Here I publish a message from my correspondent James Anderson following my blog on John McLaren and Fiscal Affairs Scotland. It raises some very good points.
I’m totally with you Derek that this was the politics story of the day. There have been many story’s in the MSM to raise my hackles in the past few weeks(!) but this one really pushed my buttons for many of the reasons you highlight. It is the veneer of impartial academic credibility John McLaren and Jo Armstrong are deploying; Scots-based, at respectable Glasgow University, with knowledge of oil economics, not Tories, and using ‘real’ evidence. Frankly John and Jo’s contribution is verging on the outrageous, at least in terms of the sheer volume of UNCHALLENGED coverage it received today. Below was my own contribution to the topic, which I posted on the Herald . More power to you Derek – stay aggrieved and focussed. You are doing the job only the Sunday Herald is doing on the public’s behalf in the mainstream.
Fiscal Affairs Scotland – that’s the Centre for Public Policy for Regions to you and me – and John McLaren appear intent on continuing to push ad-nauseum the Labour and Tory line that Scotland runs a perpetual deficit position within the UK. OBR figures? Really John? And if these figures are all accurate and in the public domain what is the point in your report? Why are you continually recycling public domain information? Rushing out a press release to coincide with the first full Smith Commission plenary session? With headline conclusions and projections based on a few months of dipped oil prices?? It is a tough gig being meaningful in terms of academic research value; challenging and testing norms. I’d love to know where the value-add is in this ‘latest report same as the last doomsday report’. Utterly ignoring, say, Scotland’s Westminster controlled fiscal position now compared to five years ago and where it’ll be five years hence. This is not a report based ‘over and above cuts’; this report, if anything, simply tells a story of what Scotland’s fiscal position might be if we didn’t send our cash directly to the Treasury.
Here’s the issue. Even if you accept McLaren and Armstrong’s worst case scenario – a £5bn deficit in Scotland’s finances right now or in six months if we’d had full fiscal control – our operating deficit remains no worse or remains better than that of rUK. But that is not the worst crime committed by this report. That honour is reserved for this line: “Our calculations suggest that, across a wide range of assumptions, full fiscal autonomy could lead to a significant shortfall in funding over what the current system delivers.” No John, your calculations do not show that at all. Your calculations are based on revenue and spending without borrowing: outputs without all the inputs to Barnett plus non-devolved spend. Scotland’s public finances and all UK public finances are presently already paid from an operating deficit. The UK Government operates a gargantuan fiscal black hole. So the “current system” cannot and does not pay out anywhere in the UK from a fiscally neutral, balanced books position. Nor does Treasury pay out as a benevolent benefactor; lavishing extra spending on Scotland as net beneficiary of Westminster’s benign commitment to ‘sharing and pooling’.
Yes this press release IS part of that exact same narrative. Yes you are being lead to conclude the UK is in serious surplus whilst Scotland is in serious deficit. Yes you are being lead to conclude that rUK is subsidising Scotland and providing a safety net (Barnett). Yes the report utterly ignores Scotland as a long-standing net contributor to UK finances, our lower debt-to-spend ratio, and that Barnett itself is only one part of a near bankrupt, eye-watering, debt-laden economy (£1.5trillion and counting).
The “current system” is, of course, based on running a chronic shortfall between tax and spend (at least till 2018 but we know Osborne and the OBR will get that wrong as well), which the UK Govt borrows to offset. In fact John might have wished to re-interrogate his conclusions following the news on Osborne’s tax receipt shortfalls yesterday (based on modeling he’d been receiving from, you guessed it, the OBR!). So even if Scotland did have a shortfall between revenue and spend; so does the current system!! With fiscal autonomy we’d borrow to maintain, or increase, or decrease our levels of public spending. And we’d do so from a healthier fiscal position than Westminster (either as a fiscally independent country or as a federated state enjoying fiscal autonomy within the UK).
Given John and Jo’s undoubted intellect I can only conclude that to present the fiscal position Scotland ‘enjoys’ under Westminster’s financial control in this way (that somehow Scotland, uniquely within the UK, experiences centrally approved levels of public spending beyond its current means), is not ‘non-aligned’ and is indeed a partial and politically-loaded view. Others on here might question the substantive nature and quality of the FAS intervention: is FAS really asking the Smith Commission to reflect on what fiscal powers accrue to Scotland based solely on some disputable evidence spanning only a few months around a single out-turn (O&G revenue forecasts)? FAS put the exact same proposition to the Scottish electorate prior to the Referendum.
I know Jo Armstrong is a former O&G economist so FAS might feel it has a degree of expertise and authority on this single issue but come on; this is our country’s shared future. Economic and policy choices are far more complex than repackaging some questionable short-run O&G stats!! Perhaps that is why John and Jo set-up FAS as a semi-autonomous ‘think-tank’ running parallel to their day jobs at the taxpayer-funded CPPR? More flexibility to influence political and public thought rather than straightforward interrogation of public policy choices? There is a fair chance one or both read the Herald online so it would be good to receive a rebuttal to the points I’ve made hereby