‘Meaningless’ to calculate cost of independence

Scottish independence: The SNP government will not set out the costs of establishing an independent state before the referendum, saying such a figure would be “meaningless”.

By SCOTT MACNAB Thursday, 12th June 2014, 1:00 am

First Minister Alex Salmond.The SNP insists any figures ahead of referendum would fail to factor in negotiations. Picture: SWNS

Scotland’s chief economic adviser Gary Gillespie told MSPs that no additional work – other than what is already in the white paper – had been carried out on the set-up costs, despite previous indications that this was being examined.

This was branded “astonishing” by opposition parties who say Scots will be left in the dark about the price of setting up crucial organs of state such as a pensions system, tax system and welfare state.

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A recent Treasury report which put this figure at £2.7 billion came under fire when the academic behind much of the calculations said this had misrepresented his work and was “bizarrely inaccurate”.

Senior ministers from the UK and Scottish governments appeared before Holyrood’s economy committee yesterday to set out the economic future of the country after 2014.

Finance secretary John Swinney was challenged to come up with the costs of an independent state after a leaked cabinet memo last year suggested civil servants were working on this.

Labour’s Richard Baker said that the UK Government has at least attempted to come with a figure.

But Mr Swinney said: “That’s really a very meaningless remark, to be honest.”

Much of the structure of a new Scottish state already exists, but currently lies in UK hands.

This would be among the “share of assets” which Scotland would be entitled to after independence and form part of the post-Yes vote negotiations.

Mr Swinney said: “We cannot properly put a precise number into that analysis if it’s going to be subject to negotiation and discussion with the UK Government about share of assets.”

Asked if any additional work had been carried out on the set-up costs, the Scottish Government’s chief economic advisor Mr Gillespie said: “No.”

But Tory committee convener Murdo Fraser said: “This was an astonishing admission from the chief economic adviser.

“This is absolutely incredible – how can the SNP be so confident of its case when it hasn’t done the maths?

“It is negligence on a grand scale. Whenever anyone embarks on an ambitious project, the first thing they do is work out if it’s financially viable.”

Deputy First Minister Nicola Sturgeon said the SNP administration did not put a figure on the set-up costs to avoid the same mistake as the UK Government in “misbriefing” people.

“The Treasury is a good example of the dangers that befall you when you try to put a definitive cost on something that will be subject to negotiation,” she said.

“Every single pension paid to a state pensioner in Scotland is administered from Scotland from two pension centres – one in Motherwell, one in Dundee.

“Most of the UK welfare system as it relates to people in Scotland is administered in Scotland. So we’re not in a position of having to set that up from scratch.

“That would be a situation in which we would be seeking to transfer that infrastructure from the UK Government to the Scottish Government.”

There will also be some leeway in the timescale for achieving this, Ms Sturgeon said, with the UK Government likely to be keen on a transition period in the transfer of assets.

She added: “There will be wide negotiations around the totality of UK assets and the share that Scotland gets.”

UK assets are worth an estimated £1.3 trillion.

Chief Secretary to the Treasury Danny Alexander had earlier branded SNP forecasts on the economy of an independent Scotland “pie in the sky” and claimed they have been drawn up on the “back of a fag packet”.

The economic arguments from the Scottish Government for leaving the UK were based on “massively optimistic” projections about the amount of cash that could be raised from North Sea oil and gas, he added.

And the SNP’s claims that Scots could be £1,000 a year better off in the long term in an independent Scotland were “based on pretty heroic assumptions about growth and productivity”.

The UK minister hit out at the Scottish Government’s economic case when he appeared before a Holyrood committee.

First Minister Alex Salmond has insisted the country could be £5bn a year better off in 15 years’ time without having to raise taxes if Scots vote for independence this September.

That was based on a separate Scotland increasing productivity and employment, and growing its population.

But Mr Alexander said: “The Scottish Government’s forecasts were based on pretty heroic assumptions about growth and productivity, way above and beyond anything that has been achieved in similar regimes.”