Monday, 15 June 2015

Full Fiscal Project Fear Arrives As Expected

NICOLA Sturgeon flew to the USA; she walked back.
OK then, I've been absent for a while. Och well, it's not like anything much has happened lately. We've had an election, seen SNP take 56 out of 59 Scottish seats, saw labour lose 40 out if 41 seats, most of their best known MP's and its revered leader, James Murphy esq. We saw the Lib-dems decimated across the UK, saw Ed Miliband and Nick Clegg fall on their swords and resign, saw Davie Cameron fluke a wafer thin Tory majority in Westminster and ex Secretary Of State for Scotland, Lib Dem Alistair Carmichael, shown to be a lying toerag who instigated an attempt to smear the first minister during the final stages of the election and just managed to cling on to his own seat after losing 85% of his previous majority to the SNP, making him the sole Lib Dem in Scotland.. This became evident after the election {quelle surprise} and has led to calls for a rerun of the election in Orkney and Shetland and a public campaign which raised £60,000 to cover fees for a legal challenge to his election. With the only Tory MP in Scotland now made Secretary Of State, that joke about more pandas in Edinburgh zoo than Tory MP's now applies to all the main UK parties.  Have I missed anything else? Aye. The sad death of Charles Kennedy from alcohol related illness which appears to have been blamed on the SNP winning his seat and breaking his heart or his will to live depending on which paper you read.
Things have moved on. The 56 new SNP MP's have finally managed to find seats and offices in Westminster, have been allocated responsibilities, including chairing two committees and have got down to the day to day business of raising Scotland's profile by peeing off the Westminster establishment by clapping, asking sensible questions, turning up for work every day and ordering a chip buttie in the canteen.
As you would expect MSM has not been best pleased by the lection results and take every chance they can to put a negative spin on any SNP doings as nasty threats to the integrity {sic} of the UK and fiscal irresponsibility. This is particularly true of the amendments requested to the Scotland Bill, that watered down, rushed through, ill conceived and unworkable proposed legislation designed not to fulfil 'THE VOW' but to trap the Scottish Govt by giving them only the most toxic and unbalanced set of powers possible and goading them to try and use them to off set the ideological austerity that most respected economists are now publicly saying is not only unnecessary but damaging to the UK economy. Here's an intelligent and balanced take on some of the issues around what's happening now from Iain Macwhirter   In The Herald on Sunday this week he wrote:
So goes the joke about how "Saint Nicola" as Labour's Lord Foulkes calls the First Minister, went down so well stateside she now walks on water.

There she was swapping jokes with Jon Stewart on the Daily Show, holding artsy receptions at the Lincoln Plaza in New York, lecturing officials the White House, meeting the IMF's Christine Lagarde, but not President Obama. "Well, we didn't ask" said the Scottish Government, somewhat disingenuously.

All this adoration of Ms Sturgeon seems unfair. Few political leaders get such star treatment, not even Alex Salmond in his hey day. (What was all that about him being the back-seat driver?) She has managed to combine being an elected leader with being a celebrity. Well, she should enjoy it while it lasts, say Labour.

Back home the press was full of new "blows" to Sturgeon over the falling price of oil. "Nicola Sturgeon's dream of full fiscal autonomy in tatters" cried the Daily Record. The referendum was supposed to have resolved the constitutional issue, but clearly the campaign is still running, only now over FFA.

Press commentary had been dominated by a claim that the SNP was "running scared" of calling for all tax powers to be devolved to Holyrood. Sturgeon had, the headlines claimed, "shelved" plans to table such an amendment to the Scotland Bill.

"The SNP promised in their manifesto to deliver FFA", said Labour's Shadow Scottish Secretary, Ian Murray, last weekend, "but they have barely settled into their Westminster offices before abandoning it."

However, when the SNP did then put down an amendment to this effect four days later, the critics did a handbrake turn. "The SNP's economic credibility is in tatters," said Ian Murray, even though they were doing what he had been urging them to do.

The odd thing about this whole FFA debate is that everyone knows it's not going to happen. Labour and the Tories were never going to hand over full tax-raising powers to Holyrood. Yet if you read the Scottish press you'd have thought Scotland was on the brink of actually getting devolution max.
It's like that early referendum which people said Nicola Sturgeon was going to call when she clearly wasn't. David Cameron has always opposed fiscal autonomy on the grounds that if you give full economic powers to Scotland it might as well be independent. And he has a point. Full fiscal autonomy is a policy that no-one really wants, even though everyone seems to want to talk about it.
The SNP talk about fiscal autonomy because they see it as a step to full independence. Their amendment is intended to call the bluff of Conservative MPs who have been saying that it is about time the Scots were jolly well told to manage their own affairs and stop robbing English taxpayers.
Labour and the press want to talk about fiscal autonomy because falling the oil price makes independence look like a bad deal. They assume - wrongly - that fiscal autonomy is essentially the same as independence, and so they can use the same arguments.

But the lesson of the referendum, and even more so the General Election, is that FFA actually made relatively little impact in the end. The relentless warnings in the press about "deficits" and "black holes" didn't stop the SNP winning the biggest landslide in election history. And the focus on FFA since the election is doing little to help Labour recover its lost ground in Scotland.
Last week's Herald/TNS poll on Holyrood voting intentions was devastating. It suggested that 60% of Scots now intend to vote SNP in the Scottish Parliamentary elections next year, leaving Labour with precisely zero constituency seats in Holyrood. Worse, it indicated that 80% of voters under 35 are now supporters of the SNP against only 6% for Labour.

The Labour Party is dying out in Scotland, yet it continues to bang away relentlessly on the same message without asking why it isn't working. Are the voters just stupid? Why can't Scots get the message that they can't go it alone without economic hardship?

In fact there's reason to believe that the FFA scare, like its parent Project Fear, has actually damaged the Union rather than strengthened it. The rhetoric is entirely negative and to many Scots, demeaning. It is effectively saying that, unlike any other small country in Europe, Scotland is uniquely incapable of running its own affairs and managing its own economy.

Unionists insist they are not saying Scots are "too wee too poor too stupid" but that's how it sounds to many voters. That is why so many Scots get angry about the press reports on Scotland's alleged inability to finance independence; they think it's just running their country down and they don't like it.

Actually it's worse - it looks like a case of: "The UK got the oil, now it's running out, you're on your own. Hahaha." Scotland remains the only nation, state or region to have oil discovered in its waters and receive no direct benefit.

Nicola Sturgeon understands this, which is why she hardly bothers rebutting the IFS numbers. She isn't like Alex Salmond, who used to get riled and would argue the toss endlessly about the economic numbers. What she has been doing, with considerable success, is acting as if Scotland already was an independent country.

Critics say she is running away from the reality - but what actually is the reality here? If there were fiscal autonomy, the calculations based on the General Expenditure and Revenue Statistics would no longer apply. Scotland would be raising all tax locally and sending a subvention south for common services like defence and foreign affairs. That would have to be negotiated as would Scotland's burden of debt and repayments.

There would also be the tricky question of equalisation payments between Scotland and the UK. This is not independence, but a form of federalism, so even with fiscal autonomy there would be transfer payments to be negotiated as there are in all federal systems.

This may sound like the Scots getting their cake and eating it, but the point is that FFA, unlike independence, does not mean fiscal separation. All financial relationships would be subject to continual negotiation like everything else in a federal system.

There is little point in speculating about the precise nature of these negotiations because FFA is not going to happen. What is going to happen is much worse than FFA. Next year Scotland gets to set a Scottish rate of income tax - but no powers over the other taxes - and an invitation to use it to reverse Westminster-imposed benefit cuts.

This is a transparent fiscal trap. The Unionist parties hope the Scottish Government will repeat the "penny for Scotland" campaign of 1999 and lose votes in the election. They assume Scottish voters will never vote for increased taxes.

But it sounds as if John Swinney is minded to call their bluff and offer precisely that at the next election. And if he makes a sound moral case, he may well get away with it. The politics of tax are different in Scotland as the Tories found in the 1990s. And the more Labour appears to be using the same language as the Tories on taxation, fiscal autonomy and the Scottish "deficit", the more it is alienating its own core voters. Those voters would much rather take selfies with the woman who has become the living embodiment of the values of the new Scotland.

Listening to: