The wages of Scottish independence – infrastructure

Geographically Scotland is very isolated. It is a stranded at the top of mainland Britain with a single land border with England.  Any goods or people coming and going to Scotland have a choice of independent access by air and  sea  or dependent  entry and exit via rail and road through England.

Why does this matter?  Two reasons: Scotland cannot assume free passage for goods and  people through England in perpetuity. They might not have it immediately after independence if  Scotland  is  unable to gain EU membership,   either because the  reduced UK (henceforth the UK) opposed it or the other EU members did.  Alternatively the UK (or England on its own) might leave the EU.  It would also be in the UK Government’s hands
to impose its own restrictions on the free movement of Scottish imports and exports.

In any of these eventualities Scotland would be severely hampered in its importing and exporting.  EU law would prevent the free export of Scottish goods to and through the rest of the UK  if Scotland was not part of the EU and to the EU through the UK if the  UK  did not remain in the EU.  If the UK did not remain in the EU, exports to Scotland  from the UK would also be subject to EU protectionism and even goods from the EU could become subject to tariffs and quotas if they passed through the UK.  As for the UK Government taking steps off their own bat to impose restrictions, that could be a real possibility if the UK left the EU,  either in retaliation for EU imposed restrictions on UK trade with the
EU or EU restrictions on the movement of goods to and from the non-EU nations of Europe  to the UK . There might also be disputes between the UK and Scotland which could result in restrictions, for example, Scotland failing to pay the interest on their share of the UK National debt at the time of independence or Scotland operating too lax  an
immigration policy resulting in immigrants coming into Scotland with the intention of moving across the border to England.

The precarious geographical situation of Scotland shows the importance of it remaining on good terms with the UK  in the event of independence.  But it also means that  the UK  would have no incentive in improving railways and roads right up to the Scottish/English border.  In the UK  it may make sense for political  reasons to build a high speed rail line from London to Glasgow and Edinburgh as is presently under discussion (http://news.scotsman.com/edinburgh/Scotland-must-be-on-new.6606935.jp),
although the proposed HS2 route is being fiercely resisted by those parts of England through which it will wend on its way to Scotland (http://www.rail.co/2011/01/31/why-britain-needs-hs2/).  But if Scotland were independent , at best it would make no  political sense for the UK to extend such as line further than Carlisle, a city ten miles short
of the Scottish border and  70 odd miles from Glasgow.  More likely than extending  the high-speed line to Carlisle  would be a decision to extend it no further than Manchester, a city 170 miles from Glasgow. The same reasoning would be likely to apply to all rail and road access between England and Scotland,  because there would be little benefit  to the UK in improving  the links right up to or anywhere near the Scottish border.

But even if the UK was willing to improve railways  and roads up to the Scottish border, it is doubtful whether an independent Scotland could afford to extend the links to Glasgow and Edinburgh. HS2 if it ever gets built will cost tens of billions of pounds  (http://stophs2.org/news/2368-hs2-bill-1000-family).  A substantial part of the line, around a fifth of its length, would be in Scotland if it runs  to Glasgow and/or Edinburgh.  Bearing  mind that Scotland’s GDP at present is  less than £140 billion (in 2009 it was
officially estimated at £131 billion – http://www.scotland.gov.uk/Publications/2011/06/21144516/5), it is difficult to see how Scotland would fund the construction, maintenance and running of the HSE on their side of the border.

Poor communications,  external and internal,  would  not hinder only Scottish exports and imports of goods . It would  also adversely affect large sections of the private enterprise part of the Scottish economy  such as tourism and dissuade talented  individuals from coming to work in Scotland or businessmen to invest there. Poor infrastructure generally would be a disincentive to individuals and businesses.  Existing well qualified individuals and companies located in Scotland might well decide to move elsewhere.

But infrastructure is about much more than main roads and rail links to major cities. An independent Scotland would have to fully fund all new capital projects in  Scotland including the rail and road network over the sparsely populated highlands and islands, and maintain the existing networks.  This would not be easy to do even under the present devolution arrangements because  Network Rail (which has responsibility for the
railway in Scotland)   is projecting  considerable cuts in funding (http://www.guardian.co.uk/business/2010/may/31/rail-industry-prepares-for-public-funding-cuts)

Amongst other things, an independent Scotland would also have to build new schools, universities, prisons, law courts   and hospitals and maintain the old ones;  prevent coastal erosion (a considerable task with such an extensive coastline for such a small population);  fund most the local council’s infrastructure spending and maintain state-owned Scottish Water  infrastructure . Of course much of this is already done via the UK Treasury block grant Scotland receives each year, but  thereby hangs a tale: in the first ten years of devolution public spending in Scotland increased dramatically. Now it is due to fall, viz:  “In the last decade, Scottish Government departmental expenditure has grown by over 5% a year on average in real terms. It is projected that between 2011/12 and  2014/15 it could fall by an average of 2.9% in real terms per annum and be £3.5 to £4bn lower.” (http://www.scdi.org.uk/downloads/SCDIBlueprintforScotland.pdf).  That  is the official estimate in the event of Scotland remaining within the UK  with  all the benefits that provides, such as assurance for business investors that Scotland is effectively  underwritten by England  and   a massive annual subsidy from England. (Shortly before Labour left office in 2010, the monetary benefits to Scotland since devolution in 2000 were calculated by  the Scottish Secretary Jim Murphy’s office at £76 billion, that is the difference between tax raised in Scotland and public expenditure in Scotland since 2002 – http://www.scotsman.com/news/Scotland39s-76-billion-39devolution-dividend39.6009619.jp).

In short, infrastructure spending in the ten years since devolution has taken place in the most benign economic and fiscal circumstances. Those circumstances would not exist come independence. Indeed, they would probably be far  worse by the time independence was reached because  according to the Murphy report the tax deficit is already at  dangerous levels : ‘… an examination of “real money” government expenditure that excludes capital spending, Scotland Office economists found total expenditure in Scotland currently amounts to 145 per cent of all Scottish tax receipts.”

An independent Scotland would find itself immediately saddled with a massive national debt as the result of taking on a proportionate share of the financial obligations of the UK at the time of independence (this would be in excess of £200 billion – https://englandcalling.wordpress.com/2011/06/02/the-wages-of-scottish-independence-public-debt/), further debt in the shape of PFI contracts for work undertaken in Scotland
and local authority debt. On the other side of the fiscal ledger, the tax base in an independent Scotland would shrink because of the unhealthy  proportion of its GDP which is  dependent  on public spending (https://englandcalling.wordpress.com/2011/05/19/the-wages-of-scottish-independence-public-sector-employment/) and the receipts from oil in Scottish waters would not compensate for the £8 billion pa Scotland receives in extra funding from the UK Treasury because the per capita funding is around £1,500 per head higher in Scotland than it is in England.  The oil is also a rapidly declining asset. (https://englandcalling.wordpress.com/2011/05/14/the-truth-about-uk-oil-and-gas/).
It is also a fact that Scotland has a dangerously narrow private sector being far too dependent on oil, Scotch whisky, material and tourism.  This means it could easily be blown off course by a sudden change of fortune in one of the main revenue earners .

With additional costs and tax revenue falling, it is improbable in the extreme that Scotland’s infrastructure could be maintained at its present level let alone substantially improved.  Nor  is there any reason to believe that  an independent Scotland would be wise in its use of money for infrastructure investment.  The Scottish parliament was estimated to cost £40 million and cost  £414 million (http://www.parliament.uk/documents/commons/lib/research/briefings/snpc-03357.pdf) and a tram scheme in Edinburgh which bids fair to waste £750 million with
precious little to show for it (http://scotlandonsunday.scotsman.com/comment/Edinburgh39s-disgrace-II-Tram-fiasco.6783582.jp).  Those are serious amounts of money for an economy the size of Scotland. A massive like England could shake them off, but a few fiascos of this magnitude could seriously damage Scotland.

The likely outcome for infrastructure in an independent Scotland is more ridiculously expensive projects, less of it and worse maintained.

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5 Responses to The wages of Scottish independence – infrastructure

  1. Peter MacCann of Castlecraig says:

    Belgium could well split up , would Brussels then have to apply to join the EU.? Ask a silly question , but the same would apply to Scotland. So there has been no defence waste by Westminster!! Who owns our Embassies. Not England so perhaps they are owned 10% by Scotland. London is numerically the fifth largest French city, is that a problem. No one has even noticed. No passports have ever been needed for Ireland. They shared the currency with the UK until recently and they still use some of our Consulates abroad. There are many stupid obstacles that are put up by Unionists which are groundless.

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