I feel sorry for SNP members. The Growth Commission was their big report. Long awaited. The answer to the failures of the 2014 referendum. Published in a flurry of breathless press releases, members were champing at the bit to debate it at their conference at the weekend but they turned up to discover it was completely absent from the agenda.
The Scottish Growth Commission is a substantial piece of work. It makes a number of assertions but it also admits how challenging an independent Scotland’s finances would be.
And with the finance secretary saying he wants to implement some of the recommendations now, it deserves serious scrutiny. Liberal Democrats oppose independence and this report strengthens our case against independence.
I am grateful for the admissions from Andrew Wilson and his colleagues. Many of the arguments I was making in 2014, and was castigated for by the Yes side, have now been endorsed by his report.
On the currency, on the volatility of small economies, on the deficit, on the years of financial pain.
What the report confirms is the fundamental weakness of the Scottish public finances. That weakness is a direct threat to our National Health Service. It is that serious.
In 2014 I said that the GERS figures were a sound measure of the public finances – it was denied then but has now been confirmed by the Commission. There should be no more undermining of GERS by the Yes movement.
I warned that economies of small countries are prone to greater volatility – denied then, now confirmed by the Commission. The report says “The greater volatility that small economies can experience also strengthens the case for fiscal conservatism…”
I warned that an independent Scotland could not demand control of the Pound – furiously denied then, confirmed by the Commission now. The report admits “Scotland’s government would cede effective sovereignty over monetary policy”
I warned that oil was volatile, falling and could not be relied on – this has now confirmed by the Commission. The report says oil “should not depended upon for recurring annual commitments.”
I warned that Scotland could lose the annual UK Barnett dividend of £13billion. Angrily refuted then, now confirmed by the Commission. Not only has this gone but an independent Scotland would be paying money to the UK for years after we’d left, with an “Annual Solidarity Payment” modelled at around £5 billion paid to the UK Government and cut from the Scottish Budget. The NHS in Scotland needs that money but that would be the price of independence.
What’s more I warned that there would be spending cuts – denied in 2014, now confirmed by the Commission.
“A 6-7% fiscal deficit is not sustainable and action will be required to reduce it to more sustainable levels,” it states “We then anticipate a period of between five and ten years to put the public finances on a sustainable footing.”
What’s more the report makes clear that spending in an independent Scotland will be 1% less than GDP growth.
So GDP growth of 1% or less would result in real terms spending cuts.
Over the last decade Scottish onshore GDP showed average real growth of just 0.8% pa, while the latest forecast from the Scottish Fiscal Commission published last month is for GDP growth in 2023 to be running at 0.9% pa.
Looking back and looking forward an independent Scotland would be facing real terms cuts.
In fact, if we had followed the Commission’s fiscal rule it would have resulted in a cut of £29 billion more than George Osborne’s plan over the last ten years.
David Phillips from the Institute of Fiscal Studies confirmed it:
“It’s a continuation of austerity. If public spending growth is one percent less than GDP growth, that’s austerity.”
Even Independence supporter Jonathon Shafi, from the Radical Independence Movement admitted would “open the door to various forms of austerity politics”.
An independent Scotland will face cuts which will threaten the NHS.
These are significant admissions that show the No Campaign in 2014 was right and the Yes campaign was misleading the voters.
But even more importantly they show the fundamental weaknesses of independence.
An independent country would face at least a decade of pain with cuts to public services without the back up of significant oil revenues. It would have no control over its currency with an economy that was prone to greater volatility.
And the real risk is this. £29billion cuts based on the last ten years, £5billion solidarity payment to the UK, the loss of the UK Dividend worth billions.
The future of the NHS will be undermined by the weakness of the Scottish finances. This is confirmed by the Growth Commission. To save the NHS we need to remain in the UK.
People at the heart of the Yes Campaign are furious that the Growth Commission has confessed. Mainly because it will repel voters from voting yes. Not from principle but based on a calculation on what people want to hear.
Former senior MP George Kerevan warned that the commission risked “robbing” the next independence campaign of working class support.
Jonathon Shafi said it would be a “very hard sell” to voters.
Colin Fox was alarmed that “It risks driving hundreds of thousands of former Yes voters into the hands of Jeremy Corbyn.”
All these are rightly concerned that the yes campaign will haemorrhage votes.
But the campaign will lose votes because we have the truth from the Commission about the reality of independence. The risk to our economy – by their own admission – is substantial. The threat to our NHS is real.
Liberal Democrats are opposed to independence and always have been.
The Commission confirms why we were right to oppose independence in 2014 and why we are determined to stop it now.