Belfast Telegraph

Home News UK

Independence bonus claim questioned

The Chief Secretary to the Treasury has branded claims Scots could net an "independence bonus" of £1,000 a year as "pure wishful thinking" at the same time as he has been challenged to set out potential cuts to public spending north of the border if there is a No vote in September's referendum.

Danny Alexander likened the Scottish Government to a "gambler trying to persuade us to bet the house on a six horse accumulator" after it published a report which claimed Scotland could be £5 billion a year better off 15 years after independence.

Meanwhile Holyrood Finance Secretary John Swinney has pressed the senior Westminster politician on whether the system for allocating funds to the different parts of the UK would be changed if Scotland voted to stay in the UK.

Mr Swinney fears changing the Barnett Formula could lead to a £4 billion cut in public spending in Scotland.

He said that the Liberal Democrat manifesto for the 2010 general election had proposed replacing this with a "new needs-based formula to be agreed by a Finance Commission of the Nations", but added Mr Alexander's remarks earlier this week appeared to contradict this.

On a visit to Edinburgh to launch a Treasury paper which claimed everyone in Scotland could benefit from a £1,400 "UK dividend" if the country stayed in the UK, Mr Alexander reportedly said no party in the UK was planning to change the Barnett Formula.

Mr Swinney challenged him, asking the UK Government minister: " Why did you give that answer when you had full knowledge that your own party's Home Rule and Community Rule Commission report (the Campbell Commission) says: 'The Liberal Democrats have long believed that the Barnett Formula should be replaced by a genuine needs-based assessment'?"

The Scottish Finance Secretary said that "ma ny leading Liberal Democrats" had "long called for the Barnett Formula to be scrapped".

He went on to tell Mr Alexander: " You fought the last UK general election on a manifesto which said: 'Replace the current Barnett formula for allocating funding to the Scottish, Welsh and Northern Irish governments with a new needs based formula, to be agreed by a Finance Commission of the Nations'.

"So you know full well that elected members of the Westminster parties are proposing to make changes to the Barnett Formula because the Liberal Democrats are one of those parties."

Mr Swinney insisted that replacing the current funding a rrangements with a new formula "could lead to further cuts of £4 billion in Scottish public spending over and above those" that Westminster is "already inflicting on Scotland".

At the same Mr Alexander hit out at the Scottish Government's claims there would be an "independence bonus" if Scots vote Yes in the referendum.

"The Scottish Government's Independence bonus is pure wishful thinking," the Chief Secretary to the Treasury said.

"It is not based on evidence and is not supported by independent experts who describe their figures as 'too optimistic' and 'apple pie'. The nationalists are like a gambler trying to persuade us to bet the house on a six horse accumulator."

Scottish First Minister Alex Salmond said his Government's paper, which was published on Wednesday, ''gives a very clear picture of what independence could deliver in economic terms''.

An increase of 0.3 percentage points in the productivity growth rate could raise an additional £2.4 billion a year in revenues by 2029/30, according to the report.

Upping the employment rate in Scotland by 3.3 percentage points - taking it to the level of the five best-performing countries in the developed world - could provide additional revenues of £1.3 billion a year, it claimed.

Meanwhile, a rise in the population that is less than the UK as a whole is expected to see could net a further £1.5 billion a year by 2029/30, the report stated

''We project that over a 15-year period, the tax revenue addition is £5 billion - around £1,000 a head for every man, woman and child in Scotland, or some £ 2,000 for each Scottish family,'' Mr Salmond said.

''We describe that as the bonus of independence - the independence bonus."

The Treasury has claimed that the assumptions the Scottish Government had based this on were "hypothetical" and said it had failed to "provide a detailed assessment and analysis of the policies they would put in place to achieve them".

Mr Alexander said the Scottish Government was " asking voters to believe that breaking up the most successful union in history will increase productivity, employment and growth without explaining how this will happen."

He added: "Every Scot will get a £1,400 UK dividend if we keep the UK together - we shouldn't put that at risk."


From Belfast Telegraph