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.