Iain Macwhirter argues that if Barnett was abolished "there would be a budgetary shortfall, not least because of the collapse of the oil price" (Another nail in the coffin of Osborne's UK, Comment, March 22).
But we have to bear in mind the SNP's pledge to hold Westminster's feet to the fire on Better Together's promises, which included a so-called "Union dividend" of £7 billion a year (which was predicated on 2014 oil prices, so it would be more now). It might seem that receiving such a "subsidy", as Unionists like to think of it, is incompatible with fiscal autonomy, but no-one claims rUK would be non-autonomous if it received from Scotland the £3 billion or so a year in "debt interest" logged in GERS accounts.
The Scottish Government rightly accepts a moral liability for our share of UK debt, but this amount is swamped, as recent work by many economists has shown, by sums generated by the moral liability of the UK Government over the greatest mis-selling scandal of recent times, the deception of Scotland over oil in the 1970s, which led to Scotland's enormous subsidy of Thatcher's UK (about 25% of our annual GDP during the boom).
If holding the balance of power, the SNP should press for a roll-out of maximal powers over public expenditure including welfare and pensions over the next parliament, together with a similar roll-out of tax powers with the difference between revenue and expenditure met by the UK Government up to a limit determined by what would have been provided under the Union dividend. Any further gap to be funded by borrowing, starting from a zero-debt baseline, but in such a scenario the oil really would be a bonus, with current account public expenditure almost wholly funded from the non-oil revenue.
The alternative, if the SNP don't hold the balance of power, is austerity-plus effected by the adjustments which will have to be made to Barnett, now revenue is included. Anyone who believes that the Unionists will, of their own accord, stand by their Union dividend promise when everyone in England is demanding Scottish per-capita public expenditure be reduced to the UK average can't have been born of woman, but must have come up the Clyde in a bubble.
Professor Alan Weir
Glasgow
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