Devolution and an in-out referendum Part 2 – The hard facts to be put before the Celts

Devolution and an in-out referendum

Part 2 – The hard facts to be put before the Celts

Posted on October 5, 2014 by Robert Henderson in EditorialElections // 1 Comment
In part 1 I looked at the UK electoral arithmetic which suggested that England might well  vote to leave the EU  while one or more of Scotland, Wales and Northern Ireland would vote to stay in the EU.  I then proposed a strategy to diminish the stay-in vote in the Celtic nations. This was to bring home the realities of life in and outside the UK for Scotland, Wales and N. Ireland.
The primary matters the Scots, Welsh and Northern Irish should be reminded of before they vote to leave the UK are:
  1. Wales and Northern Ireland are economic basket-cases which rely heavily on English taxpayers to fund their public expenditure. To lose that subsidy would cripple them both. Nor would they get anything like as much extra funding from the EU – assuming it would have them as members – as they would lose from the end of the English subsidy.
Scotland is in a better position because it is larger and has, for the present at least, significant oil revenues.  But it is a very narrow economy relying very heavily on public service employment – a significant part of which deals with the administration of English public service matters – while the private business side of is largely comprised of oil and gas, whiskey, food, tourism and financial services.
The figures below are the latest official estimates of the tax raised in each of the four home countries to the end of the 2012/13 financial year. These figures should not be treated as exact to the last million because there are difficulties in allocating revenue to particular parts of the UK, for example, with corporation tax, but they are broadly indicative of what each country collects in tax.  I give two sets of figures to show the differences when oil and gas is allocated on a geographical and a population basis.
UK                England    %           Wales      %       Scotland   %        Northern Ireland %
469,777   400,659 85.3%    16,337 3.5%   42,415 9.0%       10,331   2.6%
469,777   404,760 86.2%    16,652 3.5%   37,811 8.0%        10,518    2.6%
Compare this with public spending for each of three small home countries in the calendar year 2013 (I was unable to find expenditure figures for the financial year but they would be little different) :
Scotland      £53.9 billion  – difference  of £12 billion approx. between tax raised and money spent
Wales            £29.8 billion   – difference of £13 billion approx. between tax raised and money spent
Ireland         £19.8 billion   – difference of £9 billion approx. between tax raised and money spent
NB differences between tax raised and money spent are based on Table 1 figures which give the most favourable interpretation of Scotland’s tax position.
The three smaller countries are accumulating debt at a much greater rate than England.  In addition, small countries which go independent would find raising the money to meet their overspends would be much more expensive than the cost of financing the debt as part of the UK
  1. The vast majority of their trade is with England. Barriers created by England’s departure from the EU could have very serious economic consequences any of other home countries remained within the EU.
  2. Much of what they export to countries outside the EU has to pass through England.
  3. All three countries would be net takers from the EU budget not contributors. The EU is unlikely to welcome with open arms an additional three small pensioner nations. There would be no guarantee that the EU would accept any or all of them as members, but even if it did the terms they would have to accept would be far more onerous and intrusive than they experience now. In particular, they would almost certainly have to join the Euro as this is a condition for all new members.
  4. An England or a reduced UK outside the EU would have to impose physical border controls because any part of the UK which seceded and joined the EU would be committed to the free movement of labour within the EU (more exactly the European Economic Area – EEA). That would mean any number of immigrants from the EEA would be able to enter either England or a reduced UK via whichever part(s) of the UK had seceded and joined the EU.
  5. Being part of the UK gives the smaller home countries great security because the UK still has considerable military clout – ultimately Britain is protected by nuclear weapons – and the size of the population (around 62 million and rising) is sufficient in itself to give any aggressor pause for thought. The proposal for armed forces made in the SNP sponsored White Paper on independence recommended armed forces of 10,000 regulars to start with rising to 15,000 if circumstances permitted.   That would be laughable as a defence force for a country the size of Scotland which has huge swathes of land with very few people on that land.  An independent Wales and N Ireland would be even worse off militarily.
  6. They could not expect to walk away from the Union without taking on a share of the UK national debt and of taxpayer funded pension liabilities proportional to their population, have a currency union to share the Pound, have UK government contracts for anything or retain the jobs exported from England to do administrative public sector work  for England, for example, much of the English welfare administration is dealt with in Scotland.
If this is done, with any luck the enthusiasm for leaving the UK to join the EU if England or England plus one or more of the other home countries has voted to leave the EU will diminish sufficiently to make a vote to remain in the EU unlike or at least reduce the vote to stay in to level where there is not an overwhelming vote to either stay in or leave.
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3 Responses to Devolution and an in-out referendum Part 2 – The hard facts to be put before the Celts

  1. I think you are well aware of the facts you have decided to gloss over but here they are anyway. Scotland may export to England, but England must import. As Smith said “it is not out of charity do we expect the baker to make our daily bread”. Scotland provide significant amounts of materials and product that England depends on and would incurr significantly higher cost in procuring these elsewhere. There is also the fact that the figures you likely rely on do not account for “through put”. that is exports that merely pass “through” England before leaving this island on their way to their final market. Port of exit figures would have it that items such as whisky being English exports in your chosen interpretation. I am sure you wouldn’t try to argue that an independent Scotland is somehow to be forced to sell such products to an English middleman. I mean that would make you very foolish indeed. Thus you should agree that Scotland’s exports equal some 16% of all UK exports.

    The UK’s very poor -4% balance of payments annouced on 4 September would fall to -6.9%, if Scotland no longer used Sterling to trade oil and gas exports. Such a fall would cripple the UK government because of vastly increased lending rates. Spain almost faced default with -4.2% balance of payments. The UK only avoids this because of access to the City of London finance. No wonder the banks have such a strangle hold. Your state has been running a balance of payments deficit funded by oil revenues and exports rather than making the fundamental changes to your society and government. You continue to decline. This very point of balance of payments is why the Scottish leader Salmond was well able to say that a refusal to monetary union was a bluff.

    It as you pointed out is not in Scotland’s interest to cause problems with a significant trading partner. Just not in the way you seem to believe. It would not be good for Scotland if England fell into economic turmoil and default. Does this make Scots not completely independent? In a way are any countries in the modern trading world independent. It would though be a vastly superior situation than the one current of complete economic and political domination. Scots would be in a position to make a deal.

    If you point out any problems Scotland has economically you are only highlighting UK wide problems. Scotland’s buget deficit is actually slight lower than the UK average and nearer to international norms. Of course Scots wouldn’t be spending vast sums on overseas wars. They could afford to half military spending while keeping to NATO average and still spend twice what is currently spent in Scotland by the current UK. Why would a nation of 5 million have nuclear weapons? Another saving. If you think a Scottish force with modern weapons could give any country a bloody nose look around the world. Anyway the only land border Scotland has is with England and the economic damage a war with Scotland would do to your country I’m sure you must agree outweighs any possible gain. In the area of public service sector, once different accounting systems are allowed for Scotland meets the same average as England. In fact is slight more efficient and thus gets more for its money.

    Again UK debt would be divided on the basis of where the money was actually spent and thus Scot should expect alot less than 8% to carry. It wouldn’t be the rUK’s decision but the people who own the debt. As debt was amassed via the central Bank which created fiat currency to the value, it is firmly tied to the currency. It is simply impossible to take a share of the debt without using the currency. Not a matter of choice as you seem to believe.

  2. Bob says:

    What is this “UK debt”, if we are talking England as oppossed to the “UK”, who has loaned anything to England? We have no government, we have no parliament, how can England have a debt? The “UK” is a nonsense, if some idiot has been lending money to the “UK”, then they have thrown their money down the drain. Clearly the “UK” is a dubious bloc of countries formed out of corruption, as if that binds the people of the countries. The moral is be careful who you lend to.
    Tamas talks as if the Scots have some kind of global right to monopolise Whisky manufacture, there is nothing to stop the people of England making their own whisky, I believe some of them do. Scotland as a seperate country, under English law would only ever be able to do wholesale trade with England, as by Magna Carta. And even then they are limited to be in England for only fourty days, and that of course is dependant upon English traders being allowed access to Scotland markets.
    England will not fall into any turmoil by defaulting on the imaginary debts, it will simply print it’s own currency instead of being forced to take the Bank of England notes which are magically made out of thin air and are merely pieces of paper. But hey if they want their pieces of paper back they can have them, if not then they could be used as toilet paper? When we print our own national currency they will cease to have a valid value. There is nothing to hold England back, once we start thinking outside the box, the only thing that holds the existing system together is corruption and fear of the nasty individuals who run the system. They have killed people such as JFK who was going to take on the money lending scam, and let the government print it’s own money. At some point fear will turn to anger, if not all ready, and the hunters will become the hunted.

  3. Lurker says:

    Largest private employer in Scotland is Tesco. While lots of those jobs are in shops/distribution there is also a large office/call centre operation. That would probably leave for England.

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