I WAS pleased to read Tim Rideout and John Robson’s, “We need to bust the myth that a deficit is a bad thing” (Letters, February 17). It is not. A deficit is the norm.
Included in Tim and John’s article were four issues that have to be continually brought to the fore to combat the same old potatoes being brought out ad nauseam by Unionist pundits and politicians – currency, national debt, deficit and pensions.
It is important that an independent Scotland break free from the financial shackles of Westminster Treasury decisions and it can only do so by establishing its own currency as soon as possible. By all means align it with Sterling, the euro and US dollar for the first two or three years but, for those who want to rejoin the EU, we have to have our own free floating currency for a few years before we can even contemplate re-entry. What we call our new currency is irrelevant.
READ MORE: We need to bust the myth that a deficit is a bad thing
National debt? Precisely, what national debt?
We have all seen in this last year how Kate Forbes has pleaded with Rishi Sunak to give the Scottish Government extra borrowing rights to allow Holyrood to decide for itself whether to extend the furlough scheme in a timely fashion and also business rates relief. Unfortunately both requests fell on cloth ears.
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The result in the first instance was that many people in Scotland found themselves redundant as the dozy Chancellor came to the table too late to stop notice being served to thousands across the whole of the UK, not only Scotland.
In the latter case only swift action by Scotland’s Finance Secretary in the last week to utilise a part of a newly promised increase in Barnett consequentials to extend relief over 21/22 has allowed many small and medium-sized businesses to breathe a little easier over their immediate future. Even this is conditional on the UK Treasury actually transferring the funds on time – apparently it doesn’t always happen.
Had Scotland been an independent state, with its own currency in place prior to the current state of emergency (Covid-19) we would have done what the UK Government and Bank of England have done, ie: increased the amount of currency in circulation and lent it to the Scottish Government at near-zero interest rates. We would have placed forward orders with those companies most likely to succeed in developing an effective vaccine and we would have used our standby military forces to assist the NHS in setting up whatever temporary (we hope) facilities were required to get us through. More importantly, we would probably have shut our land, air and sea borders to possible virus carriers entering the country way back. Similar to Norway which, like Scotland is more a peninsula than an Island. one third of Scotland’s cases and less than 10% of Scotland’s death rate.
So, in answer to my own question, Scotland has no national debt to talk about and, for the amateur historians amongst us, never has had – even prior to the so-called “Union”.
Tim and John state a figure of 42,000 new government posts being required when Scotland becomes independent and how their income and spending feeding back into the economy will increase GDP. I am a little surprised at the magnitude of the figure but will accept it as being reasonable. Does it include our nascent military forces that we will require to protect our land, sea and air borders? Possibly not, this will also increase our GDP as in the near future all of these resources would be home-based – no foreign interventions, no nuclear deterrents to finance – with possibly a significant contribution from the rUK for use of the Faslane facilities while they construct a new site for Trident somewhat further south.
In addition to Scotland’s own increase in civil servants, hopefully spread around Scotland and not concentrated in Edinburgh or even the Central Belt, there will be foreign embassies and their staffing to consider. More spend, more employment opportunities and, albeit likely to be relatively small, a further boost to Scotland’s economy.
Now I come to my last point and a point that has irked me since 2014. If we accept that rUK will want to be seen as the “continuing state” under the Vienna Convention it must also accept that all state assets, other than those immovable assets (land, buildings and infrastructure) physically in Scotland, and all state liabilities pass over 100% to the continuing state, ie: rUK. This means all debts, including those that are off balance sheet, of which by far the largest is state pension rights accrued.
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If we follow the above to its natural conclusion, that means for the first few years of independence the Scottish state could enjoy several years of a pension holiday as the rUK would be responsible for the payment of state pension to all existing and future pensioners based on the years they had contributed to the UK National Insurance scheme up to their transfer to a Scotland-only scheme. If you think this is wishful thinking, ask yourself the question – do UK pensioners forfeit their pension rights when they decide to spend their retirement in Spain, France or Timbuktu? No they do not, and it would be no different for those resident in Scotland who had contributed to the UK National Insurance fund up to independence, a fact that was confirmed at the time of the last referendum, first by the pensions department and later by the UK pensions minister, and yet we still hear Forsyth and other Unionist pundits rabbiting on about this point.
Using the GERS figures for 2019/20 published in August 2020 – now demolished by Covid and Brexit – as a guide, the exclusion of interest and pension payments would turn what was projected as an 8.5% deficit into a surplus of 10.9% – a surplus that could be used to create a proper national pension fund for tomorrow’s pensioners in a better Scotland.
Covid and Brexit have changed the game altogether and the figures above, other than pensions, will bear no resemblance to where we start, but if we push for what is right we will start off from a stronger position than the doom-sayers predict.
Ernest Wastell
Meigle
— to www.thenational.scot
