SNP’s secret plans to cut spending revealed
Finance Secretary John Swinney. Picture: PA
The SNP government is privately preparing for the prospect of cuts to jobs, welfare benefits and pensions after independence, amid growing concerns that Scotland faces a bleak economic future, a leaked document has shown.
Ministers in Edinburgh have also accepted the Bank of England in London would still have a controlling veto over public spending after independence under the SNP’s plans to keep the pound.
The emergence of the report, which was presented to the Scottish Cabinet by finance secretary John Swinney, comes as a former economic adviser to First Minister Alex Salmond warns in today’s Scotsman that such an arrangement would be little different to the existing “block grant” Scotland gets from Westminster.
Military spending is also unlikely to rise much above the current level Scotland enjoys, despite SNP complaints that Scotland does not get a fair deal, the report reveals. Opposition parties immediately accused SNP ministers of saying “one thing in private and another in public”, but the Scottish Government insists the contents of the report have been overtaken by events.
The paper, which was presented to the SNP Cabinet last year, emerged as finance secretary John Swinney yesterday hailed official figures which indicate that Scotland’s public finances are in better shape than the UK as a whole.
But the Cabinet paper reveals the Scottish Government anticipates that in four years Scotland will have a “marginally larger net deficit than the UK”.
This means a bigger gap between public spending and the taxes raised to fund them.
Expected North Sea revenues are set to fall in light of recently revised estimates, the report says, and this will hit the nation’s prospects after independence.
“Given the relative importance of North Sea revenues to Scotland’s public finances, these downwards revisions have resulted in a deterioration in the outlook for Scotland’s public finances,” it states.
The country’s expected net deficit has more than doubled from £12 billion to £28bn as a result of these revisions, the paper indicates.
“This high level of volatility creates considerable uncertainty in projecting forward Scotland’s fiscal position,” the paper adds. “This would, on present assumptions about onshore tax revenues, require some downward revision in current spending.”
This is likely to hit services in Scotland, with a warning that “these pressures could reduce the resources available to provide additional public services”.
The paper says Scotland’s armed forces would have a “much lower budget” than its population share and the SNP has said this would not be any more than £2.5bn.
The report accepts that Scotland’s budget after independence would be subject to conditions and any government at Holyrood would “have to ensure that it remained in line with any agreement on monetary union”.
Professor John Kay, a former member of Mr Salmond’s Council of Economic Advisers, writes in The Scotsman today that it is “hard to imagine RUK [the rest of the UK] countenancing either deficit or debt levels in Scotland significantly in excess of those for the UK.”
The SNP has also pledged to protect Scotland from the worst of the coalition’s welfare cuts, such as the bedroom tax. But the recent recession has seen the UK Treasury “absorb the risk” of soaring benefits, the leaked paper says, and Scotland’s ageing population will add to welfare problems after independence.
The cost of setting up the institutions of the new state will be “significant”, including £600 million a year for new tax body Revenue Scotland. This is double the current payments to HMRC.
But the Scottish Government insists that the paper has been “overtaken by events” with oil revenues having surged on the global market to $115 a barrel. Initial estimates from the Office for Budget Responsibility put oil prices at less than $100 in the years ahead, but other forecasters have put it at $130.
The SNP added that over the seven years from 2010/11 to 2016/17, Scotland would have been better off than the UK to the tune of £16.8bn.
Former chancellor Alistair Darling, who now heads the pro-Union Better Together campaign, said the paper was a “hammer blow” to the SNP’s credibility.
Labour leader Johann Lamont said: “John Swinney and his colleagues know the truth about the consequences of Scotland leaving the UK – in public they deny them.”
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The British Establishment are Using the Same Tactics they Employ inNI to Destabilise Democracy and Disenfranchise the Electorate
11:10 AM on 07/03/2013
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croft
10:55 AM on 07/03/2013
the problem with independence is that all the people who know how to run an independent scotland are busy running taxicabs or cutting hair..lol
Says the paid for unionit.
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Norsewarrior King
11:09 AM on 07/03/2013
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"The Communication Workers stated their view to fight for a YEs Vote are they the SNP? Women for Independence with lots of publicity in and out of ES Campaign are they SNP?"
One example of the Yes Campaign promoting a policy from either of those groups will do.
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Norsewarrior King
11:08 AM on 07/03/2013
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"As I stated earlier I will not vote for a party in Independent Scotland that wants to remain in the EU ,retain the monarchy ,or a monetary union with RUK please explain to us all how this makes me "backing with unquestioning devotion the SNP in everything?""
One example of a single occasion that you've ever criticised the SNP or any SNP policy on this website will do.
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11:08 AM on 07/03/2013
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Norsewarrior King
11:07 AM on 07/03/2013
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" you in an earlier post stated that SNP was only voice in YES Campaign ,now you want to say the Independence movement is diverse which is it?"
The independence movement itself is diverse, but sadly the voice of the independence movement - the Yes Campaign - is anything but diverse.
The ONLY policies it promotes are SNP policies - because the SNP completely control and dominate it.
As I've been arguing for months, if we are to have any chance at all of winning the referendum it is vital that the running of the Yes Campaign and the setting of its policies is immediately opened up to ALL in the independence movement, NOT just the SNP.
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jasper2000
11:06 AM on 07/03/2013
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Has the Westminster Govt. any plans (secret or otherwise) to cut spending within the discussed time scale? If so has this been contrasted and compared with the proposals in this leaked document. If not, why not ? Are pro-unionists interested in anything that approaches balanced comment or do they all jump on the next bone tossed to them by the Westminster propaganda machine?
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11:06 AM on 07/03/2013
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fittiebeach
11:05 AM on 07/03/2013
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After 300 years of union the unionists claim Scotland is too poor
dont these guys ever learn ?
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The British Establishment are Using the Same Tactics they Employ inNI to Destabilise Democracy and Disenfranchise the Electorate
11:05 AM on 07/03/2013
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Assertions that are printed by the Scotsman or any other paper are only facts as far as Westminster politics is concerned.
For true facts you have to look outside the country to what other nations are saying about UK finances.
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Norsewarrior King
11:04 AM on 07/03/2013
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"I've been trying to read comments from an impartial view-point and I cannot see your twice-repeated comment that the SNP fanatics are losing the argument. You do have examples, do you?"
I do indeed - see any of the interactions between me and 'moderate opinion' for comprehensive evidence of an SNP fanatic getting absolutely destroyed in an argument.
"Serious question - do you think that the Scotsman's articles are impartial?"
No, I already said earlier that its pro-union, I've never suggested its impartial.
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Amadeus
11:04 AM on 07/03/2013
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Ah yes the SNP's plan to create Nothern Greece but without the benefit of decent weather!
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Moderate Opinion
11:04 AM on 07/03/2013
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Your tactic of backing the SNP with unquestioning devotion and attacking anyone who even slightly criticises them is utter stupidity - it will put off the many Scots who are inclined to vote yes but who don't like the SNP.
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As I stated earlier I will not vote for a party in Independent Scotland that wants to remain in the EU ,retain the monarchy ,or a monetary union with RUK please explain to us all how this makes me "backing with unquestioning devotion the SNP in everything?"
you really look kind of stupid now ,guffaws of laughter over the keyboards everywhere as you flap around
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11:04 AM on 07/03/2013
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Colonialtoff
11:04 AM on 07/03/2013
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well well well ,after all the years of debate the unionists have to revert to the old lie as their argument in favour of the union IE Scotland is too poor to be independent .desperation indeed----------I belive it was Swinneys report. LOL
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Colonialtoff
11:02 AM on 07/03/2013
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they cannot deny that at the time of this report they were telling the world how much better off they would be to the point of being another Norway with a huge oil fund for future generations.
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