Sunday, April 12, 2015

Against 'full-fiscal autonomy'

During one of the Scottish 'leaders' debates' Nicola Sturgeon reiterated her party's commitment to 'full-fiscal autonomy' for Scotland, something she hopes to extract from whatever government is formed in Westminster after May's General Election.  The so-called 'black hole' of over £7 billion that Scotland would have to fill either with tax rises and, or spending cuts is not my primary concern, not because it is unimportant but because I think there are two very good reasons to oppose fiscal autonomy even if it was a measure that was fiscally neutral.

1) It is not an economically stable solution to the national question within the UK.  People who are suggesting it - and they are not all nationalists - rather give the impression that the Eurozone crisis never happened.  The fact that the Eurozone has a single monetary policy but not a single fiscal policy is part of the reason why EU countries have found the recession so difficult to cope with.  For a currency union to work, you need cross-border transfers.  Given this is broadly the consensus with regards to Europe it seems very odd to suggest that within the UK we should ignore this and go for fiscal dis-integration.  This is just repeating what I said here but it might be worth elaborating a little.  As pre-referendum Alex Salmond used to like pointing out, Scotland has often ended up with an inappropriate monetary policy because said policy was formed primarily to cool an overheating economy in London and the south.  True enough but within the fiscal union, the effects of this were ameliorated with transfers in the form of welfare benefits that could be paid in Scotland without having to rely on exclusively Scottish tax revenues.  There's no reason that this situation wouldn't happen again but next time it would be without these automatic stabilisers.

2)  It is not a politically stable solution to the national question within the UK.  One wonders if this is a policy that anyone really wants?  The Nationalists may say that they do but I'm not convinced.  One of the defining characteristics of the SNP is their refusal to take responsibility for anything.  Nothing that happens in Scotland is ever their fault, even though they've been in power since 2007.  Local government cuts because the council tax has been frozen for years?  Or because they refused to even think about using Holyrood's tax-varying powers?  Don't be silly.  All ills can be attributed to the fact that we're locked in a constitutional prison with cold-hearted neo-liberals who don't like children or kittens.  The Nationalists, on the other hand, would love to help the children and kittens but they can't because they don't have enough 'powers'.  Why the ones outlined in the Smith Commission aren't enough they haven't bothered to explain.

There is no reason to think this would not continue in the future because whatever powers are given, any short of independence will never ever be enough.  Moreover, the powers that would be left reserved to Westminster would be those that rank pretty high in Nationalist demonology.  For them, particularly evil is defence spending - for lots of reasons but primarily because this involves having nukes.  Now having these is not something I'm too keen on myself but they form but a part of spending which accounts for less than 2% of GDP.  It is around the world average and slightly below that which NATO considers a minimum requirement but the notion persists that the UK devotes an abnormally high share of public spending to defence.  For the Nationalists, there is no limit to the spending that could be devoted to 'bairns', were it not for the fact that we had 'bombs'.

That would leave other aspects of foreign policy and immigration.  Here I think the Nationalists are kidding themselves a bit that we're a nation of Euro-philes who would like to see more immigration but I happen to agree with them about both EU membership and the need for a more relaxed immigration policy. In fact, I'm kind of left wondering what would be the point of remaining part of the UK in a situation like this?  I'm sure that thought has occurred to them as well, which is presumably why they're suggesting this.  I don't believe they are sincere in wanting to pay a subscription to those policy areas of the British state that they disapprove of the most.  They don't want to be part of the British state and they are clearly not reconciled to the fact that a majority of Scots do not share their view.  I don't think fiscal autonomy would work and I don't believe the Nationalists want it to work - as good reasons as any for opposing this daft idea.


Niall Murray said...

Great post. I tried to write about this myself, though perhaps with less success:

One of the downsides of discussing the "black hole" is that we can forget what a shocking idea FFA is at any time.

Agree on defence. One of the things forgotten in "bairns not bombs" discussion is that if we followed SNP and cut out Trident, we would have to spend the money saved on other defence spending, to hit our 2% commitment. So it should be "good bombs not bad bombs".

sloppy said...

hi shuggy,

a few questions.

1, What if Scotland did become independent - who could the SNP then blame?

2, Why are you pro-EU and/or pro immigration? All the opposition to the EU/immigration is not just swivel eyed loony racists.
Put it this way, do we really *need* 500,000 Polish street sweepers and cafe waitresses? Really? Can anybody convince me this is desirable? I don't think it is, and I'm leaning towards voting Out in an In/Out EU referendum.

3, I agree with you on defence but - is disarming Trident really a good idea? A - If you don't shaft the rest of the world, you get shafted. International realpolitik for dummies. B - Disarming the missiles is a long, dangerous process and the warheads need to decontaminate, or whatever it is they do, for about 60-odd years anyway. surely since we have them, we should just keep them? Undesirable as they are.

Shuggy said...


1) You mean who would they blame when it turns out not all Scotland's problems are a function of the Union? Certainly not themselves. I'd imagine they'd continue as before and would blame the terms of the deal they got for at least a generation.

2) There's problems with the EU but I think we're better in than out. Everyone wants access to the single market and those European states like Switzerland and Norway that are not members have to conform to European standards anyway but without any political influence. The free movement of labour is a considerable advance in human liberty and it's something Brits benefit from just as much as other Europeans. More generally, immigration is a net gain for the UK because it helps fill skills gaps (the NHS would collapse without it and because immigrants are more economically active. It helps ameliorate the problems associated with an ageing population.

3) On Trident, we don't really disagree. I said I wasn't keen on them but you're probably right that it would be hardly worth getting rid of them now. My point was really a narrow one: there wouldn't be any disarmament benefit in the sense of having more money to spend.

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