Scottish Financial Planning

The Joys of Optimistic Planning by Politicians.

The recent referendum in Scotland with regards to their political future has ended in the a narrow vote to remain part of the Union.

Part of the rosy independent future that was promulgated by the Scottish National Party (SNP) was that the vast oil revenues that was coming from the North Sea would provide for the secure financial future for an independent Scotland.

All of this was the vision based upon the rosy revenues being derived by the oil price being at $100+ per barrel.

However, within the space of 3 months, oil has dropped to below $60 per barrel.  We are seeing the deleterious effect that financial mismanagement is having on the Russian economy.  The lower price is affecting the oil companies who have advised that investing in the North Sea is unprofitable at this price level.

They are scaling back their investment and making redundancies.  http://www.bbc.co.uk/news/business-30525539.

How would have effected the financial position of the Scottish government ?  Surely this would have delayed or completely put on hold all of the financial promises made.

Are we as the electorate and poor benighted suffering public, not sufficiently fed up with the promises of the politicians of the rosy future we will all have in the Utopian Ideal they offer, but based completely on fairy dust mathematics.  They have been learning from the management skills of Fred Goodwin, previously chief executive of RBS, who despite raising £12 Billion from shareholders to put the bank on sound financial basis, then had to be bailed out by the UK government to the tune of £45.5 Billion.

So RBS estimated the amount of capital required, was a mere 20% of the eventual capital investment.  This is a good example of the elaborate flights of fancy that seems to emanate from the politicians of the SNP and the Labour Party under the inspiring leadership of Ed Milliband.

Despite these financial failing, no one in the previous Labour government have been held to account for the dire financial situation we were put in.  So the SNP and other politicians feel free to make elaborate promises of free services and the continuous expansion of these free services, based upon revenues which have always been assumed to be and have now been shown to be fickle in the extreme.

What would happen if Scotland had been unable to pay their national debts in the future, would they expect that England would bail them out again as they had been following the Darien Scheme in 1707.

Disentanglement

Whilst much is being made by some political elites of the wrongs, injustices and other failings that are being meted on a section of society by the other political elites.  They always paint a picture that under their “inspired” leadership things will be considerably rosier.

No politician ever wants to tell you all the truth about what would be required in order to achieve their vision of utopia, after all if they truly costed their vision properly and the practical impacts that would result from the disentanglement of countries, they would struggle to sell their vision.

At its simplest level, every single institution that current exist within your country would have to be reproduced once you choose to go “Independent”.  What are the implications?

Let’s start at the beginning

First of all – the country has decided to go independent, but what does that really mean?

  • New Constitution
  • Political Representation
  • Political Parties
  • Public Services / New Ministries / New Agencies
  • International treaties
  • Cross Border Agencies
  • Setting Up A New Country
  • National Administration
  • Judicial Infrastructure
  • Procurement
  • Immigration
  • Shared Contracts
  • Negotiation for Separation
  • Shared National Services

These are only the starting points for discussion.  Anyone wanting to add new topics or even an article please let me know.

Devolution and the United Kingdom

Having had the result from referendum on 18th September, we know that Scotland has decided for know that it wants to remain as part of the United Kingdom for now.

Part of the commitments made was that greater powers would be devolved to Scotland. The government have said whatever powers are devolved should also be assigned to each nation within the union.  In addition a resolution of the “West Lothian Question” would be put in place. In essence Members of the Parliament (MPs) Westminster, would be allowed to vote on Legislation which applies to their particular part of the Union.  Would you believe that this has not always been the case? – politicians!

This would see to be fair redistribution of authority and powers and for all parts of the union to be treated fairly.

Labour Party

Whilst the Labour seems to be content to that Scotland has not abandoned the Union, after all 40 of the 59 Scottish MPs are Labour, they are not prepared to offer the same amount of devolution as the rest of the UK.

http://www.bbc.co.uk/news/uk-politics-29606220

Yet again the English are supposed to be roll over and be compliant saps for the Labour Party.  Why are the English not entitled to the same rights as the Scots/Welsh/Northern Irish?

Is this another case of Labour Party trying to ensure that the English are able to govern themselves.  Setting regional devolution is a not started as it would mean that we are unable to govern effectively and make England the way the English want it.  Or is it another case of the Labour Party wanting to retain power at all costs.  There is nothing wrong with MPs for a specific region being the only ones allowed to vote on Legislation that only affects them.  If Scotland wants to lower the rate of Income tax, that should be the rights of the MSPs, but it should be done on the understanding that no additional funds will be transferred from other parts of the UK to subsidise their operating model.

In essence we should turn the UK into a federated Kingdom, with some aspects reserved to the Central Government in Westminster, such as Defence, Foreign Policy and departments which have a national remit, such as Passports, driving licences etc..  Most other things should be delegated to the “National Assemblies”.  The difficulty will arise as to the redistribution of funds by the central government to the regions.

This is not a simple debate, but there needs to be a realignment of the political structure of the UK to take into account the aspirations of all the nations.  Otherwise we risk a demand for a new referendum and this time from the English.

 

European Nationalism

The referendum in Scotland has set off a train of expression throughout Europe of different regions who want to have a greater freedom, or in some cases to have expressed a desire to gain their independence from their current country.

A significant degree of frustration from “local” communities stems from “distant” politicians. The number of scandals, ranging from political contributions, sex scandals, tax evasion, bribery among other things.  Also as states have centralised, they have distanced themselves from the electorate. They continually promise much or and fail to deliver, whilst the perception is that they are “lining their pockets ” and looking after their own interests.

This has been compounded by the inability of the current political elite to deal with the financial crisis which began in 2008. Their seeming inability to deal with the consequences and fallout from the banking crisis and the financial situations that countries found themselves in has not helped to engender faith in politicians.  The complete lack of vision and inertia has meant that the electorate has lost faith in the political elite and the current political structures.

The danger that regional nationalism raises, is that the leaders of the Nationalist movements will repackage the same unfounded political promises in order to gain power, whilst leaving out the important details which would “distract” the electorate.

I am not advocating that sticking with the existing political structure and political elites is the only solution to the problems of the western world, but I am suggesting that before irrevocable decisions are made that the all the questions are asked and answers are analysed and debated.

To borrow a quote from the film Dave

It’s the definition of modern leadership.

You set out a bold goal and you don’t say how you’ll do it.
The other less endearing feature of the Scottish referendum debate and electioneering, was the vitriol and abuse that was heaped on any on anyone who even dared to suggest that the proposal on the table was the wrong choice.  Again as we are seeing in Catalonia, that the only “publicity and electioneering” that is taking place is that for the “pro-independence”.  Everyone who disagrees or questions the veracity of the argument.
Healthy political debate needs to be had, but the electorate needs to become more involved and not allow themselves to be hoodwinked by charismatic politicians.  We all need to understand that budgets and the country’s finances are the responsibility of all and that we should hold the political classes accountable.  In the UK, we have seen the Labour Party mess up the country’s finances that it will take us nearly a generation to get this under control again.  Yet again, the Labour Party is promising to spend more money on this, that and the other without telling us where the money is going to come from.
Debate
I would call all of Europe to hold a debate on how we want to be governed both on a national basis and also on a Pan-European Basis.
What do we want /expect our individual countries to provide in a huge number of areas.  I am going to suggest a number of areas for consideration, but would welcome comments / feedback and suggestions.
  • Social Services
  • Transportation (Roads / Rail / Air / Ferry)
  • Health
  • Defence
  • Currency
  • Banking
  • Education / Primary / Secondary / Tertiary
  • Business Services / Industry
  • Work
  • Pensions
  • Environment
  • Immigration
  • Decision Making
  • Utilities
  • Energy / Climate Change
  • Parliamentary Representation
  • European Integration and How we want the EU to work?
  • International treaties
  • International Organisations

The Decision is In

Finally the vote on Scottish Independence is in and the vote is in favour of remaining in the Union has achieved a majority.

Some of the communication and pronouncements that have been made by commentators is that the question of Scottish independence has been settled for a “political Generation” – that is to say a 15 year period.

Having seen the turmoil and planning chaos that this particular referendum has caused, do we really want to go through this rigmarole again?

It would seem that the Scottish nationalists are not willing to move on and govern in the name of the Scottish population, but would like to continue their pursuit of the independence dream. So we are faced with the prospect of another referendum in approximately 2030.

Next Referendum

This particular referendum has been the province of those who are currently resident in Scotland and reflects the views of those individuals. The rest of the United Kingdom was not allowed to express their view on the subject.  If the Scottish people at some stage in the future wish to have another referendum as to whether they wish to remain in the Union, then the other home nations should also be given the right to decide their own status within that Union.

Shetland / Orkney / Western Isles

During the discussions and electioneering for the Scottish Independence, the above parts of Scotland requested that a separate referendum to ascertain their own relations both with Scotland and also the United Kingdom as a whole.  Part of the devolution debate should include a discussion as to the future status of those territories.

Perhaps they could be turned in Crown Dependencies with their agreement and provisions being made for the “management” of their offshore “estates”.  It would be necessary to define their future relationship with both the UK as and Scotland in particular.

Referendum Campaigning

Whilst the rest of the UK has had to sit by and watch the campaigning during the Scottish Referendum and it can honestly be said that I have been appalled by the behaviour and antics of those involved in the Yes Campaign.  The vitriol and abuse that has been heaped on anyone who has dared speak out against Scottish independence is worthy of actions of President Putin and the media campaign against Ukraine or that of the Nazi Party.

Devolution Debate

Part of the debate has been that should Scotland vote against Independence, more powers would be devolved to Scotland.  The government has said that what powers are devolved to Scotland should also be devolved to the other home nations.  It has also been suggested that the “West Lothian Question” would be resolved FINALLY.  For those who are not familiar with the vernacular. This relates to a UK parliamentary questions relating to legislation passed in Westminster.  Currently if there is legislation in question relates to say Scotland only, then only Scottish MPs vote in the legislation.  However, the current situation relating to legislation concerning English specific legislation is that ALL MPs feel the right to vote on the legislation.  Part of the re-arrangement for constitutional situation should only allow MPs to vote only legislation which relates to their part of realm.

The Labour party, has done its usual backsliding and is now opposing the resolution of the West Lothian Question.  The reason for this, is that the majority of Scottish MPs in Westminster parliament are Labour Members.  Without those members voting on English Legislation the Labour Party would probably fail to pass any proposed legislation – so as usual only what is good for the Labour Party matters.  Have the “Westminster Elite” not learnt anything from the referendum vote.

Unintended Consequences

The whole debate or at least the perception of the debate south of the border, is that all that ails Scotland is as a result of the Westminster Parliament and more specifically the English.  And what does 2 years of listening to that invective do… Congratulations Mr Salmond you just managed to make the English very fed up, THEY are not stupid enough to believe that ever Scot buys into the invective but they do now believe that it’s time to stop being ashamed of being English, and that the English deserve exactly the same rights as….. the Scottish!  Funny that!

Given the likely pursuit of the SNP to gain independence from the United Kingdom at some time in the future, the Government in Westminster should in future ensure that critical defence infrastructure should not be built in Scotland, but in England so as to minimise the cost of moving defence equipment out of Scotland.

Historically the English have been somewhat apathetic or even ashamed to say they are English and put up with the jibs of the other nations, generally with good humour.  However, the diatribes, invectives and snide remarks by the YES camp, has resulted in the English begin to question their own position in the union and what should be the rights of the English.  It has also generated a significant amount of anti-Scottish feeling.  Alex Salmond and the YES campaign should be congratulated in poisoning the relations within the union.

Questions asked regarding Scottish Independence.

An interesting page on the BBC has highlighted a small number of questions regarding Scottish Independence.

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-26620304

Pet Passports

As Scotland and Scottish residents would be a separate legal entity and travellers to the rest of the UK from Scotland would be expected to comply with OUR rules and regulations.

As a visitor to Scotland I would expect to have to comply to Scottish laws. Why should Scottish nationals / residents expect preferential treatment once they leave the UK.

The Open (Golf)

Honestly as a non-golfer, this is a question which is supreme indifference to me, but if Scotland were to “retain” the open post independence – what would be the point of

 

Royal Mail and other “public enterprises – privately owned”

The current Scottish government have said that post independence Scotland would “nationalise” the Royal Mail and possibly other “public” services. The precise details have to be costed or organised. But the basic fact that Scotland or indeed the Scottish government has not acknowledged is that the service offered by the “Scottish Royal Mail” would be more expensive to operate assuming that they offer a universal service to all localities.

The cost of postage in Scotland would have to reflect

  1. the reduced volume of business for Scottish Royal Mail
  2. Different currency and associated business costs
  3. Need to negotiate with other countries for access to the International Postal Union and cost of international mail
  4. Post to the rest of the UK would now constitute “international mail”
  5. Increased costs for business in Scotland and those sending to Scotland from the UK
  6. Would Scotland be allowed to carry on using the Postal code system devised by the Royal Mail, which presumably is Crown Copyright.

Would the Scottish government have the funds to invest in Royal Mail Scotland to ensure that they are able to compete on an international stage or would it impose a monopoly with the associated business challenges

MEPs

Following the European Elections on May 22nd 2014, Scotland will elect 6 MEPs. The question was asked what would happen to these individuals once Scotland goes independent.

The answer from the Scottish Government is that the MEPs would serve their full term until 2019. This is based upon a fundamentally flawed set of assumptions:

  • Scotland will be a member of the EU from the date of its independence.
  • Assuming Negotiations are successful would Scotland be happy to have a similar representation that of Cyprus which has a smaller population – I think not.

If Scotland were unsuccessful in joining the EU immediately upon its independence – all Scottish MEPs would by logical deduction would lose their seats as Scotland would not be an EU member state and therefore would not be entitled to representation in the European Parliament.

Another glaring example of the rosy world of the pro-independence movement.