'Scotland subsidises rest of the UK' says leading economist

Calman proposals 'unworkable'

Scotland would be better off independent

A leading Professor of Economics, Andrew Hughes Hallett, has today [Saturday] confirmed that Scotland subsidises the UK treasury in London and that the unionist cabal’s Calman recommendations are unworkable.

Professor Hughes Hallett made the remarks whilst appearing on Radio Scotland’s ‘Newsweek’ show this morning. When questioned by presenter Derek Batemen on the economics of independence, the Professor confirmed John Swinney’s case that Scotland would be better off financially with economic independence.

The comments come just weeks after Nobel Prize winning economist Josef Stiglitz confirmed that the UK Government had ‘squandered’ Scotland’s oil wealth and the SNP’s plans for oil fund must be carried out as soon as possible.

Commenting on the remarks, Dundee West MSP Joe FitzPatrick, who is a member of the Parliament’s finance committee, said:

“Professor Hughes Hallet has confirmed what John Swinney and the SNP have been saying  for years. It’s economically unviable for Scotland to remain part of the union and subsidise the rest of the UK.  For years Scotland has more than paid its own way, only for unionist parties in Scotland to peddle the myth that it is the other way around.

“An Independent Scotland will be able to build the better and fairer Scotland we all want to see. With the cuts from ConDem coalition about to bite, the importance of the economic powers of independence has never been more important to Scotland.

“The SNP will be working hard over the next year to promote a better Scotland, a Scotland free from the financial ties of the union and a Scotland free from the Tories - and their cuts agenda. For too long Scotland has been held back by the union and held back by a Labour party who prefer Tory rule to home rule – it’s time to end that. It’s time to stand up for Scotland, let her flourish, and show that we’ve got what it takes to make Scotland better.”

Below are some extracts from Professor Hughes Hallett’s interview.
Newsweek Scotland, Saturday 23rd October 2010
Presented by Derek Bateman.

Interview with Andrew Hughes Hallett, Professor of Economics at the University of St. Andrews and George Mason University (Virginia).

Derek Bateman (DB):  “...that brings us nicely to Mr. Swinney who says all these cuts are the cost of the union and we can no longer afford our membership of club Britania. The implication is that our natural resources are being bled to swell around the coffers of the Treasury and the firm bite of austerity can be avoided via independence. Is there an election looming? Well we thought we would test his treaties, not with politicians but with one of our foremost  academics, Sir Andrew Hughes Hallett, who is a professor of economics at both the University of St. Andrews and George Mason University in Virginia. He’s a proponent of fiscal automony for Scotland, he went into our Washington Studio.”

Andrew Hughes Hallett (AHH):  “It’s really not an issue of independence as such, as it’s the ability to use and spend your tax powers yourself. Which would make the difference, whether that’s in the context of independence or not is neither here nor there.”
DB: “But would you not need to be an independent state in order to get those powers?”

AHH: “If you want to get into the nitty-gritty... the usual perception is that Scotland spends something like 20% more on public services per head than the UK average, now there is nothing wrong with that if you can raise the money. Those numbers are very misleading because the spending in that part is what is spent on behalf of Scotland but not necessarily in Scotland. The estimates of Scotland’s share, that’s contributions to defence is £2.8billion whereas roughly £2.0billion are actually paid out in Scotland. So there is an implicit subsidy going south in that sense and you can think of plenty more examples, I don’t want to get into North Sea Oil – which is an obvious one. But things to do with the crown agents who take fees for electricity generation and give it to the treasury, there use to be a case of landing fees. The foreign exchange earnings are, the tax revenues are all accredited to the London Government and so on. And so when you get down to it, on the current account for the last five years at least, maybe longer, Scotland’s had a current account surplus – which is currently, according to the National Accounts of Scotland is £1.3billion.”
DB: “Can you actually say that Scotland would definitely be better off or is there a lot of suspicion there?”

AHH: “No, you can definitely say that we would be better of f in terms of revenue. It would depend on what they do with the revenue when they get it but that’s another issue of course.”
DB: “Economically, not politically, does John Swinney have a case to make when he says that ‘Scotland can’t afford the union’?”

AHH: “Well, I would’ve thought he has a case. I mean you would probably think the same if it was your private income because at the moment on the current account there is a subsidy going to London.”
DB: “We hear from critics , well obviously unionists, most of them in London  about how that it goes the other way, Scotland is subsidised. If that was the case  then, why would the treasury want to hang on to an area of the country that was being subsidised?”

AHH: “...that’s not what the numbers show, that just the perception. If you actually look at the numbers, I quoted them for defence earlier , the distinction is what is said to be spent on Scotland’s half but is not actually spent in Scotland.”
DB: “Is another way of putting this is that the treasury knows when it is on to a good thing?”

AHH: “Well indeed, yes. I would’ve thought that if I subsidy. It’s not huge from a UK’s perspective but I wouldn’t want to be surrendering it because it is helping.”
DB: “Mr Swinney is making this case about the union, would something like the Calman proposals go anywhere near providing what you are outlining there?”

AHH: “They would make a very small start. We can have a very long discussion on this but the Calman proposals are actually unworkable because they assume you have information which you actually don’t have...”


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