Scotch Independence - the countdown

RAVENBLACK · Feb 24, 2014

gas. said: ↑

Where does the oil money go?

Oil has long been at the heart of Scottish politics. Forty years since the North Sea first
came on stream it still infuses the debate on Scotland’s place in the United Kingdom. Oil
was at the centre of Alex Salmond’s address to the SNP party conference last week. BP’s
Â£4.5 billion investment west of Shetland, announced earlier this month, prompted a
predictable bout of verbal sparring between the SNP and the Prime Minister.

The oil boom has underpinned the nationalist case and fuelled their rise to prominence.
It’s Scotland’s oil. If only the country could claim independence, the black gold would
guarantee a new prosperity.

Yet North Sea oil has had a more profound effect on Scotland than just the argument
about sovereignty. It has coloured the very nature of our economy and how we have built
our society. It has changed the attitudes and values of the nation. The discovery of oil
always has a deep impact on a country. The sudden, new-found wealth can be a great
boon. But, like an unexpected inheritance, it can prompt unlooked for change with
uncomfortable consequences.

Like many a political controversy, the debate about oil and Scotland’s public finances is
wilfully skewed by those with a political axe to grind. It is time to debunk two myths that
have become current in the more extreme wings of our politics.

The first is peddled by those on the Unionist right, often based south of the border, who
state that Scotland is subsidised by England. Nothing makes Scottish blood boil more
than this blithe assumption, arrogantly asserted. For though public spending is higher
north of the border, the Treasury in turn benefits from the taxes from North Sea oil, most
of which is in Scottish waters.

Michael Moore, the otherwise harmless Scottish Secretary, blundered into this trap earlier
this week with his claim that Scotland had spent Â£197 billion more than it contributed in
tax since 1980. Not so, retorted the SNP. If you include oil revenues, that deficit was just
Â£41 billion, less proportionately than the UK’s.

The flip side of this is the second myth – that if only Scotland were independent, it would
be able to enjoy its oily birthright. This seductive tale has been told by nationalists ever
since oil first squirted out of the North Sea. As Salmond said to his delegates in
Inverness, “Scotland’s vast energy reserves can power our future as an independent
nation.” But this is equally misleading. For Scotland already gets its oil money via the
Barnett Formula which sets government spending in Scotland at a higher level than in
England.

The numbers show a remarkable coincidence between North Sea revenue and the
‘Barnett premium’ that Scotland enjoys. Between 2005 and 2010 oil revenues from
Scottish waters amounted to Â£40.5 billion, while the cumulative premium of public
spending over that in England was Â£40.8 billion.

In other words Scotland gets its oil money, and what’s more, it receives it in a stable,
predictable form that irons out the inevitable fluctuations in revenue caused by volatile
oil prices.

True, the Barnett Formula arrangements were never explicitly supposed to compensate
Scotland for its oil revenues. Such a direct link would have been a hostage to fortune,
limiting the government’s ability to respond to changing circumstances. Instead Barnett is
said to be ‘needs based’, reflecting Scotland’s supposedly greater requirement for public
spending. As such it was designed to bring about convergence between spending on in
the constituent parts of the UK as economic inequalities faded away

But politics has a way of finding balance between competing claims, and over the years
there has been no convergence as the UK government has consistently adjusted spending
in Scotland to maintain the premium.

So the idea that an independent Scotland could establish some kind of Norwegian style
oil fund as a cornucopia to fund our pensions is pie in the sky. We’ve already had the
cash and spent it, Mr Salmond.

And this goes to the nub of Scotland’s political economy. What do we do with our oil
windfall? Have we spent it wisely? Could we spend it better? What impact does it have
on the way our economy and society is structured?

This is the real question that Scotland’s politicians should be asking themselves. Not
‘Who’s Oil?’ but ‘Where did the money go?’

So how has Scotland spent its oil inheritance so far? Well, some of it is recycled as
benefits, such as free care for the elderly and subsidised medical prescriptions. But the
vast majority goes on higher spending on health, education and the other core public
services.

The problem is that Scotland does not have much to show for this largesse. The Scottish
Government’s two largest budgets are healthcare and education. In both areas spending
per head is much higher than in England, by 8% and 14% respectively, a combined
‘premium’ of Â£1.8 billion last year. Yet the evidence shows that healthcare and
educational outcomes in Scotland are no better than those south of the border. Indeed,
Scottish schools are falling behind their English counterparts in terms of exam results.

In other words, between a quarter and a third of Scotland’s oil money is wasted in these
two areas alone. The same story applies in other areas of public spending which as a
whole is 19% higher than England’s, amounting to Â£1,624 a year extra for every Scot.

The effects of this go deeper than a simple matter of waste, however worrying that might
be on its own terms. For we have to consider where this money has gone. In effect
Scotland has bought public sector capacity – in terms of buildings, equipment and staff –
that is not being used to the full. The end result is very similar to paying people to dig
holes and fill them in again. And this has a big impact on the wider economy and society.

If government floods the public sector with extra money but gets little in return, it causes
the price of what it is buying – labour, bricks and mortar, equipment – to rise. The
numbers of people employed by the public sector in Scotland is 25% compared to just
over 20% in England. As a result Scottish businesses have to pay a premium for staff
because the cost of labour has been forced up.

This effect – called ‘crowding out’ by economists - is one of the reasons why Scotland’s
historic rate of economic growth is lower than the UK average. Scotland’s economy,
titled heavily in favour of public sector employment, may be cushioned in an economic
downturn, but performs badly in the long term.

There are social consequences too. If the oil money is spent largely on paying public
sector workers, then that creates a powerful constituency that is hostile to reformed public
services and lower tax. This might explain why Scotland is dominated politically by
parties of the left.

In a sense, therefore, Scotland has similarities to many other states that have enjoyed an
oil bonanza. Instead of adding to the overall prosperity of the nation, the money is used
politically to bolster constituencies that support the regime.

There is no doubt that the oil money could be used more wisely. Last year’s Barnett
premium was worth Â£8.5 billion. Imagine if just half of this was returned to the Scottish
people in the form of tax cuts. There is enough there to abolish both council tax (which
costs households Â£2 billion) and business rates (Â£1.8 billion), boosting growth and
creating hundreds of thousands of jobs. Alternatively the money could be spent on
building a superlative transport and communications network, or we could focus on
getting bang for our buck in the public sector. There is ample scope here for a radical
agenda of change from any number of political perspectives.

Alex Salmond likes to conflate the story of oil with that of renewable energy, in a golden
seam of wealth extending into the future. According to the SNP, if Scotland controlled its
own energy resources it would be the sixth richest country in the world.

This is a nice image, but it misses the point. A better analogy is another of the First
Minister’s favourites, of Scotland becoming the new Saudi Arabia. No one would argue
that oil has made the Arab kingdom wealthy. But it suffers from high unemployment, low
growth and weak civic institutions, all overseen by a corrupt and bloated elite. That is
hardly a model worth emulating.

Click to expand...

^^^^^^^^^^^^^^^^^^

Boring ***** ****.

RAVENBLACK · Feb 24, 2014

aldotheapache said: ↑

Well if it doesn't matter where it goes why you greeting about ya dense **** ?
Click to expand...

I'm not. But you are you stupid ****.

RAVENBLACK · Feb 24, 2014

http://www.pressandjournal.co.uk/Article.aspx/3587407/

Ouch Fatso.

Not content with further reducing the North East's income the SNP twats actually wonder why they only have 17% in favour of the Bollockswood Central Belt driven Scottish Parliament.

gas · Feb 24, 2014

ERINBLACK said: ↑

^^^^^^^^^^^^^^^^^^

Boring ***** ****.
Click to expand...

If you bothered to read it you would appreciate it backs your case regarding the distribution of wealth generated by the oil industry in Scotland.

But being a senile piss stinking impotent old **** its obviously way over your shrunken head.

The Raging Oxter · Feb 24, 2014

ERINBLACK said: ↑

http://www.pressandjournal.co.uk/Article.aspx/3587407/

Ouch Fatso.

Not content with further reducing the North East's income the SNP twats actually wonder why they only have 17% in favour of the Bollockswood Central Belt driven Scottish Parliament.
Click to expand...

I'd love to see the data analysis of that poll.

"We interviewed 100 Conservative voters and only 17% of them were in favour of Scottish independence".

A.L.D.O 4.1 · Feb 24, 2014

ERINBLACK said: ↑

I'm not. But you are you stupid ****.
Click to expand...

Emm yes you were . You were greeting about oil revenue going to Edinburgh in an independent Scotland .

Don't you remember ?

It was just before I said your memory capacity was ****ed because you're senile ?

About 20 minutes ago ?

No ?

Haha ya daft **** .

RAVENBLACK · Feb 24, 2014

StereoTypist said: ↑

I'd love to see the data analysis of that poll.

"We interviewed 100 Conservative voters and only 17% of them were in favour of Scottish independence".
Click to expand...

What a fud you are.

The SNP and Holyrood are reviled up here as much as Westminster.

Stupid ****.

RAVENBLACK · Feb 24, 2014

aldotheapache said: ↑

Emm yes you were . You were greeting about oil revenue going to Edinburgh in an independent Scotland .

Don't you remember ?

It was just before I said your memory capacity was ****ed because you're senile ?

About 20 minutes ago ?

No ?

Haha ya daft **** .
Click to expand...

What a ****in numpty you are sonny.

I said "Central Belt" anyway.

gas · Feb 24, 2014

I have decided to change my tune and encourage the good folk of Scotland to vote yes to independence on the understanding that that Nigel **** ER and all his descendants are to never set foot on English soil for the rest of eternity.

The Raging Oxter · Feb 24, 2014

gas. said: ↑

Where does the oil money go?

Oil has long been at the heart of Scottish politics. Forty years since the North Sea first
came on stream it still infuses the debate on Scotland’s place in the United Kingdom. Oil
was at the centre of Alex Salmond’s address to the SNP party conference last week. BP’s
Â£4.5 billion investment west of Shetland, announced earlier this month, prompted a
predictable bout of verbal sparring between the SNP and the Prime Minister.

The oil boom has underpinned the nationalist case and fuelled their rise to prominence.
It’s Scotland’s oil. If only the country could claim independence, the black gold would
guarantee a new prosperity.

Yet North Sea oil has had a more profound effect on Scotland than just the argument
about sovereignty. It has coloured the very nature of our economy and how we have built
our society. It has changed the attitudes and values of the nation. The discovery of oil
always has a deep impact on a country. The sudden, new-found wealth can be a great
boon. But, like an unexpected inheritance, it can prompt unlooked for change with
uncomfortable consequences.

Like many a political controversy, the debate about oil and Scotland’s public finances is
wilfully skewed by those with a political axe to grind. It is time to debunk two myths that
have become current in the more extreme wings of our politics.

The first is peddled by those on the Unionist right, often based south of the border, who
state that Scotland is subsidised by England. Nothing makes Scottish blood boil more
than this blithe assumption, arrogantly asserted. For though public spending is higher
north of the border, the Treasury in turn benefits from the taxes from North Sea oil, most
of which is in Scottish waters.

Michael Moore, the otherwise harmless Scottish Secretary, blundered into this trap earlier
this week with his claim that Scotland had spent Â£197 billion more than it contributed in
tax since 1980. Not so, retorted the SNP. If you include oil revenues, that deficit was just
Â£41 billion, less proportionately than the UK’s.

The flip side of this is the second myth – that if only Scotland were independent, it would
be able to enjoy its oily birthright. This seductive tale has been told by nationalists ever
since oil first squirted out of the North Sea. As Salmond said to his delegates in
Inverness, “Scotland’s vast energy reserves can power our future as an independent
nation.” But this is equally misleading. For Scotland already gets its oil money via the
Barnett Formula which sets government spending in Scotland at a higher level than in
England.

The numbers show a remarkable coincidence between North Sea revenue and the
‘Barnett premium’ that Scotland enjoys. Between 2005 and 2010 oil revenues from
Scottish waters amounted to Â£40.5 billion, while the cumulative premium of public
spending over that in England was Â£40.8 billion.

In other words Scotland gets its oil money, and what’s more, it receives it in a stable,
predictable form that irons out the inevitable fluctuations in revenue caused by volatile
oil prices.

True, the Barnett Formula arrangements were never explicitly supposed to compensate
Scotland for its oil revenues. Such a direct link would have been a hostage to fortune,
limiting the government’s ability to respond to changing circumstances. Instead Barnett is
said to be ‘needs based’, reflecting Scotland’s supposedly greater requirement for public
spending. As such it was designed to bring about convergence between spending on in
the constituent parts of the UK as economic inequalities faded away

But politics has a way of finding balance between competing claims, and over the years
there has been no convergence as the UK government has consistently adjusted spending
in Scotland to maintain the premium.

So the idea that an independent Scotland could establish some kind of Norwegian style
oil fund as a cornucopia to fund our pensions is pie in the sky. We’ve already had the
cash and spent it, Mr Salmond.

And this goes to the nub of Scotland’s political economy. What do we do with our oil
windfall? Have we spent it wisely? Could we spend it better? What impact does it have
on the way our economy and society is structured?

This is the real question that Scotland’s politicians should be asking themselves. Not
‘Who’s Oil?’ but ‘Where did the money go?’

So how has Scotland spent its oil inheritance so far? Well, some of it is recycled as
benefits, such as free care for the elderly and subsidised medical prescriptions. But the
vast majority goes on higher spending on health, education and the other core public
services.

The problem is that Scotland does not have much to show for this largesse. The Scottish
Government’s two largest budgets are healthcare and education. In both areas spending
per head is much higher than in England, by 8% and 14% respectively, a combined
‘premium’ of Â£1.8 billion last year. Yet the evidence shows that healthcare and
educational outcomes in Scotland are no better than those south of the border. Indeed,
Scottish schools are falling behind their English counterparts in terms of exam results.

In other words, between a quarter and a third of Scotland’s oil money is wasted in these
two areas alone. The same story applies in other areas of public spending which as a
whole is 19% higher than England’s, amounting to Â£1,624 a year extra for every Scot.

The effects of this go deeper than a simple matter of waste, however worrying that might
be on its own terms. For we have to consider where this money has gone. In effect
Scotland has bought public sector capacity – in terms of buildings, equipment and staff –
that is not being used to the full. The end result is very similar to paying people to dig
holes and fill them in again. And this has a big impact on the wider economy and society.

If government floods the public sector with extra money but gets little in return, it causes
the price of what it is buying – labour, bricks and mortar, equipment – to rise. The
numbers of people employed by the public sector in Scotland is 25% compared to just
over 20% in England. As a result Scottish businesses have to pay a premium for staff
because the cost of labour has been forced up.

This effect – called ‘crowding out’ by economists - is one of the reasons why Scotland’s
historic rate of economic growth is lower than the UK average. Scotland’s economy,
titled heavily in favour of public sector employment, may be cushioned in an economic
downturn, but performs badly in the long term.

There are social consequences too. If the oil money is spent largely on paying public
sector workers, then that creates a powerful constituency that is hostile to reformed public
services and lower tax. This might explain why Scotland is dominated politically by
parties of the left.

In a sense, therefore, Scotland has similarities to many other states that have enjoyed an
oil bonanza. Instead of adding to the overall prosperity of the nation, the money is used
politically to bolster constituencies that support the regime.

There is no doubt that the oil money could be used more wisely. Last year’s Barnett
premium was worth Â£8.5 billion. Imagine if just half of this was returned to the Scottish
people in the form of tax cuts. There is enough there to abolish both council tax (which
costs households Â£2 billion) and business rates (Â£1.8 billion), boosting growth and
creating hundreds of thousands of jobs. Alternatively the money could be spent on
building a superlative transport and communications network, or we could focus on
getting bang for our buck in the public sector. There is ample scope here for a radical
agenda of change from any number of political perspectives.

Alex Salmond likes to conflate the story of oil with that of renewable energy, in a golden
seam of wealth extending into the future. According to the SNP, if Scotland controlled its
own energy resources it would be the sixth richest country in the world.

This is a nice image, but it misses the point. A better analogy is another of the First
Minister’s favourites, of Scotland becoming the new Saudi Arabia. No one would argue
that oil has made the Arab kingdom wealthy. But it suffers from high unemployment, low
growth and weak civic institutions, all overseen by a corrupt and bloated elite. That is
hardly a model worth emulating.

Click to expand...

Written by Tom Miers who works for:

New Direction – The Foundation for European Reform is a centre-right think tank that formulates policies promoting the free market and opposing a federal Europe. It is the political foundation at European level affiliated to the Alliance of European Conservatives and Reformists (AECR), and based in Brussels, Belgium.

To be treated with the same contempt that any right-wing zealot should be.

ManDingo 20"/20" · Feb 24, 2014

Well maybe if you ****s didn't live in the arse end of nowhere you would get more investment.

You're a ****ing glorified industrial estate. Get over it.

gas · Feb 24, 2014

StereoTypist said: ↑

Written by Tom Miers who works for:

New Direction – The Foundation for European Reform is a centre-right think tank that formulates policies promoting the free market and opposing a federal Europe. It is the political foundation at European level affiliated to the Alliance of European Conservatives and Reformists (AECR), and based in Brussels, Belgium.

To be treated with the same contempt that any right-wing zealot should be.
Click to expand...

I'll fool you some day.

The Raging Oxter · Feb 24, 2014

ERINBLACK said: ↑

What a fud you are.

The SNP and Holyrood are reviled up here as much as Westminster.

Stupid ****.
Click to expand...

please log in to view this image

Map of Scotland at the last Holyrood election. The entire North East is SNP.

You're a ****ing ****** ER. An absolute, ****ing ******.

A.L.D.O 4.1 · Feb 24, 2014

StereoTypist said: ↑

I'd love to see the data analysis of that poll.

"We interviewed 100 Conservative voters and only 17% of them were in favour of Scottish independence".
Click to expand...

We interviewed ER and 17% he said he would vote yes . 60% or the time he said he would vote No and 23% of the time he said he was the duke of Wellington .

RAVENBLACK · Feb 24, 2014

StereoTypist said: ↑

Written by Tom Miers who works for:

New Direction â The Foundation for European Reform is a centre-right think tank that formulates policies promoting the free market and opposing a federal Europe. It is the political foundation at European level affiliated to the Alliance of European Conservatives and Reformists (AECR), and based in Brussels, Belgium.

To be treated with the same contempt that any right-wing zealot should be.
Click to expand...

This coming from a Lefty Loonie and hypocritical tree hugger

You couldn't make ****s like you up.

RAVENBLACK · Feb 24, 2014

StereoTypist said: ↑

please log in to view this image

Map of Scotland at the last Holyrood election. The entire North East is SNP.

You're a ****ing ****** ER. An absolute, ****ing ******.
Click to expand...

That counts for nothing you ****in clown. It's about what way people vote on the day.

Christ you are one thick ****.

The Raging Oxter · Feb 24, 2014

ERINBLACK said: ↑

That counts for nothing you ****in clown. It's about what way people vote on the day.

Christ you are one thick ****.
Click to expand...

So a map showing how people voted doesn't count because it's about how people vote on the day

You make Mindy look like Bertrand Russell

gas · Feb 24, 2014

StereoTypist said: ↑

please log in to view this image

Map of Scotland at the last Holyrood election. The entire North East is SNP.

You're a ****ing ****** ER. An absolute, ****ing ******.
Click to expand...

SNP vote does not necessarily mean a yes vote.

The Raging Oxter · Feb 24, 2014

gas. said: ↑

SNP vote does not necessarily mean a yes vote.
Click to expand...

Never said it did. Just responding to that dribbling, old child botherer who claimed the SNP were reviled in the north east.

Maybe he meant the north east of England?

A.L.D.O 4.1 · Feb 24, 2014

You know it's ****e being an oil producing nation . Having to rely on all that oil revener in an independent Scotland is a terrible thing . It will surely run out at some point and then where will we be ?

Makes you wonder why them daft oil companies even go to the bother of drilling for it .

Scotch Independence - the countdown

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