GERS and the Long-Term Survival of the UK

     The common sense economic case for keeping the United Kingdom together was bolstered by yesterday's release of the latest Government Expenses and Revenues Scotland (GERS) report for 2014-2015.

     In summary, it showed that Scotland has a total budget deficit of £14.9 billion – the difference between public expenditure in Scotland (£68.4 billion) and revenues raised in Scotland (£53.4 billion). This amounts to 9.7% of Scotland’s GDP, as opposed to the overall UK deficit being only 4.9% of its total GDP, which means that Scotland runs a deficit two times higher than that of the UK as a whole.

     On a per capita basis, that deficit is £2800 compared to the £1400 per capita deficit of the UK overall, and this deficit gap amounts to £7.4 billion. If Scotland were to be independent, this would be the amount by which the Scottish deficit would get bigger in that scenario, and these figures get worse when North Sea oil is stripped away, so that the onshore deficit gap hits an eye-watering £9.2 billion.

     With the collapse of oil prices since the summer of 2014, Scotland’s geographic share of North Sea oil and gas revenues was £1.8 billion – a far cry from what the SNP said would be £7.9 billion with prices a 110+per barrelaccording to the white paper it released leading up to a vote.

     Indeed, that white paper, Scotand’s Future, has often been described has overly-optimistic in its prospectus for an independent Scotland – which touted the strength of Scotland’s finances and promised the maintenance and expansion of public services and the public sector in Scotland because there was untold wealth around the corner of separation became a reality. Now with the release of the latest GERS figures, STV’s Stephen Daisley has written that it looks “more like a piece of creative accounting, a 649-page confidence trick” because the SNP failed to come up with a credible economic plan which most voters could reasonably support, and that those who continue holding up the white paper’s contents engage in “downright dishonesty.”

     In response, some nationalists say that the numbers – produced by the Scottish Government – cannot be trusted because they don’t reflect the true wealth of Scotland and assume that with all “economic levers” at its disposal, it will follow the same economic course of the UK. The SNP itself does not dismiss the numbers in such a way, but does offer much of the same spin about the lack of powers and how an independent Scotland would do things differently (to overcome the financial challenges):

“GERS tells us about the status quo and very little about the opportunities of independence. Scotland is rich in human talent and natural resources. But what we lack are the economic levers to maximise growth in our economy, and invest according to our own priorities.”

     Again however, these are the numbers from their own government, and if they were good enough to argue the (nonexistent) case for separation (as indeed, was the case), then they are good enough to make the case against separation.

     Nationalists also interject that because UK and everyone else runs a budget deficit, why should Scotland be expected to balance its books? Here, this is a matter of scale and context. The United Kingdom as a whole runs a budget deficit that is larger than Scotland’s in terms of raw numbers, but the UK – being a larger and stronger country with a more diverse economy – is able to absorb and handle large deficits from year to year, and the same is true of the United States, France, and Germany. Scale matters, though it would be unreasonable for an independent Scotland to balance its books from Day One, it is reasonable for it to start life as an independent country with a smaller budget deficit that is in line with the size of its economy, which means cuts to services, tax increases, or both.

     Another response to these numbers is saying that “oil is just a bonus”, but this flies in the face reality when one notices that without oil, the deficit would be far worse and the scale of the financial challenge more daunting.

     In his column on GERS yesterday, Alex Massie makes it clear that the SNP government's own figures have destroyed its economic case for separation and that keeping the UK together was the good option back in September 2014. After all, each man, woman, and child in Scotland is better off by £1400 because Scotland is part of the United Kingdom and benefits from fiscal transfers via the pooling and sharing of resources, which is how the Union is supposed to work (and I recommend reading Kevin Hague’s thoughtful and thorough analysis on GERS).

     However, Massie also made it clear that sheer economics alone will not be enough to ensure the survival of Britain, not least because a day may come when the economic case could favor separation. “Numbers matter”, he said, “but they are not the only fruit. But this, again, must apply to both sides of the constitutional divide. Britain, and the UK, must be worth something other than £1,400 a year.”

     He further added:

“People are not, in any case, bloodless calculating machines. They appreciate that [the economic] arguments are, in the end and at root, about something more than that. They are about who we are, how we see ourselves, and what we intend to achieve together. They are arguments about where we have been and where we may yet go.”

     In this light, more of an effort must be made to communicate the social, cultural, and sentimental value of the Union - including the very idea of Britishness and living comfortably with more than one identity. It should not be about competing identities or pitting identities against each other, because for example, to be Scottish is also to be British, and you cannot have Britishness without Scottishness.

     Emphasis must be made on shared history, culture, heritage, society, and values. There needs to be an inclusive approach which recognizes and respects the distinctiveness among the peoples the United Kingdom while also encouraging commonality and cohesiveness.

     In effect, this effort must answer the following questions:

“Who is British?”

“What’s good about Britain and why should it exist?”

“What’s the UK’s purpose at home and abroad?”, and

“What does it mean to be British in the 21st Century?”

     This will not be easy, but with a little work from the ground up – starting with individual, and eventually national, efforts – a stronger, positive, and confident British patriotic identity combined with a competent economic case can be forged to withstand the forces of nationalism in the long-term.

Nats, Maps, and (Misguidedly) Feeling Small

     One of the more humorous aspects of the referendum was the complaint from some Nationalists at how Scotland appeared on the BBC’s weather maps. At first, I had thought of it was something of an in-house joke among such Nationalists, but quickly realized that they actually believed that the BBC was deliberately – and with malicious intent – making Scotland appear small in relation to rest of the United Kingdom, especially England.

     It was, they claimed, proof positive of a BBC bias against Scotland – a way of “keeping Scotland down” and “putting it in its place.” It confirmed that there was a systematic view of Scotland being insignificant within the UK, and as the campaign ground on, this view became entrenched in the minds of many people who saw the BBC as the enemy of Scotland and the pro-independence campaign.

     In today’s post-referendum environment, the weather maps continue to provide a source for manufactured nationalist grievance against the supposed injustices against Scotland by the BBC.

     Over the weekend however, this went to a whole new level as SNP members of Parliament got in on the act and used their position as public servants (and their substantial following on Twitter) to “raise awareness” and take shots at the BBC as well as people who support keeping the UK together.

     First, there was the recently-elected MP for Caithness, Sutherland and Easter Ross, Dr. Paul Monaghan. On Friday, he tweeted out a GIF image showing the BBC’s weather map of the UK and Ireland as it appears during a broadcast, then drawing a red outline featuring an alternative view of the UK to show how the bottom part of the country (lower England and Wales) on the weather map appears to be normal, but Scotland appear smaller by comparison. The message in the tweet was: “How the #BBC works to make Scotland literally appear less significant: ‘The BBC Versus Reality’.”

     Then there was Ronnie Cowan, MP for Inverclyde, who said that “a weather map should be to scale and the BBC image is certainly not in a scale I recognize”, and Angus MacNeil of the Western Isles chimed in to say that his first political act at Westminster was an Early Day Motion (EDM) to complain about weather maps.

     Of course, a streak of SNP whining over the weather maps could not be complete without the wisdom Pete Wishart, the veteran Nationalist MP for Perth and North Perthshire. On his Twitter account, he accused pro-Union Scots (whom he refers to as “yoons”) of being “never happier than when Scotland is diminished and shown to be small and distant.”

     Looked upon separately, these musings would appear to be isolated and occasional rantings and ravings from eccentric individuals among the rank-and-file of the party. However, these are elected MP’s and leaders in their party, and in Wishart’s case, the SNP’s Shadow Leader of the House of Commons.

     As has been seen however, the senior members of the SNP are not immune from making ludicrous statements about the BBC, or anything they wish to see as insults against Scotland. Former leader and first minister Alex Salmond has repeatedly attacked the national broadcaster during and since the referendum campaign for its coverage, and recently condemned it for being “a national disgrace” and “guilty of sustained bias against the national cause.” (Note how he says “national cause” as though separation is the cause of all of Scotland - and it is not - as opposed to the “nationalist cause” which is the cause of the SNP.)

     This attitude toward the BBC from the upper echelons of the SNP have the effect of feeding into the general paranoia which already exists, and therefore legitimizes and encourages it, which in turn causes more people to believe the nonsense of invented slights such as the weather maps as part of a vast conspiracy by the Beeb to treat Scotland as a non-entity, or with less respect than it deserves. The result, among other things, was the ugly protests outside of the Corporation’s headquarters in Scotland during the referendum.

     In reality, the weather map issue is much less dramatic and exotic, but by no means boring – at least for those of us interested in geography and mapping methods. The BBC uses weather maps based on geostationary satellite images which are taken from a location approximately 22,300 miles over the equator, which means that the areas closest to the equator will always appear bigger in the picture than the areas further away from it because of the angle produced by virtue of the satellite being over the equator and the curvature of the Earth. Examples of them can be seen at the website of the Dundee Satellite Receiving Station of the University of Dundee, as well as this live map at Tonbridge-Weather.org.uk.

     Weather maps produced from these satellites are quite common and popular with news broadcasters because they require little or no reorientation, and I have seen them featured in several times for weather new and forecasts, including the ones the BBC produces when they report on the weather in the US and Canada . As the camera moves around the map from north to south, the northern parts of Canada and the US (including individual states and provinces) appear smaller while the southern parts appear large by comparison. This is very similar to the way the Beeb presents the weather in the UK, with the camera moving from north to south, and northern areas appearing smaller and southern areas appearing larger. In the case of Scotland-only forecasts, this results in the Highlands and Islands looking smaller compared to the rest of Scotland. As with everything else mentioned, this comes to where the satellite is positioned, and not part of conspiracy or bias on the part of the BBC to make Scotland and Scots feel small, insignificant, and/or inadequate.

     I’d like to believe that some in the SNP – especially those in leadership positions – understand this, but hey-ho, why let facts get in the way of lucrative grievance-mongering?

     Make no mistake, the only people who see Scotland as small and insignificant are the Scottish nationalists, because they are the ones who have an unhealthy inferiority complex about Scotland and themselves being part of the United Kingdom. Day in and day out, they bang on about how wee and powerless Scotland is within the Union – portraying Scotland as some sort of abused victim that has been relentless beaten and flogged senselessly. They look for anything which might be seen or can be construed as a slight against Scotland, and the weather maps are part of this in an effort to stoke more division and resentment in their obsession to break up Britain.

     What they fail to realize is that the decision to use certain weather maps has nothing to do with Scotland, and that most people across the UK (including Scotland) actually tune in to see what the weather is going to be like and then promptly move on their lives – as opposed to getting obsessed about how any one part of the UK looks in relation to another.

     To make this point more clear, I don’t believe the BBC has a pro-Cornish bias simply because Cornwall appears as the biggest part of the UK on the weather map; Cornwall just happens to be the southern-most area of the UK and is therefore closest to the geostationary satellite from which the maps are based. Furthermore, the southern part of the Republic of Ireland (not in the UK) appears larger than Northern Ireland (in the UK) for much the same reason – geographic happenstance.

     Perhaps the Beeb should change its maps to flat projections which ignore the curvature of the Earth. It really does not matter so long as the weather is properly forecasted and reported, but if it shuts up the more whiny Nationalists out there, then I’m all for it.

     However, while they whine about how small Scotland is, we need to talk about how significant Scotland is as a part of the UK – how it and its people have contributed immensely to the country economically, politically, and socially and culturally, as well as to its sense of self and purpose over the centuries.

     Now that’s a positive and encouraging story worth telling about (as opposed to whipping up corrosive, negative, and manufactured grievances), with the hope that it may guide future generations of Scots – proudly alongside their fellow Britons in the rest of the UK – to continue making invaluable contributions for a long time to come.

     As for the more eccentric Nats (including the aforementioned MP's), they can keep on feeling small and inadequate if they want while everyone else moves forward.

Who's "Anti-Scottish", Now?

SNP advertisement from the 2007 election.

     This week, the SNP unveiled its plans for local government taxation should it win the Scottish parliamentary election in May.

     Under the proposed changes, households within the four highest Council Tax bands will have to pay more for the funding of councils; specifically, those living in the average home at the lowest of these bands (Band E) will pay an extra £105 per year, while those living in the highest band (Band H) will be paying extra £517 per year. For everyone else in Scotland – those who live in homes within the lowest bands of A through D – there will be no changes to how much they pay.

     The biggest revelation by First Minister Nicola Sturgeon was that the package included the end of the Council Tax freeze in 2017 – ten years after the SNP implemented it when it came to power for the first time. The freeze was conducted under the pretense of helping all taxpayers by providing tax relief and it has been funded by the Scottish Government, which provided the money on the condition that the local councils did not change Council Tax rates (i.e., the “freeze”). However, the initiative has been criticized – including by the SNP government’s own poverty “czar” – for disproportionately benefiting those on higher incomes and living in larger homes at the expense of funding for public services.

     Sturgeon has claimed that the move to make those in the higher property bands pay more will raise £100 million for education initiatives, whilst the end of the Council Tax freeze and giving councils the ability to vary it by 3% per year will allow them to raise another £70 million for public services.

     In addition, those who are asset-rich but cash-poor – living in higher band homes on low incomes, such as pensioners – will be entitled to an exemption, and there will be relief across all property bands – particularly families with children. The First Minister further claimed that the charges for those in all bands will still be lower than of the freeze were not in place, average rates will remain lower than those in England, and that there were no plans for revaluation of properties, which are still taxed based on valuation from 1994.

     In many ways, this seems all well and good – getting rid of the prolonged freeze to give councils more breathing room and making changes to the overall system to make it “fairer”.

     However, it amounts to an overall tinkering with the present system, which is something they had criticized doing in years past. In fact, heading into the 2007 Holyrood election, Nicola Sturgeon as deputy leader of the SNP had said: “the Council Tax is unfair and cannot be improved by tinkering around the edges.” She had made this statement following the announcement by the Scottish Tories under then-leader Annabel Goldie that if elected, they would retain the Council Tax system with a discount for pensioners.

     To be fair, the Council Tax as been criticized throughout the United Kingdom by people of all persuasions. It was cobbled together by John Major’s government following the disastrous debacle over the Community Charge (aka, Poll Tax) which provoked a campaign of nonpayment, as well as riots and helped to bring down his predecessor, Margaret Thatcher. Council Tax has not generated such feeling as the Poll Tax, but is still considered unfair and regressive in many quarters as a means of funding local government.

     However, in responding to the Conservatives’ policy on retaining the Council Tax, Nicola Sturgeon went further in her criticism by calling them “anti-Scottish” for wanting to do so. Specifically, she said: “The anti-Scottish Tories have clearly run out of ideas as this is not the first time they have announced this policy.” Her party campaigned in 2006 and 2007 on a pledge to abolish the “unfair Council Tax” in Scotland and replace it with a “fairer local income tax where over half a million pensioners pay nothing and most will pay significantly less.”

     In May 2007, the SNP won the parliamentary election and formed a government for the first time, and they instituted the Council Tax freeze as a precursor to their objective of permanently replacing it.

     Once they got to the nuts and bolts of crafting policy however, they quickly realized that a local income tax was insufficient and undesirable; insufficient – because it could not be enough to bear the weight of funding local government, and undesirable – because it would have to be set by Holyrood and thus erode local accountability.

     Given these concerns, the SNP went into the 2011 election saying it would: “consult with others to produce a fairer system based on ability to pay to replace the council tax and we will put this to the people at the next election, by which time Scotland will have more powers over income tax.” Following that election, the cross-party Commission on Local Tax Reform was created during the current parliament and presented its recommendations in December – calling for the end of the Council Tax.

     In the wake of this, the SNP decided to forgo an all-out replacement of the Council Tax and instead, opted for the position of merely tweaking and reforming the current system.

     As Brian Taylor of the BBC noted, it has been a “long, slow retreat” for the SNP on this issue, and having placated the people with the nine year freeze, they now hope that this modest, moderate plan will be enough to satisfy the voters in thinking that they have kept their promise of producing “a fairer system based on ability to pay”, even if they failed to “replace the council tax.”

     Possibly the greatest irony of this climb-down from abolition is that the policy decided upon by the SNP shares much similarity with the recommendations offered by the tax commission created by the Conservatives. Tartan Tories, indeed.

     However, this may not matter for the election that occurs in two months. Indeed, one of my acquaintances on Twitter, who goes under the name “El Del” (@Del_ivered), believes that the very modesty of the proposed changes only further ensures the SNP’s reelection prospects. Specifically, he notes how the ability of councils to raise tax by 3% may actually be the SNP effectively passing on some of its ability to tax from Holyrood on to those councils, so that councils are left with the decision to raise council taxes for public services, but income taxation in Scotland stays the same as in the rest of the United Kingdom.

     This is important, because Labour and the Liberal Democrats have been advocating for increase in income taxes in Scotland in the belief that it may be attractive to some voters who believe that people – especially those of a higher income – ought to pay more for the benefit of public services. Not only does Del contend that they fell into a Nationalist trap, but they were “so hellbent on unleashing their tax missile at the SNP, they were blind to the vital bigger picture: Keeping [the] UK a level playing field and Westminster budgets relevant to Scots.”

     In this light, he further asserted that while the SNP does not “care a whit for UK cohesion”, they also did not wish to see talent drain away from Scotland to other parts of the UK due to tax differentials and that “calls for worker solidarity across the UK at the indy referendum were forgotten as [Kezia] Dugdale and [Willie] Rennie were happily prepared to make Scotland the highest-taxed part of Britain.”

     Having avoided this and for achieving a “reformed” (i.e., “tinkered”) Council Tax system, Del believes that pointing to broken promises by the SNP on abolishing and replacing it will prove to be ineffective because voters care about the here and now.

     However, pointing out this broken promise on Council Tax replacement is necessary when one realizes the circumstances of the election in 2007. To be sure, there were many things going on which help to explain why Labour lost power to the SNP that year, but this was still an election in which the SNP only beat Labour by one seat to form a minority government in Edinburgh. Given how close this election was in some individual constituencies (not to mention the irregularities and various voting/counting/ballot paper issues – possibly most infamously in Cunninghame North) and in the Scotland-wide result, it is possible that the “abolish and replace” promise was probably enough to help the SNP to power for the first time. Looking back, this election proved consequential, for it eventually led to the referendum, further constitutional upheaval, and nine years of SNP rule (with the last five years as a majority government). Without that promise, it is possible that Labour would have held on to power. At the very least, enough votes against the SNP would probably have kept it from attaining power that year, and all things being equal, prevented the madness of past nine years.

     Another issue is the fact that Sturgeon called the Conservatives “anti-Scottish” for taking the very position that that her party is now promoting: retaining the Council Tax system with some adjustments. Furthermore, during the 2011 election, senior SNP MSP Humza Yousaf tweeted that Scottish Labour was "betraying Scotland" by not lending its support for "scrapping the unfair Council Tax." Well, what does this make the SNP? As Euan McColm said recently in The Scotsman, "there's something troubling about the othering of politicians by opponents. It speaks of a pettiness that's a world away from the talk of consensus and working together that we so often hear."

     For that matter, if certain powers are not to be used because of the resulting disadvantage to Scotland (and the benefit of the rest of the UK), then what is the purpose – the need – for devolution, more powers, the recent struggle over the fiscal framework, or even separation? Indeed, this would seem to take the argument for the Union, as I explained a couple of weeks ago. Again, the SNP may not care about the unity of the UK, but they have paradoxically emerged as a UK unity party.

     Then again, it probably comes down to a simple fact: nobody likes paying taxes, and when they do pay taxes, they’d rather not pay any more. Even when they say they believe in higher taxes to fund public services in surveys and polls, so often, they vote according to their pocket books and not their political or social ideals – in other words, they usually vote according to their own economic self-interest.

     This may prove difficult to understand for people such as Lesley Riddoch, who seem to be wondering why the SNP is timid in its ambitions for local taxation. Why, they ask, is the SNP passing up an opportunity to really shake up the system of local taxation and come up with something new, innovative, and radical? The reason why is that Scotland is not as radical as she thinks or hopes, and the SNP knows this. Like most political parties, they don’t want to “scare the horses” (i.e., the middle classes, who tend to decide elections) so that they can stay in power. Indeed, some of those within Middle Scotland (a close cousin of Middle England) who benefitted from the freeze may well be shocked at having to pay more after nine years of frozen rates.

     In addition, as Brian Taylor pointed out, the SNP knows that any major change in local government taxation will be first such change since the advent of the Poll Tax, and we all know where that went.

     This brings up the important fact that there are no plans for a revaluation of properties, which means that Council Tax bills will be based on valuations from over 20 years ago – and that current property values are not accounted for and some people are effectively paying at a discounted rate. This sounds similar to what happened in the 1980’s when the Tories kept putting off what they knew would be unpopular revaluations and increases in the old domestic rates, until they couldn’t any longer (especially in Scotland) and decided to solve this problem by introducing…the Poll Tax.

     It is perhaps possible that similar conditions are being produced which will eventually force the SNP to move further on local taxation than it has thus far. For the moment however, they seem content with more-or-less adopting the position on local taxation taken by Tories in that consequential election of 2007. Who’s “anti-Scottish”, now?