17 would have been £8.4bn (11.8 per cent) lower.

These Islands chairman Kevin Hague claims the Growth Commission report “is objectively more optimistic than the 2014 White Paper, not more realistic as has been widely claimed”. His think tank’s paper condemns the Commission for denouncing the likely negative economic consequences of Brexit, while simply ignoring the equivalent economic damage “that would be caused by Scotland leaving its far deeper and more significant union: the United Kingdom.” It points out that Scotland trades 3.6 times more with the rest of the UK than with the EU.

Occasionally the paper is too kind to the SNP, nodding through the assumption that increased immigration would be advantageous, without calculating the political, cultural and public service impacts of such a policy, nor the fact that immigrants age as fast as the indigenous population. Overall, though, this paper is a well researched and damning deconstruction of SNP assertions, statistical cherry-picking and take-away-the-number-you-first-thought-of economics.

These Islands condemns such deficiencies in the Growth Commission Report as using misleading analysis to promote unrealistic “growth potential” claims, making no attempt to model the likely impact of its recommendations and, by failing to compare independence with any other scenarios, failing to make a case for independence. On the contrary, the paper concludes: “The Commission, by implication, makes a strong case for Scotland staying in the UK.”

We’ll take that as a no, then. After a decade of SNP evasion and waffle on the economic realities of independence, it is noteworthy that every time the nitty-gritty economic realities are properly addressed (Alistair Darling’s dogged performance during the 2014 referendum campaign is the obvious example) the SNP loses out. Reading the well-argued deconstruction in the paper from These Islands is a breath of fresh air after being subjected for years to smoke-and-mirrors “studies” by separatist apologists: after a long sabbatical at Hogwarts we have returned to the LSE.

Nicola Sturgeon’s Heath-Robinson administration is already a minority government, finally being confronted with its failures on health and education. The latest attempt to breathe life into the Named Person scheme has just fallen through, since those charged with drawing up guidelines, in response to the smack-down from the Supreme Court, failed to meet their deadline.

Brexit, hyped as a trigger of independence, is now likely to have the opposite effect: witnessing the way in which the United Kingdom, a nuclear power with a permanent seat on the United Nations Security Council, is being treated by Brussels, not many Scots are likely to calculate that an independent nation of fewer than six million people, with a serious deficit, will fare better.

Now, the SNP’s most audacious attempt to give economic credibility to separatism has been deflated by this exposure of it as a very dodgy dossier. It will be painful for the Old Believers: reality is always unpalatable to fantasists.