My grandad was a crusty old fart, given to rolling in from the pub the worse for wear and frightening the bejasus out of me when he took off his wooden leg to relax. His real one is still somewhere outside Ypres. That loss made his fisherman trade very difficult to ply so he was constantly broke. Which goes a long way to explain his crustiness. But, though he could be stern, he passed on some pithy phrases that stay with me. The one above was trotted out when my gran tried to sneak me a jeely piece with both butter AND jam; to him, sheer extravagance. Milk AND sugar on porage brought down similar condemnation. Though resisted at the time, such lessons in consuming within your means stay with you.
I was reminded of my modest and frugal grandparents when this week a rather damp squib of a starting gun was fired in the BBC Leaders’ Debate, almost simultaneous to Kevin Hague’s œvre The Price of Independence— An Objective Analysis. The former seemed scarcely able to address pragmatic political reality, while the latter contains an overdose.
Having ploughed through a serious amount of its 40 pages, the œvre contains what it says on the tin. Although claiming no party affiliation, Mr Hague bats steadily for the unionist team and has form as a vituperative critic of Yessers who dare question his numbers (including your humble scribe). Yet, to be fair, it is hard to poke holes in the extensive numbers he has gathered in this paper, based as they are on GERS and other government documents. He has set rigorous terms for any fiscal debate on Scottish independence.
To fellow believers in independence who rail against his relentless dismissal of any fiscal sanity behind that concept, I would qualify his conclusions as a beancounter. While his numbers stand scrutiny he seems oblivious that almost none of the 100+ countries who have gained independence over the last couple of hundred years did it by convincing their fellow citizens to believe in a spreadsheet. Business may well have been behind many a revolution but “we like the bottom line” has never been the mob’s cry as they storm the palace and line the bastards up against the wall.
In short, Mr Hague is one of those intelligent but unfortunate people who appear to know the price of everything but the value of nothing.
But, before we get too dewy-eyed and emotional, it must be acknowledged that running an independent country requires a pragmatic grasp of finances. So…convincing 2m+ Scots doubters who were unswayed by the dream but—more importantly—unconvinced by the numbers will take more than exuberant rallies by the faithful and dour dismissal of Westminster and all its works.
Between now and any successful second referendum in which significant numbers of those 2m+ doubters do join the believers, they must be swayed by plausible fiscal projections demonstrating how this country could prosper by itself. And, as Mr Hague’s paper points out, the rosy numbers for both oil revenues and structural deficit cited as arguments by the Scottish Government a year before the referendum had not only lost their glow by September 2014 but have deteriorated even more since. See his pp 7-8.
The details of this, including looking over more than a decade and comparisons with other European countries do pose questions to be answered if significant amount of the doubters are to change their minds. Some will undoubtedly be immune to argument, being tholed to the Union as surely as some are to Independence. But the substance of the ‘NO’ campaign was using fear of fiscal damage as a club. And, for a significant slice of doubters with (understandable) concerns for jobs, business, commodity prices, property markets, etc, a convincing projection of a satisfactory fiscal future would indeed make the difference.
Which means, however much the SNP’s Scottish Government has fudged the matter over the last two years, a narrative that meets Mr Hague’s statistics and conclusions head-on is needed. Fudge has worked up to now and will probably carry the SNP back into power in May. But they will have to address this soon or lose credibility. The passing of significant devolved powers means blaming nasty Tories and raspberrying Westminster won’t do. Wur teenage Parly has to wean itself off pocket money and get itsel’ a joab.
Problem is that wur Parly has spent 17 years on mostly gesture politics. The McCrone settlement with teachers; the smoking ban; free tuition; free personal care; concession travel; nursery provision; minimum wage—all laudable initiatives. But they are populist; they were affordable ONLY because parliamentary budgets doubled before becoming constricted in the last couple of years.
That Mr Hague’s numbers show we Scots are running a structural deficit worse than the UK’s is not some unionist plot to undermine the SNP. It is reality. And waving saltires at rallies will not make it go away. Partly because of decades of Old Labour, together we Scots have grown cosy with a profligate society, as compared to our means. And, much though the SNP may have spruced up the competence of government since 2007, they have bottled hard fiscal choices to remain as populist as Labour ever was.
Just as many a Labour-run council cut its roads or cleansing or environment budgets so that libraries, community centres, all-weather pitches, etc could get built in true pork-barrel style, so the Scottish Government has ‘protected’ a high-profile NHS full of competent front-line staff let down by appallingly inefficient administrators of its £11bn. Or it has stood by while Scottish Enterprise shows very little enterprise with the £600m it swallows every year.
Meantime, some major fiscal beasts are devouring the landscape and creating Scotland’s structural deficit. It is true transport per head will be higher here than in densely-settled England. But concession travel costs have more than doubled with abuse: some people criss-cross the country on vacation while others would happily pay. Free personal care is a noble aspiration. But since its introduction, nobody has had the chutzpah to question whether we can afford it—at least until our finances look less of a basket case. There is a shopping list of a dozen such policies that need serious debate about their viability.
But perhaps the worst of all has been the extent to which our public institutions, quangocracies and charities have become stuffed with executives pulling down bloated salaries that often exceed those in the private sector—already bad enough when bonuses are included. Once upon a time, charity executives were there from noblesse oblige and not for compensation. Last year, this blog highlighted some of the outrageous charity salaries and expenses that now divert well intentioned giving by the public from the intended benefactors.
Similarly, once upon a time, council Heads of Service and Directors were modest bureaucrats grateful for rock-solid job security that compensated for their meagre salaries. Once upon a time there were far fewer public bodies whose heads were paid far less. There are now 52 Executive, Advisory and Tribunal Public Bodies, as well as Public Corporations like CalMac and Scottish Water. Chief Execs of such are routinely pulling down more than £100,000, plus some sweet benefits. Details of these were given last you in You Know You’ve Been Quangoed.
The journalist Iain MacWhirter recently came across this interesting chart published by the Parliament research organisation SPICe that sheds some light on the scale of the issue:
Now, just why over 2,000 Health and Social Work executives should be pulling down more than £150,000 per annum here when the UK has proportionally far fewer and our (supposedly large and reputedly overpaid) financial sector should be so much less is a mystery both Iain and I would wish to see answered. Such sweet deals are symptomatic of the malaise and no-one has the cure but the government.
If Scotland is to make a go of it, the serious questions posed by Mr Hague’s analysis must be answered. That may be by judicious liposuction of the ‘flab’ highlighted above. Or by some equally trenchant wealth-creation policy so we can afford the profligacy identified —which, at present, we clearly can’t. The most effective answer would be both. We’re not quite as bad as my grandad—spending a night down the pub to obliterate the unpalatable truth that he can’t afford to spend a night down the pub—though we’re getting close.
In his blunt phrase, we cannae hae twae kitchens; we can’t go on overpaying people in non-wealth-creating jobs and piling more costly populist policies onto the public purse and think we’re running a viable country. Check out the EU Country Deficit Comparison on page 10 of the paper to see where we stand relative to our neighbours, as well as the UK.
More relevant, the history shown in the next chart on page 11 demonstrates that, while everyone suffered post-2008, the fiscal hard choices made in Greece and Ireland have allowed them to overtake us on their way back to viability. Meantime Scotland treads water in a fiscal funk that makes independence impractical as long as the SNP insists on spreading gesture jam on its fiscal piece.