IndyRef: the gift that just keeps on giving

Peter Wilson | 13/08/2014 | 0 Comments

Whoop-de-do! Another day, another UK government announcement of the big bucks it’s pouring into Scotland! It almost makes you wish the referendum process could be given an extension of time, right up until the next UK general election in 2015. Then we could be in the joyful position of watching the Conservative and Labour parties down south continuing to slug it out in order to show which of them can offer even more to Scotland after one or the other assumes government. 

Yesterday was a Tuesday so Danny Alexander was sent north again to make another of his Better Together pronouncements and to try to steal any thunder the Scottish Government might have hoped to gain from the launch of its 10 point plan to create significant numbers of new jobs under independence. Beaker has certainly learned the art of the double whammy announcement from his master, George Osborne, and in fact has even managed to turn the usual positive-negative spin into a triple whammy by – yes, you’ve guessed it – making the same big money offer twice. This time he was on Clydeside where there are serious numbers of swing voters - sorry jobs to - secure. What better way to do this than to confirm a £348m contract for three new Royal Navy patrol vessels to be built at BAE’s Scotstoun shipyard by 2017? Of course, this self-same announcement was heavily trailed last November, but that just shows the growing chutzpah of the Cairngorms National Parks’ ex-p.r. man.  

And that gets the recurring problem of Govan out of the way until well after the 2015 general election, when - if George and Boris (forget Dave, he’s toast, whatever the vote) don’t make the cut - the future of the yard will likely become Ed M’s problem. BAEs lease on the yard expires in 2019, however, so it’s not a problem likely to extend itself as far as the general election after next. Put simply, under Westminster’s and BAEs game-plan all the Scotstoun jobs will disappear between 2017-19, and as long as the yard is kept dependent upon UK Government orders for ships for the Royal Navy (with the carrot of a couple of mythical Type 26 Frigates being regularly dangled to keep the shipyard jocks in order) the ethically upstanding BAE need not spend a moment’s thought on an alternative business development plan. Cunning stuff, if not a little cynical, but then we’ve been down this road all too often before. 

We shouldn’t be mean here, though, because Westminster is putting great efforts into appearing not to be. Just days before the Commonwealth Games opened in Glasgow, the PM (‘call-me-Dave’) made one of his increasingly frequent sorties north to once again tell us he wasn’t going to get involved in the referendum as it was for Scots voters to decide, but also - completely coincidentally - to announce a £500m ‘City Deal’ investment in infrastructure and job creation in the city. This vote of confidence was made vastly more surprising by the fact that this particular initiative was designed for cities and towns in England only, with eight ‘core’ cities and 20 other cities and their surrounding areas being invited in February 2013 to negotiate City Deals. Glasgow was never in this particular picture but, moving on, some bright bunny in No. 10 obviously thought it would be a good wheeze to show a positive response to Glasgow’s continual lobbying on the subject. And so what may well turn out to be the only such opportunity the UK Government will be supporting in (what it refers to as) a foreign country was created.

But then, not too much of Glasgow’s plan to create a £1.1bn infrastructure fund will actually come from Dave’s team since his £500m is to be matched by a further £130m from other cash-strapped local authorities in the region and - LOL - by its invitation to the Scottish Government to equal the UK Government’s contribution. So, if you’ve been paying attention so far, you’ll have quickly sussed that the Scottish Government has been neatly mugged into directing nearly 60% of the finance (since it provides the bulk of the funding of most of Scotland’s local authorities) required for a strategic support initiative that Westminster has been able to claim as it’s own. And better still, in doing this, Dave & Co. have managed to strong-arm the Scottish Government into redirecting £0.63bn of its ever-decreasing Barnett Formula allocation into the pre-IndyRef direction they want. That’s devolution for you, Westminster style – still keen to tweak the rules to suit its own ends and with class p.r. management to boot. 

Not that Glasgow doesn't need and deserve better infrastructure and to its credit it has successfully managed to extract £0.5bn from Westminster that the latter hadn’t planned to spend in Scotland. But in the bigger picture (which I’ll come onto) and in terms of Glasgow’s – never mind the rest of the country’s - needs, this is really just a financial flea in the wind. 

Glasgow did receive another unexpected bonus a couple of weeks later, though, with the announcement by Culture Minister Sajid Javid (another flying visit) that not only was the UK Government contributing £5m to the Mackintosh Appeal to help restore the fire damaged building, but that it was committing a further £5m towards the cost of creating the School’s Graduate and Research Centre. Remarkable largesse really, considering funding of education in Scotland is a wholly devolved matter. 

So where does this get us? Well, an addition billion pounds a month into Scotland is very likely an unprecedented phenomenon, but then we are in final IndyRef mode just now. Will the gift that keeps on giving continue after 18 September? Absolutely not if the vote is yes, and if it is, it’s considerably less than clear whether the contract for the patrol vessels or the City Deal contribution will proceed at all since we will, in Westminster’s clearly stated terms, have become a foreign country. 

But whether the vote is yes or no, ongoing pressure from UKIP means the Barnett Formula is in the cross hairs of the UK Government’s sights and will almost certainly be brought to an end, meaning considerably less money coming to Scotland thereafter as our votes will no longer be needed. So why all the love bombing now, the constantly stated refrain that we’re Better Together and the absolute determination to throw everything possible at us to ensure we vote no? 

Well, apart from the huge savings to be made from getting rid of the Barnett Formula, there are the really big ticket items of oil revenues and taxation from the whisky industry to consider. Without these earnings, the UKs now record level current account deficit – the foreign currency Westminster needs to borrow each year to buy necessary imports – will double. Put simply, oil and whisky are essential if the UK Government is to make any inroads at all into its massive (and growing) financial deficit - and the road to ruin if independence removes these receipts from Westminster control. 

And then there’s Trident. When the colossal cost of removing it from the Clyde is totted up, a few billion temporarily sprinkled onto the Scottish economy is neither here nor there in the grand scheme of things if, by doing so, Westminster actually manages to convince us to offer up supine acquiescence to continuation of the status quo. 

Meanwhile we have another 36 days to enjoy our bread and circuses. Simples really. 

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