Aidan, James, Jeff & Kirsty are super-delighted to welcome a new member to the team this morning – Natalie McGarry. Natalie’s an SNP activist, having recently graced our tellies with her first class speech at conference against NATO membership, and she’s been blogging here since September last year. Oh, and if you’d got £10 on her being our new member with Twitter pseudo-bookie Ross McCafferty last night you’d be holding £50 now. Over to Natalie..

I am a centrist. Centre left, but certainly not as left as some of the people I meet with everyday, or come across in politics or in the wonderful and diverse fabric of Yes Scotland.  Sure, I am anti-nuclear, anti-NATO, anti-war (is that left?), pro-free health and education and a realistic living wage and many other ideological points of principle of those on the left, but… And there is a but: I do believe in some degree of entrepreneurism which I suppose is a bit capitalist. I’d like to see renationalisation of many public services but not sure how that is either entirely possible or practicable, or even the most responsible use of taxpayers’ money in the short term. I also want to see a huge review of the benefits system too. Before you gasp in horror, I don’t want a Toryesque victimisation of the most vulnerable in society, or changes made too quickly, but I think we have to be realistic about the size of our welfare bill and the number of persons who are reliant on benefit.

I spent a couple of years working with unemployed parents, mainly single parents; young women left, literally, holding the baby. Some of these were very young, had left school with no qualifications, no confidence, no means to support themselves, and without a tradition of working in their families; sometimes for two previous generations. It isn’t my intention to provoke a furious discourse on worklessness, and second/third generation unemployment, beyond saying that there needs to be a completely different approach, early on, to providing children from this background with opportunity and aspiration and support.

There requires a complete change in the collective mindset in order to increase work rates in the most vulnerable in society and others with a history of long-term worklessness.  This won’t happen through victimisation like current Tory cuts, and it won’t happen overnight. However, it does need to happen. Benefit levels are only just sustainable, but it shouldn’t just be about sustainability, but about what is best for our society and for the people in it, and that is giving people the tools, aspiration, confidence and support to succeed. If that has a knock on effect on work rates, then that can only be welcomed; and provides an opportunity to look at how we apply benefits.

A number of things have happened recently to concentrate the mind: Johann Lamont’s much despaired of but somewhat misunderstood speech on universalism; Ruth Davidson’s ill-considered claim that only 12% of the population in Scotland are net contributors; the IFS report and Patrick Harvie’s contribution to the debate in the Daily Record earlier this week. Inherent in what both Ruth and Johann had to say is a glimmer of a point, and I acknowledge that a sharp dose of realism is required.

Neither the methodology nor the catalyst of the referendum to contextualise this were either welcome or particularly subtle, though. Whilst it is irrefutable that the referendum brings with it a sharper examination of the realities of Scottish funding we should welcome only the honest discussion of where we are now, and if we want to contrast that, we should contrast it only with our relative position to the rest of the UK. Anything else is just speculation, backed up with little fact and is dishonest – on both sides. If, like Ruth Davidson, you give figures only in isolation, it is exceptionally misleading; the size of the public sector in Scotland and rUK is relatively comparable. The value of any point is undermined by the use of figures in isolation to suppress aspiration because of a perception of relative underperformance, or by the other side to suggest an unsupportable case for optimism. What was important in what Johann and Ruth tried to raise was the need to prioritise our spending; how best to do that, and where our revenue stems from.

The IFS report produced on Monday was seized upon by those in both the pro and anti-independence camps. I choose to specifically not mention Yes Scotland or ‘Better Together’ as I have not yet read their response.  My frame of reference to the response is therefore that of the SNP and the Labour Party in the form of the rhetoric of Stewart Hosie MP and Ken McIntosh MSP on Scotland Tonight and Newsnight Scotland. Both performances were fairly predictable the first time, but by the second time, with the same sound bites, they had lost my attention. Clearly the onus is on Newsnight Scotland to provoke a different discussion from the one that Scotland Tonight had not 20 minutes before and they consistently fail to do this. After all, with a limited audience, interest capture is key.  That said, perhaps that is the fault of political parties for not putting forward different voices for these two programmes. I am sure you could find other politicians to talk just as competently, but maybe with a different point, or a different slant.  The narrowness of the political commentariat in Scottish politics is a particular irk of mine, BBC in particular, but I have managed to get ridiculously off topic…

I clearly cannot do justice with a full synopsis here. Instead I will pull some of the salient facts which will be seized upon by both sides. This section on fiscal balance is particularly apposite:

• Without oil and gas revenues or, equivalently, assigning them on a population basis, there has been a bigger gap between spending and tax receipts in Scotland in recent years than in the UK as a whole;
• With a geographic assignment of oil and gas revenues, on the other hand, the gap between revenues and spending in Scotland and in the UK has been similar, indeed somewhat smaller in Scotland;
• Over recent years, tax revenues from the North Sea, if allocated on a geographic basis, would have slightly more than paid for the additional public spending per head that currently occurs in Scotland relative to the UK as a whole.

Thus far, I see nothing that generates much to be surprised or excited about. This is hardly new information. Indeed it is already available in the public spectrum through GERS reports. Clearly the higher levels of public spending in Scotland are offset by oil revenues. This shouldn’t be a difficulty, right? It is “our oil”, right? The benefit of Scottish oil should be that we can afford higher levels of public spending, right? Well, yes, I do agree that the oil is in Scottish territorial waters and that this is governed by international law, but I have only the most tenuous experience of international public and private law from a number of Honours modules at university. I certainly wouldn’t assert my opinion has any authority, even if that seems like the correct position.

Nonetheless, we proceed, as did the IFS report, on the basis that the above position is correct despite some unsubstantiated havering on the issue by Ken McIntosh. Perhaps the biggest area of contention was the “volatility” of oil prices, with associated statistics to support this assertion. Beyond the volatility was this, which seemed, to me, to found the main crux of Ken McIntosh’s argument,

“Like the UK as a whole, and most other developed nations, an independent Scotland would face some tough long term choices in the face of spending pressures created by demographic change. If, as is likely, oil and gas revenues fall over the long run then the fiscal challenge facing Scotland will be greater than that facing the UK.”

It is easy to simply skim over the references to the UK as a whole or those of other developed nations to leave Scotland isolated and struggling with long term fiscal challenges without oil. Ignoring even the predictions that a fall in oil revenues and reference to finite resource is framed in the context of the mid to long-term (i.e. 20 years and beyond), it seems that this has been seized upon to by the No campaign. From what I can ascertain their argument is predicated on the basis that the gap between revenues raised and public spending, without oil to offset it, demonstrates the lack of certainty which independence will give us, and that without the UK to bail us out, and without our oil revenue, we would be in penury.

There are a number of problems with this position, although I mention only two which I thought were poorly tackled during these debates:

• Without the oil revenues to offset the gap in maintaining the Scottish block grant, or any similar funding initiative, the same onus would fall to the UK as would fall to an independent Scotland. Either Scotland becomes dependent for handouts from the rUK as part of the union in the long term, or the UK has to focus on the economy and public sector, and work rates and tax revenue raised in Scotland to offset this. Or Scotland becomes independent, whilst oil revenues continue, and like the rUK would be obliged to, it would have to do same; provide innovation and focus to grow economy and contributions. It seems a stark choice, dependence on the UK – which is not a position any country would enjoy – and rely on the UK to grow the Scottish GDP as part of the UK, or put trust that an independent Scotland would focus more effort to develop new, green, and innovative industry to do so.
• It is easy to predict that oil revenue will run out. It is not possible to say when, but it is not an infinite resource, so it will run out.  It is reasonably foreseeable for the IFS to predict UK borrowing to be £75bn at the point of the referendum in autumn 2014. This is all based on fact; however it is ridiculous to try to apply narrow parameters to revenue streams when looking at the mid to long term. It is not accurate or responsible to do so and to make any predictions either way. If anything should prove a cautionary tale about the inevitability of boom and bust and the inability to correctly interpret the future, it is the worldwide economic crash of 2008.

It is quite depressing that the focus of any discussion on the merits and demerits of independence falls to fist-fighting on the economy in the first place.  The economy is as volatile as the oil price. And equally depressing is the focus on oil price as a crutch for sustainability. The only plus is that discussion on a future without oil is that it provokes welcome discussion about our reliance on it and opportunity to promote and research greener methods of transport in the very short term.

Scotland currently pays its way in the UK. I see no reason it couldn’t continue to do so as an independent country like many other comparable countries in the world. I make no predictions of a financial windfall or of penury.  That is irresponsible. I agree with Patrick Harvie that there are simply too many uncertainties to make gleeful or dire predictions either way.

Patrick Harvie made an excellent interjection earlier this week in the Daily Record. He said,

“Whether Scotland votes Yes or No, we will face uncertainties. Both sides should be honest about that.

The SNP plan to join Europe but keep using the pound as our currency might work. In the short term, it might even be the best option available. The SNP are wrong to offer it as a guarantee and the Labour party are wrong to dismiss it out of hand.

But the wider truth is nobody really knows what state Europe itself will be in by 2014, or whether the UK Government will even be holding a referendum about pulling out.

Instead of bland assertions, we need to focus on the kind of society we want and how government need to work to achieve it.

I want a more equal society, a greener environment, a fairer economy and politics that let people in to participate instead of holding power within the political “club”.

That’s why I find the opportunities of independence so attractive and that’s why I want to be honest about the risks, too, and find ways to overcome them, instead of hiding them.”

I might not agree with everything Patrick says and his uncompromising positions on certain issues, but I agree wholeheartedly with everything he says above.

We do not have current access to any assertion which is of much legitimacy either way on Scotland’s standing in Europe after independence, despite the best efforts on both sides to cite opinions from notable European scholars etc. We all know where the only factual opinion can be sought, and yet no one seems to want to pre-empt independence to find out.

The position of the Tory right and the pressure of UKIP could seal the deal on a UK referendum, who knows. After all, UKIP secured 14.3% of the vote in the recent Corby by-election. Jonathan Mackie eloquently wrote on his blog “Jie not Jay” about the effect of the rise of the Tory right.  It is well worth a read. It is reasonable to expect that the pressure from the right could induce a referendum: what is not as easily divined is how the UK would vote. Uncertainty in the UK.

There is inevitability that people will want some degree of security; a few facts in which they can put their faith in on independence, but we must be careful not to bog down discussion of the kind of country we want to be in facts and counter-facts, opinions and counter-opinions.

Independence is an opportunity, an opportunity to review every decision we have made and those which were made on our behalf; to shape a country reflective of the ideals we share as a society; a veritable blank slate to write a constitution with the input of our country’s citizens. We might start with the hangover of our share of national debt, but with a desire to build a better, more prosperous society, that isn’t a millstone, it is a cautionary tale. I think it is a pretty unique and exciting opportunity.

Are you Green or are you a Nat? It’s not at all clear if you can have it both ways any more. Indeed, even if you’re a climate change denying, windfarm hating petrol head, the numbers surrounding independence do look a bit shaky. And hat-tip to Tom Gordon’s excellent take down of Salmond’s clever ‘relative surplus’ language, given it loosened up my own thoughts on the matter.

The Scottish Government’s GERS report is the go-to source for reliable information about Scotland’s finances. The number of Nats who cite it in their arguments is evidence enough that it’s legitimate. For Greens who want Scotland to go it alone however, it doesn’t make for happy reading. Principles and aspirations will clash crudely over the question of oil.

Let’s start with a basic fact – if we burn existing oil reserves over the next few decades the effects on climate change would be catastrophic. We should stop drilling, well, now. The world should ideally come together, allocate existing oil reserves appropriately and get cracking with creating green energy on a global basis. Optimistic? Yes, if past global warming summits are anything to go by, but that doesn’t mean it shouldn’t remain as Plan A. We’re burying tomorrow’s future to avoid facing up to today’s inconvenient truth, and Scotland looks set to be at the forefront of that unpardonable folly if the SNP gets its way.

The basis of Scottish independence rests heavily on profiting from the black stuff under the North Sea over the next few decades so let’s look at the figures (taken from GERS):

With oil:

Scotland’s Income – £53.1bn
Scotland’s Current Spending – £63.8bn
Defence savings (after independence) – ~£2bn
Revised Spending – £61.8bn
Annual Deficit in an independent Scotland – £8.7bn

Scotland’s geographical share of oil revenues is £7.9bn which, if removed from the equation, would push our annual deficit out to £16.6bn in a single year. Probably higher through jobs lost, reduced investment etc being taken into consideration.

Our current share of the UK’s debt is estimated to be about £81bn, and keeping in mind that the UK Government has ~£60bn locked into RBS and Lloyds (the latter largely due to HBOS’ failings), an independent Scotland’s finances would be starting off in dangerously deep red territory.

‘That’s the way of the world’ many will say but, well, is it really? Proponents of independence talk about other countries who are able to make it on their own with similar population sizes to Scotland, so let’s look at some of them and what their levels of debt are:

UK – $1,592bn (~63% of GDP) (GDP ~$2,522bn) (excludes RBS/Lloyds intervention)
Scotland – $131bn (~61% of GDP) (GDP ~$215bn)
UK deficit – $201bn

Ireland – $228bn (~103% of GDP) (GDP ~ $221bn) (Deficit -$17bn)
Belgium – $484bn (~94% of GDP) (GDP ~ $515bn) (Deficit -$20bn)
Sweden – $191bn (~35% of GDP) (GDP ~ $545bn) (Deficit -$6.5bn)
Norway – $267bn (~55% of GDP) (GDP ~ $485bn) (Surplus $39.5bn)
Denmark – $141bn (~42% of GDP) (GDP ~ $332bn) (Deficit -$8bn)
Portugal – $264bn (~111% of GDP) (GDP ~ $237bn) (Deficit -$6bn)
Finland – $125bn (~48% of GDP) (GDP ~ $263bn) (Deficit -$5bn)
Czech Rep – $89bn (~41% of GDP) (GDP ~ $215bn) (Deficit -$8bn)
Slovakia – $42bn (44% of GDP) (GDP ~ $96bn) (Deficit -$2bn)
Slovenia – $20bn (40% of GDP) (GDP ~ $50bn) (Deficit -$0bn)
Latvia – $12bn (43% of GDP) (GDP ~ $28bn) (Deficit -$0.5bn)
Estonia – $1.6bn (7% of GDP) (GDP ~ $22bn) (Deficit -$0bn)

Debt balances – source: The Economist
GDP balances – source: IMF
Scottish GDP – source: Wikipedia
Deficits/Surpluses – Source: Wikipedia

(NB: I’m no economist, and finding a single, reliable source of the above information proved incredibly difficult. If there’s errors in the above, so be it, but the numbers are intended to be indicative and to form my own view of Scotland’s position in the world post-independence)

There seems to be two sets of European countries out there of similar size to Scotland – the southern states with small debt levels and small GDPs, and the Northern/Scandinavian states with higher debt levels but higher GDPs with which they can service these debts. Yes Scotland is looking to start a new country with high debt levels and a relatively low GDP. That would be a challenge and deserves considedrable scrutiny between now and 2014. I’m not saying it’s not insurmountable, but it puts Scotland in a more difficult place than most of our similar-sized European neighbours.

We have similar debt to Finland but they have a higher GDP (by $50bn) and smaller deficits. We have the same GDP as the Czech Republic but they have debt only two thirds the size of ours.

You could only say we are doing better than Ireland, Belgium and Portugal in the above list, three countries that don’t exactly have their economic problems to seek.

Further to this, and most worrying of all, is that Scotland would have to burn its green credentials just to go backwards slowly, rather than going backwards quickly. An annual deficit of about £9bn (assuming we do keep drilling) on top of a current debt of £81bn does not bode well for Scotland’s economic health.

I had always thought that polls would only show movement from No to Don’t Know or Don’t Know to Yes, but having finally looked through the figures, I can feel the resolve for my own would-be Yes vote draining away.

Now, the big argument the other way is that it is the UK that has driven us to this parlous state, an argument that I have a lot of sympathy with and a point that makes me disappointed and not a little bit angry with recent Westminster Governments. Scotland could chart a different path for itself more successfully than it could as a part of the United Kingdom, but Yes Scotland cannot pretend that it’s a clean slate. We would be starting from further back than any of us would have liked.

So, the ball is certainly in the SNP’s court to explain how a new country could swallow these figures and move on into financial health, and hot air around relative surpluses or green energy revolutions is not going to cut it. How would Scotland cut its debt levels and what is the business plan to get through the first 5, 10 and 20 years? Nothing short of that will suffice I’m afraid.

I have always believed that Scotland stands a better chance of making independence a success from a position of strength rather than weakness. These figures do nothing to change that view, quite the opposite in fact.

Too wee? Not necessarily.

Too poor? Right now…..? Yes.