Decade of austerity is price of independence blueprint, warns leading think-tank
AN independent Scotland would be plunged into a decade of austerity, a leading think-tank warned yesterday.
The Institute of Fiscal Studies (IFS) said spending on health, justice and education would be lower than elsewhere in the UK.
Its ‘observation’ on the SNP’s Sustainable Growth Commission report contradicts assurances by Nicola Sturgeon that proposals in her blueprint for independence would not lead to austerity.
IFS associate director David Phillips said: ‘Their proposals imply another decade of the sort of restraint on public spending Scotland is currently experiencing. If this is austerity, then austerity would be extended under the commission’s proposals.’
The First Minister published the commission’s report last month. It has led to grow- ing splits within the party, with Left-wing supporters angry over plans to prioritise deficit reduction over public spending.
While Miss Sturgeon has said separation would not lead to austerity, the report proposed a tight rein on public spending in the first ten years of independence.
But the IFS contradicted this, claiming Scotland could see up to 18 years of austerity, with lower spending on key services than the rest of the UK.
Scottish Tory finance spokesman Murdo Fraser said: ‘Nicola Sturgeon wants us to believe independence would come costfree. Yet this impartial expert report makes clear it would be austerity max for as long as 18 years.
‘That is the staggering price the Nationalists are prepared to pay for their obsession with breaking up the United Kingdom. Nicola Sturgeon needs to come clean. She should simply admit it: independence comes at a huge cost. Until she does, nobody should believe a word she says.’
The IFS report said: ‘The commission claims their proposals do not amount to austerity as public spending would be increasing in real terms. But their plans would mean spending on public services and benefits falling by 4 per cent of GDP over a decade. That’s on top of the reductions by the UK Government.’
Mr Phillips said that if the Government wanted to keep increasing spending on health and social care, other public services would have to suffer.
But he added: ‘Unsurprisingly, the commission does not say where the axe would fall. It is also inconsistent to claim these plans do not amount to austerity but the UK Government’s current policy does.’
The report said that UK Government spending is set to increase over the period in question – meaning that in Scotland there would be ‘slightly slower real growth’ that elsewhere in the country.
Mr Phillips said it was ‘difficult to see how a newly independent Scotland could avoid the sort of deficit reduction programme set out by the commission’.
Scottish Lib Dem leader Willie Rennie said: ‘The highly respected IFS agrees that an independent Scotland would have no choice but to impose austerity on public services.
‘There is no doubt that an independent Scotland would face cuts to public services for at least ten years, would be prone to greater economic volatility like other small countries, could not rely on oil revenues and could not demand control of the pound.’
The IFS also questioned the SNP’s claims that an independent Scotland would be financially better off in the EU, rather than remaining part of the UK.
Mr Phillips said: ‘If Scotland left the UK and rejoined the EU, that could instead mean additional trade barriers between Scotland and the rest of the UK, with which Scotland currently trades four times as much with as with the EU.
‘The commission’s figures make no allowance for any negative economic impact from such barriers. They could quite easily outweigh the gains from rejoining the EU.’
An SNP spokesman said: ‘The Sustainable Growth Commission is absolutely explicit in its rejection of austerity. Instead, it proposes real terms spending growth – a sharp contrast to the reality of Tory policies being imposed on Scotland.’
Comment – Page 16
‘Nicola Sturgeon needs to come clean’