Start-up, the spin cycle

Professor Patrick Dunleavy, from the London School of Economics, has become something of a household name in Scotland in recent weeks due to the ongoing argument about how much it is going to cost to set up an independent Scotland’s government departments.

He first came to light when the UK Treasury released a much criticised report in which they claimed it would cost Scotland £2.5 billion to establish an independence (cheap at twice the price I reckon) and quoted Prof. Dunleavy as their supporting evidence. His response was to suggest that the Treasury hadn’t actually read his report, never mind understood it.

[Further articles related to this report can be read here: http://wingsoverscotland.com/hacked-off/  and http://wingsoverscotland.com/the-news-less-fit-to-print/ and http://wingsoverscotland.com/the-horses-mouth-and-other-parts/. Alert readers will note that these are all Wings Over Scotland articles so it appears as if I am getting my information from only one source. I didn’t at the time this story was unfolding and I don’t now. Wings always provides sources anyway but you can still make use of Google to find other links to these stories if you wish.]

Last week Prof. Dunleavy published a report saying that he thought the start-up costs of an independent Scotland were in the region of £200 million, with additional costs taking things up to around £600 million (a veritable bargain, I’ll take two please). This is the summary and more can be read here. http://wingsoverscotland.com/a-flash-of-perspective/

Not surprisingly, this report hasn’t gone down all that well in Better Together/No Thanks circles and another Professor, this time Iain McLean from Oxford University, has written a critique and put forward figures that suggest start-up costs are in the region of £1.5 billion instead. I learned about this report from the Facebook site which goes by the name of  ‘ Vote NO to Scottish independence and protect the union’ who had this to say:

 Screenshot (50)

“Here is why the nationalists really should not be shouting out about Professor Dunleavy’s recent report. We all know that a cost estimate of 200m was unrealistic. Well, this critique explains why that is the case. Completely destroys the Nat myth that we would only be on the hook for about 200m. Another bad day for the nationalists”

Spot the spin? ‘We all know’ – really? Who is ‘we’ and how do we ‘know’ anything of the sort. Profs. Dunleavy and McLean are both experts and neither of them indicate they ‘know’ anything of the sort, though they are in disagreement over the figures.

Of course, the discussion doesn’t end there because Prof. Dunleavy has responded to Prof. McLean in best, polite, academic style. Please note, this is how genuine experts generally conduct their disagreements; acknowledging each other’s points and pointing out the flaws or misinterpretations in each other’s reasoning. Notice how there are no attempts at personal point scoring, ad hominem attacks or sweeping generalisations?

[Edited: This article appeared on Newsnet Scotland 28/6/14.]

I simply don’t know what the figures are for setting up an independent Scotland. I am not an economist or a Chartered Accountant nor do I know what rules and assumptions such people would be using to reach their conclusions. What I do believe is that the cost of setting up as a separate nation is not going to bankrupt Scotland and is therefore worth it in the long run. [Edit. Wings has this to say this morning http://wingsoverscotland.com/lies-packed-tight/ ] So, being able to neither agree nor disagree with either Prof. McLean or Prof. Dunleavy, the most interesting paragraph in the whole exchange is this (my emphasis added):

“It is interesting to note in this context that a main reason why costs numbers are currently hard to estimate is that Whitehall has been completely forbidden by ministers from calculating any detailed transition costs for Scotland, in case some numbers get written down that could be FoI-ed and then undermine the ‘Better Together’ campaign. Equally civil servants have been banned from even discussing any of the transition details in advance with Scottish government staff. To my knowledge, the only London body that has had any more detailed discussion with Edinburgh is the Bank of England (which is independent of ministers). Compare this treatment with the civil service briefings normally given to all parties before a UK general election. Why should the far more important issues around possible independence be left for Scottish voters to conjecture about like this, when detailed answers could easily be made available either by Whitehall or by academics commissioned to inform the debate?”

 Much is being made by the No campaign that the Scottish Government has not published figures about the start-up costs of an independent Scotland. Perhaps they are right to do so in some respects and I was a bit hacked off with John Swinney MSP for being cack-handed enough not to have an answer ready when he appeared on BBC Radio Scotland a while back, but this is also one of those areas where we can’t possibly know the answer until we have actually carried out the task. A lot will depend on the division of assets between iScotland and rUK and the level of cooperation between the respective governments and civil services. The fact is, even if it is the £2.5 billion that the UK Treasury once suggested, it is still affordable.

But if this question is so important to No campaigners, shouldn’t the UK government, which still does represent each and every Scottish resident after all, do the sums and tells us so that we can make an informed choice in September? To do otherwise is clearly a campaign tool and should be seen as such.

To finish, here is a graphic to show why I am not that bothered if the cost for Scotland to go independent is £200 million or £2.5 billion.

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About Hugh Wallace

Soldier, sailor, policeman, engineer, scientist, democrat, socialist, environmentalist, advocate of Scottish Independence
This entry was posted in 18th September, Better together, economics, independence, no scotland, politics, referendum, yes scotland and tagged , , , , , . Bookmark the permalink.

6 Responses to Start-up, the spin cycle

  1. McDuff says:

    Good article.

    Like

  2. blindingmemory says:

    Thank you! This has been my perspective of the ‘economic debate’ for quite some time, I’ve just not had the eloquence to lay it out quite as factually and conclusively as you have here. Mind if pinch bits of the last 3 paragraphs in order to make my point on this topic in the future?

    Like

  3. David Nelson says:

    The truth is that the numbers both sides are trying to throw at each other don’t tell the full picture. The original £2.7 billion estimate was clearly wrong and it’s been officially “revised”, but the way the £200 million figure was latched on to was also clearly wrong. Dunleavy has never argued the total cost would be £200 million, yet that’s the way it’s been presented. The £200 million was always the immediate cost for central departments.

    The two academics here don’t actually disagree a great deal on the numbers. As you’ve said, like all academics they don’t pretend to be able to give concrete figures so they give estimates within a range. Dunleavy states the expected range would be between £600 million and £1.5 billion, but he also says that if push came to shove he’d lean closer to the £600 million. McLean doesn’t differ a great deal in this, he simply leans closer to £1.5 billion (or even slightly above this). That’s the only reasonable way to answer a question like this because there are countless issues that could change the cost which we can’t predict.

    Unfortunately that kind of nuanced approach is completely lost on politicians/campaigners. All they’re interested in is getting a hard number that they can use to attack their opponents. If numbers differ they usually just resort to calling the other side “liars”. So we now have the No side trumpeting £1.5 billion as a concrete estimate from Dunleavy (which isn’t strictly true) and the Yes side trumpeting £200 million as the total cost from Dunleavy (which isn’t strictly true either).

    —–

    As an aside, the graphic at the end is also quite misleading. I agree that transition costs don’t matter a great deal in the grand scheme of things, but you can take any infrastructure project and make that kind of argument. Transport spending in Scotland is actually significantly higher than the UK average – e.g. one of the more recent estimates puts transport spending per head in Scotland at £533, while the UK average was £327. That isn’t particularly surprising when you consider that maintenance costs and subsidising services to rural areas are generally more expensive (about £150 higher per person every year than the rest of the UK under that estimate).

    So we can’t just point at large infrastructure projects south of the border and claim we could get that money back by being independent – you have to calculate the total costs/benefits relative to our own spending. You also have to factor in the gains that some of these projects would have in Scotland (either directly – some estimates would say HS2 would increase GDP in most Scottish regions – or indirectly if it boosts overall growth in the UK). If you want to make the wider case you also have to consider issues like the cost of servicing the national debt, and so on.

    That’s why, much like with the transition costs debate, I find it very difficult to take any concrete economic case for/against independence seriously. There are so many unpredictable variables that any estimate is simply a shot in the dark. The bond market issue alone has the potential to turn the economic situation from being broadly in our interest to complete bankruptcy, yet we have no understanding at this stage of even basic issues like our future lender of last resort. We certainly can’t simply cite, as some people on the Yes side do, the difference between revenue/spending in Scotland and the rest of the UK and conclude that it’s an open and shut case for independence.

    Liked by 1 person

  4. Hugh Wallace says:

    David, thank you for your nuanced contribution to the debate! If only we had more such.

    I totally agree that the economic case is not cut and dried and anyone trying to spin it either way is missing the point or is using over-simplification as a campaign tool. But to me that means that whether you are for or against independence you can more or less ignore economics and concentrate on the much more difficult to quantify issues of democracy, equality, poverty, wealth redistribution as well as the more contentious matters of identity and nationality. But that means having a debate about ideas rather than ‘facts’ and that is difficult for many. Sadly.

    Like

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