Opinion: An off-hand economic miracle, courtesy of new SNP Parliamentarian Tommy Sheppard

Last Sunday on Radio 4’s Westminster Hour the subject turned to the Scotland bill and the SNPs abandonment of their call for full fiscal autonomy.

About 05:20 minutes into this clip you can hear this exchange:

Carolyn Quinn – ‘Well Tommy isn’t it the case that the IFS say that if full fiscal autonomy is implemented now it would deprive Scotland of £8billion in revenue’

Tommy Sheppard MP – ‘That’s an academic estimate based on doing absolutely nothing to change the way the economy is run in Scotland.’

I had to do a double take at that. Just look at that sentence, at the sheer ingenious off-hand bullishness of it. The way it actually says ‘Yes’ whilst heavily implying ‘No’, the implication that being ‘academic’ makes you unreliable and, this being the cherry on the cake, stating that adding £8billion worth of revenue to the Scottish coffers (the equivalent of around £20 billion to the economy as a whole) would be in easy reach if it weren’t for those darn Westminster kids.

Consider that latter point for a second, the GDP of Scotland is currently just over £150 billion. This estimate includes offshore economic activity, aka the oil; Tommy Sheppard and the SNP are thus implying they have about 15% of economic growth tucked up their sleeve. 15% real GDP growth! We could all do with that. The fact that this hypothetical economic miracle is already written directly into SNP policy perhaps explains how they were able to promise so much without also promising to significantly raise the tax burden.

There’s also an interesting subtext to the phrase ‘the way the economy is run in Scotland’. If you know anything about SNP economic ideology over the last 10 years you’ll know that this means Laffer curve economics. This is the simplistic idea as advocated by John Swinney (SNP finance minister) that if you cut the Scottish rate of corporation tax British and EU companies will come flooding in creating more jobs, more growth, aka Celtic Tiger, aka prosperity and low taxes forever. The current state of the Celtic Tiger and the results of George Osborne’s own attempts to cut corporation tax have not altered the SNP’s view.

How ironic that it is old Labour people like Tommy Sheppard who now advocate Reagonomic dinosaurs like this. As the new MP for Edinburgh East has previously stated:

“I joined the Labour Party in 1979, just before my 21st birthday. Now 25 years later I’ve finally got around to cancelling the direct debit. I can no longer bring myself to vote Labour. My outlook has barely changed, but clearly the Labour Party has. I can no longer believe the Labour Party is likely to change the world very much, or at least not in a direction I would like”

It is frankly ludicrous that the SNP coalition is built on old progressives and lefties advocating a national policy of corporate tax avoidance. The mind really boggles.

Although perhaps if the SNP were honest about the state of Scotland and their economic plans they might not be quite so popular.

Tommy Sheppard MP – ‘That’s an academic estimate based on doing absolutely nothing to change the way the economy is run in Scotland.’

An academic estimate indeed.

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  • Dr Michael Taylor 10th Jun '15 - 11:27am

    The problem is neatly summed up
    “although perhaps if the SNP were honest about the state of Scotland and their economic plans they might not be quite so popular”

    The other parties have said this again and again, but SNP voters don’t believe them. Willie Rennie has done a sterling job pointing out the flaws in the SNP prospectus but we held on to just one seat and the SNP almost swept the board.

    What is needed is a way of informing the Scottish electorate that they don’t ignore – mind you that’s just as true in the rest of the UK as far as Lib Demmery is concerned.

  • Some of us remember, from our student days, Tommy Sheppard as a firebrand left wing Socialist from the NUS. Our ‘Left Alliance’ in those days included Jane Merritt, John Bridges, Leighton Andrews (hiss) and we were all ‘led'(sic) by that great Communist David Aaaronovitch.

  • George Potter 10th Jun '15 - 11:49am

    @Dr Michael Taylor

    Well the problem is that, at present the SNP can say that everything good in Scotland is because of them being in government and everything bad is because of Westminster. If they had full fiscal autonomy (such as raising 80% of spending in Scotland themselves) then they’d sink like a stone since they’d no longer be able to blame everything on Westminster.

  • The Corporations are moving into Vietnam. Labour costs that Scotland can never match and more worrying for Mr Sheppard MP are the increasing number of start-ups there. Vietnam changed its economic policy(Doi Moi) over twenty five years ago

  • Jamie Stewart 10th Jun '15 - 1:15pm

    I admire the No sides continual focus on the economy, but when it came to people voting Yes in Scotland, it wasn’t the economy, stupid! Or, more specifically, it wasn’t the macro-economy, as Scotland’s wealth distribution is so different to the rest of the UK, that there is a significant strain of “who cares if it gets worse short-term, it can’t get any worse for me”. People were voting for the long-term, which, ecomomically, is nearly impossible to argue based on supposed facts (although even the short-term argument was based on conjecture, and “academic guesses” which can be enormously wrong). I’m not a strong Yes supporter, but I do see why the short-term economic arguments may not matter to me, and why, for example, the decline of North Sea Oil wouldn’t make me less inclined to want independence.

    In the words of human geographers, a lot of Yes supporters see things in a different paradigm. I wonder when the media will catch up?

  • Jamie Stewart
    Is it so much different?
    “Most of the proportions are similar in Scotland as for Great Britain as a whole, as is their lack of change over time. The main exceptions are the richest tenth which has a somewhat smaller share of the total income in Scotland than in Great Britain as a whole (29% compared to 31%) and the poorest tenth (2% compared to 1.2%). See the UK indicator on income inequality. Because of these differences, income inequality in Scotland is somewhat lower than in Great Britain as a whole.” poverty.org
    If you want to see real poverty ,that is absolute poverty then go to Burma. You can also find in the old colonial buildings iron work from Scotland. It was as much as a Scottish colony as a British one.

  • I do find the dislike of the Laffer curve in the LibDems rather funny. It appears to have blinded some people to what it actually says. There is certainly a Laffer curve, that doesn’t mean always cutting taxes raises revenue. Simply there is a peak point where if you are to the right of it you cut taxes and will increase revenue and if to the left of it you can raise taxes and increase revenue. That does not mean the current position is either to the left or right that has to be worked out.

    Interestingly if the SNP plan is to simply cut corporation tax and see businesses flood in, they will need to be much lower than Ireland and Luxemburg as those have the history of businesses doing relocations, what reason would a business have to move to Scotland rather than Ireland?

    Ireland has suffered significantly in terms of bailing out the German (and other European) lenders who had invested in the bankrupt Irish banks without negotiating concessions; I believe this was to ensure they can’t be pressured on the question of Corporation tax by the other Euro Zone countries.

  • Richard Underhill 10th Jun '15 - 3:15pm

    “Leighton Andrews (hiss) ” is brief but unkind.

    He was a serious parliamentary candidate in Gillingham at a time when we had a “ground war” but not enough of an “air war”.

    He did campaign to “Free John McCarthy” an ordinary, innocent guy who had been kidnapped in the Lebanon. A campaign which eventually succeeded in unexpected ways.
    He did join the Labour Party and become a minister in the Welsh Assembly,.
    Was that a namesake? or impatience with the speed of our progress?

  • The SNP needs to be given the responsibility for delivering these promises and then held accountable for the results. Right now the Scottish political scene is dominated by one large party promising the moon on a stick with Westminster as a perfectly credible excuse prepared for all eventualities, and three little parties with no vision sniping from the sidelines. We can continue to rail against all the unrealistic predictions and dishonest caricatures of Westminster until we’re blue in the face, and it’ll achieve nothing. In fact, less than nothing, as the best indications available show that the SNP is looking at taking 60% of the vote in next year’s Holyrood elections.

    Full fiscal autonomy ends the situation where the SNP can always fall back on their permanent excuse if their plan doesn’t pan out. It brings a sense of responsibility to Scottish politics and would move the debate in Scotland onto territory where we can make ourselves heard.

    The political market for ‘this far and no further’ is saturated by Labour and the Tories. Defending the Smith Commission as the final destination for all devolution ambitions might even work for those parties. But for us it isn’t going to work. We should be making the case for full fiscal autonomy, even if the SNP choose to abandon it as today’s news seems to suggest.

  • Tony Dawson 11th Jun '15 - 7:58am

    @Richard Underhill:

    “Leighton Andrews (hiss) ” is brief but unkind.

    He did join the Labour Party and become a minister in the Welsh Assembly,.
    Was that a namesake? or impatience with the speed of our progress?”

    It was a pantomime hiss. I rather liked Leighton in the ’80s. As a ‘sabbatical’ on the same NUS executive, he was a considerable amount more useful than David Aaronivitch. But, it seems, he took the easier route to power. And nowadays, apparently, can be as tribal as any of them. 🙁

  • Julian Tisi 11th Jun '15 - 1:34pm

    “We should be making the case for full fiscal autonomy, even if the SNP choose to abandon it as today’s news seems to suggest.” I agree. But actually I think there are many in the Conservative party (Boris for example) who support full fiscal autonomy. How it’s delivered is a problem though. Somehow whatever the UK government does the SNP will find some way of blaming “Westminster” for all their own problems and I can see Scotland continuing to buy it.

    Nationalisk is currently a trump card beating all arguments based on facts or reason. We have to find some way of challenging the nationalism.

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