The Institute for Fiscal Studies (IFS) has today released its paper ‘[The] Fiscal Sustainability of an Independent Scotland’, which oddly enough for a forecast of doom and gloom, has already received much mainstream media attention.
The full document can be downloaded as a .pdf here. The accompanying press release reads:
‘An independent Scotland would require a significant cut in spending or increase in taxes, over and above that already announced by the UK government, in order to put their long-term public finances onto a sustainable footing. The scale of this fiscal tightening is likely to be greater than that required for the UK as a whole.
These are the main findings of new IFS research, funded by the Economic and Social Research Council (ESRC). The research uses a model of the UK’s and Scotland’s long-run public finances to project levels of public revenues and spending over the next 50 years, taking into account projected changes in the size and demographic structure of the population, in order to examine the long-term public finance challenge that would face the UK and Scotland. Even under the most optimistic scenario we consider, the long-run ‘fiscal gap’ in Scotland would be 1.9% of national income compared to 0.8% of national income for the UK as a whole.’
I’m going to take the seemingly contradictory step (from an independence-supporting viewpoint) of agreeing with them in their findings. But – and there is always a but – there is a but!
Before I go on, it is worth noting the background to the IFS. This is not some entirely innocuous, politically neutral think tank. Based in London, the IFS is known for writing reports that support traditionally Tory-style ideals. ‘How can we make the rich richer?’ could easily be their unofficial mantra. So a London-based ‘think tank’, concerned with little else than growing personal wealth. I think we all know how objective they’re likely to be in the independence debate… Note the inclusion of the words ‘…under the most optimistic scenario we consider…’ in the press release. Not ‘from all possible data’, just ‘…under the most optimistic scenario we consider…’.
Back to the report.
Now it’s hardly rocket science to figure out that an ageing population, coupled with decreasing finite resources is not the ideal scenario for any country. The word ‘finite’ alone does a pretty decent job of describing things that will not last forever. It’s what the word exists for. We all know that. We know that the vast oil reserves that Scotland is fortunate enough to have – and yes, they are still vast – will dwindle over time. There is no magical refilling of these fields from below, just as is the case with every oilfield in every country on the planet. Previously unreachable reserves are now beginning to be tapped, thanks to advancements in technology and engineering, and we are beginning to find out the truth about possible oilfields off the west coast too, despite decades of UK Government secrecy surrounding them. These will one day run dry too of course, if we choose to exploit them, but the quantity of oil we previously thought we had left has in fact significantly increased.
Whether we have up to £1.5 trillion worth of oil remaining or up to £4 trillion worth (or possibly more, given the ever evolving technologies used), it’s not really the point to be honest. As with every aspect of running any country, the long-term prospects can be altered. No independent Scottish parliament is going to be foolish enough to ignore the fact that the oil will one day run out. Plans for diversifying our industries and growing our economy will be discussed, argued over and eventually agreed upon. That’s one of the fundamental roles of any government in the modern age.
The eighties saw Scotland’s industries decimated by the Tories. Service industries are all well and good, but a broad based economy is required in the modern world, and we had a huge chunk of that ripped out of the country. We can build our industrial base up again though: industries we already excel in and those we don’t – it’s up to us. And they need not be world-polluting heavy industries. A great many jobs can be created by harnessing our geographically fortunate position as a future renewables powerhouse, for example.
The IFS report also points to forecasts which say that Scotland’s population is ageing more rapidly than rUK, and that we will have drastically lower population growth. No new people and everyone’s too old, apparently. Set in stone of course…
Again, these are things that are entirely in our own hands. We in the Yes Scotland camp know that these are the forecasts, and we also know that we need our politicians to address the issues surrounding our demographics. That’s always been the case. The point is is that we can’t do a damn thing about it ourselves unless we vote to give ourselves the powers to alter our immigration policy; to build a more diverse economy; to address the ageing population issue that every country in the world is/will soon be facing.
So I believe that the IFS were probably right with their figures. But it was their figures that were the problem in the first place.
The future is not, as the IFS would have us believe, some prefabricated, off-the-shelf scenario. It is not some immovable shadowy place that we just wander aimlessly towards, like bad actors in a zombie B-movie. The future is ours to write, to mould, to shape for ourselves. But for Scotland specifically, it can only be that IF we choose to accept the responsibility of taking that future into our own hands by voting Yes next September.