Scotland’s right of assumption

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by Hazel Lewry

As a follow on to a previous article, where I suggested updating the Treaty of Union, reserved power by reserved power, beginning with a secondary ballot at the upcoming council elections, it’s worthwhile looking at the potential consequences for Scotland.

Beginning with examining just one reserved field, energy, it is appropriate to dig deeper into the consequences of Scotland’s rights and her potential action to establish energy oversight within Holyrood.  This is just one of more than two dozen available areas over which Holyrood may choose to exercise jurisdiction.

Historically it is important to be aware that energy was never part of the original Treaty Of Union, it is just one area where Westminster has chosen to exert control.  Any area of Westminster control may be assumed by Holyrood at any time acting under the express will of the Scottish people.

First we need to define what we mean before we can state we are assuming governance over any specified item, this applies to any area Holyrood unilaterally opts to select to administer.  Unilateral, yes as Whitehall has demonstrated for centuries that it will not bilaterally and voluntarily relinquish control of anything to Scotland.

It is an especially important time to look at energy, with the new tax raid anticipated to be crippling this so vital of Scottish industries.

Scottish control would cover all aspects of energy, it would include the present elephant in the room, North Sea oil.  It would include all revenues and rights, leases and lease payments, the crown estates (where applicable), solar, wind, wave, tidal, geothermal, electrical, gas, nuclear and emerging future technologies.

It would also cover distribution and sales of energy within Scotland, or internationally.  Taxes and revenues generated from all sources, and the ability to encourage the generation industry by removing the penalties to siting new capacity in Scotland would also be included.

Firstly it would give us the right over what type and where new facilities are located. Irrevocably.  If Scotland said NO to nuclear, that is it over.  Lobbying at Westminster by vested interest is then futile.

Scotland is a net energy exporter, but what’s the entire value of energy worth in tax take to Scotland.

The figures used below are certainly open to variation, sources used could be replaced with alternative numbers to give slightly higher or lower net results.

Firstly there are North Sea oil revenues, currently standing around £13.5 billion annually, new leases can add to that substantially; the price can fluctuate varying that number.  £13.5 billion is a reasonable though possibly conservative number to utilize in the present economy.  Although the reserves and production will dwindle, the tax take is likely to increase over time if history is any judge.  A reasonable estimate (difficult as only “big oil” that perhaps truly knows what’s there) shows ¬100 years of reserves with a value probably beginning to diminish in a quarter century or so.  Exploration off the western shelf may change that dramatically, only time will tell.

In either case Scotland has over 50% of the EU Oil Reserves within our geographical boundaries.  A nice position for any nation to discover itself in, and one assuring a pole position within the EU should Scotland desire it.  That position alone will help stop any UK issues.

Then we have natural gas, which is in increasingly short supply, and contributes (2009 data) reportedly at a little under 20% of oil value, around 2.6 billion to the Treasury annually.

New exploration and lease payments with exploration likely to crash through the Treasury (UK) tax grab will be omitted here, but could be significant.

Oil tax revenue at the pump and distribution points to consumers: with 2.7 million registered vehicles on the road, ranging from 100 mpg mopeds to 7 mpg trucks this equates to about £1.9 billion.  Rounding it up to £2,500 million still gives an estimate that is extremely conservative as it substantially underestimates off road vehicle use, and consumption by shipping and aircraft, together with non vehicular fuel oil and lubricant sales which are also taxed.  Noting Jet fuel is specifically exempt.

Continuing our walk along the energy tax path there’s the electricity industry, generating about £253 million, with a potential renewables industry having a capacity of around 60 Gw. That treasury take could increase to about £1.2 billion. With the decline in volume of fossil fuel the new “green energy mix” even this is likely to significantly increase.

Nominal figures appear approximately as follows with respect to the tax value of the energy sector to the projected 2012 Scottish economy [in millions of pounds]:

 

  • Oil = £13,500
  • Gas = £2,596
  • Retail = £2,500
  • Electrical = £250

Taking responsibility for the above single reserved area, just one of many, would bring a nominal £18,846 million into the Scottish government.  Data has a variation from £15 billion to £20 billion, depending upon both tax levy and commodity pricing.

Scotland’s block grant is nominally £30 billion, and declining.

The downside of such an action would obviously be that Westminster would threaten to reduce Scotland’s “grant” by a like amount.

Basically this would equal Scotland getting control over her own revenues and assets at zero net loss and substantive net gain, for with administration of these royalties, taxes and revenues come jobs and employment effectively decentralizing the City of London and enhancing the Scots economy.

With control of the energy sector it is entirely feasible for Scotland to re-vitalize the industry leading to an exponential growth in employment, tax take, infrastructure, plant and equipment.  All the associated positions and skill sets which have been slowly slipping away have the potential and inducement to return.

In the final analysis irrespective of the ultimate monetary value, such a reassignment of responsibility means Scotland gains.  Jobs, growth, employment, economic stimulus, all of which we can expand upon through having our own fiscal levers.  Within three to five years Scotland’s economy could explode in a growth spurt rarely seen in mature nations.

The area of broadcasting could be another “first amongst equals” to be assumed by Holyrood, saving Scots an immediate £100 per year in their license fees.  The BBC spent about £63 million in Scotland last year on services, with almost 2 million licences in Scotland that equals somewhere around £31.50 per licence.  Being kind and generous Scots could set a fee at £45.50 providing an increased revenue stream for state television north of the border.

A 50% increase in Scots revenues would equal no job losses in Scotland; in fact we’d have opportunity to add jobs.  Obviously we’ve more than paid for the fixed assets many times over, so they just stay, and our state broadcaster would simply purchase programs as other broadcasters currently manage on an as needed basis.  Meanwhile the independents and cable companies continue on as they presently do.

Broadcasting was worthy of examination as it lies outside of the Barnett formula, these savings would then go straight into needy Scots pockets, while the benefits to the economy in additional employment and revenue would make dramatic local impacts.  Scotland’s film, documentary and film industries would at last have an opportunity to flower.  Planting the seed is in our hands.

Investigation quickly reveals that through the first part of the 21st century Scotland is projected to be significantly more than self sufficient – even if the “official numbers” are very carefully obscured in the bowels of Whitehall.

It appears there is little to no downside to the rapid, incremental and exponential assumption of governmental responsibilities by Holyrood.

Whitehall also benefits, because until we choose otherwise, a wealthier Scotland equates to a wealthier UK.