Break up Britain – End up Broke. Wake up Labour – What a Joke

Politicians bandy huge headline numbers about because they can get away with it. SNP policy will cost every family £5,000 in Union Dividend. This is hogwash, but will the political commentators ever bother to do the maths and unmask the shoddy accounting and perverse spin that makes a subsidy into a dividend. Actually, they probably won’t because it would require them to actually get their calculators out and go back to first principles in economic and financial modelling. No doubt the chaps/chapesses who write the business pages can and are doing this, but the big boss editors either have their own unionist agendas or are just too lazy to publish the truth in the pages that people actually read (like the front page!?!)

Labour’s biggest problem in it’s document is that it muddles up methodologies.I’m no supporter of the SNP, but when Labour take £0.8 billion as the cost of the SNP cut in corporation tax and treat it as a cost without benefit, they just prove themselves to be economically illiterate. The reason for cutting taxes, as any Tory will tell you, is to incentivise business. The Irish economic success is something Labour can’t just shoo to one side. A cut in corporation tax will result in an increase in income tax, national insurance and VAT. Where are these in the calculation? Just because these numbers are hard to forecast, taking account only of the cost side is incompetent. 

The bulk, £11.2 billion, of the Union Dividend (such perverse phraseology) is based on historic cost principles. As I’ve already shown in ‘Growling at GERS – Calculators at Dawn’ there are massive sums allocated on completely rubbish bases. So, the pensioner in Easterhouse pays the same for the Iraq war as the city trader in London. Yeah, right, that makes sense! And, the £3 billion of depreciation in GERS would have no place in a business plan going forward.

Or how about the VAT, according to GERS and I quote “Scotland’s share of UKVAT revenue was estimated on the basis of Scotland’s share of household expenditure on those goods and services subject to VAT, as estimated from the Expenditure & Food Survey (EFS). The results should be treated with caution since they are based only on household expenditure estimates and not the share relating to the amount of VAT received from businesses registered with Scottish VAT offices or received from businesses trading within Scotland.” – Does that sound like the GERS people even believe in their own method – I don’t think so! Especially when you realise that the EFS Scottish sample might only be 667 households – or less. I kid you not.

Working over historical data and allocating it on questionable bases may give you a number – but it won’t be the right one. When a corporate banker looks over the business plan of a de-merger, the historics might be of interest, but it’s the business plan and associated risk analysis along with an assessment of the underlaying human and physical assets that’s going to make the case for or against independence. Labour have got the wrong figures for the wrong job.

What Labour have done is to create the worst case scenario. By taking fully absorbed historic costs, based on dubious methodologies, then adding all the possible costs with none of the possible benefits, the only auditor who’d be likely to sign off on their numbers are Arthur Andersens. If Labour will mount an election campaign on these numbers, they will come to regret it – if our media chums ever bother their arses to expose the sham.

Love

McGellie x 

Scottish Independence – Get Enlightened.

Why do I want Independence for Scotland – I hear you ask?

Is it because we will be richer, or have more clout internationally, or what?

Nah, although I don’t find Labour’s scaremongering persuasive on the financial front. And, Anabel Goldie’s line that Scotland has more influence in the UN/NATO/EU because we’re part of England (sorry, the UK) is simply barking, (at least an Independent Scotland would have it’s own chair rather than having to sit on Westminster’s knee).

My reasons for wanting Independence are psychological and cultural. When Scotland win at football I rejoice, when Scotland lose, I don’t despair – because obviously Scotland isn’t 11 men on a football pitch….! Scotland is a bigger, a huge concept, rich in history, culture, identity, success, failure, promise. When an author like Ian Rankin (he’s so vain he’s bound to Google himself and find this) says that Scotland wouldn’t gain anything by Independence - he’s worrying about whether he’d still be eligible for the Man Booker. He’s not thinking about Scotland or about Scots.

What Scotland would gain from Independence is not being dependent on England. In a world where people refer to the UK as England, we’re playing a crap hand by condescending to put up with that degree of invisibility. An underperforming asset. If we play Independence right, with due regard to the global PR opportunity it presents, Scotland and Scottish culture (including, but not only, the Loch Ness Monster) will come out of the shadow of England. That’s what we gain from Inedependence.

And now is the time. The consequences of the internet revolution are still being worked out. But it blindingly obvious that you can build a much bigger presence on the web than your relative population size. The internet is a great equaliser, it abolishes the need for trading borders – why not think global.

The SNP aren’t responsible for the economic success of Ireland, Norway, Iceland. Nearly half of the members of the EU have populations smaller than Scotland.  So, clearly the fearty assumption that it’s better to be big are now shown to be hollow. Being nifty is better than being big. Being sharp and clever are the premiums in a world where just about everything you touch or do could have been made on the other side of the world. Let’s stop rehearsing how it was Scots who invented everything and get on with doing it all over again (but this time applying for all of the patents).

Our biggest asset is our people – Scottish people. Scottish people who’ve gone to London at every opportunity just to prove they can. Funny how the benefit of that Scottish capital to England and the London tax take is never included in Labour’s Union overdraft calculations. Independence won’t curtail the ambition of Scots to emigrate and test themselves against unknown challenges, but an Independent Scotland will have a better chance of encouraging some of our diaspora to return (starting with the 59 Scottish MPs who’ll be kicked out of Westminster – those who really did want to serve could sharpen up Holyrood no end).

Being culturally at ease can only really be achieved in your own culture, otherwise you’re always a foreigner, an outsider. The very many Scots who live outside of Scotland or who leave because it’s the thing to do might well be persuaded that an Indpendent Scotland is worth giving a go. With opportunity no longer limited by geography, the internet makes Scotland a land in which to have a go go.

But this is the weird bit. Independence is no big deal. You still get your food from Tesco or the farmer’s market. You’ll still get your insurance from Italy, your power from Scottish Power’s new Spanish owners, buy your clothes from an Icelandic company and settle any number of transactions with a lovely call centre in India and let’s not forget the Chinese in the mix. When you vote for Independence, the Sky won’t fall in and you’ll still get Sky plus. It’s simply a constitutional rewiring. The substance will stay, but the intellectual content will be reconfigured. Being Scottish, being Scotland won’t look like a dangerous risk when looking back. In fact those gainsayers who think the Scots are too chippy(?) to be a real country will hang their head in shame.

Love

McGellie x 

Bread and Butter Tory Pudding – the Conservatives address to the Union.

David Cameron is Gordon Brown’s nightmare – we know this. But there’s worse. His visit yesterday shows a distinct lack of passion for the Union – and we know where that leads. Forget the cold showers – it’ll be an outburst of pragmatism.

 The Union is in the Tory DNA – is it hell. DNA takes millions of years to evolve. History may link the Tories and the 1707 Act of Union with Scotland – pragmatically. Tory policy can and does change on the whim of a boy wonder. When Goldie smugly says that the ‘Conservatives and Unionists are pro-union – it’s in the name’, she betrays her ignorance of the roots of her own ‘Conservative and Unionist Party’. The Liberal Unionists who broke away over Irish Home Rule in 1886 in reaction to Gladstone’s conversion to the Irish cause, later merged with the Conservatives. Goldie generalises from the specifics of the Irish question to include the Scottish question. It may work for her but Scotland is not Ireland. And, if she does want to bring Ireland into it, maybe their success as an independent state with far more influence in international forums than Scotland ever achieves in it’s role as North Britain, might undermine her own ‘objective’ position.

Meanwhile, the underlying electoral logic remains overwhelming. If the Tories ‘respect’ the ‘yes’ vote of Scots in a referendum for Indpenedence, as Cameron proposes, they will conveniently dispose of 40 Scottish Labour MPs for the cost of one Tory – and look at the quality/threat of some of those MPs – Handy! You also get to resolve the West Lothian question and you get to laugh as Gordon has to choose to further his commitment to ’serve’ in the Scottish Parliament or find a seat in England (oh the humiliation!) so he can still play with the big boys.

For now, being your voice in the Scottish Parliament is perfect. Keep your head down and let the Nats and Labour trash each other – it’s a win/win game. The time for grand magmanamous gestures will come soon enough, in the meantime, just sit back and keep on the pragmatic espousal of domestic policy, keep on eating the bread and butter pudding. 

Love,

McGellie x

The SNP deferment of an Independence referendum is a tactical mistake

The SNP are wrong to defer the independence referendum.

Why? I’ll give you three rocking reasons, starting with the weakest first:

1) The SNP idea of “gaining credibility” is not just a ticking tax bomb as Andy Kerr says, it’s gifting Westminster and the Unionists up here with a prolonged opportunity to give them a kicking.

2) Deferring the referendum puts it on the other side of the nextUK Westminster election. Since it is Westminster, rather than Holyrood, that will take the Independence decision, an immediate referendum would put the Independence question firmly on the next election agenda. Going into a Westminster election with a large majority of Scots in favour of Independence would sharpen the minds of not only the 56 Scottish MPs but all of the parties. The English will only accede to granting us independence if they can be bothered attending to the issue. It’s the sort of thing that can be dragged out indefinitely. In an election when there is a Unionist Scot seeking to be voted in as PM it is the best opportunity we will get for a generation. Independence is the most elegant solution to the West Lothian question, and the English will never vote a Scot into power. If the English can be persuaded that it’s in their self interest to let those moaning Scots get on their way, they will vote accordingly. A David Cameron led Conservative Party proposing Scottish Independence is a lot more likely than the SNP think!

3) Who gives a toss about the SNP?It is an appalling conceit by the SNP to think they can prove Scotland’s ability to be Independent. Tactically, this SNP agenda of deferment will alientate the very very large number of Labour, Liberal, Tory and NON VOTERS who want to vote for Scottish Independence (but not the SNP) in May. By wrapping themselves in the Saltire, the SNP confuse their own limited ability with a thousand years (and more) of Scottish history. They are the vessel, not the drink. Depriving me of an immediate vote on an Independence referendum, so they can prove themselves smacks, paradoxically, of a lack of self-confidence and a dubious abrogation of the independence question – as if they owned it.

Love

McGellie x

Are the SNP boring? – their website says it all.

Since the last post, I’ve had the joy of catching up with the SNPs website. The front page stories are:

Council Tax, Student Loans, Local Healthcare and Signing up to the SNP. 

Oh, aye, that’ll be me inspired.

 Love

McGelliex

The SNP are boring and slack

How long is Scotland prepared to continue hanging around at the margins of the UK?

 Rattling over to Edinburgh on the peak time “Waverly-Queen”, the land of the Metro, the two senior managers I was sat next to spent the journey in crisis talks over a media strategy document for their nationwide PLC. Quoth man #1, “Should the decisions be made by the people on the ground who know the facts or by someone in London?” Who cares what man #2 said, man #1 had nailed it.

I’ve worked with a bunch of organisations with “head offices” in London. Always the Scottish end just gets told what to do. Oh yeah, ‘a representative’ gets to the London meetings, but that’s just to ensure ‘buy-in’ for decisions that don’t reflect the Scottish facts because they are always marginal.

This is the fate of Scotland in the Union. This is why its time for independence.

But what do the SNP want to talk about – taxation!?! Oh Pleeease. Clearly the donks who make up strategy are all terribly excited about Mathewson and Souter, but when they’re not unveiling a high profile supporter all their lines on independence are fearty ones, scared in case they frighten off the cowerin timerous beasties that read the Unionist press. It is risible that the SNP have to actually come out to assure us they really will have a referendum in the next parliament – because they’ve down played the issue so much.

The SNP want to talk about tax, they want to talk about normal boring domestic ‘grown up’ politics, they want to present themselves as the credible party ready for power. But this is 2007, the 300th anniversary of the Act of Union, when at last Scotland has a shot at being the nation again. Oh come on, we’ve sung the song, worn the T shirt, and flown the flag – for so long. The symbolism matters.

No doubt the SNP think its a tactical game (it is), they think they can take my vote for granted because I want an Independent Scotland. So best keep the Independence question pushed out of sight, stop Labour getting more chances to espouse their ‘black hole’ theory.

But it ain’t that simple. By failing to fly the flag of independence proudly in this tercentenary year, the many who want Independence, but see the SNP only as a means to that end, might just not bother to vote. If Alex and Nicola are more interested in their own power, than delivering the end of the Union, a whole bunch of people like me might lose confidence. There’s an much much bigger number of people who will not vote at all if the election is fought on the ‘normal’ domestic agenda. Tax is so boring and ALL politicians are liars when they present complex data (heard a good budget speech recently?). The numbers may be true, but the messaging is twisted and mashed up - wholesome food becomes vomit.

If the SNP content themselves with playing a boring campaign it makes them look like they’ve got something to hide. Better to make the case. Just relying on Labour blowing it isn’t good enough. Complacency breeds contempt.

Love

McGellie x

ps. Why have the SNP not settled the question of the status of an Independent Scotland in the EU or at least lined up an unassailable raft of legal, constitutional and European opinion? And why have they allowed the GERS ‘black hole’ report to go unchallenged when it’s so easy to take apart (see below: Calculators at Dawn). It’s pretty slack.

Happy Anniversary England – 19th March 2007 – I didn’t forget even if you did!.

Why Scotland signed up to the Act of Union is a hot debate. Different historians draw different conclusions from the same facts – depends where they start from. But what about the English, why did they drive this incorporating act in the first place? Well, it seems it was a pretty straightforward case of geopolitical insecurity. Fighting the war of the Spanish succession was challenging enough without a bunch of tossers in the Scottish parliament taking the piss (the act of security, the act of peace and war, the wine act, the wool act). Resolving the Scottish question was the act of a mature and responsible government seeking to preserve the united monarchy and get on with taking a leading role in Europe (sic). So far so historical.

When the English signed the Act of Union on the 19th of March 1707 they got what they wanted. But this merger (that’s the polite term businesses use for a takeover when there are sensibilities that have to be preserved) wasn’t motivated by increasing sharholder returns through anticipated synergies. It was about shutting up the Scots. Making sure that the French stayed over the channel and the Catholics stayed off the throne. The Union was a job done.

But roll forwards 300 years and ask yourself now: What do the English get out of the Union? The French are their allies not their enemies, and having a Catholic monarch doesn’t seem to be much of an issue – if they want to have a monarch at all. The Scots are still a moaning bunch of gits, hogging a disproportionate number of places in the cabinet, a Scottish prime minister to boot (maybe). They vote on English domestic matters and England subsidises every Scottish family by £5,000 according to that notable statistician Wendy Alexander and…and…and they just whine all the bloody time. Why do the English put up with this? Mostly because they’ve yet to realise they’ve got a choice! Inertia isn’t the only way to do politics.

Happy Anniversary England 

 Love

McGellie x

Tony Blair – Wendy Alexander is numerically illiterate. Schhhhhhh-Scotland’s got the fizz

Cadbury Schweppes are going to demerge because it makes business sense. Any parallel with ending the Union? I should say so. The most practical one is that whatever Tony/Wendy/Jack say about the Scottish fiscal situation provides more rather than less reason for independence.

On the one hand the bigger the deficit, the greater the measure of failure of the UK as an economic unit.

On the other, all the figures they come up with are based on questionable assumptions and methodologies (see ‘calculators at dawn’ below) using historical costs which are therefore…er…historical. Going forward we will cut our cloth and our defence budget, olympics commitment etc, to fit our new circumstances. Sure there’s a challenge, but dependency is an appalling business model to build a future on.

Do you really think that Cadbury and Schweppes made the decision to demerge based on historical results? Well actually yes – because they recognise the merged business has been  dysfunctional. Will their management teams just carve up the historic costs and revenues and project them forwards? Not a chance, the business prospect of demerger is the opportunity to release the suppressed energy of the constituent parts.

Love

McGellie x

New Labour, New Trident, New Viagra

The Labour party wants to renew trident because it’s scared that not doing so will make it look weak. This is a political not a military argument and it stinks of Michael Foot’s duffel coat. Trying too hard to distance yourself from past PR disasters is just as likely to create…a new PR disaster!

One day Labour wants to set a unilateral example to the world over carbon emissions policy, the next it has to prove it’s virility by supporting a crazy whacked out anachronistic weapons system from a cold war that’s been overtaken by global warming.

What’s the point of cutting carbon emissions if you’re still prepared to invoke a nuclear winter – lights on, nobody home.

Love,

 McGellie x

Growling at GERS – calculators at dawn!

If I got a pound for every time a Unionist tried to wear me down with a statistical debate about how Scotland couldn’t cut it on it’s own, I’d save up the cash and pay off the deficit myself.

We all know that Scotland has a third of the land area and only 8.5% of the population. We all know that by simple economies of scale cramming millions into London will create a cheaper, if not a happier or better, way of providing public services. God knows what Thames water would do if it had the scale of Scottish landscape to plug leaks in.

But these are just the starting points. As others have pointed out the Barnet formula is getting squeezed which is certainly a failure of Unionism from a Scottish point of view. But what I want to do is have a quick run around GERS. This is the report that calculates the deficit. Read it. It’s informative.

http://www.scotland.gov.uk/Publications/2006/12/11084016/0 

What I got out of it was how craply the data was actually allocated between Scotland and the rest of the UK. It’s simplistic stuff. But is it sensible? or adequate? For instance defence expenditure is allocated on the basis of population. Is that not a bit daft? Well, if Scotland was independent, would you really need £2.8 billion every year to stay safe? If you could settle for £1.8 billion, that would be a billion off the independence deficit straight away – an opportunity saving. So we can all agree that GERS is about allocating existing costs and not working out whether an Independent Scotland would be viable.

But still, allocating defence expenditure on the basis of population is insane. It mean that Scots with their relatively lower income pay the same as their richer South of England Brits. Allocating on the basis of population is inherently regressive and should not be tolerated.

Small changes in methodology make big changes in the numbers. Let’s assume that income tax is a more progressive basis than population and that this is good. As the largest single source of Scottish tax revenue, should income tax in some way be matched with UK wide expenditure that can’t be allocated regionally? It would make a lot more sense that using population.

If so, then you might want to use the going ratio of 7.3% which is the Scottish share of UK income tax according to GERS. Now take all of the non identifiable expenditure which is currently allocated in GERS on a pro-rata population (8.5%) basis and recalculate it on the basis of income tax receipts to adjust for incomes. Save £921 million from the so called Scottish deficit.

The GERS report itself recognises methodological errors (appendix A) worth £440 million. And in an arcane note allocates 12.7% of a UK wide £22.8 billion adjustment to Scotland. Now, this includes timing adjustments and depreciation, which I understand, but how Scotland could take a 12.7% hit for historic and non-monetary adjustments escapes me – especially when the new National Asset Register doesn’t include the Scottish Parliament (see previous post on “Who sold the Scottish parliament”!!). Certainly no Venture Capitalist would give a toss about such historic non-monetary items when considering the viability of Scotland as a going concern.

And I’m not having it either. Someone with more time could usefully deconstruct the numbers. In the meantime I’ll split the £22.8 billion on a population basis (with which I still don’t agree) to shave another £964 million off the so called Scottish deficit, and I think there’s probably more to be saved here.

So far that’s £2,325 in adjustments to the GERS deficit – without cutting a penny from defence and other central expenditure.

Now come with me for a look at the income calculations. Methodolically, when a report says (in the context of corporation tax allocations) ”significant conceptual and practical difficulties exist…” you may want to take that as a great big warning sign. It transpires that 38% of UK tax receipts (that’s £170 billion) depend for the allocation of the Scottish element to a thing called the Expenditure and Food Survey (EFS) http://www.statistics.gov.uk/ssd/surveys/expenditure_food_survey.asp

Hold on tight, cause this is scary. The total actual survey sample achieved is around 7,850 households. Which means that if the sample reflected Scottish households on a pro rata basis, only 667 households would have been surveyed. Is a sample of 667 households in Scotland adequate for the allocation of 38% of the UKs tax revenues? I say no way. 

It gets worse. The actual sample selection is based on random post codes with no reference to geography. It follows that there’s no basis for confidence that even 667 households in Scotland get included in the surveys.

If I read about (for example) the latest ICM poll in the Scotsman on the May 3rd election, and it had a sample size of only 667 I’d be pretty pissed off and think them sloppy. If they’d taken the sample without regard as to whether the interviewees lived in Scotland and had a vote in the eleciton, I’d think they were taking the piss.

This pathetic sample size and methodology undermines any credibility GERS may hold out. 

And let us not forget the so called Scottish deficit is overbown because GERS doesn’t include the oil revenue in the calculation – £5 billion just left floating. Ok I know the SNP have turned the oil into a mantra with a totemistic quality that alienates as much as attracts, but it is absolutely unnacceptable for the Executive to prepare the GERS report on a basis which excludes oil revenues from the general calculation. Given all the other dodgy methodology floating around the report that’s just barking.

I’m not trying to put Scotland in surplus. If you’ve got a disproportionately small population density, the financial equation will always be tough. But with over £7 1/2 billion brought into question in this post alone along with some seriously dodgy methodology, make sure that any time a politician/journalist/idiot quote GERS without caveat or caution – you must stick up your hand and call them a fool.

It’s time for Scottish trident !?**!

Ok, let’s take the Scottish share of the UK defence budget – that’ll be £2.8 billion and think about how we could spend it for Scotland.

Oh, I know, we could have a tartan trident! A couple of billion a year should do it nicely to cover the HP payments from the US. We’ve got all the facilities in place and it would make us really really safe and feel very very important! Imagine an independent country of 5 million people with the ability to trash large sections of the world. That would scare all our many potential enemies away.

Of course it’s insane, but just swilling the thought around, like fine wine in a glass, (especially if you’re a teetotaller) helps explain a little more about the allure of power and how a post imperial Westminster clutches at the symbols of power – pathetic.

Spend the cash on something useful.

Loves

Mcgellie x

Isn’t it time Scotland spent its own money on its own International Aid and Development agenda?

I’ve just noticed the Opinion Poll that SCIAF (Scottish Catholic International Aid Fund) released on Wednesday 21st February. It’s a proper poll with a grown up sample rather than a self-selecting webby thingy.

I’m not going through all the results cos they’re on their website www.sciaf.org.uk, but I do think that the idea of Scotland running its own aid budget it fantastic. Currently we shovel £377 million a year into Hilary Benn’s agenda. But what could we do with that cash. Ok Hilary at Frontline Scotland will tell you it would all be a disaster. But surely the reason the Exec made a few mistakes in Malawi is because they lacked the experience, the infrastructure and the networks/contacts to deliver. If you had £377 million, you could routinely expect to pay over £20 million in administration and be in line with London’s expense ratios. With £20 million in hand you could afford to hire some seriously clever people. Patricia Ferguson is currently the minister for Tourism, Culture and Sport and – er – International Development. How does that work? The impossibility of anyone to deliver effectively on this portfolio is self-evident pretty damn obvious.

With a properly financed department, Scotland could make up it’s own mind about our aid priorities. I don’t go with the Exec’s exclusive focus on Malawi, but they only had £4 million p.a. to spend. With £377 million in the kitty, one can presume they’d want to take a more global view. Who knows what we’d want to do with that, we could certainly freshen up the agenda to represent a truly post-imperial bilateral aid policy (India is still the biggest single donee from the UK budget) and ensure that all tied aid deals are well and truly expunged from the agenda.

Isn’t it time Scotland spent it’s own money on International Aid and Development agenda.