John Swinney and the big funding leak

Columnist and film writer

Friday 8 March 2013

JUST as there are lies, damned lies and statistics, so there are leaks, damned leaks and whoops, there goes the Hoover dam.

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Alison Rowat

Falling into the latter category is the briefing paper to the Scottish Cabinet on the economic prospects for the Scottish economy post-independence.

As much as the Scottish Government rushed to say the brief delivered by John Swinney, the Finance Secretary, had been overtaken by events, the emergence of the note has the potential to make the row over the EU legal advice that never was look like small change.

Instead of independence amounting to jam tomorrow, which has been the SNP's case since Adam wore jute, it now appears that the jam is off, or at any rate we'll be digging down in the bottom of the jar for it. In future, should Scotland go it alone, it could be dry bread all the way, in diminishing quantities, with more people in the queue for it. At the core of the problems are diminishing and volatile North Sea oil revenues, which will fall by 2017/18 to £4.3 billion. Just as less money comes in, the demand for benefits and services by an ageing population will increase. Add to this the costs of setting up a tax collection system (between £575 million-£625 million a year), and paying off Scotland's share of the UK's national debt, and the ramifications for public sector pay, pensions and services begin to become clear. While Mr Swinney can have some effect on the former with pay restraints - never a popular move - the pensions problem is the meteor heading the way of any government in an independent Scotland. Addressing this, Mr Swinney's paper says the next, and current, task for his group of economic advisers would be to "consider the affordability of state pensions". Consider the reaction that could be caused by that one sentence alone. One wonders if the Scottish Government has even begun to grasp how fundamental the pensions question is to their goal of an independent Scotland. Pensioners, and those approaching retirement, are already anxious about safeguarding what they have, and about who will step in to fix problems should anything go wrong in future. To raise the possibility – however remote – that state pensions could in future be lower is a spectacular own goal. Regardless of all the numbers that were thrown around this week, and will continue to be hurled between now and polling day, that worry will stay in people's minds. Who can best protect pensions will be the new "whose hands is the NHS safe in?"No wonder there has been such cheering from the Better Together camp at the leak of the Swinney memorandum. It has done the job they were thus far unable to do: confirm the fears of doubters, and add a few new ones besides. So far, the Scottish Government's response has been woeful. Saying the paper has been overtaken by events won't do, unless you are of the view that the situation has become better, not worse. Any takers on that? Thought not. What they should be asking opponents is whether they could do better given the economic realities the whole of the UK now faces. Like any opposition (and what is the Better Together movement if not HM Opposition to Independence) the pro-Union camp has not so far been expected to do the "vision thing". It is content, verging this week on deliriously happy, to criticise the plans of others. The closer Scotland comes to a vote on independence, the more that position becomes the political equivalent of the "find the lady" card con. Never mind what briefing the Scottish Government is hiding, where are your plans and forecasts?With the Budget two weeks away, tis the season for thinking ahead economically. On that front, at least, the Scottish Government can consider itself deeply fashionable. With the pro-Union camp in Scotland conveniently quiet on the economic outlook, and Labour's economic policy inside and outwith Scotland still a work in progress, one could do worse than look to Westminster for a sense of what might lie ahead. There, hunched over the crystal ball is a figure repeating the mantra, "There is no alternative". If the phrase seemed familiar, it was not the only thing Mr Cameron had borrowed from a past seer. That money tree of which the prime minister spoke ("It's as if they think there's some magic money tree") sounded remarkably like Mrs Thatcher's magic button from 1980 ("If I could press a button and solve the unemployment problem do you think I would not press that button in an instant?"). While calculated to please the Thatcherite right and lower expectations for the Budget, David Cameron's speech on the economy yesterday had the pleasing consequence, for the Tory part of the Coalition anyway, of trashing the plea by Vince Cable, the Business Secretary, for more borrowing to boost growth. That way, said the Prime Minister, lies the abyss. Further than that, Gypsy Rose Cameron could not say. It all went cloudy, one presumes. No mention of what declining oil revenues would mean for a UK without Scotland, the effects of an ageing population, or the all pain and no gain future involved in servicing a towering national debt far into the future. Mr Swinney has at least had the courage to look into the kind of low to no growth years that lie ahead for most western economies. He may have broken the first rule of peering into the future – never deliver bad news – but at least, unlike his peers in other parties, he is not deliberately looking the other way.

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John Swinney and the big funding leak

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