Why does Westminster want to hold on to the ‘scrounging Scots’?

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by Peter Thomson

It is a question that is confusing Scots in ever increasing numbers.  Scots would prefer to see the current constitutional disaster area made into a revised federal UK.  This policy was once beloved of the Lib Dems until they took Cameron’s shilling, a move which cost them dear in the May 2011 elections in Scotland.  If Cameron will not reform Westminster and create a federal UK then the Scots are going to walk anyway.  SNP support continues to grow on a daily basis.

Well then, just why does Osborne continue to ‘subsidise’ the Scots, while borrowing more and more money?  It’s not as if the Scots are a loss leader.  It is a question you will never hear asked by the Westminster media bubble.  Why does Westminster need the Scots rather than the other way round.

Here is my attempt at an answer, but understand I do not use ‘Westminster’ as a synonym for England.  Westminster is now the biggest problem faced by the nation states of Scotland and England.  The Westminster parliament has run out of control and is now accelerating the break-up of the UK Parliamentary Union.

In the short term Osborne and the Treasury need the daily cash flow from taxes raised in the Scottish sector of the North Sea oil and gas fields to help underwrite foreign currency deals.  It is part of the reason that it seemed a good wheeze to squeeze North Sea oil and gas producers even more.

Sadly for Osborne the producers know that the oil and gas is going nowhere and currently it is more cost effective for them to leave it in the ground rather than funding his lemming like rush for austerity; especially as they are starting to wager on an independent Scotland giving them a far better deal.  

Surely we ask, this can not be all?  Compared to the trillions of pounds thrown at the City of London in bank underwriting it is peanuts.  Yet a growing number of economists and analysts are now suggesting the oil and gas revenue is all that is between Westminster and membership of the PIGS group of defaulting EU members.

Without the Union of Parliaments, Westminster would lose its permanent seat on the UN Security Council and probably its membership of G8.  With Scotland gone the remaining parts of the Union become just another medium size country with a middle sized economy.  Think of all the freebies and grand standing that Westminster’s current politicians will lose out on.

Then there is the growing reality of power shortages in England as the current nuclear plants go off line with no ready replacements in the offing.  The Advanced Gas Reactors are already reduced to safe operating capacities of less than 60% due to micro fractures in the heat exchangers.  These fractures are currently repaired with a high ‘tech’ radiator sealant, but they can not continue for much longer.

What if, when Scotland becomes independent, the generating companies decide to export their excess base load and peak capacity via the proposed Scotland-Scandinavia HDVC link rather than over the border to England or across the sea to Northern Ireland because they will get better returns there than they do at present from the ‘National Grid’?

The reality is England would not cope and there would have to be outages in the North of England to prevent London from being ‘off line’ at peak use times.  The HDVC link from France is already at full capacity and the French are having the same problem with their AGRs, so cheap French power is not going to last forever and the new HDVC link across the North Sea to Holland is well behind schedule.

For those who find it hard to believe this is the case, in 2008 one base load coal generator plant in Scotland failed to come on-stream to meet demand, the surge caused nuclear plants to trip (making the failure worse) and there were power cuts and outages across London and the South East shutting down large sections of the railway network from London Bridge to Kent.

Successive Westminster governments have taken Scotland and its excess generation capacity for granted.  The problem of power supply is clearly resolvable but given the timescale – it looks increasingly as if Scotland could be independent by 2015 – the failure of successive Westminster governments to deal with the shortfall could come back to haunt the rump UK Government as it becomes ransomed even further for its energy needs.  The English people need to start asking Cameron just what is plan B if the Scots go, rather than the current head in the sand propaganda that Westminster and its media bubble are pumping out at the English electorate.  

So is Westminster sleep walking England towards economic disaster?  

Scotland is actually in surplus in its relationship with the Treasury to the tune of some £1.6 billion in the year 2009-10 and has been for the previous three decades – if not longer.  So far when any country has sought independence from Westminster, be it Australia, Canada or New Zealand, any attempt by Westminster to pass on what they see as the countries share of the UK debt has failed.  What’s more if Westminster tries this debt share with a Scotland where its policies currently are seen by Scots to be an attempt to stagnate the Scottish economy, watch out for a counter claim by the Scots for their share of all the UK Government’s assets.

Forget the ‘Scottish’ bank bail out so beloved in the Westminster bubble.  In international law Scotland is only liable for the share of bank debt that it regulates for.  The Scottish Banking sector was not that much in hock in the CDO debacle of 2008 – that is the companies with a SC company registration who would be regulated by an independent Scotland.  

The Royal Bank of Scotland’s mercantile trading and investment arm is registered in England, as is its NatWest subsidiary and associated NatWest trading arms and therefore regulated under English Law.  So the ‘Scotland could not have helped its banks to the same extent as the UK Government’ is just another Westminster bogeyman story playing to their own internal story line and a large chunk of delusion in an attempt to keep the English electorate sweet with yet another claim of how they saved the too poor, too wee, too stupid Scots. The estimated cost per Scot to have bailed out its own regulated banks is around £2,300 on a per capita share of the UK Government’s total bank bail out – and that actually includes the bail out to non Scottish banks,  as well.

Economist and Nobel Laureate Professor Hughes Hallet of Washington State University argues that the debt that is being currently racked up by Osborne is nothing to do with Scotland.  Scotland is surplus in its cash account with the Treasury and the SNP is achieving success in maintaining a balanced budget in spite of a year on year 1.3% real term cut in its pocket money from Westminster.

The question remains, just what will it take to get the English electorate to wake up and realise the Scots are not their enemy but their friend.  The enemy of both sits complacently at Westminster pigging from the tax payer’s trough, stuffing political ‘has beens’ into ermine to keep them on the gravy train, subsidising its millionaire friends’ already bulging bank books while walking England over the edge of a financial collapse.  When Scotland goes, that will make the current Greek tragedy look like a tea party.