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Set-up cost of independence 'up to £1.5bn'

THE cost of creating the ­government machinery needed to run an independent Scotland would be between £600 million and £1.5 billion, according to a leading academic.

Professor Patrick Dunleavy, a public policy expert at the London School of Economics, said voters "can be relatively sure" set-up costs for the new state would fall within this range over the first 10 years after it left the UK.

The figures are estimates of the cost of creating, or sharing, the agencies, government department and new IT systems need to run an independent country.

If Scotland votes Yes in ­September, the country will need, among other things, a ministry of defence, treasury, foreign office and network of overseas embassies.

It would also require complex IT systems to collect taxes and pay benefits and pensions.

A number of arms-length ­agencies, such the DVLA, which administers driving licences, would also have to be set up or deals struck to buy in services from existing UK bodies.

At the weekend Mr Dunleavy published research suggesting an independent ­Scotland would face immediate set-up costs of £200m plus a further £900m for tax and benefits IT system over the medium term.

But in a blog yesterday he accepted the figure could rise as high as £1.5bn, an estimate put forward by the UK Treasury and endorsed by his fellow LSE academic Iain McLean.

Responding to his colleague, he said: "Scotland's voters can be relatively sure that total transition costs over a decade will lie in a restricted range, from 0.4 per cent of GDP (£600m), up to a maximum of 1.1 per cent (£1,500m). This is a step forward in debate."

To put the figures in context, the health service in Scotland costs £12bn per year to run.

The wide range in set-up ­estimates reflects the fact neither the Scottish nor UK government has made detailed calculations.

The Scottish Government insists a precise figure is impossible to calculate because the new arrangements, and therefore costs, would depend on negotiations with the rest of the UK. The UK Government has ruled out making contingency plans.

Mr Dunleavy said the Whitehall ban was "a main reason why costs numbers are currently hard to estimate".

He said voters had better information on party spending plans ahead of a General Election, adding: "Why should the far more important issues around possible independence be left for Scottish voters to conjecture about like this, when detailed answers could easily be made available either by Whitehall or by academics commissioned to inform the debate?"

Mr Dunleavy entered the debate after the Treasury used his work to warn start-up costs could rise as high as £2.7bn, a figure he rejected as "bizarrely inaccurate".

Alex Salmond this week wrote to Prime Minister David Cameron requesting an inquiry into how the figures came to be published by the Treasury.

But he was again challenged over the cost of leaving the UK during First Minister's Questions.

Labour's Drew Smith said: "Does the First Minister not understand that the failure of his Government to produce robust and comprehensive information about the cost estimates leaves the people of Scotland with the impression that the SNP would support independence regardless of the costs?"

Mr Salmond said Mr Dunleavy had "comprehensively demolished" the Treasury's higher estimates and called on the pro-UK Better Together campaign, which quoted the figure, to issue a "fundamental apology to the people of Scotland".

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