SNP: A path to fiscal autonomy, but do the sums add up?
We’re at a moment of elite incomprehension over Scotland. When a magazine like the Economist berates Nicola Sturgeon for moderating her manifesto, calling it a “suicide note”, you realise how disorienting was the bomb the SNP dropped into politics with its manifesto yesterday.
Let us review the fiscal outlines of what the SNP proposes. It wants – as the IFS explains today – to take the amount of Scottish public spending controlled by Holyrood from its current level – around 7 per cent as calculated by the Institute for Fiscal Studies, to several tens of billions more.
If Westminster sticks to the principle of the Barnett formula, whereby further moves to devolution come with “no detriment” to Scotland, then any costs associated with such increased fiscal freedom would go on being funded by the taxpayers of the whole UK.
However, at the moment Scotland became fiscally autonomous – that is, raising and spending most of its taxes itself – the Barnett principle would be over. Then the gap between Scottish spending and taxation would appear as a transparent “Scottish deficit”, which as the IFS points out would be bigger, percentage wise, than that of the whole UK’s.
Specifically, if nothing else changed, an IFS report today says Scotland would be running a £9.7bn deficit by 2019, compared to a UK surplus. However the SNP’s case is based on the assertion that almost everything would change.