Full Fiscal Autonomy and Bust


Ed Miliband is correct, the SNP’s proposals for Full Fiscal Autonomy are a huge threat to public services and pensions in Scotland. Over the past 10 years Scotland has spent more than it has earned and the extent of that deficit, on average, has been greater than the rest of the UK. Furthermore, future projections by independent experts suggest that this situation will worsen in the coming years.

It is due to this context that the independent IFS have determined that the SNP plan to replace the Barnett Formula with Full Fiscal Autonomy will cost Scotland £7.6b per year. To put that in context, that is over 50 times what Scotland spent on Trident last year or around £1,200 per Scot. This is a policy driven by ideology, not Scotland’s interests.

Nationalists suggest that if the oil price recovers, the deficit will reduce. However, it must be remembered that the oil price collapse has not yet been accounted for in the Scottish Government’s deficit estimates. Furthermore, due to increased costs and subsidies, oil revenues are unlikely to ever fully recover even if the oil price does.

A second argument is that, due to the damage it would cause to public services, Full Fiscal Autonomy would never be supported in an unlikely Labour-SNP coalition. This is correct, but it also highlights how little influence the SNP will have over Labour.

There is one other scenario. The coming election looks too close to call and David Cameron is very keen to remain in Downing Street. His government, perhaps in partnership with UKIP, will drive down public spending based on an ideologically driven agenda, so why would he not do a deal with the SNP to reduce UK public spending by £7.6b by offering Full Fiscal Autonomy? Why wouldn’t Nicola Sturgeon and Alex Salmond not accept that offer?

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