GERS Report Shows Scotland subsidises UK, says Professor Andrew Hughes Hallett

 The following interview was conducted during my tenure as Chief Editor of the former title Newsnet Scotland. I intend to resume publishing with the title Scottish Times in due course.

EXCLUSIVE:

Professor Andrew Hughes Hallett is a world class economist who divides his time between George Mason University in Virginia and St Andrews.

From 2001 to 2006, he was Professor of Economics at Vanderbilt University (Nashville) and before then at the University of Strathclyde in Scotland. He has been Visiting Professor in Economics at Princeton University, Bundesbank Professor at the Free University of Berlin, and has held visiting positions at the Universities of Warwick, Frankfurt, Rome, Paris X, Cardiff and at the Copenhagen Business School.

PROFESSOR HUGHES HALLET, COULD YOU SUM UP YOUR IMPRESSION OF WHAT THE NEW GERS REPORT TELLS US ABOUT THE SCOTTISH ECONOMY DURING THE DEEPEST PART OF THE GLOBAL RECESSION IN 2009-10?

The things that stand out are that it has been a rough couple of years, but Scotland had weathered the storm better than the UK as a whole. She has a budget deficit for the first time in half a dozen years but it is a smaller deficit than the UK. So the implicit subsidy to the rest of the UK (RUK) is still there.

What’s more, this has been happening in a period when oil prices were low. This is of course a backwards looking exercise (up to April 2010). Those low prices were reversed a year ago, so the implicit subsidy will have increased markedly since then.

Note: all my remarks take the revenues/spending actually raised in Scotland, as opposed to those allocated to Scotland by the accounts (which are often quite different). You will appreciate the significance of that difference.

IN WHAT WAY IS SCOTLAND SUBSIDISING THE REST OF THE UK?
Public spending has fallen as a percentage of UK total each year since 07-08, so Scotland is being squeezed more than RUK. That seems unfair, and it goes back to when Gordon Brown took over as PM.

However the share of Scottish public spending in the UK total has risen
when oil revenues are included, so RUK is relying more and more on Scotland’s share of oil revenues for its spending.

The deficit on the current budget is 6.8 per cent of GDP, whereas for the UK as a whole it is 7.6 per cent. Again you see the implicit subsidy to RUK - equivalent to about one per cent of our GDP being sent south (adjusting to get RUK figures, rather than all UK figures).

Adding in capital spending, the figures become 10.6 per cent (Scotland) versus 11.1 per cent (all UK). Same story.

Note capital spending in Scotland is rising fast (unlike RUK) as it should be to power the way out of a recession. Correctly: any recession is too good to waste!

WHAT ABOUT THE VOLATILITY OF OIL INCOME?
Non-oil GDP is down 3.0 per cent, but with oil it fell 7.5 per cent. As I said, oil was a damaging factor in this period, but will have improved now. Hence Scotland is actually doing better than it appears from these figures.

However, UK GDP is down only 1.8 per cent. So Scotland's performance has been weaker than UK, presumably because she is subsidising the latter and because she has been allowed to run a smaller "counter cyclical" deficit.

IS THERE ANYTHING IN GERS THAT THROWS LIGHT ON THE SNP GOVERNMENT’S DEMAND FOR MORE TAX POWERS?
Income tax revenues are down 2.8 per cent overall, implying a significant deflation bias under the current Scotland Bill proposals - as many had argued when the Bill came to the Scottish Parliament last year.

But more significantly many of the other tax revenues are now rising as a share of total revenues: I note here national insurance contributions, fuel, and particularly excise taxes (tobacco, alcohol, vehicles).

So income taxes are a poor source of revenue to rely on. Think what you could have done with a wider spread of tax revenues to power the spending to get out of recession and to use as levers to grow the economy.

news scotland

Scotland better off leaving bankrupt Britain

Published during my tenure as Chief Editor of the former title Newsnet Scotland. I intend to publish under the title Scottish Times in due course.

Despite a huge drop in North Sea oil prices in the year 2009-2010 an independent Scotland would have been better off economically being outside the UK according to newly released Government figures.

Commenting on the new GERS (Government Expenditure and Revenue Scotland) figures released today one of Scotland's leading investment bankers Ben Thomson, chairman of the Campaign for Fiscal Responsibility, said: "The latest GERS figures show that Scotland’s budget position in 2009/10 was better than for the UK as a whole.

"As a percentage of GDP, both Scotland’s net fiscal balance (-10.6% compared to the UK’s -11.1%) compare favourably with the UK as a whole." (See chart)

"This is despite the drop in Scotland’s geographic share of North Sea revenues for 2009/10 from £11.7 billion to £5.9 billion which has resulted in a deterioration in Scotland’s budget position.

Debt to GDP ratio based on GERS

"It is also worth pointing out that this will also have improved considerably since 2009/10, the year covered by GERS.

"The Office for Budget Responsibility (OBR), in its 2011 Budget Report, estimated that North Sea revenues would average £13.4 billion over the next five years of which Scotland’s geographic share would be £12.2 billion.

"This is more than double the revenue levels in 2009/10 and would bring Scotland’s net fiscal position close to balance."

Compared to current UK debt

Against a backdrop of out-of-control UK debt it is clear that Scottish families, institutions and businesses would benefit significantly from independence. This year UK public sector net borrowing for April and May totals £27.4bn which is £1.5bn more than the same period in 2010 according to the official ONS (Office of National Statistics) report. 
...............................................................................
UK consumer confidence

According to YouGov's Household Economic Activity Tracker (HEAT) UK consumers remain extremely negative (-26 points) about the next 12 months ahead. This compares woefully to China which has a positive (+42 points) rating making the difference in consumer outlook between the two economies a 68 point gap.

Newsnet Scotland Comment
With oil revenues much higher in the last year it is clear that being released from its share of UK fiscal debt an independent Scotland would be in the position to increase the standard of living of all Scottish citizens.

Yes, as Unionist commentators like to point out an independent Scotland would have carried debt in this single year but as can be seen it would be less debt than it must carry as part of the UK.

news scotland

Cost of the Union to every Scot - £2, 413 each year

Published during my tenure as Chief Editor of Newsnet Scotland. I will resume publishing under the title Scottish Times in due course:

Scots must pay £12.546 billion every year just to stay in the Union according to Office of National Statistics (ONS) information. UK public sector net borrowing (excluding financial interventions) was £139.4 billion in the year 2010/11 and so Scotland's share based on 9% population amounts to £12.546 billion.

This is at least the annual cost for Scots of remaining within the Union as Scotland's national accounts show a surplus meaning none of the debt is accrued in Scotland.

According to world-renowned economic expert Professor Andrew Hughes Hallet Scotland's economy, unlike the UK economy is in robust shape:

“Scotland’s accounts, rather than those compiled in London, show that Scotland has a small net surplus, rather than being a net beneficiary from the UK."

The bad news for Scots is that the UK treasury is accruing debt which is accelerating owing to bad house-keeping south of the border and dragging the Scottish economy down with it.

Think Tank statement

An analysis from the right-wing think tank - the Institute of Economic Affairs (IEA) - shows Scotland's share of the UK's skyrocketing public debt will be a staggering total of £110 billion by the time it is likely to become independent.

This sum is startling and, to make matters worse, is set against official UK Government figures which forecast unprecedented levels of UK debt which will surge past £1.1 trillion this year.

Perhaps not surprisingly these figures will be used by pro-independence supporters to show that Scotland must get out of the sinking UK ship as quickly as possible.

There's no cause for alarm though as Scotland will have the ability to escape this problem if it votes 'Yes' in the forthcoming independence referendum. The real problem facing the budgets of Scots families, institutions and businesses is that the SNP Government may wait too long to call the independence referendum while each year Scots have to pay £12.5 billion and rising - merely to be ruled from London.

Based on the official figures it costs every single Scot £2, 413 per year to pay off a debt they didn't cause. This debt could be avoided if Scots vote 'Yes' in the referendum and so would be an 'independence dividend'.

With full independence Scotland will control its oil and gas reserves and so have no problem picking up this 'Union tab' but how much longer will Scots tolerate austerity and benefit cuts designed for a plummeting UK economy?

Scotland's share of UK debt is unlikely to be as bad as the analysis by the IEA's Richard Wellings suggests as it bases its figures on Westminster public spending figures which are exaggerated. For example the entire cost of maintaining Trident is classed as a Scottish expense rather than a UK one. Wellings' analysis though does say that there is a preferable method of estimating Scotland's share of debt:

"Better still would be an estimate that also took account of the share of UK tax revenues generated in Scotland, but such a calculation is complicated by significant fluctuations in North Sea receipts from year to year."

As we know Scotland is in surplus and that is calculated based on our population share of North Sea oil and gas reserves. An independent Scotland would be entitled to far more of those resources than its population share and so it reasonable to assume that Scotland's share of the debt will be estimated downwards during independence negotiations with London.

Certainly, whatever Scotland has to absorb from the UK's debt mountain will be manageable - once Scotland is independent - as when oil and gas revenues are added to a Scottish exchequer our debt to GDP ratio will be far less than England's.

At the moment exports from Scotland's huge financial services sector are credited to London which means Scotland's current GDP is hugely underestimated. Post-independence this picture will become clearer and Scotland will look in much better shape to face the future.


News Scotland

Reasons Scots will vote 'Yes' to independence - Shoogly pegs

A piece I published during my tenure as Chief Editor of the former title Newsnet Scotland. I will resume publishing under the title Scottish Times in due course.

Analysis by Alex Porter

Scottish Unionism has seen better days and there are any number of angles on its current crises. So, as the great referendum debate starts to take shape can the usual arguments for Union hold?

Shoogly peg 1: The media is the massage

One worth consideration is that control over the traditional media no longer equates to control over the political loyalties of Scots. Unionist politicians can gang up on a Nat in a tv debate and believe their collective reasoning to be indestructable but the Nats still win elections. That must rankle in certain quarters.

Every year around 1.5% of the population becomes eligible to vote. These people are young and clued-in with all things world wide web. Every year 1.5% of the population - with few internet skills - leaves Scotland to the rest of us. Taken together these figures mean every year 3% of the voting population becomes instantly internet savvied and so the influence of traditional media dwindles. Of course, the rest of us in the middle are not sitting still so are also becoming more internet savvy. At every passing election the Katie Grants of this world talk exclusively to her own rapidly-dwindling kind.

One very real danger for Unionism posed by the internet is that voters have so many varied sources of information. The consequence is that their 'bollotix' alarm sounds at the merest hint of a dodgy narrative on TV news reports. People are not easily led or misled anymore. It was thanks to the internet that the SNP overcame the hositility of Scotland's Unionist media to win their historic first term in 2007. Four years later social networking and other internet channels played no small part in delivering the SNP a majority of Scotland's 129 seats in Holyrood.

It stands to reason then that the internet will play a key role in who wins Scotland's independence referendum. More Scots now get news from the internet than any other source such as the BBC and that trend is consolidated year after year in proportion to the passing of traditional Unionism and its print media allies. Unionism depended heavily on influencing traditional media and so even if there is any substantial remaining attachment to the Union, Unionists must surely realise that it can no longer get its own way because it can massage the message.

The contrived narrative about Scots having no desire to exercise their democratic right to an independence referendum is now consigned to the midden of history where it always belonged. However, said midden will have to wait a wee while longer before giving refuge to 'received wisdoms' of Scotland's pro-Union mainstream media on the subject of the benefits of independence. Will Unionism be able to bamboozle our internet savvy Scots voters into sticking with the "Union dividend" in the midst of austerity cuts? Somewhat, but Scottish nostrils will detect a reek and so an opportunity presents itself to the SNP.

Political beliefs are no longer simply drip-fed to the Scots electorate by fusty establishment figures like Jim Wallace (Lord Wallace of Tankerness) with a penchant for ermine but are arrived at using peer-to-peer recommendations via social networking channels. Scots, especially young Scots, have developed a healthy distrust of traditional media's political commentary and reportage. Information passed on from a friend, on the other hand, has value. Having young bright things such as Kirk Torrance, the party's New Media Director, to advise the SNP who have grasped this new paradigm shift leaving Scottish Unionism a decade behind the curve.

Shoogly peg 2: Independence a distraction

Watching the Unionist-leaning media having a post-mortem about what has gone wrong was the icing on the cake for Nationalist activists. Most Scots couldn't give two hoots what happened to Unionism. The Unionist political establishment, or what remains of it, is shocked and the old Jedi mind-tricks that once held sway in TV political commentary are now exposed, deliciously for independentistas, as blindingly obvious scare-tactics in real-time.

The well-worn classic is the one about how debating the constitution is a distraction from dealing with the economy. If that's the case then how can Unionists such as former chancellor Alasdair Darling also argue that an independence referendum should be held quickly so as to minimise uncertainty for business? If independence is not relevant to the economy then what could business be uncertain about? People are not daft and if you treat them as if they are they'll eventually change the channel.

For their part the Nationalists could argue that the delay in transferring tax-raising powers to Holyrood is causing uncertainty for Scottish business. Many Scottish boardrooms feel threatened by London's current advantages and so the business landscape is now very favourable to fiscal autonomy - Unionism would be foolish to lose whatever business constituency is still retains and some, such as the decimated Lib Dems, are beginning to realise that only by proposing substantially more powers will the Scotland Bill become palatable to the Scots electorate.

Today's Scots, and especially internet-savvy Scots, know full-well that independence is about politics and economics and therefore jobs and services - to suggest otherwise is treating the electorate contemptuously and the recent election showed that Scots have had their fill of specious, negative soundbites.

To his credit David Cameron, in reaction to the SNP's landslide, did promise he would make a positive case for the Union during the referendum campaign. It is not clear who in Scotland will bother to listen to the English Etonian Prime Minister, least of all Scottish pro-Union supporters. Scottish Unionists, on the whole, have defined their Unionism entirely by what they are against and so when pushed - and they haven't been pushed much until now - can't express why they support the Union except in vague terms of economic benefits.

Instead, we are bombarded with the economic downside of independence but this is never convincingly substantiated by official statistics which could prove or disprove their case. Those figures have been long concealed from public view arousing yet more scepticism of the case against independence.

Shoogly peg 3: Umbrellausterity

Which brings us to the next shoogly peg of Unionism. Scotland needs the umbrella of Union to protect it from the uncertainties of the international economy. What planet are these commentators on? The reality of living in UK PLC is perfectly and simply understood by all Scots who know what the word 'austerity' means.

Austerity cuts are imposed on Scotland by Westminster which is running an unprecendented and ballooning deficit. UK government debt stood at £903.4 billion at the end of March and heading due North. At the same time Scotland's economy under the stewardship of John Swinney is in surplus. So, despite Scotland's economic surplus the Scottish parliament has to lose out to pay for poor house-keeping South of the border. Some umbrella.

The umbrella metaphor goes from the ridiculous to the sublime when reflecting on the plummeting value of the pound. A depreciating sterling means foreign goods and components become more expensive. Scottish importers must then pass their increased costs on to Scottish consumers. What is becoming clearer, month by month, is that an increasing number of economists and analysts accept that there is no reason to believe that austerity measures and historic low interest rates will do anything but make the UK economy worse.

Britain is being left behind by its key trading partners according to Scottish economist Brian Ashcroft. Germany is a manufacturing power-house and so can balance its books by exporting goods it makes. Manufacturing only accounts for 12.8% of the UK's economy. That is a dire state of affairs and means there's no easy way of paying off spiralling govenment debt. Closing the gap in manufacturing would require more than a generation of capital investment. Capital is formed by companies saving money but with interest rates held at 0.5% there is no incentive for them to save.

There-in lies the UK's catch 22 - raising interest rates is not an option for Westminster as its debt now approaches £1 trillion and the UK's consumer debts are higher than the rest of the EU combined. If the people are already struggling and you land them with higher interest payments how will they be able to also pay for the government's increased interest payments through taxation? Some umbrella.

To continue borrowing the UK government must borrow against future North Sea oil revenues. If it can't then confidence in the UK economy will nose-dive and capital will flee. The fly in the ointment is the referendum on Scottish independence which is now certain after the SNP's landslide victory. Much of the commentary from the English print media suggests that the English would be glad to get the subsidy-junkie Scots off their backs. The London treasury knows the truth, though, and the issue of control over North Sea assets could not be more sensitive. The truth is that Scotland's North Sea resources are the UK's economic umbrella.

Nationalist self-imposed shoogly peg

Set against this economic reality it makes perfect sense for the SNP to prioritise securing more tax powers for Scotland's parliament in advance of the referendum. If parliament secures more economic powers - especially corporation tax - then full independence will become increasingly certain as the divergence of the Scottish and English economies gathers pace.

One potential pitfall for the referendum 'Yes' camp though is the thorny subject of currency. Scotland's Finance Minister John Swinney simply must face the issue of a Scottish currency head on. It is unfortunate and potentially damaging that the SNP are uncomfortable on the subject of advancing an independent Scottish currency as the monetary gods are currently smiling on Salmond.

With the UK's debts mounting, London's approach will be to continue inflating debt away by increasing the money supply. This will accelerate the devaluation of sterling. It matters less then if Scots keep more of their money if that money buys less and so fiscal autonomy is only part of the economic powers equation.

There is a real opportunity for the Nationalists to argue that a strong Scottish currency, backed by oil, would quickly rise in value against sterling (suddenly not backed by oil) meaning Scotland's share of the UK deficit will be much cheaper to pay off. The case for an independent Scottish currency can be won in the boardrooms and it simply must now be the subject of national debate.

With such a strong case to make there is no reason to risk the distrust of Scots who have shown they want to be levelled with. And the currency issue will be brought up again and again by Unionists who sense the SNP's unease on the subject. With everything going the SNP's way why would they throw a lifeline to the 'No' camp?

Hanging Scotland's Jacket

Our independence referendum will of course be about many issues and at core be about how secure Scots feel about themselves and their culture. Perhaps it is a weakness that the debate is reduced to "little more than a car boot sale haggling session" but the fact is that much of the debate will centre on the issue of economics.

The problem for Unionism is that its economic rhetoric no longer mesmerises as it once did and so the 'No' camp must quickly get with the internet programme. The 'Yes' camp on the other hand is ahead of the game and has the momentum in a nation which seems to no longer fear the word independence any more.

The only danger for the cause of an independent Scotland is whether or not the 'Aye' camp will feed Scotland's insecurities and try to sweep the issue of currency under the carpet. If the latter want Scots to take a leap in the dark with them then Scots will have to believe that they are being told it like it is.


news scotland

Unionist expert backs Scottish independence

A piece I did during my tenure as Chief Editor of Newsnet Scotland. I will resumer publishing under the title Scottish Times in due course.

Analysis by Alex Porter

A clown twisting a balloon into a dog grabs children's attention briefly and increasingly briefly each time the child sees the same trick. The political editor of Scotland on Sunday (SOS) Eddie Barns's anti-independence articles have a similar impact.

In last week's SOS Eddie ran the lead story "SNP expert says split will hit economy". It's only once you've finally made it to the end of his piece that you realise that said expert is not in fact an SNP expert and he didn't say anything about how a split [independence] would 'hit' the economy.

The expert in question is economist John Kay who is not an SNP member but is in the Government's Council of Economic Advisors - an august body whose members straddle Scotland's constitutional divide. Having led his readers to believe that Kay is an SNP insider, Barnes reaches the breathless conclusion that Kay's opinion "undermines a vital plank of the First Minister's quest to break Scotland away from the Union". All that in the first paragraph and a half and typifies the recent hysterical reaction from the Unionist press since the landslide SNP election victory a month ago.

Professor Kay did mention that full independence would bring with it "complications" as does any responsibility and Kay does say that an independent Scotland would be "limited by the realities of globalisation" as all independent nations are but he didn't say that an independent Scottish economy would be "hit" or suffer in any serious way at all.

Kay, visiting Professor of Economics at the London School of Economics, supports fiscal autonomy which means all of Scotland's taxes being raised and collected in Scotland. Arguing that full tax powers would benefit Scotland, Kay's opinion actually undermines the postion of all the Unionist parties, none of whom support fiscal autonomy. As fiscal autonomy is not on offer it would be more credible to interpret Professor Kay's view as showing that continued Union will hit the Scottish economy. Indeed, Professor Kay actually said that an independent Scotland is a "perfectly viable economic prospect". Last week's SOS could easily have led with "Unionist expert backs Scottish independence" as its headline.

Professor Kay's take is that Scotland would benefit from being part of a larger state within the Union so long as it controls and collects all its own taxes. This is a reasonable opinion which finds wide support in Scotland.

His analysis does however ignore the the massive monetary downside of Britain's skyrocketing national debt and the consequent devaluation of the pound. The realities of UK PLC are that there is no economic umbrella as the Coalition Government's policy of currency devaluation destroys savings and pensions - a backdoor tax or wage cut. Devaluation brings inflation as overseas products become more expensive meaning your family budget doesn't stretch nearly as far as it did last year.

Considered political journalists can get the economics of independence badly wrong too. On the same day across the M8 at the Sunday Herald Iain Macwhirter perpetuated the unionist myth about Scottish banks being bailed out at English tax-payers' expense. Iain still hasn't got his head round the fact that it was the bank's shareholders and bondholder, based mostly in the City of London, that were bailed out at the expense of all taxpayers including Scottish ones. There are numerous examples of governments bailing out their home-based companies and banks who lost money through foreign investments. Why would an independent Scotland bail out London-based investment houses, who did not do their due diligence and so made poor investment decisions, at all?

And given Iain's left credentials perhaps he can tell us why any of these banks should have been bailed out by the taxpayer at all - a point ably made last week by Professor Kay.

Macwhirter moves on to the subject of fiscal autonomy: "Fiscal autonomy is fine, but do you want control of taxes in order to cut them to promote enterprise, or raise them to meet ambitious social objectives? You can't do both."

The point of fiscal autonomy is indeed partly that - the policy privilege of exerting your own priorities. However another key point which is completely missed by Iain is that having those powers, in itself, would give Scotland a wage increase. So, you have more money before making your policy choices as a nation and there are plenty examples to demonstrate this. So with an increase in income you actually can "do both" or incentivise enterprise while maintaining social spending for example.

That, at least, is the position of one internationally renowned expert in Economics. Professor Andrew Hughes Hallet of St. Andrews and George Mason University in Virginia this week backed the ability of Scotland to improve its economic performance by using the "whole range of fiscal policies" independence would bring.

I'm pretty sure Hughes Hallet's independence endorsement will not be described by Eddie Barns as "supporting a vital plank of the First Minister's quest to argue the SNP's case for Scottish independence". Something tells me that's not in Eddie's box of tricks.


News Scotland

Apologies for being away

Apologies to followers of my blog. I've been busy working with Newsnet Scotland. Now that the election is safely out of the way I hope to be able to update my site from time to time.





News Scotland

Not being independent is costing Scots jobs and prosperity

A piece I did for during my tenure as Chief Editor of Newsnet Scotland. I will soon resume publishing under the title Scottish Times.

by Alex Porter

As the party leaders clashed last night during the latest TV debate, Iain Gray claimed Alex Salmond’s dream of an independent Scotland would cost every Scot £2600. With the election now reaching fever pitch and Labour well behind in the polls and facing the loss of some high profile MSPs, Mr Gray resorted to spreading fear and panic insisting that Scotland would be left with a £13.75 billion black hole in its finances if it became independent.

Before the 2007 election Labour warned that every Scot would face a £5000 tax bomb were the SNP to be elected and many were turned off voting for the party. The reality of the SNP government was that Scots had their Council Tax frozen which actually reduced stress on family budgets.

The most recently available official figures show that Scotland's national accounts run a surplus. Scotland's financial position in the financial year 2008-2009 was a budget surplus of £1.3 billion (GERS) while the rest of the UK has been running the highest deficits in its history.

The question the Scots electorate might be then be forgiven for asking is why their nation should be shackled to the UK economy and paying the price for massive deficits it doesn't contribute to. With UK government debt heading for the £1 trillion mark and with no sign of Westminster tax-take increasing in the drowning UK economy, Scots can look forward to years, if not decades, of increasing austerity cuts if we remain within the confines set for us by Westminster rule.

London-driven public sector cuts have been foisted upon Scots to pay for the failure of economic policies largely under Gordon Brown's Labour government and then continued by the current coalition. The result of this chronic economic mismanagement is the UK's financial, economic and currency crises which Scots have no option but to watch their cities, communities and families being dragged into.

Despite this corrosive economic environment at UK level, Scotland's national accounts have heroically remained in surplus and employment trends have bucked the depressing UK reality. This is testimony to the sound management of the SNP, and especially Finance Minister John Swinney, who has created enormous efficiency savings in the way government is run, particularly in the area of public sector procurement. It is regrettable that Scots cannot reap the rewards of these savings and instead continue to face a reduction in their parliament's block grant from London.

The harsh truth is that with the relative value of the pound collapsing and UK debt continuing to rise to unsustainable levels, Scots must consider their options and decide what powers their parliament needs most to protect their families, jobs and businesses.

North Sea oil is currently underwriting UK government borrowing. Without it the UK would be insolvent. With around 8% of the UK population, estimates put Scotland's contribution - through North Sea oil revenues from corporation tax alone - at 20% of the UK total. That figure disregards taxation raised at the pump.

In an independent Scotland that money would be reinvested in jobs and services. With the second-largest pension fund in the world, Norway, the richest country in the world according to the Legatum Property Index 2010, shows that rather than face a future of austerity Scots could, and perhaps should, be building a prosperous future for their children and grandchildren.

In poll after poll Scots have shown that they want their parliament to have more economic powers. In order to thwart that expressed desire the Unionist parties have designed, what they shamefully call, the Scotland Bill in order to give the impression that more powers are about to be returned to Scotland, but upon closer scrutiny we can discern that more powers will be re-reserved to Westminster.

Another cruel piece of rhetoric being disseminated by the Scotland's too wee, too poor and too stupid brigade is that an independence referendum would distract government from improving the economy. Firstly, it seems that the more attention the last Labour government and the current coalition government pays the economy the worse it seems to get. That aside, Scots are more than capable of having a national debate on independence while still going to work. If we can watch EastEnders and work, if we can read newspapers and still run a family budget and if we can follow the football while making sure the BBC licence is still paid then the Scottish government can bring forward the independence referendum that Scots want, while still managing to get on with improving the economy - something only the SNP government in recent years has been capable of doing in any case.

The truth is, though, that independence is about improving Scotland's economy. Without independence Scots, through their parliament in Edinburgh, do not have the collective powers to really put jobs and prosperity back on the national agenda. It is a daily economic crime that Scots are misled about the economic lifeboat of independence whilst the truth of what lies ahead for the UK Titanic is kept from sight.

news scotland

Contraction underlines Scottish and UK economic divergence

A piece I did during my tenure as Chief Editor of Newsnet Scotland. I will soon resume publishing under the Scottish Times title.

Britian's GDP contracted by 0.6% in the last quarter of 2010 according to the Office of National Statistics (ONS).

Scotland UK comparison

Although the same figures are not available specifically for Scotland, the UK numbers do nevertheless provide evidence of divergence between the Scottish and the UK economies. The contraction in UK numbers takes place against a backdrop of falling Scottish unemployment and rising employment.

Recently enterprise minster Jim Mather, comparing job market statistics, alluded to the divergence of the two economies saying: "For three consecutive monthly labour market statistics releases, we have seen falling unemployment and rising employment in Scotland compared to rising unemployment and falling employment across the UK.
"Scotland's total employment rate is at its highest level since the three months to December 2009 - and Scotland has a higher employment rate and lower economic inactivity rate than the UK as a whole."

This latest economic data serves to underline existing evidence which shows that the Scottish economy is in robust shape whilst the UK economy is in trouble. According to the most recent Government Expenditure and Revenues Scotland (GERS) report the Scottish economy was running a surplus as recently as 2008-2009.

Having factored in interventions in the financial sector in 2008-2009, Scotland's financial position was a current budget surplus of £1.3 billion, or 0.9 per cent of GDP, including a geographical share of North Sea oil revenues. At the same time, the UK was in current budget deficit of £48.9 billion, or 3.4 per cent of GDP, including 100 per cent of North Sea revenues.

Given that UK government borrowing has escalated, standing at £23.3 billion for the single month of November 2010, one would expect an economic contraction in Scotland leading to job losses. However the opposite is true.

This is good news for SNP Enterprise Minister John Swinney as his party goes into the Holyrood elections. By being able to point to Scotland bucking the trend the SNP will impress upon the Scottish electorate that where their parliament has powers over the economy success ensues, and so more powers will mean more economic success.

Low interest rates bitter-sweet

According to received wisdom the ONS negative growth figures will lend authority to those seeking to keep interest rates low. Low interest rates, we are often told, makes it easier for companies to borrow and so stimulate economic activity.

However the reality is that although lending to main street banks from the Bank of England (base rate) is only 0.5%, the banks aren't lending to main street. Instead, it seems, they use the almost free money to buy and sell financial products to and from each other, triggering commission on each transaction and therefore bonuses.

In the City of London this almost free money sloshing around gives the impression of buoyant underlying economic activity. The commissions and bonuses ulitimately derived from devaluing the pound have a ripple effect and so in the South-East there is a general sense that recovery is never far away. Devaluation is felt more severely outwith the South-East where increased prices are squeezing family budgets and an increasing number of homeowners now need to use credit cards to meet mortgage payments.

Prices rise as a devalued pound means importers will have to pay more for products and components coming into the UK. These costs are passed on to the consumer creating price inflation.

It is not clear what the economic benefits of devaluation are to the UK economy as a whole. Despite the pound losing value against key trading partners, unemployment is rising in the UK whereas it has never been lower in Germany.
Currency devaluation does benefit exporters but as the UK is an importing economy the trade deficit widens and so the government receives less in taxation. Consequently to pay for public services the government must turn to borrowing on the markets in order to finance its increasing deficit. This in turn leads to the case being made for austerity cuts.

Monetary policies which benefit the City leads necessitate austerity cuts. Yet those who use public services most tend not to be the City bankers or shareholders. Any benefits homeowners have from lower interest rates on mortgages are offset by higher prices and public sector cuts. Once interest rates do rise it will be clear to homeowners that their low mortgage payments were bitter-sweet.


scotland news

Dollar hegemony takes another knock

A piece I did during my tenure as Chief Editor of Newsnet Scotland. I will soon resume publishing with the title Scottish Times.

by Alex Porter, Economy Editor

The Bank of India (BoI) is the first Indian bank to offer trade settlements between the rupee and the Chinese yuan (RMB) from Hong Kong. Hong Kong is the only offshore market for Chinese currency with $400 billion yuan being traded against other currencies in the past year. The news is the latest in a string of efforts by China to have the RMB accepted as an international currency and follows a campaign of persuasion by the China Banking Regulatory Commission.

Currently Indian buyers make payments in US dollars and so often have to convert their rupees into US dollars to effect transactions. This new facility being offered by the BoI lessens the need for Indian importers to keep the same volume of US dollar in reserve and use as an intermediary.

With world markets being flooded with dollars the rupee is considered by Chinese exporters as being more stable. That aside, if Indian importers want to procure low-cost goods then Chinese exporters have some leverage to have settlement in rupees.

The US will not be overjoyed by this development as having the dollar as a reserve currency means the dollar's value is supported by the need for foreign companies to have reserves to make international transactions. This structural demand helps offset the glut of supply and so prevents the value of the dollar falling more than it has in recent years.

Real-time financial settlements are now supported with the Bank of India having a RMB account with Bank of China with transactions extending to buyers and sellers in all of China's provinces.

Towards the end of last year Russia and China began trading directly in each other's currencies. Russia's currency, the ruble, is fully convertable in international exchanges. Although international investors believe that it would be in China's best interests to float the RMB, Beijing is cautious.

One key strength of the US dollar is that there is no obvious candidate for replacing it as the world's reserve currency. Until recently the markets were convinced that the euro would become an obvious candidate to become a rival however soveriegn debt problems across in Greece, Spain, Portugal and Italy have undermined confidence in the euro's future.

Many analysts believe that the Chinese would like to position the RMB as a successor reserve currency. Holding a large amount of US debt, the Chinese have been frustrated to see the value of their dollar investments become depreciated through quantative easing by the Federal Reserve.
scotland news

Niall Ferguson: USA could collapse. What about UK?

In the video below Prof Niall Ferguson of Harvard University is explaining why the US could collapse under the weight of debt it has. The collapse he argues would be akin to the collapse of the Soviet Union which buckled under the weight of the Afghanistan war.

Given that the UK has bought $250m of US debt. Some argue that this is a currency where the US and UK print new money and buy each other's debt to make themselves look solvent.

All this raises the question that if the US could well collapse then isn't the UK in exactly the same postion? And if a Harvard professor is talking about the US becoming a failed state then why does the US have AAA ratings? Are the ratings agencies captured?

All this is should say one things to Scots. Demand powers of your taxes and prepare for a new currency!

Independence of Scots Law at risk from Scotland Bill

A piece I did during my tenure at Newsnet Scotland. I will soon resume publishing under the title Scottish Times.

by Alex Porter
Scottish Lib Dem peer and former Depute First Minister of Scotland Jim Wallace has inserted an amendment in the Scotland Bill which will see criminal appeals from Scotland's High Court of Justiciary go to the UK Supreme Court. There are concerns that this little publicised aspect of the Scotland Bill will lead to a diminution of the powers of Holyrood, and is a threat to the identity and independence of the Scottish legal system.
"Loss of identity"
Elish Angiolini QC, Scotland's Lord Advocate, has warned that Scots law will suffer a "loss of identity" because of the UK Supreme Court's extended powers to rule on Scottish human rights cases.
Giving evidence to the Scottish Parliament's Scotland Bill Committee, Scotland's top law officer explained: "Because of the approach of the Supreme Court, there is a real danger that we will not just have harmonisation of our criminal law, procedure and evidence, through that process, but that there will be a complete loss of identity for Scots law unless it is something which is genuinely rarely exercised in the context of something which is of substantial constitutional significance across the United Kingdom, or where it is a very new piece of jurisprudence which is clearly ambiguous."
Her comments follow the controversial decision taken by the Supreme Court in the Cadder v HMA case, which overruled a previous decision by the High Court of Justiciary in Edinburgh. The Supreme Court ruled that detention of suspects by the police without access to legal advice breached the European Convention on Human Rights (ECHR). The decision has had serious implications as a total of 867 cases have since been unable to proceed or continue as a direct result, according to a review on the impact of the case by the Crown Office and Procurator Fiscal Service (COPFS).
Unclear on the scope of the Cadder appeal ruling, Angiolini has now sought the referral of five cases to the UK Supreme Court to achieve a "definitive resolution" on the matter.
A spokesperson for the Crown Office said: "The judgment of the Supreme Court in Cadder v HMA has given rise to a number of collateral issues. It would be beneficial to achieve a definitive resolution and referring these cases to the Supreme Court is the most effective way of achieving that." The five cases are not expected to be heard until October.
Fears are that Jim Wallace's (Baron Wallace of Tankerness) amendment will render Scots criminal law subservient to the UK Supreme Court in all matters.
As Scotland's Advocate General, Wallace has had an amendment inserted into the Scotland Bill which removes the authority of Scots law in relation to criminal appeals. Part of the ammendment includes:

"Remove acts of the Lord Advocate in her capacity as head of criminal prosecutions and investigation of deaths in Scotland that are incompatible with any rights conferred by the European Convention on Human Rights that are given effect to by the Human Rights Act 1998 (“Convention rights”) or Community law from the ambit of section 57(2) of the Scotland Act; and

"Create a statutory right of appeal from the High Court of Justiciary sitting as a criminal appeal court to the Supreme Court in relation to matters where it is alleged that the Lord Advocate has acted incompatibly with any such Convention right or Community law to replace the existing devolution issue procedure that currently applies in such cases. The jurisdiction of the Supreme Court should be maintained both for reasons of constitutional propriety and, more importantly, to ensure that fundamental rights enshrined in international obligations are secured in a consistent manner for all those who claim their protection in the United Kingdom."

The idea of transferring the statutory rights of appeal from the Scottish High Court of Justiciary to the UK Supreme Court is supported by the Scottish Human Rights Commission (SHRC) in criminal cases where it is alleged that the Lord Advocate has acted in breach of the European Convention on Human Rights.
Giving evidence to the Scotland Bill Committee earlier this month, Professor Sir David Edward (University of Edinburgh), a former European Court of Justice judge who recently produced a report on this area of legal jurisdiction, said: “It is perhaps significant that in their submissions to us the Scottish Government, the justice directorate, the Scottish Law Commission and, indeed, the Lord Advocate all said that the Supreme Court's jurisdiction should be totally brought to an end. Our view was that there was a case for giving the Supreme Court some jurisdiction, but not in the form in which it had previously existed.”
SNP Justice Secretary Kenny MacAskill told Newsnet Scotland that his view is that Scottish courts should be the ultimate decision-making authority in every aspect of criminal law.
The telling question amid this whole process is why won’t Jim Wallace, a Liberal Democrat peer, consider the option of allowing all these powers to be held entirely by Scottish courts where ultimately the judges are Scottish instead of solely considering further centralisation?
Liberal Democrats: promises, assurances and bearing gifts
These latest revelations give further credence to the argument that the Scotland Bill, which was supposed to further devolve powers to Scotland, is in reality a Westminster Trojan horse designed to take powers back.
Experts have told Newsnet Scotland that some of the new powers being devolved will almost certainly be used such as Scottish Duty Land Tax (SDLT), landfill tax and the ability to borrow but these powers are insignificant compared to the far more substantial taxes such as Corporation Tax, national insurance or VAT.
Ostensibly there are a significant transfer of income tax powers but Newsnet Scotland is advised that because of the way the Bill has been crafted there is an inbuilt cost-disincentive to using this tax. A number of renowned experts such as economists Jim and Margaret Cuthbert and Professors Andrew Hughes-Hallett and Drew Scott of George Mason and Edinburgh universities, among others, argue that the income tax powers are "dangerously flawed", "unworkable" and "a perfect storm".
Observers will be forgiven for concluding that the income tax powers have been designed this way on order to give the impression of more powers being transferred. This strategy would have the effect of partly placating the Scottish electorate's desire for their parliament to have full tax powers whilst actually taking powers away from Scotland. The aim, critics will speculate, is to achieve confidence whilst picking Scotland's pockets of existing devolved powers - a 'confidence trick' or 'con'.
The role of Jim Wallace - now a member of the unelected House of Lords - in the Scotland Bill process indicates a trend, according to some commentators, of how Liberal Democrat politicians readily abandon their liberal principles of decentralisation and federalism upon catching a whiff of power.
The debate over the value of a Lib Dem promise has taken another twist in relation to the Scotland Bill as news unfolds that powers have been dropped or at best delayed from the Calman proposals, including air passenger duty, aggregates levy and the assignation of income tax yield from savings and distributions. This completely contradicts promises and assurances from the Lib Dem leadership.
In addition, some powers already held by the Scottish Parliament in areas such as insolvency law, charity law and the regulation of the health professions may actually be taken back by Westminster.
In May last year Liberal Democrat MP Alistair Carmichael, now depute chief whip to the House of Commons said: "Calman's recommendations will be implemented and many other Scottish issues on which Labour has prevaricated will now be tackled."
Current Secretary of State for Scotland Michael Moore (Lib Dems) promised that the proposals recommended by the Calman Commission would be "implemented in full."
Leader of the Lib Dems' Holyrood group Tavish Scott offered assurances that the proposals of the Calman Commission would be implemented in full insisting: "Absolutely ... no doubt".
Given that the Scotland Bill radically affects the nation one would expect the Lib Dems to seek a referendum on the new devolution settlement. No such vote is being planned by the ConDem coalition government although they are holding a referendum on a new voting system that no-one wants.
As for the Bill itself, there will be a number of hearings at Westminster today. Professor Hughes-Hallett, who believes that the Bill is "dangerously flawed", will be amongst those giving evidence.
In Scotland's media much has been written about the problems associated with the powers included within the Bill, but the unwritten story is about the powers that have been dropped or re-reserved.


news scotland

Poll shows SNP heading for second term

A piece I did during my tenure at Newsnet Scotland. I will resume publishing under the title Scottish Times.

by Alex Porter

An opinion poll by IPSOS Mori today shows that Alex Salmond's SNP Government is poised to form a second term after this year's elections to Scotland's Holyrood parliament.

The poll of 1,000 people was taken between the 10th and 13th of February and shows that the SNP has now closed the 10 point gap with Labour, recorded as recently as November 2010 by the same polling company. In this latest poll, the SNP has overtaken their principal Holyrood rival which records 37% of the popular vote for the SNP government compared to Labour's 36%.
In the light of this latest opinion poll, Scottish political commentators, many of whom have recently forecast certain victory for Labour at the forthcoming Scottish elections, will now be dramatically revising their predictions.

The poll shows that on the regional vote the SNP leads by an even larger margin over Iain Gray's party, recording 35% to Labour's 33%.

Worryingly for Labour this reversal in their party's electoral fortunes is likely to be largely attributable to political leadership - the Scottish electorate's familiarity with First Minister Alex Salmond - as well as their identification with his performance as Scotland's foremost political representative.

Last weekend signs emerged that the Holyrood Labour group were struggling to demonstate unity with reports suggesting senior figures within the Labour shadow cabinet were critical of Iain Gray's leadership. Gray, according to party sources, is easily led by "immature" influences within his team.

The Nationalists, who formed a government for the first time in their history in 2007, will be eager to present themselves as having been a competent administration. In this context SNP strategists will want to present the party as even more popular than they were when they won office four years ago.

This latest analysis boosts the SNP's re-election prospects as polling on both the constituency and regional votes show the SNP being four points up on the party's election winning performance in 2007.
Commenting on the poll described on the Times front page as "Salmond surges into Holyrood poll lead", SNP Depute Leader and Scotland's Deputy First Minister Nicola Sturgeon said:
"Today's poll shows there is all to play for in Scotland's election this May. With the SNP moving ahead of Labour and achieving a poll rating four points higher than the election results of 2007.
"As voters look toward Scotland's election in May it is the SNP's strong record in office, our team of recognised and trusted ministers and MSPs, and the vision we have for Scotland's future that is winning the support of voters who want to re-elect a Scottish Government that is working for Scotland.
"In the last week the SNP has delivered on jobs with 25,000 apprenticeships, protected public services with a balanced budget, funded the fourth year of a council tax freeze saving the average household £322, and put in place the money to abolish prescription charges from April this year.
"And it is the SNP that is on the same side as people across Scotland in opposing rising fuel prices with our demand for a fuel stabiliser and the scrapping of the Tories duty rise.
"Over the next 80 days as we head toward's Scotland's election, the SNP will continue to govern for Scotland, to build Scotland's economy, protect our public services, and to stand on our record of delivery and vision for Scotland's future."
News of the SNP's lead in popular opinion will perturb Labour strategists who will now surely question Labour's negative strategy as the May 5th election approaches.
news scotland

Labour civil war ahead of Holyrood election

A piece I did during my tenure at the former title Newsnet Scotland. I will resume publishing under the title Scottish Times.


by Alex Porter

Weekend reports claim that the Labour party in Scotland face internal divisions that could derail the party's goal of replacing the SNP as the Scottish government, just weeks before the Holyrood election campaign begins in earnest.
Over the weekend the Times newspaper reported that serious divisions have emerged inside the Labour shadow cabinet over Iain Gray's decision to vote against the SNP government's budget despite Finance Secretary John Swinney agreeing to Labour's demands. The internal criticism is aimed at Gray and his "failing to take control", reports the Times.
The reports suggest that senior voices inside Mr Gray's Holyrood group have criticised how the leader "allowed himself to be led by immature voices within the shadow cabinet".

One Labour MSP is quoted as saying: “What we should have done, given that we got most of what we wanted, was to say that while the budget was still imperfect, we would vote for it and be seen to put the national interest before the party interest …

“… That would have been the mature thing to do. Iain was not driving the ‘No’ vote. Instead he allowed himself to be led by immature voices in the shadow cabinet – he let it run.”

The news will be seized on by the SNP who will now seek to exploit Labour's divisions. The party's Campaign Director Angus Robertson said: “The revelations show Iain Gray was led on the Budget vote and that he isn’t even capable of leading his own group of MSPs, never mind Scotland.

“It just proves that they were offered all they wanted – and more – and put puerile political opposition before the national interest.

“It is obvious many of his MSPs are unhappy and have startlingly resorted to making known their unhappiness with Iain Gray’s leadership."
Labour's manifesto uncosted
In another dramatic twist over the weekend it emerged that the Labour party's draft manifesto is uncosted and must undergo a comprehensive re-write a matter of weeks before the Holyrood election.

In an article in the New Statesman journalist Dan Hodges revealed that key Labour election pledges have not been costed:

http://www.newstatesman.com/blogs/dan-hodges/2011/02/party-labour-miliband-shadow
“Labour's Scottish election campaign has also suffered an additional setback after the manifesto was produced without costings, and has had to undergo a comprehensive re-write …"
Iain Gray's leadership
The revelations indicate that there are problems of organisation inside Labour's Holyrood team which, as the election approaches, are fraying nerves and causing bitter divisions between leading members of the party.

At the root of the matter is Iain Gray's leadership qualities. Iain Gray has kept a very low profile since it emerged that Labour at UK level did all they could to facilitate the release of the Lockerbie bomber, whilst at the same time the Scottish arm was orchestrating a campaign to shame the SNP for the Libyan's release on compassionate grounds.

As the election campaign heats up Gray must convince the Scottish electorate that he, not Alex Salmond, is the man to lead Scotland. With his own senior MSPs describing him as being led by an "immature minority" within the party, convincing the electorate of his ability to excel as Scotland's First Minister will now be a much tougher prospect.



news Scotland

Scots want economic independence - but how badly?

A piece I did during my tenure of Newsnet Scotland. I will resume publishing under the title Scottish Times.

By thwarting the voters' widespread desire for their parliament to have full powers over taxation via the mechanism of the Scotland Bill the Labour, Lib Dem and Conservative parties have become an austerity alliance

by Alex Porter, Economy Editor

With the Holyrood election campaign imminent none of the horse traders would have seriously risked bringing down the Scottish budget and opprobrium on their parties' heads. It was a forgone conclusion that Labour's chronic oppositionalism would see it vote against any SNP budget and the smaller parties would have to fall into line to make passing the budget arithmetically possible. With the Scottish budget adeptly ushered through by Finance Secretary John Swinney we can now turn to the political elephant in Scotland's economic room - Westminster austerity cuts and Scotland's determination to stop them.

Scotland in post-austerity Britain

Two news items in the last week have given a glimpse into the future in Britain PLC post-austerity.

Covered here (removed) by Newsnet Scotland, the first examined the shocking news that North Ayrshire council is considering implementing a plan which would introduce a four-day school week for its childen at both primary and seconday schools. Public spending is being decimated to pay for the UK's spiralling budgets deficits and so a way of life, taken for granted since the introduction of the welfare state, is at stake. The social implications of this kind of policy are profound and threaten Scotland's status as a first-world nation.

The second item hitting the headlines is the revelation that Glasgow University could be insolvent by this time next year. According to Principle Anton Muscatelli the university, established in 1451, could run out of money in academic year 2012-13. The university has sounded the alarm and has drawn up plans to end or merge a number of courses to help make £20 million in savings over the next three years.

An indication of the financial dire straits in which the university finds itself is that the plans include the controversial merging of the history, archaeology and classics departments as well as the axing of several modern language courses. Such extreme cuts will undermine the international prestige of the university and Scotland's rankings in the world of academia. For a nation which was once the preeminent academic hub of the world during the period of the Scottish Enlightenment and whose academic innovations include the professorial system itself, it is unthinkable that one of its ancient universities should not have an independent anthropology department.

Given the parlous state of the UK economy and the public sector cuts planned by the ConDem government in London, it is critical that those facing consequent redundancy and unemployment in Scotland can have access to educational courses. However the university is considering cutting its evening and weekend classes which are currently subscribed to by 5000 adult learners a year. The social dimension is further affected as vital courses in nursing and social work face a cull, and additionally the university's renowned Centre for Drugs Misuse Research faces the axe.

Scotland's Unionist opposition parties will, as politicians do, try to blame the SNP government for the cuts, but the reality which has to be faced is that the cuts are being forced on the Scottish government by Westminster. London is cutting Scotland's block grant by a total of £1.3bn in 2011-12 (that's less than the previous year), a figure which is not even adjusted for inflation.

The SNP finance minister has saved Scotland a lot of money through creating efficiencies in the public sector, especially in the area of procurement, but a £1.3bn (around £1.7bn when inflation adjusted) hole is more than difficult to fill. Council services and employees, universities and others will invariably take a hit.

Powers not cuts

However amidst the negotiations and horse trading over Scotland's diminishing budget, we risk losing sight of the salient issue. The cuts are not necessary. Scotland's national accounts (GERS) show a surplus, so the £1.3bn question is - why the cuts?

Alex Salmond's party will argue that with Full Fiscal Autonomy (FFA) none of these cuts would be happening. The fiscal surplus which Scotland currently enjoys could, the Government argues, be spent on increasing - not cutting - public expenditure. Westminster's cuts are about paying for the UK's deficit, a deficit which is generated south of Hadrian's Wall. With FFA Scotland would not be have to be held accountable for its neighbour's debts.

The Unionist parties have anticipated these calls for FFA and have preempted them by drawing up the Scotland Bill proposals. The Scotland Bill will give and take some powers from/to the Scottish parliament but these powers are not significant and experts believe that they are "unworkable" and "dangerously flawed". Polls show a clear majority (57%) of Scots favour their Parliament having full tax powers, but the Scotland Bill falls far short of that desire.

Critics claim the Scotland Bill does "not go nearly far enough" and is badly crafted because it is merely a device for channelling the Scottish electorate's desire for significant change into a constitutional cul-de-sac. Unlike FFA the Bill does nothing to protect Scots from Westminster's cuts agenda and so the three Unionist parties, by designing the flawed Bill then colluding to usher it in, leave themselves open to being castigated as an austerity alliance.

The critics make a good point. The SNP will argue at the election that Scotland needs economic independence. It has a compelling case and there is clear public backing for it, but is it deliverable?

The truth is that even if the SNP are given a second term by voters there is nothing it can do to gain more powers for the Scottish parliament. The Scottish parliament can not add or subtract from its own powers. Control over the Scottish parliament's powers is retained by Westminster. The nationalists tend to do better at Holyrood elections than Westminster elections and so as long as the Unionist parties constitute a majority of Scotland's MPs in Westminster there is nothing the Scottish people can do to have such democratic demands met.

If popular desire is to be satiated then a popular campaign to demand more powers would have to be launched. The problem though is that the subject is rather a dry one. It is difficult to imagine masses of demonstrators on Princes Street in Edinburgh chanting, "What do we want? Full Fiscal Autonomy. When do we want it? Within the current financial year."

Campaigners would need a seductive slogan that could act as a focus and mobilise the public to put pressure on the Unionist alliance currently blocking such significant reforms. Swingeing cuts resulting in such profound social changes as the proposed four-day school week do offer siclike opportunities. Fiscal Autonomistas could point out that economic independence would protect Scotland from the very clear and present dangers which London's austerity programme hold for Scotland. Many struggles throughout history have been won and lost premised upon the popular appeal of a slogan. "Make love not War" heavily influenced public perceptions during the Vietnam war because it was and still is evocative and appealing on many levels. "Powers not Cuts" or "Autonomy not Austerity" don't really cook the same goose.

Paradoxically Salmond's team faces the situation whereby pointing out the limited powers the Scottish parliament has to effect change in the economy actually depresses voters, who feel then feel that their parliament and by extension the SNP government are impotent.

It would be something of a relief for the SNP then if such a popular movement arose. In that respect there is much sound economic thinking currently being done behind the scenes by organisations such as Reform Scotland and the Campaign for Fiscal Autonomy but these are ill-suited to the purposes of a Scotland-wide grassroots campaign movement. The brain power is already in place so it requires only an umbrella organisation to set the heather alight. With austerity looming such an organisation would find allies the length and breadth of Scotland and from boardroom to livingroom.

The situation whereby Scots go to the polls wanting full economic powers but vote for the Unionist parties who seek to block these powers indicates that one of those Jedi Knight mind-tricks are in play. Indeed, it brings to mind the Monty Python crucifiction scene whereby one of the Christians who are in line to be crucified briefly interrupts reality when he tells the Roman he's taking the freedom option. He's actually taken seriously for a moment and is going to be set free before revealing that he was pulling the Roman's leg. The moral of the story is that servitude is all in the mind.

(Video removed)

With the Unionist parties ignoring the public mood over the subject of economic independence, the moment for a new movement dedicated to the Scottish parliament having its own treasury has arrived.



news scotland

Scottish economy suffers as UK trade deficit escalates

A piece I did during my tenure at Newsnet Scotland. I will resume publishing with Scottish Times.

by Alex Porter, Economy Editor

The UK's trade deficit, which stood at £8.5bn in November 2010, rose to £9.2bn in December according to the Office for National Statistics (ONS).

In light of the latest figures all talk of an "export-led recovery" in the UK economy will now be viewed with extreme scepticism. The latest monthly deficit in goods compares to a surplus in services which includes the 'resurgent' banking sector and which stood at £4.4bn to the good.

The banking surplus is not surprising given how much free money the Bank of England is injecting into the private banks. This almost free cash is used by the banks to buy and sell financial products from and to each other and each transaction is then calculated as earnings which then triggers banker bonus payments.

The policy of the former Labour government and the current ConDems of transferring taxpayers money to support the banking sector is having a deleterious effect on the UK economy. When the trade deficit is subtracted from the balance of payments surplus there is an overall deficit of £4.8bn for the single month of December 2010. This is the worst monthly deficit in the last 5 years.

Compared to key trading partners the UK has a relatively small manufacting and exporting sector. The Bank of England's policy of printing new money and giving it to the banks (quantative easing) decreases the value of the pound. This does help make exports more competitive but as the UK is an importing economy importers must pay more for the goods which come into Britain, and so the trade deficit escalates. On top of that the increased costs incurred by UK importers are then passed on to the UK consumer resulting in increased prices on main street, othweise known as inflation.

Increasing trade losses means there is less and less tax take for the UK treasury which consequently has to borrow money to balance its budgets. Given that the UK government is undergoing a crisis in its public finances this kind of news is very unwelcome. In November government borrowing reached a record £23.3bn and today's trade figures means that even that staggering figure will likely be surpassed.

With the UK economy falling off a cliff, Scotland is being told to cut its cloth. This is despite the fact that Scotland is running a surplus in its national accounts. That surplus goes to help plug the hole in the UK's finances whilst a further £1.3bn is being shaved from the Scottish budget to fill the same hole.

As has been evident in the last week these cuts are beginning to bite. North Ayrshire council have proposed a plan to implement a four-day school week for primary and secondary schools and Glasgow University could be insolvent by next year according to its Principle Anton Muscatelli. These are the first signs of just how deep Westminster's austerity cuts are going to be.

With the Holyrood elections looming Scots will want to know how their jobs and family budgets can be protected from the consequences of the UK's economic crises.

Full Fiscal Autonomy would mean Scotland's surplus would stay in Scotland and if there's a deficit south of the border then it's not for Scots to be held to account for the debts of others. This is the policy of the SNP, however as long as Westminster controls the powers the Scottish parliament has over taxation it is for Scots voters to pressurise the Unionist parties into withdrawing their support for the Scotland Bill. This ill-conceived Bill leaves Scots exposed to the worst effects of the crisis in the UK's public finances. The Unionist parties must give backing to fiscal autonomy, which is supported by a majority of the Scottish electorate along with eminent economists and business leaders.

Two forces of the economic weather system are about to collide. The high pressure of the UK austerity programme is about to meet the low pressure of the Holyrood election campaign. Voters are in an extreme state of anxiety over jobs and services and the party which does not convince the Scottish electorate of its economic competence will find itself tossed out of the consequent tornado on May 5.


news scotland

Is The Guardian paving the way for war in Iran?

When the Weakileaks files first hit the headlines in Britain it was through their partners The Guardian.

It seemed that the first published documents painted a very critical picture of the Iranian government. Now it seems that The Guardian did not publish information which threw light on Iranian opposition parties that it had hitherto portrayed as lovers of democracy and freedom.

Now it seems Wikileaks and The Guardian have fallen out and threats of legal action abound:

Labour should apologise over Lockerbie hypocrisy

Now that Labour are exposed as having cynically exploited the Lockerbie bombing for political advantage there are some questions which have to be answered. That done the victims, the Scottish government, the Scottish parliament, the Scottish people and beyond now deserver an apology for this repugnant hypocrisy.

Labour had pressurised for the release of Megrahi whilst at the same time trying to heap shame on the Scottish government for his release. How utterly despicable.

Below are just a small number of questions that now need answering. And then we need an apology.


by Joan McAlpine


Questions for Scottish Labour hypocrites over Megrahi

Now that all the evidence is out in the open. Here are some questons for the hapless Iain Gray and his adolescent Justice Mnister, Richard Baker.

When did you discover that your Labour colleagues in London were plotting to have Megrahi released?

When?

Was it before or after you started your attacks on the SNP government policy?

Why did you continue to attack the SNP, knowing that your own colleagues plotted Megrahi's release?

Will you now condemn Gordon Brown and his Ministers who plotted to have Megrahi released?

Why not and what does that say about you - Iain Gray - as a 'leader'?

What's it like being a patsy, used by the big boys in London?



news scotland

Labour reeling: last ditch smear attempt fails as Megrahi files finally vindicate SNP

Revelations by Newsnet Scotland piles pressure on Labour to apologise for cynical exploitation of Lockerbie bombing for political gain:


A last ditch attempt at smearing the Scottish government on the Megrahi issue has failed spectacularly after official documents exonerated the SNP’s handling of the affair and revealed the previous UK Labour government did “all it could” to facilitate the release of Al Megrahi.
A report by top Whitehall Civil Servant Sir Gus O'Donnell has vindicated claims made by the SNP over its handling of the issue and revealed that, far from not interfering in the process, the Labour party did "all it could" to help facilitate the release of the man known as the Lockerbie bomber.
The report follows the recent publication of secret files by controversial website Wikileaks that showed Labour Ministers had advised the Libyans only one week after Megrahi’s illness had been diagnosed. The Scottish government has also published documents detailing the communications it had with senior Labour party Ministers.
US relative Stephanie Bernstein, who lost her husband in the downing of Pan Am 103 said: "It's disgusting, absolutely appalling. It looks as if the Labour government were acting as attorneys for the Libyans."
Frank Duggan, the Washington-based lawyer who is representing US families, said the politicians' behaviour had been "disgusting". Mr Duggan criticised Kenny MacAskill for releasing Al Megrahi but said his conduct had not been as bad as the Labour government representatives.
Mr Duggan added that “...they [the SNP] were not as bad as the British diplomats and officials who claimed to have no part in this decision but are now shown to be advisers to the Libyans one year before the actual release of the murderer. It is disgusting but not unanticipated."
The report also makes clear that the Scottish government were not influenced by the then UK Labour government’s desire to free Megrahi and that there was no evidence to suggest BP business interests played any part in the decision to release him on compassionate grounds.
Responding to Sir Gus’ report a Scottish government spokesperson said:
“The Scottish Government has consistently made clear that the Cabinet Secretary for Justice's decision to grant Mr AI-Megrahi compassionate release was taken following due process and following the precepts of Scots justice, without regard to foreign policy, commercial or any other considerations. The findings bear out the consistency of the Scottish Government's position in all respects.”
The spokesperson added:
“The review also confirms that, in contrast, the UK Government's position on the negotiation of a prisoner transfer agreement with Libya was influenced by commercial considerations, including lobbying by BP. What has not previously been public knowledge is that commercial and other considerations led, in late 2008, to a change in the UK Government's policy to favour the release of Mr AI Megrahi although they attempted to conceal that policy from the Scottish government.”
The fresh revelations pose serious questions for Labour politicians in Scotland who have, from day one, mounted a vociferous campaign against the SNP over the compassionate release of Mr Megrahi.
On 21 August 2009 Labour’s Holyrood leader Iain Gray said: "If I was First Minister, Megrahi would not be going back to Libya. The decision to release him is wrong. He was convicted of the worst terrorist atrocity in our history."
In a speech to Holyrood on 2 September 2009 Mr Gray said: “It is now almost two weeks since the Justice Secretary took his decision to release Mr Al Megrahi and return him to Libya. I said then that I believed that was the wrong decision and nothing we have heard in the past fortnight or this morning has convinced me otherwise.”
In December last year Labour’s Justice spokesman Richard Baker said: "As I said at the time, the decision to release Megrahi was wrong. He is the worst murderer in Scottish history.”
Commenting on the new revelations, Mr Baker insisted that there had been no hypocrisy on the part of the Labour party over their attacks on the Scottish government. However Mr Baker may well have caused problems for himself and his party by repeating on Radio Scotland discredited newspaper smears that the Scottish Government were trying to gain more powers by agreeing to release Megrahi under the PTA.
Smear attemptThese smears surfaced at the weekend after an English Sunday newspaper ‘The Mail on Sunday’ carried an article claiming Alex Salmond had sought a deal over the secret PTA agreement originally hatched by Tony Blair. The catalyst for the claims was an article in the Vanity Fair magazine.
The ‘story’ suggested that the Scottish government had offered a deal on the PTA in return for help with compensation claims expected from prisoners forced to ‘slop out’ in Scottish prisons. The smear also made it onto the pages of two Scottish newspapers.
However it has emerged that the story was based on an internal email sent by former senior Labour party official John McTernan to two Labour colleagues, Mark Davies and Tom Greatrex. In the email Mr McTernan mentions a ‘deal’ and refers to Scottish Ministers having the final say on prisoners. The email, dated 09th November 2007, refers to a meeting between Jack Straw and Kenny MacAskill.
Newsnet Scotland can reveal that the ‘deal’ mentioned by McTernan was a demand by the Scottish government that Al Megrahi NOT be included in the PTA. Far from wanting to strike a deal that would have let a fit and healthy Al Megrahi return to Libya (as Labour wished), the SNP were opposed to such a move and wanted Megrahi removed from the PTA altogether. Something that Labour’s Foreign Minister Jack Straw originally agreed to but would later backtrack on.
Newsnet Scotland has also learned that less than one week before, Jack Straw privately revealed that the Libyans had no expectation of Megrahi’s release. Newsnet Scotland can also reveal that, when asked if Alex Salmond had in fact suggested the deal alleged by the newspaper articles, Straw would neither confirm nor deny it, saying: “My conversations with Alex Salmond were private.”
Mr Salmond’s spokesman Kevin Pringle has since described the claim of any deal with Labour to release Megrahi on a PTA as “complete and utter garbage without a shred or scintilla of truth.”
The article in Vanity Fair was authored by David Rose and contains some glaring errors. In the article Rose claims that a report on Megrahi’s cancer by one Dr. Karol Sikora , dated July 30 2009, was taken into account by Kenny MacAskill. In fact Dr. Sikora’s report played no part in Kenny Macaskill’s deliberations on Megrahi’s application for compassionate release.
Commenting on the newspaper claims a Scottish government spokesman said:
“This story is simply wrong, just as the previous - and different - version by the same author in Vanity Fair was also wrong. Anyone who knows anything about the issue knows it to be a total misunderstanding.
“The issue in 2007 was not about release of al Megrahi but the technical issue of whether to exclude al Megrahi from the face of the Prisoner Transfer Agreement - as the Scottish Government demanded - and the UK Government seeking to renege on their commitment to do so on the basis that the issue was academic as they would publicly say that Scottish Ministers had a veto over any such transfer.
“The UK Government seemed to think they could achieve this by attempting to link it to other issues under discussion at that time. However, our concern was that even if we exercised the veto and rejected prisoner transfer for al Megrahi, we could be subject to judicial review in the absence of a specific exclusion.
“Therefore, and as the record shows clearly and consistently, the Scottish Government maintained our opposition to the PTA itself and to al Megrahi’s non-exclusion from it, and criticised his non-exclusion in extensive correspondence in 2007 and 2008 with Jack Straw and the Prime Minister, from both the Justice Secretary and the First Minister.
“We made it clear in every single piece of correspondence and meeting that Scottish Ministers would judge the issue on the precepts of Scots Law and not on any other considerations."
To have a clearer understanding of the origins of this latest failed attempt at targeting the SNP over Megrahi we need take a look at the background of the three people involved in the email.
The sender, John McTernan, was advisor to Tony Blair when the secret ‘Deal in the Desert’ was struck. McTernan (seen in the video below) claimed last year that the PTA agreement, hatched between Blair and Gadaffi, had nothing to do with oil deals and was in fact a “reward” to the Libyan leader after Libya dismantled its WMD programme. (Content removed)"


The main email recipient Mark Davies was special adviser to Jack Straw from 2005 to 2010, crucial years as far as the ‘Deal in the Desert’ is concerned. The second recipient, Tom Greatrex, is now Labour MP for Rutherglen and Hamilton West and was a former advisor to ex Secretary of State for Scotland Jim Murphy.
Last year Mr Greatrex was named by The Sun newspaper as the source of another smear after a leak compromised the Queen’s security. The ‘Balmoral Paths’ smear was intended to be used to attack the SNP, and indeed Labour MSPs at Holyrood demanded the resignation of SNP MSP Roseanna Cunningham when the story broke in The Daily Record, however things went quiet when The Sun named Mr Greatrex as the leak source.
HypocrisyThese latest Megrahi disclosures are hugely embarrassing for Labour at a time when the party is seeking to install Iain Gray as Scotland’s next First Minister. Many will question why he allowed the party to politicise such a sensitive issue, repeatedly making comments that would ultimately prove to be at odds with the actions of his own leadership.
The events are certain to have damaged the Holyrood Labour leader and come barely a month after he made insulting ‘ethnic cleansing’ remarks about Montenegro that caused a diplomatic row.
Mr Gray now faces accusations that he was either completely ignorant of what his London leaders were up to and has been made to look foolish or he was in fact aware of Labour’s ‘double dealing’ and is guilty of a serious lack of judgement and quite staggering hypocrisy. The latest comments from his Justice Spokesman Richard Baker suggest that Mr Gray is guilty of the latter.
This poetic justice for Labour must surely bring their shameful politicising of this incident to a close and will hopefully cause reflection on the part of very many Scottish journalists and BBC Scotland correspondents who caused outrage by acting as chearleaders against their own Scottish government and whose own reputations hang a little limp today.
There still remains though the small matter of possible injustice and the questions that surround the safety of the conviction of Mr Abdelbaset Al Megrahi.

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Lockerbie, Megrahi and Labour Hypocrisy - The Truth comes out

The story of how Britain wanted Al Megrahi freed is going round the world. In Scotland, the BBC is still trying to make the Scottish population believe it's all down to the SNP government. Labour have used the Lockerbie bombing to try and undermine the SNP government accusing it of embarrassing Scotland and calling for resignations. All along they were lobbying for his release which shows the people just what kind of organisation they are.

The best take on the story I've read is by Joan McAlpine and I've reproduced her piece here for my blog frequenters:


by Joan McAlpine, Go Lassie Go

All the documents relating to Megrahi's release were made public today. As expected they vindicate the Scottish government and are highly embarrassing for Scottish Labour which continued to publicly oppose the release 2009 while they knew their ministers in London supported release and had done for a year. (Will Iain Gray and Richard Baker now admit defeat?)

However the new papers also show that the ludicrous American suggestion that the UK government successfully put pressure on Scotland simply is not supported by the facts. In the new papers the cabinet secretary Gus O'Donnell says "Moreover it is clear that Her Majesty's Government (HMG) considered that any attempts to pressurise or lobby the Scottish government could be counterproductive to achieving this outcome." eg Megrahi's release.

This weekend saw another red herring in the Mail on Sunday - based on a false Vanity Fair piece and picked up by Guido. Paragraph 14 of the cabinet office document and subsequent letters between Jack Straw and Des Browne discuss a UK government "understanding" that Kenny MacAskill was prepared to discuss the terms of the Prisoner Transfer Agreement in 2007 in return for certain concessions on compensation for prisoners taking slopping out cases and devolution of firearms law. This was their “misunderstanding”, no doubt based on wishful thinking – they were desperate to conclude a PTA, in terms acceptable to Libya. The SNP wanted a specific exclusion of Megrahi from the deal (a position they maintained). So there was no deal or trade off. The UK Government reneged on seeking such an exclusion because Libyans wouldn’t accept it (or they wouldn’t progress energy/BP deal) In 2007, the issue was not about his release – it was about his non-release. Remember Megrahi did not have cancer at that point, the PTA was the only discussion and it was rejected by Scotlan. So all the UK speculation about what MacAskill might want was just that - speculation.

The Scottish government rejected the dodgy Prisoner Transfer Agreement cooked by Tony Blair in return for oil deals. In 2008 the UK govenrment was firmly in favour of release. But how much more evidence do we need of Labour hypocrisy? All the Scottish Government documents can be viewed here. The Scottish govenrment's detailed response to today's new information is here. But the most damning assessment of Labour's role comes from the Cabinet Secretary Gus O'Donnell whose assessment I will reprint in full:

SIR GUS O’DONNELL’S CONCLUSIONS

i. none of the materials that I have reviewed contradicts anything in the then Foreign Secretary‟s statement to the House Of Commons (12 October 2009) or the current Foreign Secretary‟s letter to Senator Kerry (23 July 2010), or statements made by the former Prime Minister on this matter;

ii. it is evident from the paperwork, including in documentation already released, that the Libyans made explicit links between progress on UK commercial interests in Libya and removal of any clause in the PTA whose effect would be to exclude Mr Megrahi from the PTA. It is also evident, including in documentation already released, that BP did lobby the former Government to make them aware that failure to agree the PTA could have an impact on UK commercial interests, including Libyan ratification of the BP exploratory agreement (EPSA) signed in May 2007. As is already in the public domain, these commercial considerations played a part in the former UK Government‟s decision to reverse its position and agree to the removal of this exclusion clause. And once the exclusion clause had been removed from the draft PTA, the former UK Government in turn held up final signature until progress on commercial deals had been achieved. The records show that Cabinet Office and FCO Ministers and officials were mindful of, and pressed Libyan interlocutors for progress on, the major BP deal (alongside other UK deals) in the context of agreeing the PTA. But:

a) while the PTA provided a framework to consider the transfer of prisoners, it did not permit transfer when an appeal was outstanding and, critically, in line with every other PTA, provided no automatic right to

transfer;

b) any decision on an application for transfer of Mr Megrahi under the PTA was for Scottish Ministers alone to make. Scottish Ministers retained an absolute veto over any request for prisoner transfer in the case of Mr Megrahi, a veto they used in August 2009 by rejecting his application for

transfer;

c) the PTA did not in any case form the basis for the release of Mr Megrahi; 14

d) there is no evidence that pressure was placed on the Scottish Government by BP for the transfer or release of Mr Megrahi (either under the Prisoner Transfer Agreement or on compassionate grounds);

e) there is nothing in the paperwork to indicate any pertinent contacts between BP and HMG after February 2008;

f) the Libyans were not told there were linkages between BP‟s exploratory agreement and the transfer or release of Mr Megrahi (either under the Prisoner Transfer Agreement or on compassionate grounds).

iii. it is clear from the paperwork that at all times the former Government was clear that any decision on Mr Megrahi‟s release or transfer under a PTA was one for the Scottish Government alone to take. The documentation considered by the review demonstrates that they were clear on this in their internal deliberations and, crucially, in their contacts and exchanges with the Libyans, including at the highest levels, and with the Scottish Government. In Gordon Brown‟s only meeting with Colonel Qadhafi, on 10 July 2009, he made clear that the decision was solely a matter for Scottish Ministers and HMG could not interfere.

iv. nonetheless, once Mr Megrahi had been diagnosed with terminal cancer in September 2008, HMG policy was based upon an assessment that UK interests would be damaged if Mr Megrahi were to die in a UK jail. The development of this view was prompted, following Mr Megrahi‟s diagnosis of terminal illness, by the extremely high priority attached to Mr Megrahi‟s return by the Libyans who had made clear that they would regard his death in Scottish custody as a death sentence and by actual and implicit threats made of severe ramifications for UK interests if Mr Megrahi were to die in prison in Scotland. The policy was primarily motivated by a desire to build on previous success in normalising relations with Libya and to safeguard the substantial gains made in recent years, and specifically to avoid harm to UK nationals, to British commercial interests and to cooperation on security issues. The desire to see such a result developed and intensified over time as Mr Megrahi‟s health declined and the imminence of his death appeared greater; 15

v. Policy was therefore progressively developed that HMG should do all it could, whilst respecting devolved competences, to facilitate an appeal by the Libyans to the Scottish Government for Mr Megrahi‟s transfer under the PTA or release on compassionate grounds as the best outcome for managing the risks faced by the UK. This action amounted to: proceeding with ratification of the PTA; explaining to Libya in factual terms the process for application for transfer under a PTA or for compassionate release; and informing the Scottish Government that there was no legal barrier to transfer under the PTA;

vi. I have not seen any evidence that HMG pressured or lobbied the Scottish Government for the transfer or release of Mr Megrahi (either under the PTA or on compassionate grounds). Jack Straw stated clearly in his calls with Alex Salmond including on 13 and 24 October 2008 and his meeting on 28 April 2009 that this was a matter for the Scottish Government. Indeed, throughout this period, the former Government took great effort not to communicate to the Scottish Government its underlying desire to see Mr Megrahi released before he died. Moreover, it is clear that HMG considered that any attempts to pressurise or lobby the Scottish Government could be counter productive to achieving this outcome. Although it is likely that the Scottish Government was aware of this desire, there is no record that it was communicated or that UK interests played a part in Mr Megrahi‟s release by the Scottish Government on compassionate grounds. When the matter came to the then Prime Minister in August 2009, he did not seek to exercise any influence on the First Minister or the Scottish Government. Mr Megrahi‟s release on compassionate grounds was a decision that Scottish Ministers alone could – and did – make

This entry was first published on Go Lassie Go

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