In the run-up to the election the Scottish businessman and blogger Kevin Hague has done a sterling service on his blog picking apart the wilder claims of the SNP. In particular in a recent post Full Fiscal Autonomy in 700 words he dismantles in the most thorough, even-handed and scrupulous way the claim that FFA could feasibly represent a workable way of continuing current levels of spending for Scotland.
Without wishing to put words into Hague's mouth - and I really do urge you to read his posts on FFA - he makes the point that Scotland is receiving about £1450 extra per person per year from Westminster in public spending, but generates about £250 less in tax revenue per year. Under FFA therefore Scotland would have to generate about £1700 per person a year in tax revenue in order to be able to carry on spending at the level it currently does. Unless the Scottish economy should suddenly start performing vastly better (using levers to which only the SNP would appear to be privy), Scotland will not have more public money under FFA than it has now but less. £9.1 billion less in fact.
In 2012/13 public spending in Scotland was about £65 billion. On these figures therefore Scotland would have to absorb a 15% spending cut if it chose FFA.
Of course, Hague is quick to point out that the Scottish government could try to fill the gap by swingeing tax rises, but he also notes that this would have consequences in terms of companies wishing to invest in Scotland and the willingness of high earning and talented people to carry on living and working there. FFA will, Hague believes, be a disaster for Scotland, and one which will hit the poorest hardest as their benefits are cut, as government services atrophy and job prospects diminish.
It won't surprise anyone familiar with the tone of much Nationalist discourse that Hague has received the direst possible abuse on social media, abuse to which he has attempted so far as I can see to respond in a decent manner without abandoning the forensic approach which marks his writing. At the same time he must have found it frustrating that the response on the Nationalist side to his forensic destruction of their plans has been so intellectually feeble. And that it doesn't, apparently, make one iota of difference to the wide-eyed Indy zealots.
Until now.
For in a strange irony, the newly elected MP for East Lothian, Kevin Hague's own constituency, George Kerevan has made a startling statement in The National, the new pro-SNP newspaper.
It runs as follows.
"For Scotland to accept fiscal autonomy without inbuilt UK-wide fiscal balancing would be tantamount to economic suicide. However, all federal systems have mechanisms for cross-subsidising regions in economic need by regions in surplus. To deny that to Scotland suggests a disingenuous Mr Cameron is hoping to derail any move to Scottish Home Rule within the UK".
Translation. If we are to have FFA, where Scotland raises and spends all its own tax revenue, we must have a system of fiscal transfers, where richer countries (like England for example), bail us out from time to time. So actually under FFA Scotland wouldn't be raising all its own tax revenue, according to Mr Kerevan.
Now I am not denying Mr Kerevan is right that federal systems like the USA have fiscal transfers in place so that richer states subsidise the poorer ones. Kerevan has apparently been an economics lecturer for 25 years, so he ought to be clued up on this. But think of the implications. The SNP's stated ultimate goal is independence, and FFA is just a staging post on the way. How many fiscal transfers will there be after independence? None.
So when Mr Kerevan writes "fiscal autonomy without . . . . fiscal balancing would be tantamount to economic suicide" what he's actually implying is that Independence would be economic suicide too.
Actually it would be even worse. Why?
Because once outside the Union iScotland wouldn't just be missing fiscal transfers (ie English subsidy). It would have no central bank and therefore no control over interest rates or lender of last resort. So its own borrowing would be more expensive. Mortgages would be dearer and harder to come by because of uncertainty over Scotland's future currency. Its financial service industry, which largely services England, would melt away south. Its health service would be under increased strain because its population is less healthy and has an older profile than rUKs.
For Scotland FFA, with or without fiscal transfers, is in fact infinitely preferable to Independence. Yet even on this the SNP has gone strangely quiet. Kevin Hague has been unable to get straight answers from George Kerevan. Nicola Sturgeon has disputed the accuracy of the figures (even though they come from the Scottish Government's own statistics) or said the gap would be filled by more borrowing. The SNP's line is that its thumping new mandate won't mean a second Referendum any time soon.
The SNP's position was characterised by one Twitter wag as follows -
"What do we want?"
"Full fiscal autonomy!"
"When do we want it?"
"Not yet!"
But this is to give too much credit to the SNP. Better might be -
"What do we want?"
"Full fiscal autonomy plus balancing transfers from England!"
"When do we want it?"
"Now and forever!"
Perhaps Partial Fiscal Autonomy then. Or maybe just Son of Barnett Formula.
