The Third Rock Forum - Ethics

Article Title

Is the Scottish tail wagging the English dog?

Author

Nick

Topic Section(s)

Politics

Economics

Ethics

Submitted : 27-08-2014 11:35

Amended : 10-11-2014 12:14

Status : Approved:

Likes : 1

Dislikes : 0

In all the coverage of the referendum on Scottish independence, there has been almost no discussion of the allocation of oil revenues. Since it is most unlikely the SNP would have dared to go for a referendum unless they were guaranteed most of the UK's oil revenues, we need to ask some serious questions.

1. How exactly is the present UK Government proposing to allocate the oil revenues in the event of a Yes vote in the Scottish referendum?

2. When was this matter discussed and decided?

3. Why was the population of the United Kingdom not even informed of, much less involved in, a decision affecting a major UK asset?

Let's get something straight. North Sea oil revenues are a UK asset. The benefits of that asset have rightly been distributed across the United Kingdom. Surely the population of the UK should have a say as to how that asset will be allocated in the event of a Yes vote in Scotland. Look at it this way. How would the rest of the UK feel if London decided it would be better off as an independent city state and took all the wealth generated by London for itself (which, incidentally, alone accounts for 22% of the UK's total GDP)?

Let's get something else straight. It seems it has been agreed, more or less, that the liabilities of the UK will be allocated on a per capita basis. Then why shouldn't the assets be allocated in the same way. Why should Scotland take on only around 10% of the UK's liabilities but almost all of the revenues from North Sea oil?

And here's a further thought that might wake up the sleeping English dog. For decades Scotland has enjoyed a bigger share of the UK's tax take than England. Here are the per capita results of the Barnett formula for Scotland and England in 2006/7. .

England £7,121 p.a.
Scotland £8,623 p.a.

This disparity (about £1,300 p.a.) persists today and shows little, if any, sign of decreasing. So Scotland has already been enjoying a very considerable bonus in the distribution of UK revenues. When you ask how it is that Scotland can have no prescription charges and no university tuition fees, now you know. We in England have been paying for these benefits out of our tax .

There are Scots who hate the English and they would vote for independence even if it meant ruin for Scotland. Fair enough. But they are in a minority. Most Scots simply want to know whether they will be better off inside or outside the UK. In other words, the referendum depends to a large extent on how the oil revenues are allocated. By what right and in whose name did someone decide to bribe the people of Scotland to consider independence by giving them most of the UK's oil assets. Remember until Scotland becomes independent, those assets belong to the UK. The key negotiating point should have been about the allocation of those assets, assets which, by the way, have been developed in part at least by massive subsidies paid by the UK Government out of UK taxes. Clearly, the English (i.e almost 90% of the population), have been betrayed by an incompetent UK Government, seemingly outmanoeuvred by a maverick, slick and tricky leader of the SNP.

So now, unless the English sleeping dog wakes up, the Scots have a chance to snaffle most of the North Sea oil revenues so they can distribute the benefits amongst 5.25 million people, rather than, as now, amongst more than 60 million. Assuming you have no sense of fairness, are uncompromising greedy, and possibly a little bit lazy, it could look like a pretty attractive proposition.

Come on guys! Wake up! I for one am signing the petition on the Government's website. At least let's get people talking about the issue. Go to: http://epetitions.direct.gov.uk/petitions/67328. Whether Scotland votes yes of no, surely it's time the English stood up for themselves.

Replies

Status: Approved

Reply Date : 27-08-2014 13:44

Author : georgebundle

Scottish vote on independence
Nick has very eloquently illustrated the truth that democratic politics seldom serve the National Interest.
Georgebundle

Status: Approved

Reply Date : 30-08-2014 23:07

Author : Bomber

Another view
If Scotland becomes an independent country, its territorial waters will
include the North Sea oil and gas installations and so any tax revenue
arising will accrue to the new Scots Treasury under international law. How
much revenue and how long it will last can only be speculated on.

The Barnett formula for fiscal transfers from the current UK Treasury to
Scotland will cease to apply after independence in March 2016. The SNP has
decided to link its acceptance of 8% (per capita) of UK National Debt to
the use of sterling as its currency. It will also expect to receive 8% of
the UK Gilts held by the Bank of England acquired through "Quantitative
Easing". Salmond will claim all this as a democratic mandate if he wins.

A Yes vote in September will likely cause immediate turmoil in the bond
markets. The UK Treasury has already had to agree to honour any UK debt
issued up to March 2016 to re-assure the markets. But this may not work as
intended.

If the currency question is not settled promptly, there will be a real
fiscal crisis. The UK's previously untarnished reputation for debt
repayment will be in jeopardy. Gilt yields and interest rates may rise
rapidly. Massive cuts across all government expenditure may have to be
implemented instantly. The deficit is still running at around £120billion
pa. The economy would tank.

On top of that 300+ years of political union will have to be un-stitched
and a whole raft of international treaties re-negotiated by both
subsequent entities. There cannot be a United Kingdom with only one
kingdom. This includes our membership of the UN, NATO, the EU etc etc but
unfortunately not FIFA.

If I were Scots I'd vote for independence, if only to be rid of the
Southern English. The Scots haven't forgotten the early imposition of the
Poll Tax by Thatcher. But goodness, if they do vote Yes - can anyone have
confidence in Salmond's and Cameron's capacities to sort things out?

Status: Approved

Reply Date : 01-09-2014 22:04

Author : Nick

Let reason, with a bit of passion, prevail

Bomber misses the point of my original article. I'm well aware of the rules about ownership of rights within territorial waters. My point was that currently North Sea oil is within the UK's territorial waters, so any UK government with a brain would have sorted out the North Sea oil issue before the referendum. My suggestion would have been that the UK government made a referendum conditional on agreement that an independent Scotland would remit 92% of the oil revenues to the UK. My suggestion now is that, if Scotland votes Yes, the UK government should refuse to conclude the negotiations on the terms of independence without getting such a legally binding commitment. (I'm pretty sure the UK government could "get a mandate" for such an approach from the population of the rest of the UK.

Is such a demand reasonable? In my view, absolutely! As I understand it, the SNP has negotiated a deal whereby the liabilities of the UK should be allocated on a per capita basis: i.e. 8% for Scotland . (I leave aside for the moment the fact that the SNP appears to be baulking at even that modest requirement). If the liabilities are to be distributed on a per capita basis, surely so should the assets. The SNP replies that the North Sea oil is in their territorial waters, so obviously it's theirs. So there! You can't argue with a spoilt child but we can agree that that particular pillar of SNP policy is unashamedly selfish and opportunistic. They didn't earn the oil; it's through no effort of theirs; it's just luck. Just as the UK has been lucky. But what has the UK done with the revenues? It has distributed them across the four countries of the UK - and incidentally, it has, (I think uniquely for any major European country) upped it foreign aid budget to the UN's target for developed countries. So no-one is perfect but the UK has behaved pretty decently with its oil revenues, both within the UK and beyond. Not so an independent Scotland. They want to grab the oil entirely for themselves.

Obviously I need to clarify this point. Are we to approve of the break-up of any political entity, if one part of that entity decides it would be better off if it dumped the other parts and went it alone? London accounts for one fifth of UK GDP. Even the mathematically challenged will realise that, if London produces such a large proportion of the UK's revenues and yet the spending per capita is higher in Scotland than the UK, the odds are London has been heavily subsidising Scotland for decades. Yet if London took that path, it would rightly be universally condemned.

Bomber also seems to be going along with Alex Salmon's solipsistic argument that a Yes vote will give him a democratic mandate to get everything he wants. A democratic mandate is binding only on the people who have had a vote. A Yes vote will give Salmond a mandate to seek what he wants (which is meaningless since he would have that mandate anyway) but it doesn't in any way mean he has a right to get what he wants. If we in England had a referendum to abolish Scotland as a political entity and incorporate it into England, and through a referendum won "a democratic mandate" to do so, I doubt if the Scots would feel we had a right to annex Scotland. How much more ridiculous is it that a region representing 8% of the UK thinks it can dictate terms to the rest of the UK on the basis of a vote amongst less than 10% of the population. In passing, I would further question the competence of any British government that agreed to a referendum which could break up the UK on the basis of what, if it happens, will be the wishes of about 3% of the UK population.

On a couple of points I agree with Bomber. First, if Alex Salmond is allowed to dominate negotiations after the referendum, he could cause chaos in the financial markets by threatening to renege on Scotland's share of the UK's debt. It would damage the rest of the UK and it would certainly not be an auspicious start for the newly independent Scotland. Scotland might well find itself in difficulties in borrowing money on the international markets for a very long time if its first act had been to renege on its share of UK debts.

Secondly, it is true that there is a different political and social mentality in Scotland from that prevailing in the UK. In crude terms, England is generally a little to the right of centre; Scotland is strongly to the left. So it is galling for many Scots when they are governed by a Conservative government; just as it is galling for many in England when, from time to time, the country is governed by a Labour government because of 60-odd Scottish Labour MPs. Anyone's response to this situation depends on their own political leanings. Clearly Bomber doesn't like the southern English, or wouldn't, if he were a Scot. That's sad. The south of England works hard and generates much of the country's wealth on which our entire welfare system depends. Without North Sea oil AND the extraordinarily generous access England had given the Scots in every area of the UK economy (in politics, business, broadcasting, the arts, etc.), Scotland would be a much poorer country. Most people in England know this; and so do most people in Scotland. Some of those Scots hate the English so much or are so left wing they will still vote Yes. But my prediction is that the result of the referendum will be NO. Why? Because the revenues from North Sea oil are uncertain and finite - and without North Sea oil and all the advantages of unimpeded access to the rest of the UK's market, Scotland would be a drab, poor, cold country with insufficient revenues to support what seems, from the main topic of the independence debate, to be, ironically, a predominantly dependency-orientated population..