Political Battle Over Who Can Make Scots Richer

Written By Unknown on Rabu, 28 Mei 2014 | 18.26

The battle for Scotland moved to a scrap over who would put more money in the pockets of the Scottish people as conflicting economic visions were presented by each side.

Chief Secretary to the Treasury Danny Alexander claimed staying with the UK would make Scottish people £1,400 richer than if they opted to independent.

Scotland's First Minister said his financial assessment found Scottish households will be £2,000 better off in 15 years, if the country votes to split from the UK.

Both men were presenting competing financial cases for independence at venues just metres away from each other in Edinburgh on Wednesday morning.

According to Mr Salmond, Scotland would be £5bn better off by 2029 if it opted for independence.

However, Mr Alexander said that the start-up costs of an independent Scotland alone would be £1.5bn and said there would be a gap in its public finances from day one.

He accused the Scottish Government of failing to provide proper costings for independence and warned that interest rates would be higher because of an independent Scotland's higher cost of borrowing.

Scottish Parliament The Scottish Government strongly criticised the figure. File image

Presenting his financial case, Mr Alexander said: "Today we have shown that, by staying together, Scotland's future will be safer, with stronger finances and a more progressive society because as a United Kingdom we can pool resources and share risks.

"It means a UK Dividend of £1,400 a year for every man, woman and child in Scotland.

"That dividend is our share of a more prosperous future. It is the money that will pay for better public services and a fairer society."

Mr Salmond claimed that Scotland's finances in 2016-17 would be similar to, or stronger than, both the UK and the G7 industrialised countries as a whole.

He said: "Scotland is one of the wealthiest countries in the world, more prosperous per head than the UK, France and Japan, but we need the powers of independence to ensure that that wealth properly benefits everyone in our society.

"That wealth means we will start life as an independent nation with strong finances and huge economic potential.

"The latest figures show that by using the powers that only independence will bring we can deliver an independence bonus with increased revenues for Scotland."

Mr Alexander said under independence Scottish people would have to work an extra two weeks before they stopped paying tax and started earning for themselves. Tax Freedom Day for the UK this year is today.

He was dealt a blow overnight when the academic behind the research claimed the Treasury had "badly misrepresented".

Patrick Dunleavy, a professor of politics at the London School of Economics (LSE), says that when Treasury officials used his research to calculate the start-up costs of independence, they overstated the figure by 12 times.

Officials had previously briefed that, partly based on the research of Professor Dunleavy, they estimated the start-up costs for an independent Scottish Government at £2.7bn.

It was a calculation of how much it would cost to set up 180 government departments, in line with recent equivalent costs in Whitehall.

The Scottish Government had strongly criticised the figure, saying it would not need anything like 180 departments and that much of the departmental infrastructure was already in place in Scotland.

The Professor himself echoed the view.

He wrote on Twitter: "UK Treasury press release on Scotland costs of government badly misrepresents LSE research.

"Appears to take minimum Whitehall reorganisation cost of £15m and multiply by 180 agencies to get £2.7bn. Overstates maybe 12 times?"

Later, he tweeted: "Could they be this crude? Phone call from Treasury guy later confirms: Yes, they had been."

Scotland's First Minister Alex Salmond has demanded the Treasury withdraw the figures and apologise.


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