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The new estimate of iScotland's transition: between £600m and £1.5bn

Scottish voters "can be relatively sure" that the final bill for a transition to independence would be between £600 million and £1.5 billion, according to an academic whose work was "misbriefed" by the UK Treasury.

Academics and politicians have been arguing over the set-up costs of an independent Scotland in recent weeks after a top Treasury official admitted they had "misbriefed" a figure of £2.7 billion based on the work of London School of Economics professor Patrick Dunleavy.

The debate raged on at First Minister's Questions after Labour constitution spokesman Drew Smith urged Alex Salmond to check revised figures on Prof Dunleavy's blog today, following a critique by fellow LSE academic Iain McLean which put set up costs at up to £1.5 billion.

Mr Smith said: "I wonder what the First Minister's response is to Professor Iain McLean, who does put the set-up costs at £1.5-£2 billion, and he may want to go back and check Professor Dunleavy's blog this morning.

"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: "I don't have to respond to Professor Iain McLean, incidentally someone who believes in the scrapping of the Barnett Formula and I would be interested to know if that view is shared across the Better Together parties.

"I don't have to respond because Professor Dunleavy has done it, and suggested why Iain McLean has been led astray.

"Given the obvious evidence that Professor Dunleavy's work, cited by the Better Together campaign and Danny Alexander, has been comprehensively demolished by Professor Dunleavy himself, and he has said himself that the figure was exaggerated by a factor of 12, at what stage will any of these parties accept that they have got it wrong and owe a fundamental apology to the people of Scotland?"

In his blog, Prof Dunleavy urges politicians on both sides to "lighten up a wee bit about transition costs - and debate instead the real issues of principles, values and future choices that separate them".

He said: "I welcome the fact that behind some debating points in Iain's piece that I don't want to engage with, that the scope for discussion about transition costs has clearly focused down.

"Scotland's voters can be relatively sure that total transition costs over a decade will lie in a restricted range, from 0.4 of 1% of GDP (£600 million), up to a maximum of 1.1% (£1,500 million). This is a step forward in debate and I am grateful to Iain for helping to bring it out."

Prof Dunleavy said there now appears to be an acceptance that initial set-up cost would be £200 million and he attributes the differences in the remaining bill over the following decade to "disputes about language", "scope for difference" between academics and a mistake by Prof McLean.

He added: "A main reason why costs numbers are currently hard to estimate is that Whitehall has been completely forbidden by ministers from calculating any detailed transition costs for Scotland, in case some numbers get written down that could be FoI-ed (requested under freedom of information) and then undermine the Better Together campaign.

"Equally, civil servants have been banned from even discussing any of the transition details in advance with Scottish Government staff.

"To my knowledge, the only London body that has had any more detailed discussion with Edinburgh is the Bank of England, which is independent of ministers.

"Compare this treatment with the civil service briefings normally given to all parties before a UK general election.

"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?"

Conservative leader Ruth Davidson also challenged the First Minister on the "pounds and pence cost to separation" if there is a Yes vote in the referendum.

She highlighted a new report from the Scotland Institute as showing the "blunt financial truths that would face a separate Scotland".

The Tory told Mr Salmond: "We may not like to hear it, but having interviewed the main credit rating agencies they say an independent Scotland is 'likely to end up with a much lower credit rating and significantly higher borrowing costs than currently enjoyed within the union'."

She asked: "Does the First Minister agree with this report that there is a real pounds and pence cost to separation?"

Mr Salmond told her credit ratings agency Standards and Poor's had said "Scotland would qualify for our highest assessment" while another agency, Moody's, had stated that "scoring for the economic strength of an independent Scotland would likely fall somewhere in the high range".

He said: "Even people in the ratings agencies, not known for their sunny optimism about the prospects of any country, if they say this about Scotland and point out Scotland is one of the wealthiest countries in the world, can't the Scottish Conservatives realise the potential of this economy and have confidence in our ability to marshal these natural resources, combine them with the talents of the people and live up to the excellence of the assessments."

A Treasury spokesman said: "It is becoming clearer by the day that the Scottish Government has massively under-estimated the cost of setting up a new state.

"Professor McLean of Oxford University has today estimated the costs to be between £1.5 billion and £2 billion.

"The Scottish Government have repeatedly refused to publish their own workings. They should come clean and start contributing facts rather than fantasy figures to the debate."

Labour MSP Jackie Baillie said: "This is a major embarrassment for Alex Salmond. He now appears to be the only person claiming we could leave the UK on the cheap.

"As always, the First Minister wants us to believe that he alone is right and everybody else is wrong.

"It is now clear beyond all doubt that setting up a separate Scottish state would be a costly business.

"Why would we want to spend potentially billions setting up institutions that we already have today as part of the UK?

"Alex Salmond now needs to be honest about how much independence would cost Scottish families. We know he is rushing to appoint new staff to look at this issue.

"If he doesn't publish an assessment of the cost of independence, people simply won't believe a word Alex Salmond has to say on this issue."

Scottish Conservative deputy leader Jackson Carlaw said: "The First Minister always seemed tongue-in-cheek when quoting Prof Dunleavy in recent weeks. Now we know why.

"Not only is the latest estimate between £1.5 and £2 billion but it seems Alex Salmond is all too well aware of it.

"Summer temperatures may be rising, but this is nothing to the SNP's recent form for bluster and hyperbole on this matter.

"And worst of all, the set-up real costs, which by all accounts appear to be eye-watering, are being kept secret from the people of Scotland."

Liberal Democrat leader Willie Rennie said: "Alex Salmond's favourite set-up costs adviser has now accepted that total additional costs for establishing an independent Scotland could be up to £1.5 billion.

"That's more than seven times higher than our First Minister will admit and an eye-watering figure that will cost Scottish public services dear.

"The First Minister should now come clean and accept that Professor Dunleavy, an academic he has quoted often in recent weeks, is now stating the real cost of setting up an independent state over the first decade will be between £600 million and £1.5 billion.

"The First Minister is now isolated with even his favourite adviser distancing himself. It is therefore incumbent on the First Minister to publish full costings for setting up an independent Scotland."

A spokesman for the First Minister said: "Professor Dunleavy is absolutely clear that so-called 'set-up costs' would be no more than around £200 million, a figure accepted by the Scottish Secretary - not the Treasury's bogus figure of £2.7 billion, which saw Westminster caught red-handed trying to cook the books and for which they have still to apologise."

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