An independent Scotland, without UK help, would now face a terrifying catastrophe
If ever there were an argument to be made about how the broad shoulders of the United Kingdom support Scotland and our economy, it has been substantially boosted by the events of the last few weeks. On Friday, Chancellor Rishi Sunak announced an extension to the Self-employed Support Scheme being provided by the UK Government, one which has already seen 2.3 million claims worth £6.8 billion across the country. In addition, the Coronavirus Job Retention Scheme, which has helped furlough 8.4 million jobs across the UK, has also been extended, with greater flexibilities introduced.
The total level of UK Government support for the Scottish Government, and directly to Scottish business, now exceeds a staggering £10 billion, made up of Barnett consequentials from spending in England of £3.5 billion for the Scottish Government to distribute, the Job Retention Scheme worth £4.8 billion, and the Self-employed Income Support Scheme, the Business Interruption Loan Scheme, Bounce Back Loans and additional welfare payments, collectively bringing the total to around £2,000 extra for every man, woman and child in Scotland.
With some depressing inevitability, the response from the Scottish Government to these substantial sums is that they are not enough. Like a Highland Oliver Twist, the SNP Finance Secretary Kate Forbes has her hand extended asking for more.
To a unionist, there are few sights more delicious than observing nationalist politicians whose default response to any issue affecting Scotland is to ask Westminster for more money. It is a rich irony that a party committed to Scotland standing on its own two feet seems unable to implement that principle in practice whilst they hold the reins of power in the Scottish Government.
The more than £10 billion provided by the UK Government stands in stark contrast to what has been allocated so far by the Scottish Government directly from their own resources. In its summer budget revision, the Scottish Government
has reprioritised a mere £255 million from within existing departmental budgets for Covid-19 expenditure. To put this in context, this is from a total Scottish Government budget now in excess of £46 billion in the current financial year.
The SNP argue that, without substantial borrowing powers, Holyrood is restricted in the business and other support that it is able to offer, ignoring the fact that the Scottish Government does already possess powers to borrow, albeit limited, and also the facility that is known as the Scotland Reserve. The issue is that these borrowing powers have already been substantially committed, and the Scotland Reserve run down, to fund dayto-day spending commitments, not least the cost of the SNP’S most recent budget deal with the Greens – a point which had previously been picked up by members of Holyrood’s Finance Committee. Rather than setting aside cash and leaving capacity for a rainy day, SNP ministers seem to have taken the approach of an irresponsible teenager maxing out the credit card, and then turning to their parents for help.
Without the capacity to borrow more, where might additional funds for business support come from within the existing Scottish budget? We do know that there are large areas of spending which were allocated as recently as February to which the Scottish Government are no longer committed – the promise to introduce 1,140 hours of free childcare for three and four-year olds; the devolution of social security powers; and a whole range of capital infrastructure projects which will not now be proceeding at the speed previously envisaged due to lockdown. Rather than plead poverty and demand more Westminster cash, it surely cannot be beyond the wit of Scottish ministers to look within their own budgets and find money not currently being properly utilised, that can then be freed up to support struggling businesses.
The Fiscal Framework that governs the size of the Scottish devolved budget protects us from an economic shock across the whole UK. But if the Scottish economy takes a greater knock than the UK as a whole as a result of this crisis, then the tax revenue coming to the Scottish Government will be lower in future, leaving us with less money to spend on public services, or the need to increase taxes yet higher.
There will be further difficulties for the Scottish economy if lockdown restrictions are not eased in Scotland on a similar timescale to the rest of the UK. The Chancellor has made it clear that the furlough scheme will apply on the same basis Uk-wide, leaving Scottish business concerned that they may be put at a disadvantage if the furlough scheme is restricted before the Scottish Government allows them fully back to work.
We now know that decisions being taken by the Scottish Government around relaxing lockdown restrictions are largely matters of political consideration, rather than being based entirely on the science. It was, and remains, a significant principle of fiscal devolution that each part of the United Kingdom has to take responsibility for, and bear the cost of, political choices that are made.
So it would be entirely unreasonable to expect the English taxpayer to support a furlough scheme lasting longer in Scotland due to a political choice from the Scottish Government, or indeed restrictions having to be maintained here as a consequence of political failures from the SNP in, for example, providing PPE to care homes, or extending testing.
With SNP Ministers already encouraging taxpayer-funded bodies such as Historic Environment Scotland and Sport Scotland to take advantage of the UK furlough scheme, it is unlikely that the UK Treasury will be sympathetic to yet more demands from the Scottish
Government for additional cash not available elsewhere in the UK.
There is a fascinating counterfactual analysis to be done as to what situation Scotland would now be in had we voted for independence in 2014, with a new state having been created, possibly with its own currency, an annual budget deficit in excess of £12 billion, and hit with the enormous economic shock that the coronavirus pandemic has brought us.
It sends shivers down the spine to think what a catastrophic situation Scotland would be in without the broader UK support that we now benefit from. Perhaps even SNP ministers can reflect, in quieter moments, just what a lucky escape we had when we said No to separation in that once-in-a-lifetime vote. Murdo Fraser is a Conservative MSP for Mid-scotland and Fife