Scotland Bill is ‘Perfect Storm’ warn Renowned Economists



Eminent economists have warned that the combination of Westminster’s Scotland Bill coupled with ConDem tax plans could create a “perfect storm” damaging Scotland’s economy and public sector.

The comments were made by leading academics Professor Andrew Scott of Edinburgh University and Andrew Hughes Hallet, Professor of Economics and Public Policy at George Mason University, Washington DC.

The danger, they argue, is that as the bill and the fiscal plans are due to kick in after four years of ConDem austerity cuts this economic mix could spark a new wave of job losses and leave the Scottish economy weakened and trapped.

Giving evidence in Parliament the respected academics said the “flawed” tax powers in the bill coupled with huge UK spending cuts could create a “perfect storm” and warned politicians over raising or introducing new taxes without the powers to abolish others.

These internationally renowned academics are among a growing number of high profile figures who have questioned the viability of the ConDem’s Scotland Bill, which are based on the Calman proposals, and who argue that Scotland would be far better off with economic independence.

In response to these warnings the SNP, which argues for economic independence, will now write to the leaders of the three unionist opposition parties who collaborated on the Calman Commission, asking what they will do to guarantee that the Scotland Bill offers job creation powers and does not jeopardise Scottish employment and economic growth through its measures to increase tax raising powers.

Alexander’s Ambush

Having been invited to the Scottish parliament’s Scotland Bill Committee to offer their opinions on the merits of Westminster’s Scotland Bill the meeting with the Professors soon descended into a row as opposition parties attacked the Professors on their work on fiscal independence.

Convenor of the committee Wendy Alexander (pictured above), who was forced to resign her position as Holyrood group leader in 2008 amid financial corruption allegations, will now face accusations of having abused the committee’s powers in order to interrogate the academics on work which had no relevance to the stated purpose of the hearing. Ms Alexander demanded to know “the source of the analysis” they used in papers on a subject not directly related to the Scotland Bill.

Supporting Ms Alexander’s chairing of the meeting David McLetchie, who was forced to resign as Conservative Holyrood group leader in 2005 owing to an allowances scandal, said Ms Alexander’s line of questioning over fiscal powers was “reasonable”.

The motive behind this departure from protocol later became clearer when Finance Secretary John Swinney was ordered to reappear before the committee to respond to the committee’s findings. Previously the Finance Secretary cited a report by the same academics as work he agreed with and which, he said, backed his claims that fiscal independence would lead to economic growth.

Prof Hallett said yesterday that the claims about increasing GDP were “referenced in the papers” that both he and his colleague had written and that “Increased powers could be expected to increase the level of GDP by between 0.6 per cent and 1.3 per cent.”

The unexpected line of questioning meant the professors were unable to cite their evidence that ‘fiscal autonomy’ would be GDP enhancing. This inability was interpreted by the committee as contradicting the Finance Minister’s claims about the said report. The Minister’s schedule must now be readjusted to accomodate the Committee’s investigation.

One by-product of the committee’s conduct is the damage that will have been done to the Scottish parliament’s reputation and the further undermining of the process whereby experts give evidence and work in a spirit of cooperation and partnership with parliamentary committees.

Since the minority SNP government came to power in 2007 various committees have conducted investigations which were initiated in a similar vein to this one. This has lead to increasing criticism that Labour and the other unionist opposition parties are prepared to wreck the standing of Scotland’s parliament for partisan self-interest and so calling into question the whole process of devolution.

As the row unfolded during the Scotland Bill Committee hearing Professor Scott said: “We’re here today to provide evidence on the impact of the Scotland Bill, not to discuss, through academic, intellectual arguments, an alternative that is not being legislated.” … “It strikes me we should simply leave if all we’re going to do is discuss this.”

Prof Scott did respond positively to the Committee’s unexpected interest in the professors’ work and offered: “If you would like us to conduct a seminar on our work, then we could probably do that in a more convivial atmosphere.”

MSP Brian Adam (SNP), Deputy Convener of the Committee apologised to the economists for their treatment by opposition politicians in Committee: “We’ve treated these two witnesses shabbily, and personally I would like to apologise for the way you’ve been treated.”

Holyrood Elections

As the elections draw closer and the fog of political war thickens the parties will vie over the key issue of economic credibility. The electorate is deeply concerned over the direction the UK economy is taking and the impact that the impending austerity cuts will have.

It is vital then that a national debate over the various options of the Scotland Bill, fiscal autonomy and independence is had in order that the Scottish electorate can weigh up which strategy offers maximum protection from the worst effects of the UK sovereign debt, currency and financial crises.

This warning by internationally renowned economists and academics will cause anxiety for already cash starved institutions such as Scotland’s universities as well as businesses and the taxpayer. Brian Adam said: “This warning of a “perfect storm” of fewer tax payers, lower revenues and potentially fewer jobs is one that parties and MSPs must heed.”

We can take from events in the Scotland Bill Committee that the battle has begun over who will set the economic agenda for the election. With the Scottish electorate shown in studies to favour significant new powers for the Scottish parliament Labour and their Calman coalition allies will seek to refocus attention away from the severe criticism, from a plethora of experts, of the Scotland Bill onto what they argue is an unsubstantiated case for economic independence.

If the Scottish electorate believes that Iain Gray is better placed to navigate Scotland through these stormy economic waters then he, not Alex Salmond, will be handed the keys to Bute House on May 5th.