Tuesday, 16 January 2018

The SNP's Conversion

Yesterday the SNP published "Scotland's Place in Europe". It's a good piece of work and a worthwhile read for anybody who wants to gain an understanding of the (UK wide) issues surrounding Brexit and the various options we face.

But if we allow ourselves to step back from the Brexit question for a moment, it's interesting to read the report while considering the SNP's continued commitment to drag Scotland out of the UK Single Market. A couple of observations;

Firstly, the report is admirably thorough but with one major exception: it simply ignores Scotland's exports to the rest of the UK (rUK) when scaling the economic issues. Given we're looking at the Scottish Economy here, we should surely scale figures in the context of total Scottish exports, not just "international exports" (a term they use to allow them to ignore exports to rUK completely). Let's take a quote from the report and correct it;
"24. The EU is Scotland’s second most important international export market. In 2015, Scottish companies’ exports to countries within the EU were estimated at £12.3 billion, which is 43%  16% of Scotland’s total international exports and supports, directly and indirectly, hundreds of thousands of jobs across Scotland."
[Notice by the way that these figures come from the Scottish Government's Export Statistics Scotland publication, a report that nationalists decry as wholly unreliable when they don't want to face the reality of what the figures show]

Let's take another example - note they no longer even bother with the "international exports" qualifier here;
"38. To replace a 5% reduction in Scotland’s EU exports with increased trade from the BRICS economies would require a 30% increase in exports to those economies. Even if the UK signed agreements with the 10 biggest non-EEA single country trading partners (including USA, China, and Canada), a process which would take many years, this would only cover 37%  14% of Scotland’s current exports compared to 43%  16% of current exports that go to the EU"
Of course we could also rewrite that quote thinking from the perspective of Scotland leaving a post-Brexit the UK;
"38. To replace a 5% reduction in Scotland’s EU UK exports with increased trade from the BRICS economies  the EU would require a 30%  20% increase in exports to those economies. This within the context that our current levels of EU trade have been achieved after almost 45 years of unfettered market access."
Let's do one more - but first we need to highlight an apparent error in the base figures;
"90. Similarly, in relation to the agriculture and forestry sectors, Brexit represents a hugely significant challenge. Food and drink alone accounts for Scotland’s biggest non-energy export, with over two-thirds of exports worth £1.2 billion in the first three quarters of 2017 going to EU countries."
There is no source given for the "two-thirds of exports" assertion (the next sentence references this report which doesn't seem to give that figure, unless I've missed it?). The most recent ESS data (for 2015) gives a full year figure for Food & Drink exports to EU of £1.8 billion (so would seem consistent with the above, given that's a "first three quarters" number), but that's 38% (over one-third, not over two-thirds)  of "International Exports" of £4.8bn and just 20% of all exports (when rUK exports is included) of £8.9bn.  So the corrected version would read;
"90. Similarly, in relation to the agriculture and forestry sectors, Brexit represents a hugely significant challenge. Food and drink alone accounts for Scotland’s biggest non-energy export, with over two-thirds less than one third of exports worth £1.2 billion in the first three quarters of 2017 going to EU countries."
OK, so they ignore exports to rUK when scaling the export figures (and they may have made a "two-thirds" instead of "one-third" typo) ... but assuming Scotland remains in the UK with unfettered market access this approach could be defended, albeit I would suggest it's presented in an intentionally misleading way.

The second observation is that the SNP suddenly seem very happy to believe economic forecasts from HM Treasury, the National Institute for Economic & Social Research (NIESR) and Fraser of Allander. They are variously cited throughout the document and their forecasts summarised in this handy table at the back

[We can forgive the NIESR/NEISR typo]

Anybody familiar with the indyref debate must surely be raising their eyebrows at this point. Notice how the Scot Gov forecasts are at the most pessimistic end of the spectrum - "Project Fear" anyone?

Now let's just remind ourselves of the attitude shown to HM Treasury forecasts when they related to the outlook for an independent Scotland;
  • Here's Alex Salmond referring to The Treasury's figures - which were using what turned out to be extremely optimistic Office for Budget Responsibility (OBR) forecasts:

    "But the First Minister dismissed the OBR’s figures as “stuff and nonsense”. A spokesman for the First Minister said: “Danny Alexander must ­apologise for the Treasury’s dodgy dossier on the finances of an ­independent Scotland"
  • When HM Treasury analysis suggested the one-off costs of setting up the institutions for an independent Scotland would be £1.5 - 2.7bn, Salmond called it a "highly misleading briefing". He suggested the true figure would be nearer £0.2bn, a figure which was obviously fantastical at the time. Later that same year the Centre for Economics and Business Research (CEBR) published a report which concluded: "The set up costs for an independent Scotland would run to nearly £2.5bn"
It's worth looking at the forecasts the Scottish Government produced prior to the indyref compared to the numbers from HM Treasury (and others variously dismissed by the SNP at the time) ... and note what we now know to be the actual outcome

As for NIESR, the SNP weren't quoting them during the Indyref when they concluded that;
"on the basis of any reasonable division of existing assets and liabilities, Scotland would begin its independence with a substantial debt burden and less scope for risk-sharing. We estimate that Scotland would need to run primary surpluses of 3.1% annually order to achieve a Maastricht defined debt to GDP ratio of 60% after 10 years of  independence. This would be more restrictive than the fiscal tightening over the last four years."
Finally for now, within the Scotland's Place in Europe report the Fraser of Allander Institute (FAI) is quoted in relation to the jobs threat from Brexit;
"The FAI have also presented the impact on jobs, suggesting Brexit could cost up to 80,000 jobs."
That's the same Fraser of Allander Institute who have suggested that more than four times as many jobs are supported by rUK exports as by rEU exports.


It will be interesting to see how the SNP respond to HM Treasury and other respected institutions' analyses and forecasts if their fabled indyref2 ever occurs.






Saturday, 13 January 2018

The UK Single Market

The SNP believe that the UK leaving the EU will damage EU/UK trade - this argument has merit.

The SNP argue this means the case for Scotland leaving the UK is strengthened - this argument is ridiculous.

Any argument that Scotland should leave the UK because of trade friction created by Brexit is so obviously flawed it's hard to explain why without sounding condescending - so bear with me;
  1. Scotland exports four times as much to the rest of the UK (rUK) than we do to the rest of the EU (rEU). The information that tells us this comes directly from the Scottish Government themselves (and has nothing to do with which ports goods leave the UK from, because the data is based on customer location)
  2. To argue Scotland should leave the UK because of EU/UK trade friction is to argue that Scotland would be better off in the EU because then we could continue to trade freely with the EU, would avoid the downside of post-Brexit trade friction
  3. But if Scotland chooses to be on the EU side of an EU/UK trade border, we would see that same trade friction impacting our trade with the UK. EU countries don't get to negotiate their own bilateral trade agreements.
  4. So we're choosing between trade friction with the EU if we stay in the UK or with rUK if we leave. The fact that our exports to the latter are four times greater than those to the former makes it obvious that, if we have to choose which side of a post-Brexit EU/UK trade border to be on, the economic argument for staying on the UK side is compelling
So how do the SNP deal with the glaring logical inconsistency in their argument? With the now wearyingly familiar mix of misdirection, obfuscation, deceit and denial.

The flaw in the SNP's logic is most easily explained by describing Scotland's choice as being between the "UK Single Market" or the "EU single Market".

That the UK Single Market exists is self-evident. We have free movement of goods, services, capital and people, we have common customs and excise duties and we have a single currency. But some within the SNP simply try to deny its very existence (SNP MSP Joan McAlpine claims UK single market ‘doesn’t exist’).

They are hampered by the fact that, in the context of Brexit, the "UK Single Market" concept is easy to grasp and widely referred to;
  • The Scottish Governments own Nobel Laureat-laden Fiscal Commission Working Group referred to the fact that "retaining a common currency would promote the single market ..."
  • In The implications of EU withdrawal for the devolution settlement (Scottish Government commissioned, foreword by Joan McAlpine SNP MSP) the author states "Withdrawal could, however, call into question the UK single market ..".
  • The House of Lords European Union Committee records the term "UK Single Market" being used by a variety of contributors and adopt it themselves - for example the term appears 10 times in this report
  • In "Brexit and the Territorial Constitution" Professor Risk Rawlings (a staunch proponent of further devolution) uses the phrase "UK Single Market" no less than 7 times
I could go on, but the next nationalist argument becomes that the UK Single Market can't exist because there's no Single Market Treaty. People who argue that are not familiar with the 1707 Act of Union which explicitly provides for;
"full Freedom and Intercourse of Trade and Navigation [..] the same Customs and Duties on Import and Export [..] Laws concerning Regulation of Trade, Customs and such Excises to which Scotland is by virtue of this Treaty to be lyable be the same [..] the Coin shall be of the same standard and value throughout the United Kingdom"
Those words may be arcane, but they do a pretty good job of defining free trade, free movement, a customs union and a single currency.

At which point nationalist keyboard warriors accuse those referring to a 300 year-old treaty as "living in the past" - neglecting the fact that the provisions quoted above have never been repealed, so represent current legislation.

Next comes "well why didn't you use the term UK Single Market during the indyref?". The answer is, rather obviously, that the UK Single Market only becomes something one needs to distinguish from the EU Single Market as a result of the Leave vote.

Then we get the echo of UKIP's straw-men of "are you saying all trade will stop?" or "but we'll still want to trade with each other!". Needless to say, nobody's arguing trade will simply stop or there there will be a lack of desire to trade - what we're talking about is damage to Scottish/UK trade for the very same reasons that the SNP argue UK/EU trade will be damaged.

The SNP like to distract by quoting figures highlighting the number of Scottish jobs that are supported by EU trade. What they conveniently neglect to mention is that (using comparable assumptions) more than four times as many jobs depend on rUK trade.

Finally (for now) the SNP then resort to simply trying to hide the scale of Scotland's trade with rUK by ignoring it. Hard to believe I know, but in press releases (as detailed here) and published papers (as detailed here) they claim that 43% of Scotland's exports go to the EU, a figure they arrive at by ignoring rUK exports. The correct figure (from the Scottish Government themselves) is that 16% of Scottish exports go to the EU, compared to 63% going to rUK.

I'm happy to keep having this argument though. The more those arguing for independence argue that the UK single market doesn't exist, the more they draw attention to the fact that it does ... and the more they help publicise and expose the flaws in their latest argument for breaking up the UK.


Thursday, 11 January 2018

The Act of Union 1707: An Economic Union



Because of some fairly ridiculous arguments about whether or not the UK is a single market, I've found myself reading the Union with England Act 1707 - the "Act Ratifying and Approving the Treaty of Union of the Two Kingdoms of SCOTLAND and ENGLAND".

Given the absence of any punctuation, the introduction is pretty hard going  - but when you read the specific provisions they're actually pretty easy to understand.

Originally there were 25 clauses of which 15 were economic in nature. A number of the provisions have since been repealed - reading just those still in force we can see very clearly that the Act of Union explicitly provides for the UK being (in the language of  Brexit) a Single Market and a Customs Union.

Quoting directly from the Act (highlighting mine):

  • "IV.  That all the Subjects of the United Kingdom of Great Britain shall from and after the Union have full Freedom and Intercourse of Trade and Navigation to and from any port or place within the said United Kingdom […]  And that there be a Communication of all other Rights Privileges and Advantages which do or may belong to the Subjects of either Kingdom"

    So that's Free Trade and Free Movement

  • "VI. That all parts of the United Kingdom for ever from and after the Union shall have the same Allowances Encouragements and Drawbacks and be under the same Prohibitions Restrictions and Regulations of Trade and lyable to the same Customs and Duties on Import and Export …"

    So that's a Customs Union

  • "XVIII. That the Laws concerning Regulation of Trade, Customs and such Excises to which Scotland is by virtue of this Treaty to be lyable be the same in Scotland from and after the Union as in England …"

    So that's Single Market Regulation

  • "XVI. That from and after the Union the Coin shall be of the same standard and value throughout the United Kingdom as now in England …"

    So that's your Single Currency

There can be no doubt that the Act of Union was explicitly and in large part an act of Economic Union - and the provisions that make it so are still in place, so we're not getting distracted by an historical curiosity here.

It's not surprising therefore that those arguing for separation from the Union have been stymied by the economic arguments and appear breath-takingly hypocritical when they argue the economic case for remaining in the EU while dismissing the economic case against Scotland leaving the UK.

That the economic arguments for remaining in the UK trump those for remaining in the EU is relatively clear when we remember that the UK market, according to the Scottish Government's own figures, is currently four times more important to Scotland than the EU.



This is a fact that the SNP actively obfuscate and mislead about. Take this press release from December 2017 which boldly states:
"The single market is made up of almost 500 million consumers – over eight times the size of the UK market. It is the destination for 42 per cent of our exports, contains eight of our top 12 export destinations and contributed £11.6 billion to the economy in 2014."
This is staggeringly misleading. We know from the Scottish Government's own figures above that 16% of "our" exports go to the EU, so where do they get the 42% from?  If you exclude the UK as an export market then (per the figures above) the EU represents 43% of Scotland's trade outside the UK. There's no doubt that the "our" in this press release is referring to "us Scotland", so the 42% figure is - not to put too fine a point on it - flat wrong.


It took me a while to work out where the figures quoted come from - they're close to but don't match figures in the latest ESS data (published a year ago) and that bugged me. The clue is in the fact that they quote a "worth to Scotland" figure from 2014 - and sure enough in a press release dated 07/12/2017 they quote stats from ESS 2014, despite the fact that their own  ESS 2015 data had been available for nearly a year when that press release was written. They don't gain anything from using out-of-date statistics - it's just shoddy work that makes a fact-checker's job harder. So the £11.6bn figure is needlessly out of date, the latest available figure is £12.3bn


As for "contributed £11.6 billion to the economy", the equivalent (and up-to-date) statement would be that "exports to the rest of the UK contributed £49.8bn to the economy in 2015".

They go on to say
"According to the Centre for Economic and Business Research an estimated 300,000 jobs in Scotland rely on our trade with the rest of the EU."
I'm guessing this is the source for this stat, an analysis which unfortunately doesn't show how many Scottish jobs "rely on our trade with the rest of the UK" if we were to use comparable assumptions.

Fortunately Fraser of Allander have done such an exercise and their findings are clear and unsurprising: more than four times as many jobs in Scotland are supported by trade with rest of the UK than are supported by trade with the rest of the EU.



We know - because Blair McDougall submitted a Freedom of Information request asking the question - that the Scottish Government hasn't carried out any analysis on "the economic impact of an independent Scotland being outside of a customs union with the rest of the UK (assuming for example the rest of the UK had left the European customs union and Scotland voted to become independent)". 

I'm not surprised.





Wednesday, 10 January 2018

Having Reservations

As "architect of the Scottish Parliament", Donald Dewar argued that everything that could be devolved should be devolved1. A corollary of that would be to say we should seek to devolve powers unless there is a compelling reason not to.

With my These Islands hat on, I've recently been looking at devolution from a Welsh perspective.  In doing so I discovered that Wales offers a perfect case-study of why devolving spending powers is not necessarily a good thing for the devolved nation concerned. Those arguing for further devolution of spending powers to Scotland would do well to take note.

If the United Kingdom stands for anything, it stands for the pooling and sharing of resources. Without such pooling and sharing, Scotland, Wales and Northern Ireland wouldn't each be currently receiving many billions annually in fiscal transfers from England. Without those fiscal transfers, public spending in the devolved nations would need to be dramatically reduced (or, less realistically, tax revenues would somehow need to be dramatically increased).

Using ONS data2 we can see how significant these fiscal transfers currently are on a per person basis, not just nationally but also across England's regions.


 [To understand this chart: if you multiply each regional per person amount by the regional population you would get the cash amount transferred in or out - add these figures together and they net out to zero (I've checked, it works) - We're just shuffling money around within the UK here.]

To head off the standard Scottish Nationalist response: no this data doesn't show that Scotland is somehow being damaged by being in the UK. In fact it reflects the fact that Scotland is able to spend more on public services than it would be able to if it wasn't part of the UK. It's worth noting that transfers "in" for Scotland are caused almost entirely by relatively high spending, for Wales mainly by relatively low revenue and for NI by a mix of both relatively low revenue and high spend. I'll publish more complete analysis by nation/region soon.


The current mechanism for adjusting the budget available for devolved nations is the Barnett Formula. There are detailed briefings on the These Islands Website which explain both the history and mechanics of the Barnett Formula (How does the Barnett Formula actually work? and What is the Barnett Squeeze?), but all you really need to know is this: the Barnett Formula is not needs based, so changes in devolved budgets do not reflect changes in need.

The Barnett Formula in practice is highly sensitive to rates of change in population, resulting in it serving Scotland (with its declining population) relatively well compared to Wales and Northern Ireland. This is not in any way "fair" or "needs based". The chart below shows the impact over time of applying the Barnett Formula for Scotland, Wales and Northern Ireland, using realistic assumptions and where the only difference between the three nations' formula driven per capita budgets is their actual relative rates of population growth/decline.


This in-built unfairness is why whenever anybody sensible takes a look at the Barnett Formula, the conclusion is the same: it needs to be replaced by a needs based formula.


That the Barnett Formula remains in place today is testament to the combined forces of political inertia and the strength of the Scottish parliament. Scotland is most likely to suffer (relatively) if a "fairer" mechanism for allocating spending among the devolved nations is put in place.

This is of course why, when "The Vow" was being delivered, the SNP insisted that the Smith Commission recommendations included the line "the block grant from the UK government to Scotland will continue to be determined by the Barnett Formula". It's also why the SNP dropped their brief flirtation with the idea of "Full Fiscal Autonomy" for Scotland, because that would mean scrapping the fiscal transfers that enable Scotland's higher public spending.

What struck me when looking at the relative per capita spending data for Wales (see table below) was that the only comparable area of spending where Wales receives a higher per capita spend than Scotland is Social Protection. Social protection is of course not devolved, it's fully reserved. Being fully reserved it is effectively guaranteed to be allocated on a needs basis, because the entitlement to (for example) a State Pension is standard UK3 wide - if there are proportionately more pensioners4 in Wales, they'll get proportionately more funding.

Now look at all those other areas where Wales has less per capita spending than Scotland
  • Health and Education are fully devolved  - so we know that Wales' capacity to spend in these areas has suffered relative to Scotland due to the way the Barnett Formula works
  • Transport is c.80% devolved, so tells a similar story
  • The mix of devolved vs reserved is less clear for other areas - but we can observe significantly lower spend for Wales relative to Scotland in "Economic Affairs", "Housing & Community Amenities", "Enterprise & Economic Development", ...

At this point the analysis only really takes me far enough to ask a pointed question: are these lower spend levels for Wales justified by lower need, or has the Barnett Formula left Wales unfairly starved of funds?


This is a blog, so you'll perhaps forgive a rambling conclusion (Chokkablog's motto is "thinking allowed" after all):
  • From a "UK-wide" perspective, devolving further spending powers without replacing the Barnett Formula with a needs based formula would be both imprudent and reckless - because the Barnett Formula is not "fair"
  • Devolving revenue raising powers carries similar risks. Even if you allow some base level fiscal transfer to remain (i.e. so that if 100% of revenue raising powers were devolved, Scotland would still receive some of England's tax revenues) you would still be exposed to the problem of how that figure was adjusted over time. It's also hard to see how such a situation would be tenable from an English perspective - the more revenue powers are devolved, the closer we edge to Full Fiscal Autonomy. Regular readers of this blog know that would be a terrible idea for Scotland
  • Devolving Social Protection powers (for Scotland or Wales) would take away the assurance of  "needs based" funding that reservation of those powers gives
  • There's a democratic trade-off involved in accepting that the UK-wide priorities may not be the same as those Scotland or Wales alone would choose - but being in a union is all about compromising how much influence you have in return for enjoying the benefits that accrue from being part of a greater whole. The data suggests Scotland does pretty well out of "the greater whole". At least as far as the Barnett formula is concerned, that's more by accident than design.






NOTES

1. Profile: Donald Dewar the architect of the Scottish Parliament

2. Country and regional public sector finances: Financial year ending March 2016

These figures are used to allow consistent comparisons between regions and nations. The "geographic" (favourable to Scotland) N Sea revenue allocation methodology figures are used, but in the year in question N Sea revenues were only c.£60m or about £11/capita for Scotland (so frnaly irrlevant).

The deficit for Scotland using these figures is slightly higher than that shown by the 2016/17 Scottish Government GERS Report (£15.2bn vs £14.5bn in GERS for 2015/16 - a £130/capita difference).

The figures are very close also to the GERW data produced by Cardiff University for Wales (£14.8bn vs £14.7bn).

3. Except NI

4. As indeed there are: ONS data

The Act of Union 1707: Religion


For a blog post explaining the economic foundations of Scotland's place in the United Kingdom, I was reading the Union with England Act 1707 - the "Act Ratifying and Approving the Treaty of Union of the Two Kingdoms of SCOTLAND and ENGLAND".

The Act also ratifies the Hanoverian Succession1 which (since the Act of Settlement 1701) excludes Catholics (or anybody who has married a Catholic) from inheriting the Crown. Given the Monarch's role as Supreme Governor of the Church of England this is unsurprising - but the stark language used is quite shocking to a contemporary reader
"II. That the Succession to the Monarchy of the United Kingdom of Great Britain and of the Dominions thereunto belonging after Her Most Sacred Majesty and in default of Issue of Her Majesty be, remain and continue to the Most Excellent Princess Sophia Electoress and Dutchess Dowager of Hanover and the Heirs of Her body being Protestants upon whom the Crown of England is settled by an Act of Parliament made in England in the twelth year of the Reign of His late Majesty King William the Third entituled An Act for the further Limitation of the Crown and better securing the Rights and Liberties of the Subject And that all Papists and persons marrying Papists shall be excluded from and for ever incapable to inherit possess or enjoy the Imperial Crown of Great Britain and the Dominions thereunto belonging or any part thereof And in every such case the Crown and Government shall from time to time descend to and be enjoyed by such person being a Protestant as should have inherited and enjoyed the same in case such Papists or person marrying a Papist was naturally dead according to the provision for the Descent of the Crown of England made by another Act of Parliament in England in the first year of the Reign of their late Majesties King William and Queen Mary entituled An Act declaring the Rights and Liberties of the Subject and settling the Succession of the Crown"
[There's a load more on  "securing the Protestant Religion and Presbyterian Church Government" in provision XXV]

This brought to mind the fact that in the Scottish independence referendum in 2014, there's evidence that Catholics were significantly more likely to vote Yes than Protestants - if you like, were more likely to vote to scrap this Act. I think few in Scotland will be surprised by this fact, but I suspect a good many don't understand the possible historical reasons why.



There may be other correlating factors (e.g that Catholics in Scotland may have a markedly different sage or socio-economic profile than Protestants), but it's at the very least interesting to note that religion is a better predictor of whether someone is likely to have voted Yes (or No) than either place of birth or gender.





1. When Queen Anne died in 1714 with no living children, this led to George I inheriting the Crown. Someone who knows their history tells me George I was 51st in line to the throne, after some 50 Catholic heirs who had been disbarred by parliament, and a great grandson of James VI/I

Sunday, 26 November 2017

EU Withdrawal: Irritable Bill Syndrome

The EU Withdrawal Bill is currently being eased through the bowels of Westminster, digested by the Houses of Commons and Lords, inched forward by the peristalsis of readings, committees and amendments. The question of where repatriated powers should lie and how this impacts the devolution settlements is clearly going to be a cause of irritation as the Bill forms. Nobody expects this to be a smooth passage.


This blog is a layman’s attempt to understand some of the issues involved and to think aloud about whether complaints of a “Westminster power grab” are justified or not. The fact that I think Brexit itself is an act of great folly, I will place to one side.

***

Those accusing the UK Government of an attempted power grab1 argue that powers being repatriated from the EU should be passed directly to the devolved authorities if they relate to existing devolved competences. On the surface this may appear a reasonable enough stance, but it’s worth making two simple observations.
  1. The powers in question are powers that have never been within the legislative competence of the devolved authorities (i.e. in practice they have never been devolved)

  2. The powers in question are (in general) powers used to maintain the integrity of the EU Single Market so - by logical extension - they’re powers that relate to maintaining the integrity of the UK single market

The first of these points is reinforced by the wording of the Withdrawal Bill itself, which takes pains to specify that anything that is within the legislative competence of the Scottish parliament or Welsh Assembly before Brexit, remains so after2.

This is all because devolution occurred while the UK was in the EU. The context was that EU (and by implication UK) single market integrity was assured by the devolved authorities' obligations to comply with EU law. Brexit takes away that obligation, so the context dramatically changes; new legislation is needed to assure the integrity of the UK single market post-Brexit.

It can be argued that when "fully devolving" certain competences while expecting to remain within the EU, in effect the UK Government reserved some powers to exercise in concert with other EU member states through the Council of Ministers. The nub of the issue here is the use of the words “in effect” in the previous sentence.

To illustrate: the Scottish Devolution Settlement sets out matters which are reserved to the UK parliament and "all other issues are deemed to be devolved". With particular relevance to the EU Withdrawal Bill, the implication is that current "fully devolved" competences include: Agriculture, Forestry & Fisheries; the Environment; Justice & Policing; Trade & Industry; Economic Development.

This means that a large number of the powers* being repatriated relate to competences that are "deemed to be devolved". Depending on your perspective, this is either a legal technicality or an important point of principle.

* I detail the specific powers at the foot of this blog-  to cover here would be to distract from the core argument.

The “legal technicality” argument points to the fact that the Welsh Devolution Settlement is worded differently, defining instead what is devolved and Stating that "any area not listed [..] is non-devolved" - yet surely the spirit of devolution was the same in both cases? This argument also suggests that legislators did not consider the possibility that the UK would leave the EU when drafting these settlements, or at least failed to think through the consequences of leaving when drafting Scotland's.

The “important principle” argument is that put forward by the late Donald Dewar, namely that the default position should be for everything to be devolved that isn’t specifically required to be reserved. Presumably it's an acceptance of this principle that has led to recent proposals for the Welsh Devolution Settlement to be changed from a "conferred powers" model to a "reserved powers" model (i.e. to mirror the approach taken with Scotland's settlement). These are changes that should come in to force from April 2018, well ahead of Brexit.

Both arguments have merit, but a sensible approach would surely be to look at what in practice we want to achieve rather than being constrained by where we start from - particularly if we accept the argument that where we start from is in large part due to previous legislators’ failure to consider the possibility that the UK wouldn’t perpetually be a member of the EU. To put it another way: do the repatriated EU laws fall into the category of being required to be reserved?

The powers being repatriated are (in general) powers that exist with the EU to enable the creation and enforcement of frameworks that guarantee the integrity of the EU single market. For the very reason that that these powers are held at an EU level now, the default assumption must surely be that they are required at a UK level to guarantee the integrity of the UK single market.

Of course in theory these powers don’t need to be held by the UK Government for UK-wide frameworks to be agreed by the constituent nations – but ”in theory” that same argument could be applied to the EU member states. The political reality for the EU has been that to create and enforce these frameworks has required reservation of certain powers.

The UK is clearly a different beast from the EU, and some argue that these frameworks should be able to be created by mutual agreement between the constituent nations, that there's a big difference between UK-wide frameworks being imposed and those frameworks being agreed. Of course this is true, but the process of agreement is one of negotiation - and few would argue that the UK Government isn't overloaded with negotiating tasks right now. In this context, any negotiation that can be sensibly deferred surely should be - this isn't the time for the UK to be playing "constitutional and legislative poker games."3

Context matters here. With Scotland controlled by an SNP government who make no secret of their desire to break up the UK, it seems optimistic in the extreme to assume they would negotiate in good faith to preserve the integrity of UK single market, rather than opportunistically seek to further their cause of separation.

From here forwards I'm going to suggest we accept a simple principle: the manner in which we handle repatriated powers should be the simplest option that guarantees the integrity of the UK single market.

The first point about simplicity is one of pragmatism. To (mis)apply Occam’s Razor4: the simplest answer is normally the right one. The scale and complexity of the EU Withdrawal Bill is unprecedented; wherever simple solutions can be found they should be gratefully seized.

So as a first step we might assume that all powers repatriated from the EU should reside with the UK Government, at least in transition. This seems simple and one might argue that it guarantees the integrity of the UK single market. Except of course it doesn’t if it creates cause for grievance that can justifiably be seized upon by nationalists and used as a catalyst for, say, another Scottish independence referendum.

The source of this potential grievance lies in the fact that to legislate to reserve these repatriated powers to the UK requires the legislative consent of the devolved authorities (or use of the controversial Henry VIII clause).

With the rhetoric of “Westminster power grab” being used already, we can be sure that any legislation that could be construed as “re-reservation of powers" will be exploited for grievance purposes and legislative consent withheld.

But if we trust our ability to have an informed national debate, the question that matters is surely whether there is a justified cause for grievance.

Given that the powers in question have never been exercised by the devolved nations and are pretty much by definition powers required to maintain the integrity of the UK single market, it would seem difficult to rationally argue against the simple exponent of, by default, shifting the powers (initially at least) to Westminster.

If we consider the avowedly pro-EU SNP's position: how can they credibly argue that they're in favour of these powers being reserved to Brussels while we're in the EU, but object to those self-same powers being reserved to Westminster when we're not? After all, when it comes to constraints applied by EU law today, the devolved authorities have no direct link to the Council of Ministers - the Scottish Government has far more influence at Westminster than it does at Brussels, so its influence would grow even if these powers "only" shift to being reserved at a UK level.

It seems that the SNP's position can simply be summarised as "Brussels good, Westminster bad". This mindset is neatly illustrated by an exchange I had on Twitter with Patrick Harvie (leader of the Scottish Greens) in which he made it clear that the difference between Brussels and Westminster is that, when it comes to Westminster, he doesn't trust "them";



** Clarification [27/11/2017]**
Although I include the complete text of the tweet above (and link to the tweet in the quoted text above the image), Patrick has asked me to point out that his final tweet did also include a link to this article > Supreme court orders UK to draw up air pollution cleanup plan, so he feels I am unfairly implying he is demonstrating unjustfied prejudice in the way I have presented this. I'm happy to clarify
** Ends **

From the Scotland Act 2016 to the current proposed revisions to the Welsh Devolution Settlement, the UK government has shown its willingness to embrace and continue the process of furthering devolution. In this context, the fact that simple and pragmatic solutions are proposed during the (already hugely disruptive) process of withdrawal from the EU shouldn't be interpreted as evidence of malign intent.

If anybody here is attempting a "power grab", it would seem to be those devolved administrations exploiting a legal technicality to gain powers they have never previously exercised.


***

Appendix: The Specific Powers in Question

This blog has referred only to powers in a general sense in an attempt to avoid becoming bogged down in detail. The detail of the specific powers in question is informative, however, at it helps us understand how and why these powers matter and why they were reserved to the EU in the first place.

According to a list published by Nicola Sturgeon and Carwyn Jones, there are 111 powers that are "vulnerable to a Brexit Power Grab". It's a long list but we can group many of them together to help us judge their importance to retaining the integrity of the UK single market. I've relegated the actual list to a footnote5.

As many as 29 could be said to broadly relate to Environmental Protection. If part of the UK has less stringent environmental standards than another, it’s likely to be cheaper to manufacture and produce there (because complying with environmental regulation carries a cost), so “unfair” economic advantage would be conferred on that area.  “Unfair” because the resulting pollution or environmental damage would, of course, not respect any borders.

At least 16 relate to agriculture, fisheries and food. These include issues relating to standards of animal welfare, approaches to disease control and regulations on pesticide use. To allow free movement of livestock and fair competition between producers, it’s essential that these issues are governed by common frameworks. At least 5 of these relate to food standards and labelling: conformation with these standards places a burden on businesses or places constraints on their marketing - so if we’re to maintain a level playing-field and ensure free-movement of goods, then common UK rules have to be agreed and adhered to.

Fisheries is just one of these, but it’s a big one. Anybody who cares about the sustainability of fish stocks recognises that fishing waters around these islands (and of course more widely) need to be carefully managed. The imposition of fishing quotas is the short-term price we pay for long-term sustainability. To allow a structure where (say) English fishermen were subject to more stringent quotas than their Scottish competitors would be a clear “single market” failure.

Just one relates to state aid, but again it’s a big one. As long as we’re committed to pooling & sharing resources, it's surely logical that state aid rules are consistently applied within the UK.

There are a large number (36?) that can be grouped under the broad category of Justice & Home Affairs. I confess to have tired by this stage and to lack enough knowledge of these topics to offer insightful comment - but to the layman's eye it does seem that some of these could be devolved without without causing obvious risk to the UK single market.

At this stage I start to flag. It looks to me like maybe 7 relate to data sharing and information security, 7 to medical and scientific matters, 3 to transport, and 7 "others" which include energy related issues. I'll leave it to others more informed than me to comment on the necessity or not for these to be exercised at a UK-level

Finally, there are 5 which relate to EU institutions - depending on the nature of the final Brexit settlement these presumably become redundant, get replaced by UK equivalent bodies or we choose to continue to co-operate with the relevant EU Agencies

***

This blog has been greatly informed by the following, each of which I strongly recommend;

On the case for all repatriated powers to initially go to Westminster:
"Continuity, Devolution & the EU Withdrawal Bill" - D.H Robinson for These Islands

On the case for all repatriated powers in areas of devolved competence to go directly to the devolved authorities:
"Brexit & The Territorial Constitution" - Prof Richard Rawlings for The Constitution Society

The balanced Case, including arguments from "both sides":
"Brexit: Devolution" - House of Lords European Union Committee


Notes

1. The Scottish and Welsh First Ministers (Nicola Sturgeon and Carwyn Jones) have taken this position1, as have the leaders of the Scottish Labour & Green parties (Richard Leonard2 & Patrick Harvie3) among many others.
"statement issued by Ms Sturgeon Carwyn Jones" - BBC
"Richard Leonard backs Nicola Sturgeon in Brexit powers row" - Guardian
"Harvie raises Westminster power grab concerns at FMQs" - Greens Press Release

2.  Note clauses (11.1.b) and (11.2.6) of the Withdrawal Bill


These clauses can be tricky to read, so let's expand the Scottish example. Section 29 of the Scotland Act 1998 already states:
"An act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Scottish Parliament. A provision is outside the competence so far as [...] it is incompatible with [..] EU Law"
The Bill proposes this is amended to effectively replace EU Law with "retained EU Law". The actual clause wording becomes:
"An act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Scottish Parliament. A provision is outside the competence so far as [...] it is in breach of the restriction subsection 4(A)"
where subsection 4(A) effectively reads:
"An Act of the Scottish Parliament cannot modify [..] retained EU Law" [unless] "the modification would, immediately before exit day, have been within the competence of the Scottish Parliament"
3. "Enough has been said to highlight the importance of the UK single market dimension for the balance of power between the UK Government and the devolved administrations, as well as the scope, as time ticks by, for high stakes constitutional and legislative poker games." Brexit & Devolution (page 12) -  Professor Rick Rawlings

4. Occam’s Razor applies to explaining phenomenon rather than establishing strategies, but I think the parallel is reasonable here

5. The Powers in Question
A breakdown of the 111 powers as identified by the SNP as being those which "intersect with the devolution settlement in Scotland" [Numbers given are those used by the SNP when publishing the list, groupings are merely my own "rough & ready" attempt]

Environment Protection
29. Environmental Impact Assessment (EIA) Directive; 30. Environmental law concerning energy planning consents; 31. Environmental law concerning offshore oil & gas installations within territorial waters; 32. Environmental quality - Air Quality; 33. Environmental quality - Chemicals; 34. Environmental quality - Flood Risk Management; 35. Environmental quality - International timber trade (EUTR and FLEGT); 36. Environmental quality - Marine environment; 37. Environmental quality - Natural Environment and Biodiversity; 38. Environmental quality - Ozone depleting substances and F-gases; 39. Environmental quality - Pesticides; 40. Environmental quality - Spatial Data Infrastructure Standards; 41. Environmental quality - Waste Packaging & Product Regulations; 42. Environmental quality - Waste Producer Responsibility Regulations; 43. Environmental quality - Water Quality; 44. Environmental quality - Water Resources; 45. Environmental quality - Biodiversity - access and benefit sharing of genetic resources; 10.Carbon Capture & Storage; 8. Aviation Noise Management at Airports; 28.Energy Performance of Buildings Directive; 61.Hazardous Substances Planning; 65. Ionising radiation; 66.Land use; 78.Onshore hydrocarbons licensing; 97.Radioactive Source Notifications – Trans-frontier shipments; 98. Radioactive waste treatment and disposal; 107.Strategic Environmental Assessment (SEA) Directive; 16. Control of major accident hazards; 24. Efficiency in energy use


Agriculture, Forestry & Fisheries
1. Agricultural Support; 2. Agriculture - Fertiliser Regulations; 3. Agriculture - GMO Marketing & Cultivation; 4. Agriculture - Organic Farming; 5. Agriculture - Zootech; 6. Animal Health and Traceability; 7. Animal Welfare; 51. Fisheries Management & Support; 56. Forestry (domestic); 11. Chemicals regulation (including pesticides);  80. Plant Health, Seeds and Propagating Material

Food & Food Labelling
52. Food and Feed Law; 53. Food Compositional Standards; 54. Food Geographical Indications (Protected Food Names); 55. Food Labelling; 77. Nutrition health claims, composition and labelling

105.State Aid

Justice & Home Affairs
12.Civil judicial co-operation - jurisdiction and recognition & enforcement of judgments in civil & commercial matters (including B1 rules and related EU conventions); 13.Civil judicial co-operation - jurisdiction and recognition & enforcement of judgments instruments in family law (including BIIa, Maintenance and civil protection orders); 14. Civil judicial cooperation on service of documents and taking of evidence; 15. Criminal offences minimum standards measures - Combating Child Sexual Exploitation Directive; 81. Practical cooperation in law enforcement - Asset Recovery Offices; 82. Practical cooperation in law enforcement - European Investigation Order; 83. Practical cooperation in law enforcement - Joint Action on Organised Crime; 84. Practical cooperation in law enforcement - Joint investigation teams; 85. Practical cooperation in law enforcement - mutual legal assistance; 86. Practical cooperation in law enforcement - mutual recognition of asset freezing orders; 87. Practical cooperation in law enforcement - mutual recognition of confiscation orders; 88.Practical cooperation in law enforcement - Schengen Article 40; 89. Practical cooperation in law enforcement - Swedish initiative; 90. Practical cooperation in law enforcement - European judicial network; 91. Practical cooperation in law enforcement - implementation of European Arrest Warrant; 70. Minimum standards -housing & care: regulation of the use of animals; 71. Minimum standards legislation - child sexual exploitation; 72. Minimum standards legislation - cybercrime; 73. Minimum standards legislation - football disorder; 74. Minimum standards legislation - human trafficking; 103. Rules on applicable law in civil & commercial cross border claims; 104. Sentencing - taking convictions into account; 92 .Procedural rights (criminal cases) - minimum standards measures; 93. Provision of legal services. 94. Provision in the 1995 Data Protection Directive (soon to be replaced by the General Data Protection Regulation) that allows for more than one supervisory authority in
each member state; 109. Uniform fast-track procedures for certain civil and commercial claims (uncontested debts, small claims); 110. Victims rights measures (criminal cases); 111. Voting rights and candidacy rules for EU citizens in local government elections; 101. Recognition of insolvency proceedings in EU Member States; 67. Late payment (commercial transactions);  68.Legal aid in cross-border cases; 69. Migrant Access to benefits; 75. Mutual recognition of professional qualifications; 76. Mutual recognition of criminal court judgments measures & cross border cooperation - European Protection Order, Prisoner Transfer Framework Directive, European
Supervision Directive, Compensation to Crime Victims Directive; 17. Cross border mediation;
46. Equal Treatment Legislation


Data Sharing and Information Security
18. Data sharing - (EU fingerprint database (EuroDac); 19. Data sharing - European Criminal Records Information System (ECRIS); 20. Data sharing - False and Authentic Documents Online (FADO); 21. Data sharing - passenger name records; 22. Data sharing - PrĂ¼m framework;
23. Data sharing - Schengen Information System (SIS II); 26. Elements of the Network and Information Security (NIS) Directive

Medical & Scientific
9. Blood Safety and Quality; 57. Free movement of healthcare (the right for EEA citizens to have their elective procedure in another member state); 59.Good laboratory practice; 96.Public health (serious cross-border threats to health); 108.Tissues and cells; 79.Organs; 25. Elements of Reciprocal Healthcare

Transport
99. Rail franchising rules; 100. Rail markets and operator licensing; 60. Harbours

Others
27. Elements of Tobacco Regulation; 58. Genetically modified micro-organisms contained use; 62. Heat metering and billing information; 63. High Efficiency Cogeneration; 95. Public sector procurement; 102. Renewable Energy Directive; 106.Statistics

EU Agencies
47. EU agencies - EU-LISA; 48. EU agencies - Eurojust; 49. EU agencies - Europol; 50.EU Social Security Coordination; 64. Implementation of EU Emissions Trading System

Sunday, 12 November 2017

Where Are You From?

Last weekend I took a trip "home" to Islay, the Inner Hebridean island where I spent my formative years. My mum - with whom I have an at best strained relationship - now lives in a care home on the neighbouring island of Jura.

It was an emotional few days, during which I thought a great deal about identity and sense of self.


SCENE 1: Care Home, Jura

An old woman sits in a chair, a rug across her lap. On the table beside her sits a radio, permanently tuned to radio 4. Beside the radio sits a large-buttoned phone, a glass of water, a glass of milk and a bowl of Smarties. The chair is backed against the wall, angled towards the room’s single window.

Sitting facing her on straight-backed chairs are two people: her son and his wife

The old woman’s face contorts as she toothlessly sucks on a Smartie. Behind the gurning, her expression is one of sad resignation. Her rheumy eyes stare into the middle distance as she shakily reaches for another sweet, her hand sweeping until it hits the side of the bowl. It’s clear she’s practically blind.

There’s a lengthy silence. After two hours of talking – with the old woman offering very few words in return - the couple have run out of things to say.

Eventually the younger woman speaks;

- do you ever speak with the other residents?

- [dismissively] no

- I’m sure they’ve all got interesting stories to tell

- [scoffs]

Another long pause. The old woman’s right hand sweeps and fumbles for another Smartie. The couple catch each other’s eyes. He shrugs. Hiding her exasperation well, but not quite fully, she tries again;

- that chap in the wheelchair seems nice, he was cheery when we walked in

- him? He tried to talk to me once … but, well, I couldn’t talk to him

- why not?

- well … [a dismissive half-laugh] … it’s just pointless … he asked me “where are you from?” what sort of a question is that?

- but ... it’s a normal question to ask, it’s just a way of starting a conversation

- but what am I meant to say? I was born in London, lived in Norfolk, moved to Islay, moved to France, moved back to Islay … you can’t just answer a question like that

- but that’s why it would be an interesting conversation?

- [scoffing] well I can’t be bothered with it all

***


SCENE 2: an RSPB bird hide, Loch Gruinart, Islay

The same couple are sitting on a wooden bench, binoculars trained through the open observation window in front of them. On a bench bedside them, similarly focused on the wildlife outside, are two middle-aged men. The background noise is the unmistakable gaggling of geese.

At this time of year, over 40 thousand barnacle geese arrive from Greenland to over-winter on Islay – several thousand of them are in the shallows in front of the hide.

It’s cold – a sharp wind whistles through the open observation windows

One of the men nudges the other - they speak in broad Glaswegian accents;

- look, there

- where?

- where I'm looking ... past the second cluster of geese

- what're you seeing - the duck?

- aye, it's a gadwell - see the black tail

- you sure?

- aye, gadwell, nailed on - add it to the list

The second man puts down his binoculars and writes in his note book. The hide falls quiet, they all return to scanning the birds in front of them. The second man speaks;

- so these geese have just arrived from Greenland, aye?

- aye

- some journey they’ll have had, eh?

- aye

(pause)

- curlews man, I love curlews - they’re my favourite

- aye

- do they stay here all year?

- aye

(pause)

- it’s funny when you start thinking where birds come from

- how?

- well … we say the barnacle geese some from Greenland, but do the people in Greenland say the barnacle geese come from here?

- it’s where they breed but - so they come from Greenland

(pause)

- what about the cuckoo?

- eh?

- well the cuckoo’s a British bird, isn’t it?

- aye, they breed here

- but they’re only here for, like, three months… they spend most of the year in Africa

- so?

- well, if they spend most of their time in Africa, isn’t that where they come from?

(pause)

The man sitting with his wife glances over

- maybe it’s meaningless to try and apply our concept of nationality to birds?

- huh?

His wife, without breaking her gaze through the window, kicks his foot

- Sorry - nothing - ignore me



***

Where am I from? I was moulded, forged and occasionally beaten into the person I am now mainly on Islay. So I'm from Islay, I'm an Ileach.

It was farm labouring on Islay - during holidays and briefly when I dropped out of school - that I learnt what a work ethic is, what hard work means. I tied fertiliser sacks round my legs and crawled on my hands and knees for days, hand-thinning turnips. I enjoyed the back-breaking satisfaction of manually cutting and stacking peat. I worked long hours in all weathers, experienced the relentless, unforgiving treadmill of dairy farming in the winter - 6am and 6pm milking times, 7 days a week.

My life now couldn't be much more removed from that of the island farmer, but that experience has stayed with me, is an important part of who I am.

Which is why a highlight of last weekend's trip was visiting the farming family who I worked with all those years ago. The father is now 88 years old, retired but full of life. The mother is as warm and welcoming as she was 35 years ago, as she was when she looked after me when I needed looking after. Their son, my friend, still farms - although the dairy herd has sadly long since gone, a victim of the inevitable economic disadvantage that island farmers face selling milk to the mainland.

I enjoyed my trip; sometimes it's worth pausing to think about where you're from.



Saturday, 11 November 2017

These Islands

It's a while since I've posted on here - my day job sometimes has to be allowed to take over my life. One extracurricular thing I have found time to work on - very much in the spirit of this blog - is a forum called These Islands. I have agreed to Chair the organisation and we launched in London and Edinburgh a couple of weeks ago. For those interested the full text of the speech I gave at the launch events is up on the These Islands website and copied below.

***

These Islands came about because a group of us were drawn together, first by a shared sense of frustration, but then by a shared sense of opportunity.

Through both the Scottish Independence and EU referendums we were frustrated with the poor quality of political debate and – particularly during the Scottish Independence referendum – we were disappointed with the lack of a well-articulated positive case for the United Kingdom. One of our Advisory Council members, Professor Nigel Biggar, sums this up rather well when he refers to the “faltering inarticulacy” of those trying to explain what the United Kingdom is good for.

But we recognised that this was at least in part because the white heat of a referendum campaign isn’t the time to start making what are often subtle, emotional and nuanced arguments – arguments that take time to develop, rehearse and share, and that need to be allowed to sink in to the wider public consciousness.

That’s when we stopped asking why others weren’t doing a better job of leading this debate, and started asking ourselves why we shouldn’t do it. That’s when our frustration turned to a sense of opportunity, when the idea for These Islands was born.

As an entrepreneurial businessman I’ve learnt to try and surround myself with people smarter than I am. By working with co-founders Tom Holland and Professor Ali Ansari, I had achieved that on day one – and together we set out to recruit an Advisory Council to help us.

We wanted to bring together a group who would represent all four nations of the UK and bring a wide variety of perspectives – including from outside the UK. We were overwhelmed with the response we received. As you can now see on our website, our advisory council of 33 members features not just some of the finest academic minds in the UK, but leading business people, representatives of multicultural Britain, great communicators, and passionate campaigners.

What you might notice missing from our advisory council is serving politicians. This was an explicit decision – the three peers we have on our Advisory Council are cross-bench peers. We made this choice because we believe we have to be above party politics, that this is a cause that needs to think beyond electoral cycles. The subject we’re dealing with here – the very future of the United Kingdom – is frankly too important to be left to politicians alone.

So how do we intend to harness the power of this group, what are our ambitions?

To capture this in a phrase: These Islands is a forum for debate which stands unabashedly for the view that more unites the people of the United Kingdom than divides them. In practice this means we want to stimulate and steer a positive national debate, something we aim to do initially through publishing a series of Briefings and Papers.

Briefings will be short, factual pieces, aimed at ensuring that any debate is well-informed. If you like, these will be our attempt to fight the tide of “fake news” and misinformation.

Papers will be more substantial and – critically – contributed to and peer reviewed by our advisory council. I’ve had the privilege of chairing three advisory council meetings to date and I can assure you: that process works.

The papers will be around three broad themes.

Firstly we aim to explore the Moral case. Many flinch at the use of the word “moral”, but we don’t think we should. Our first published paper – by Nigel Biggar, Regius Professor of Moral and Pastoral Theology at Christ Church, Oxford University – does an excellent job of confronting the moral question head on when it asks: What is the United Kingdom Good For? I urge you all to read it.

Secondly we want to discuss the Multicultural case. The United Kingdom has allowed four separate national identities not just to survive but to thrive within it. That is surely something to be celebrated. But beyond that, these islands have a proud history of welcoming immigration. Some of the strongest senses of British identity are to be found among the UK’s ethnic minorities. These plural or hyphenated identities – British-Asian, British-Muslim, British-Caribbean, British-European – stand testament to the fact that “Britishness” can be a truly multicultural form of identity. We think that’s a fact that’s worth recognising and celebrating.

Our third main theme is the Economic case. The order of these themes is not an accident. Too often the economic case is presented as somehow distinct from the moral and multicultural cases – as the rational case that stands apart from the emotional. The truth is that the economic case only exists because of the moral and multicultural cases. Our widely shared commitment to economic pooling and sharing is the practical manifestation of what might be termed an “implicit moral contract”: that wherever you live in the UK, wherever you come from, whatever your heritage, you should be entitled to certain standards of healthcare, of education, and of welfare. So while we will explore the economic practicalities of how our constitutional settlements work, we want to place this in a wider context, to make it about more than just “putting a pound sign in front of everything”.

There are other themes we’ll explore – how best to care for the wildlife of these islands, for example – but our three core themes will be moral, multicultural, and economic.

Finally, it’s worth adding that our approach is not one of uncritical cheerleaders for the United Kingdom, as defenders of the status quo. We recognise that the UK needs to continually evolve, that problems exist that need to be addressed, and that we have to react to the changing world around us.

So that is how we come to be here and broadly what we aim to achieve. But we will fail if we are not heard, if we don’t succeed in stimulating a quality debate. That is our challenge – and why we hope to engage the interest of opinion formers and thought leaders like many of you in this room.

***

Please visit These Islands to learn more

Thursday, 7 September 2017

Economic facts have become SNP's enemy

This piece originally appeared in the Daily Record on 07/09/2017


The reaction of the SNP and their pro-independence outriders to the latest Government Expenditure and Revenue Scotland (GERS) figures has laid bare the astonishing paucity of their economic arguments.

Unable to answer the obvious problems that the GERS figures highlight for those championing the break-up of the UK, they’ve resorted to trying to discredit their own figures. In case anybody’s forgotten: these are the figures on which they based their case for Independence, figures their own White Paper described as “a useful indication of the relative strength of Scotland’s public finances as part of the UK and a starting point for discussions of Scotland’s fiscal position following independence”. 

Now it seems the SNP want to deny this starting point.

Having once proudly boasted that they had Nobel Laureates championing their cause, the SNP now appear reduced to relying on the increasingly embarrassing contributions of accountant and tax specialist Professor Richard Murphy.

We should be more interested in what Murphy says than who he is, but given his penchant for self-aggrandisement it’s worth noting that he’s the man who was unceremoniously dumped as an advisor to Jeremy Corbyn’s Labour Party. John McDonnell publicly stated that Murphy “leaves a lot to be desired on macroeconomic policy”, to which he responded by suggesting that the Shadow Chancellor – a self-confessed fan of Karl Marx’s Das Kapital - was “all too willing to accept conventional neoliberal thinking”. Let’s be kind and just say that nobody can accuse Murphy of being guilty of conventional thinking.

Politically homeless, Murphy seems to have cast his eyes north and spotted a pro-independence movement bereft of ideas and desperate to find ways to distract from the simple facts shown in GERS.

GERS shows that the UK’s deficit is running at just 2.4% of GDP and, because Scotland voted No in 2014, that relatively healthy fiscal context determines Scotland’s ability to continue to sustain spending on vital public services.

By contrast, following the collapse in North Sea oil revenues, Scotland’s notional stand-alone deficit is 8.3%. The EU’s “excessive deficit” threshold is 3.0%, so even before considering the challenges of creating a currency and weathering the shock of separation from the UK single-market – a market objectively four times more important to Scotland than the EU - it’s clear that an independent Scotland wouldn’t be able to sustain the tax and spend levels described in GERS.

So economic facts have become the SNP’s enemy. Cue Professor Murphy, a man willing to say what desperate people want to hear if it gets him in the limelight. With the gay abandon of somebody unburdened by understanding, he’s set about casting aspersions on the Scottish Government Statisticians who compile the GERS figures and all those who use them.

He’s bumptiously asserted that the figures are “untrustworthy”, “rigged by Westminster”, “literally made up” and “nonsense”. Incredibly he’s even suggested that those using the GERS methodology are “risking the allegation of professional misconduct”. So that includes not only the Scottish Government’s Chief Economic Adviser’s team in St Andrews House and the ONS (who qualify the report as National Statistics), but presumably also those Nobel Laureats who relied on GERS when they sat on the SNP’s Fiscal Commission Working Group. Surely only the most desperate politician would lean on Professor Murphy’s transparently misguided proclamations for support?

Well it turns out there are quite a few desperate nationalist politicians. SNP MP Mhairi Black used a recent newspaper column to cite Professor Murphy as reason to dismiss her own government’s figures. A quick search of Twitter shows his blog rants have been promoted by SNP MSPs and MP’s including Joan McAlpine, Peter Grant, Chris Law, Gordon MacDonald, Christina McElvie and Richard Lyle1 .

If any of these politicians had bothered to dig past Murphy’s bluster, they’d see that his ill-informed opinions are based on a combination of technical misunderstandings, an inability to grasp the simple concept of materiality and his own failure to get his head around the figures.

There isn’t room here to indulge in the minutiae of Murphy’s technical points2.

Suffice to say he’s like somebody looking at a report into the Titanic disaster and complaining there isn’t enough information about the deck-chairs. We might not know precisely how the deck-chairs were arranged, but that’s just not a material issue.

Murphy’s wider argument is basically one of incredulity: he simply refuses to believe the GERS figures can be correct because he doesn’t understand them. He casually advertises his ignorance of how the figures are compiled by admitting to being continually bemused because he thinks the numbers are somehow “improbable”.

For those who’ve taken the time to study the GERS figures and the methodology behind them, there’s nothing bemusing or improbable about what they show. Scotland’s per capita deficit is much larger than the rest of the UK’s mainly because of higher spending.

Despite GERS-deniers’ determined attempts to obfuscate and misdirect, Scotland’s higher per capita spending has nothing to do with estimates or allocations. Nobody credibly disputes that we spend over £1,500 per person more on comparable public services in Scotland, a fact fully explained by the known actual figures in the table on this page3.


There isn’t necessarily anything inherently unfair about this either. Scotland has geographic, demographic and socio-economic characteristics which mean greater per capita spend is required to deliver equivalent services.

Whatever the likes of Murphy may claim, there’s nothing bemusing or improbable about the relative scale of Scotland’s deficit.

The pro-independence camp likes to suggest that the GERS figures show Scotland failing under the yoke of Westminster rule. In fact they show UK-wide sharing of resources allowing greater spending on public services in areas with greater economic need; only the most narrow-minded nationalist could see that as a failure.


************

1. Twitter promotion of Murphy by SNP MPs and MSPs





2. I've dealt with the latest technical points raised by Murphy here > Another Example of Murphy's Flaw

3. Past experience tells me that some people don't understand display rounding. Just for those people, here's the table displayed to 2 decimal places