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  By George Kerevan
 
CREDIT where credit is due: the Better Together campaign pulled off a coup with its publication of a leaked cabinet paper from John Swinney, laying out fiscal options in the post-independence period.
 
However, what the document actually says is very different from the spin put on it by the No campaign. Quite the opposite in fact.

It’s worth having a look at the supposed “secret” document, which you can find on the Better Together web page. But beware. When you log on you’ll find the front page of the document boldly proclaims “top secret – the truth about taxes, spending and oil in a separate Scotland”. Clearly this is not part of the internal memo but a mock-up supplied by the creative geniuses behind Better Together to put their own spin on the contents. You’ll also see they have redacted the first part of the paper. I wonder why?

The Better Together editors insert comments throughout the document. Frequently these are at odds with the text. For instance, the running commentary says: “Today [the SNP] claim that Scotland is better off than the UK. They admit internally that we’d soon be worse-off.” However the text in question is actually quoting a forecast from the Office for Budget Responsibility (OBR), which advises the Chancellor of the Exchequer. So it’s the OBR that claims Scotland is fiscally better off, not Mr Swinney. What the document actually says is: “Before 2016-17, Scotland is projected to have a smaller deficit, as a share of GDP, than the UK.”

The paragraph in the leaked document then says: “In 2016-17, the OBR forecasts suggest that Scotland would have a marginally larger net fiscal deficit than the UK.” Proof things will be worse under independence?

Even here, the No campaign spin doctors are twisting things. For a start, the OBR forecasts Scotland’s deficit (for the single year) at a paltry 2 per cent. Assuming independent Scotland had economic growth of 2 per cent or more – which it could with such a stimulus – it would easily fund this deficit. Far from being worse off, Scotland would be getting richer at around £500 per person per year on these figures. (By the way, the OBR only gets Scotland’s 2016-17 deficit lower than for the rest of UK by predicating unrealistically low oil prices.)

The central argument of the No campaign is that pooled sovereignty allows the sharing of economic and fiscal risks in an uncertain global economy. By itself, that is reasonable point of view. Any small nation can easily find itself facing adverse economic conditions; eg Finland lost 15 per cent of its GDP in three years, after the collapse of the Soviet Union destroyed its main export market.

Of course, Finnish growth soon bounced back and by 2000 was a phenomenal 6 per cent as the Finns went into the mobile phone business. Which is my point: the experience of small, industrial nations in Western Europe is that they respond faster and more successfully to economic crisis than do bigger nations. In other words, the economic insurance argument of the Better Together campaign is disproved by real life.

Examples are legion. Tiny Iceland’s banks went kaput in 2008 sending unemployment to an unheard 10 per cent. But Iceland has recovered and unemployment is below 5 per cent – it’s nearly 8 per cent here. Last month Iceland even had its international credit rating raised – unlike Britain. Sweden, despite the downturn, has a government debt less than half the UK’s. Swedish growth hit a record low in 2008 but was back at an all-time high by 2010. In 2008, Switzerland had to bail out its own banks, which had liabilities several times larger than the country’s GDP. These days the Swiss authorities are desperately trying to stop everyone else’s money poring into their country’s restored banking system. Ireland has just had two years of faster growth than Britain plus it has a healthy export surplus.

Meanwhile the UK has still not recovered the level of output it had before the banking crisis. Britain’s total debt is still rising and economic growth has stalled. Yet the majority of small nations in Western Europe have made a faster and stronger recovery. This knocks the case for pooled fiscal risk on the head.

We need to ask how these small countries managed to dig themselves out of an economic hole as fast as they did? The answer has nothing to do with being wise. Anyone could see the Irish and Icelandic economic car crashes coming a mile away. But Western Europe’s small independent democracies have significant advantages when it comes to changing economic direction quickly.

First, these countries were able to tailor fiscal policy to their own local needs. A bigger nation may have superior borrowing powers but its fiscal policy ends up a compromise that may not suit specific regions (eg Scotland) when it comes to promoting recovery. Ireland’s export-led recovery is predicated on its low corporation tax. Sweden returned to growth by slashing income tax, especially for low-income families. Iceland refused to bail out its banks with taxpayers’ money and banned the export of capital to ensure bank funds were invested in the local economy. In the UK, where the government still panders to the City and Russian oligarchs, none of these things were done.

Second, in a small democracy solidarity makes it easier for a government to ask for the necessary economic sacrifices during an emergency – provided everyone contributes equally. In Britain however, vested interests always seem to be exempted from national sacrifice. In Britain, Chancellor Osborne is protecting bankers’ bonuses from the EU. In Iceland, they jailed the bankers who caused the crisis.

Better Together are congratulating themselves on the headlines their coup garnered, which focus on John Swinney prompting his SNP ministerial colleagues not to spend before the economy is strong enough to merit it. Actually, that sounds to me as if Mr Swinney is a better bet than George Osborne.


Courtesy of George Kerevan and the Scotsman newspaper

Comments  

 
# Fungus 2013-03-08 17:03
Good stuff but all the analysis in the world will not help when the only thing most people will remember is the ordure spouted by the BBC.
 
 
# Fourfolksache 2013-03-08 17:14
Which is why the YES campaign needs to up its game!!!
 
 
# maisiedotts 2013-03-08 18:18
Sorry but I keep seeing this and I ask how?

Each and every one of us supporters *IS* the YES campaign, a grassroots, non politically aligned campaign with NO political clout or control over the MSM or BBC.

So in what way do you suggest we "up our game"?
 
 
# cuckooshoe 2013-03-08 17:48
Like to know what the Scottish Office had to say about the latest GERS figures?

gov.uk/.../...
 
 
# 1876 2013-03-08 19:02
I'm genuinely shocked at the media coverage of this 'leaked' document.It is way past biased,it is blatent propaganda.It is obvious that the BBC and STV are completely in the Better Together camp and are acting as their communication wing.
 
 
# Dee 2013-03-08 19:05
The damage is done, the only way to rebut it is to get the new pension scheme out as quickly as possible. And hope it is a better deal than the one the uk are offering. The bbc should hang their head in shame the way they have reported this whole story. Waiting on any political from bbc Scotland reminds me of standing blindfolded with your hands tied behind your back and not knowing when they are going to boot you right in the chuckles.. Will be at the next balanced media rally.
 
 
# hiorta 2013-03-08 20:10
Unionists have been repeatedly asked to tell us what gains the Scots might expect from a 'NO' vote.
There has been only silence and a promise we would keep and pay all costs for, the obscene Weapons of Mass Destruction.
As a bonus, they now give us even more lies and distortion.
They've lied to Scots for so long and so often, they can no longer help themselves.
They are getting extremely desperate, especially as we don't fall for it.
What's their next ploy - assassinations?
 
 
# Tappietourrie 2013-03-08 19:41
To date, I Do not know of any relevant information from the ‘YES’ campaign that has been warped and this to me is its’ strength-THE FACTS AS THEY ARE and openly the topic of investigation for all and sundry. The bending of the truth and misinformation on the ‘NO’ side will get them hung and left out to dry. Any thinking person is going to question statements on both sides to determine truth as both have vested interests, for as long as the ‘YES’ campaign keeps to the truth it will win in the end. The Arab spring should be a lesson to the ‘NO’ campaign insofar as that factual information is going to get out and low betide the organisation caught telling porkies. I am old enough to remember the 1979 fiasco and the lies we were told. This was the kernel of my conversion to Independence for Scotland. Keep the truth coming out.
 
 
# Edulis 2013-03-08 19:44
I am angry that the BT lot could get away with this. From the examples given, this wasn't spin. This was downright lies. I await to hear whether Derek Bateman will be allowed to challenge the Unionists. In fact it is axiomatic that the leader of BT should be called to account for misrepresentati on.
 
 
# ggreig 2013-03-08 20:07
More comment on this subject and the BBC from Craig Murray: craigmurray.org.uk/.../...
 
 
# Angusman 2013-03-08 20:07
Yes, all true, but how do we defeat the Better Together campaign when everyone hears or reads only the ministry of Misinformation's version of events.
 
 
# chicmac 2013-03-08 20:24
How about this from Stephen Nickell a member of the OBR‘s main steering committee.

Source Telegraph March 2011 (my eboldening)

“The OBR forecasts oil prices to peak this year at $113 a barrel, but to remain at $107 or above through to the end of 2015,... ... But, Mr Nickell added: “Forecasting oil prices, as anyone knows, is a mug’s game.

Note no significant oil price drop predicted through to 2015. By the OBR
In actuality prices have gone up.

Note also the virtual admission that they haven't got a clue.

But no caution shown in the quite different estimate that the SNP government were obliged to use.

Westminster ministers talk up the UK’s future oil revenue to external bodies it is only Scotland that gets the U-cert. censored version.
 
 
# chicmac 2013-03-08 20:40
What Professor Kemp really thought about oil price over the next few years. No wonder he is annoyed.

”Oil production should revive from recent levels for a period of several years, particularly with the higher-price scenario, where the increase could be substantial,” the study by Alexander Kemp and Linda Stephen [of the University of Aberdeen] concluded.” (Reuters, 5th December 2012)

What the UK Department of Energy and Climate Change really thinks oil price will do.

“Oil & Gas UK reckons oil receipts will be £3bn higher in 2017 than forecast last year. While Brent crude prices are now around $110 per barrel, by 2017, the UK’s Department of Energy and Climate Change predicts they could hit $130 a barrel, while the latest OECD predictions put them higher, at an eye-watering, record $150 a barrel.” (The Guardian, 7th March 2013)
 
 
# chicmac 2013-03-08 21:02
With a combination of more efficient engines, downsizing of car size, new oil discoveries, using previously uncommercial deposits, the recession and new shale production techniques America is for the first time in decades, back to self-sufficiency in oil.

However, in the longer term but beginning just about now, there is a huge gap opening up between world demand and supply of oil as the 2 billion + people of India and China become car owners (sometimes somewhat euphemistically known as the 'unidentified projects gap')

No one can predict exactly where oil price will end up, but it is just a question of how much it will go up, especially higher quality light oils like Brent crude.
 
 
# DJ 2013-03-08 21:14
BBC reporting yesterday was the most biased I'd ever heard. I travel to and from work at peaktime and only heard Willie Rennie and Richard Baker, so if they did balance by including an SNP or Yes representative it was at lower listening times.

However, the leader in The Sun hit the spot. They are running out of steam and will have to come up with better. Two years of telling a nation they are rubbish is no way to win a vote. I hope they continue.

They will reap their dividend as long as the Yes campaign are on their shoulder ready to rip on the home straight.
 
 
# Coinneach 2013-03-08 22:10
No, the No campaign will just keep repeating the same lies ad infinitum.
The Yes campaign needs to up it's game, but how.
We have NO exposure in the national press. Think about the BBC. They might be thinking, I would not be surprised. If the Yes shower win, we're toast in Scotland. But if the No's have it, we just sail on as usual. So we have nothing to lose by being partisan. Besides, it's what our political masters want. G. Brewer does not even attempt to look or act in as unbiased fashion.
I tell you, I'm getting very depressed by all this.
 
 
# dtr 2013-03-08 22:47
Me too Coinneach. I can't believe that the yes campaign doesn't have a strategy to deal with this. By now, I would have asked a very reputable, independent third party organisation to monitor the news output asking if the population is getting balanced output and to publish a blow by blow account of what the monitoring process found. The only problem with that though would be who would carry the story and what would be the spin? Such a report would though form a a good basis for several legal challenges which may be the only way to deal with this...
 
 
# Coinneach 2013-03-08 22:29
Guys, from a link on Craig Murray's site, there is a petition been launched for fair representation at https
Please sign it. Only 770 odd so far.
 
 
# Angry_Weegie 2013-03-09 01:22
Signed. 804 now.
 
 
# cuckooshoe 2013-03-08 23:15
politics.co.uk/.../...

''The prime minister had claimed: "As the independent Office for Budget Responsibility has made clear, growth has been depressed by the financial crisis, by the problems in the eurozone and by a 60% rise in oil prices between August 2010 and April 2011.''

not according to the OBR..

mirror.co.uk/.../...

It added that the deficit reduction “measures put in place by the previous and current governments would have been sufficient to reduce GDP in 2011/12 by around 1.4%”.

Over to you Mr Swinney..
 
 
# chicmac 2013-03-09 02:50
IMV that is just an entirely predictable pantomine of feigned independence on the part of the OBR concocted to allay the fact they mislead the Scottish government.
 
 
# art1001 2013-03-09 10:31
Funny how our economic prospects are always put under the microscope. It seems the good ship GB is the one with a predictable and dodgy future.

guardian.co.uk/.../...
 
 
# cuckooshoe 2013-03-09 13:51
Scotland to the rescue..

gov.uk/.../...

''UK Energy and Climate Change Secretary Edward Davey said:

“North Sea oil and gas is a vital asset. It provides energy security for the UK, reduces our reliance on volatile international energy markets and supports hundreds of thousands of jobs across the country.

“Mariner will be one of the biggest projects ever in the North Sea and the £4.6billion commitment over 40 years from Statoil is a vote of confidence in the future of UK oil and gas. Importantly, unlocking heavy oil production marks a new chapter in development, opening the potential for five per cent of our oil reserves.''
 

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