Independence: UK Treasury analysis undermined by massive blunder


  By a Newsnet reporter
The scheduled publication by the UK Treasury of analysis of an independent Scotland’s finances has been hit by an embarrassing blunder after it emerged figures will include costs for the setting up of separate agencies the Scottish Government has never claimed would be required.
It has emerged that the Treasury analysis has been based on a belief that the Scottish Government has said it needs to set up 180 Government departments in the event of a Yes vote. 

However the White Paper, on which the Treasury has based its calculations, explicitly makes clear that the bodies referred to are not government departments and argues existing bodies will share some of the responsibilities anyway.

Commenting ahead of the publication next week of Treasury analysis on an independent Scotland’s finances, including supposed ‘start-up costs’, First Minister Alex Salmond said:
“Scotland is one of the wealthiest countries in the world, more prosperous per head than the UK, France and Japan, but we need the powers of independence to ensure that that wealth properly benefits everyone in our society.

“The Treasury’s analysis is deeply flawed and deeply misleading, given their ridiculous claim that an independent Scotland would need 180 government departments – something the Scottish Government has never claimed.”

The Treasury ‘analysis’ presented to the media on Friday included the following statement:

“The Institute for Government (IfG) and the London School of Economics (LSE) have published independent analysis which puts the average cost of setting up a new policy department at £15million. Applying this to the 180 departments the Scottish government states it would need could see Scottish taxpayers fork out £2.7bn.” [our emphasis]

However, a review of the Scottish Government White paper ‘Scotland’s Future’ reveals no such claim.  According to the Scottish Government, the paper makes clear that many bodies which already exist will be able to take on new functions – and, it says, the paper does not relate to government departments.

The White Paper says:

“Around 300 public bodies currently act for Scotland at the UK level. As well as proposing new public bodies, we have developed proposals for sharing arrangements with the Westminster Government. In summary, our proposals on public bodies mean: around 60 per cent will transfer their functions to a new or existing body in Scotland either for independence day or after a transitional period”

Mr Salmond added: “The Treasury are either guilty of a horrendous blunder or it is a deliberate and deeply dishonest attempt to deceive – either way, it leaves the Treasury’s analysis without a shred of credibility, and either way they should withdraw this misleading claim.
“Much of the infrastructure needed for an independent country already exists, and Scottish taxpayers already pay their fair share for all devolved and reserved services, while Scotland also stands to inherit a fair share of joint assets, valued at around £1.3 trillion.”


During a briefing in Glasgow yesterday, head of the anti-independence campaign Better Together, Alistair Darling, raised the spectre of an independent Scotland being ‘poorer’ and unable to afford the public services it currently provides its citizens.

He said each person in Scotland would be £1,000 worse off “on day one of independence” and would face rising taxes and public spending cuts.

“The point we make is that this is a powerful case as to why Scotland is far better off being part of the United Kingdom, when you can pool resources you’ve got to make sure that, for example, when oil starts to decline, as it is, that you do not have to immediately start either cutting public spending or putting up taxes to deal with the consequences of a reduction in oil revenue.”

However, Mr Darling’s claims have been challenged by analysis carried out in February by the Financial Times which found Scotland would be in better financial shape than the rest of the UK on the first day of independence.
A study of official figures carried out by the newspaper found that a Yes vote in September would leave Scotland richer than the rest of the United Kingdom and in the top twenty nations in terms of GDP per head, ahead of both the UK and France.

Public spending in an independent Scotland would also be more affordable, with total spending amounting to only 42.7% of the GDP of an independent Scotland as opposed to 45.5% of GDP if Scotland remains in the UK.

The FT analysis said: “If its geographic share of UK oil and gas output is taken into account, Scotland’s GDP [economic output] per head is bigger than that of France.

“Even excluding the North Sea’s hydrocarbon bounty, per capita GDP is higher than that of Italy. Oil, whisky and a broad range of manufactured goods mean an independent Scotland would be one of the world’s top 35 exporters.

“An independent Scotland could also expect to start with healthier state finances than the rest of the UK.”