Sunday, February 27, 2011
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.
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.
Sunday, February 20, 2011
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!
Wednesday, February 16, 2011
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:
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.
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.
Monday, February 14, 2011
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:
“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.
Friday, February 11, 2011
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.
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.
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.
Wednesday, February 9, 2011
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:
Tuesday, February 8, 2011
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?
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?
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.
Monday, February 7, 2011
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
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
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
by Alex Porter, Economy Editor
If you wondered just how bad Westminster's austerity cuts are going to be, news that the Labour-run council of North Ayrshire is bringing forward proposals for a four-day school week in all primary and secondary schools is a not-so-subtle hint.
This is not another ambush by the Labour party to manufacture a story and blame it all on the SNP government, this is the first real sign of what's to come. Austerity cuts are not going to squeeze public services, they're going to crush them. This proposal by North Ayrshire council will likely be dropped as it is shocking in its implications and public opinion is not yet accustomed to such traumatic events. However siclike stories will soon become less shocking as they increase in frequency.
The real significance of this announcement is that it demonstrates how the bankruptcy of the UK state is now threatening Scotland's status as a developed nation.
Crisis in the community
Shocking though it is, this plan for a cut in the school week will only save £2.3m, however the council has a target of saving £38m by 2014. A raft of other cuts are being explored by the council in their “strategic options” document.
Not surprisingly reaction has been one of deep concern. Paul Arkison of the GMB Scotland trade union said of the four-day week plan: “The mere thought of this proposal shows you the sad state of affairs this council is in. Parts of North Ayrshire have some of the highest levels of unemployment and the worst areas of deprivation in Scotland. To put school children on a four-day week could threaten their educational development and would cause chaos for working parents.
Perhaps it is a sign of the nationalists' paranoia about an ambush that SNP MSP Kenny Gibson commented:
“I am astonished that Labour-controlled North Ayrshire Council is considering a reduction in the school working week from five to four days.
"The law makes it clear that pupils should have a minimum of 190 days a year in school. A four-day week would mean a 47.5 week year, something I doubt would be welcomed by parents, teachers or pupils. Educationally I can see no merit in this proposal which appears to be finance driven.”
While perhaps Mr Gibson could point to council mismanagement it is perhaps unfair to lay the blame solely at the Labour council's door.
The cuts come from the UK government in London and are indicative of more to come. With huge cuts expected over the coming years Britain could easily be looking at the privatisation of council services, the introduction of road tolls and cuts in police numbers just as crime rises due to an acute increase in financial hardship.
It would not be wise then for the SNP government to get drawn into bickering with councils when clearly the the core of the problem is the UK's economic crises.
UK crises and preparations for another another City bailout
In 2008 the financial crisis saw the UK's financial sector become insolvent. It should have been put into administration and a new financial architecture established. This would have meant the banks' shareholders and bondholders would have lost their money. Instead Gordon Brown bailed them out by transferring the debts to the taxpayer. In conjunction with this policy the Labour government colluded with the Bank of England to print new money (quantative easing) and lend it almost free to banks.
The result was that a colossal amount of debt owed by the financial sectors were hung round the neck of Joe Public. So far the public has witnessed a huge increase in unemployment and now inflation, but the true price of the banks' bail out has yet to be revealed. The debt is enormous - many times GDP - and will be getting paid off by generations of taxpayers not yet born. Gordon Brown's legacy is not just economic collapse but an immoral tax on generations who will pay for his bribing of the financial sector long after his insane economic policies are swept under the carpet by a grateful financial establishment.
More astonishing though is that despite large amounts of private debt being transferred to the taxpayer, the financial sector is still irretrievably insolvent.
Yes, they are posting profits but that's because they are buying and selling products from and to each other using bailout money and freshly printed new cash from Mervyn King. The reason this isn't picked up by auditors is that the accountancy rules were relaxed by Gordon Brown so that the banks could hide their losses and not go under. He wasn't going to go down as the chancellor who destroyed the UK's financial sector. Not Prudence. The effect is that bankers can announce profits and so justify big fat bonuses. And then you'll be warned that if we don't let them have bonuses they'll leave. Yes, if we don't stop them robbing us blind they'll walk off and rob someone else blind. How will we cope?
Why doesn't the UK's political class deal with the situation? Simple. What brains do exist in London do not reside in the skulls of politicians but financiers. The political parties are mere bankers' puppets. And they've got the media pretty much tied up too. That's why they can transfer taxpayers' wealth to themselves with impunity. On top of that they believe their own hype so much they actually believe the population would suffer without them.
They are not going to take criticism. If a politician speaks out, 'city analysts' will howl about their economic policies and get into bed with the Labour opposition. And as we saw under Brown, Labour would not bat an eyelid over bankrupting the UK state and mortgaging your grandchildren's future to get elected.
What is even more mind-boggling is that after selling the population into debt-bondage the financial sector is still broke. The reason austerity cuts are being rolled out is because they are looking to save money up for the next round of bailouts. And David Cameron is currently engaged in ensuring that the taxpayer is properly tenderised for the bankers' banquet.
If, in the middle of the night, you went to your livingroom and happened upon a burglar you'd be entitled to be a tad enraged. With the taxpayer now saddled with generations of other people's debts the public are jusifiably angry.
Cameron's response is that he is not interested in "headlines satisfying people today and tomorrow that I've given the banks a good kick in the pants. Can we do more on bonuses, particularly on those banks we own? Yes we can, and yes we will," he told The Sunday Telegraph. "But look, we've just been talking about growth. I don't believe actually in the long run, you can deliver the enterprise-growth agenda while having a running war with the British banking industry at the same time."
Eh? David might have went to the same public school as these merchant bankers but the fact is that children in Scotland are looking at a four-day school week. This happens nowhere in the developed world. These banksters extract the public's money and then use it to buy the politicians that they shmooze around City clubs with.
Keeping the financial sector at the public trough is now sinking HMS UK PLC. According to the Office of National Statistic (ONS) government borrowing for the single month of November was a record £22.77bn. And there is absolutely no sign at all that this borrowing will not continue to increase as austerity diminishes the governments tax receipts. Yes, the idea of austerity is to cut costs but unemployed public servants don't pay tax, pay less VAT and require benefits..
A general bombardment of economic propaganda means numbers are difficult to put into perspective. That weill-kent Unionist business leader, Iain McMillan of the CBI, complains that the SNP governments' National Conversation has cost the taxpayer £1m. On the subject of the impact that UK government debt will have on the Scottish economy he is strangely silent.
Every day the interest payments alone on UK government borrowing are £119.3m. This is estimated to rise to £182m a day in 2015-16. Total debt (except those being kept off the balance-sheet) is around £1 trillion. That amount of money would pay for the Scottish bloc grant thirty times over and more.
Swallow the UK deficit or go for a Scottish solution?
Officially Scotland is in surplus but here we are facing the kind of cuts to public services which are experienced nowhere in the developed world. This is because the powers over taxation in Scotland are not controlled by Scotland's own parliament but reserved to Westminster. Scotland consequently has to take austerity cuts and so subsidise those south of the border where the deficit is generated.
This fact will not be altered by the Scotland Bill. The Scotland Bill will see a transfer of powers to and from the Scottish parliament but these new powers will be minimal as the process is mere tinkering, and bad tinkering at that.
The Scotland Bill is supported by Scotland's Unionist opposition parties. Aside from the limitation of the Bill's scope it is widely believed to be poorly thought out. Internationally renowned academics, economists and business people have characterised it as "dangerously flawed", "unworkable" and "a perfect storm".
Although it is Westminster legislation the Scottish parliament's Scotland Bill Committee is helping to craft the Bill. The Committee is chaired by disgraced former leader of Labour's Holyrood group Wendy Alexander who had to quit her post amidst corruption allegations.
Ms Alexander's chairing of the committee has seen the Scottish parliament's dignity suffer as eminent academics have been "ambushed" in committee hearings which were meant to deliberate the Scotland Bill but which was used by committee members to attack the SNP government.
Scotland's other option is Full Fiscal Autonomy (FFA) which would defend Scotland from the UK deficit crisis. Without assuming full tax powers the Scottish parliament will be impotent to prevent councils like North Ayrshire needing to effect policies such as a four-day school week. Alarming though it is this is exactly the kind of example FFA campaigners need to point to if they are to get a dry tax argument over to the Scottish electorate.
FFA is widely supported by academics and the business community and the Scottish population are largely behind the idea of their parliament having more tax powers. Only by generating momentum for the idea will force the Unionist parties into removing their ideological and parliamentary block to the process of increasing significant tax powers for the Scottish parliament.
The North Ayrshire plan should then bring the debate over economic independence to the fore. A crisis to Scotland's social structure is looming and the electorate has to have the facts from both sides of the argument so that they can instruct their political servants on how to act in their best interests.
Before the Holyrood elections there will be more signs of just how painful the impending austerity culls will be. With so many Scots now worried about jobs and family budgets, the issue of Scotland's economic choices of the Scotland Bill or economic independence must take centre-stage. Scotland has to make a decision. Making the wrong one could have profound implications for our international status as a developed country.