Financial and economic flaws in the SNP’s plan make the case for Union
THE SCOTTISH government independence White Paper, released yesterday, fell flat. If length were the measure of success, it would be a winner. But despite hundreds of pages, it failed to answer the critical questions that Scots have about independence, and it certainly failed to make any case for breaking up the United Kingdom.
Economic and financial issues are at the heart of the debate, but we learnt nothing new about the Scottish National Party’s (SNP) plans for Scotland’s economy.
They persist in saying that the rest of the UK would be happy to join a currency union with an independent Scotland – even though this would import into the UK economy all the problems that the Eurozone is struggling with today. Even when every UK minister, and virtually every economic analyst, says the idea wouldn’t work, the SNP just claims they are bluffing. And in what looks like a throwaway line to satisfy some of their political allies, they suggest this currency union might only be temporary – undermining its future at a stroke.
A new state without a credible plan for its currency would be in an impossible situation. In particular, the position of banks and financial services companies would be very difficult indeed. This White Paper completely ignores the risk which independence would create for Scotland’s vitally important financial services sector – the biggest in the UK outside London. The SNP proposes a patchwork of financial services regulation, some of it purely Scottish, and some of it to be agreed with the rest of the UK. Why the rest of the UK would agree to take on these risks, simply to suit the SNP’s political project, is hard to understand.
The Scottish government is in a similar state of denial over the fiscal realities that would face the country. The dispassionate and comprehensive analysis by the Institute of Fiscal Studies, released last week, pointed out that Scotland would be in a much more challenging fiscal position than the UK as a whole, even on the most optimistic assumptions. It made projections for the next 50 years. The Scottish government’s White Paper looks at the budget for only the first 12 months of independence.
Even more bizarrely, the main policy announcement was a promise about childcare – something which is already devolved to the Scottish Parliament.
In fact, what this White Paper successfully emphasises is the case for the United Kingdom. The SNP is trying to claim that Scotland could keep all the benefits of being in the UK, like a single stable currency and a common system of financial regulation, while still becoming independent. This is simply incoherent – and it shows what happens when an obsessive political project is allowed to override all economic good sense.
The Scottish people will be right to reject it, because they will understand that, with the rest of the UK, they are better together.
Alistair Darling is leader of Better Together, Labour MP for Edinburgh South West, and a former chancellor.