Wednesday, 30 August 2017

Holocaust, Climate Change, GERS?

Of all the things which lost the last Independence Referendum for the SNP, the thing near the top of the list would have been the SNP’s failure to win the economic argument.  Anything that the SNP said or planned to say was instantly obscured by their nonsensical policy of adopting the English Pound as currency.  So far, things are altogether different.

If you got past the currency issue, the SNP tended to promise all things to all people.  They offered Scandinavian style social and public service policies, which would be built not on high direct taxation (like the Scandinavians do) but on an Anglo-American model of low direct and corporate taxation.  The people driving Salmond’s vision of Irish levels of corporation tax was the pro-business Business For Scotland.  The high profile members during the referendum, namely Gordon MacIntyre-Kemp and Michelle Thomson, put forward visions of an independent Scotland reliant on low business taxes.  In other words, they were disciples of the cult of Laffer – Arthur Laffer’s theory is that there is a point where increasing tax rates will become counter productive has been replaced by a theory that lower tax rates will somehow bring higher tax revenues.

The claims that Business For Scotland made might have been feasible claims, but without any workings on show, they looked outlandish.  Although Business for Scotland were mostly up against the might of the pro-Union parties, it was the blogger Kevin Hague, and his methodical posts outlining how and why Independence could (potentially) not work and debunking BFS which, essentially torpedoed BFS’ credibility.  So much so that, I do believe that the vestiges of BFS’s credibility can still be located somewhere down the back of Hague’s sofa.  Hague’s posts, particularly on the GERS figures, made him a cause celebre among the London centric Progress supporting elites.  Personally, I thought Hague’s posts to be the benchmark for the economic debate we should be having, even if I disagreed with his conclusions that a £9 billion black hole in the finances (at that point) meant that we couldn’t be independent – my own thoughts being that the deficit would only be the jumping off point and that dealing with the fiscal black hole should be an election issue in the first Scottish General election.  After all, there are smaller independent countries with less advantages than Scotland would have that have made a successful go of being independent.

With great irony, another critic of the Scottish Government’s fixation on low Corporation Taxes in the belief that they generate wealth was one Richard Murphy.  A long time campaigner for fair taxation and the closure of tax loopholes, Murphy began writing a series of posts in relation to the Tax Gap – the shortfall between tax expected and tax collected and received by HMRC.  One of Murphy’s arguments has been with HMRC, who have been slow to provide accurate numbers or had obfuscated Murphy’s attempts to find out what the exact size of the Tax Gap was.  Several years ago, Murphy estimated that the tax gap could be as high as £119.4 billion, of late HMRC have claimed that they have the tax gap under control.  Murphy remains sceptical and has continued to question the competency and the veracity of HMRC.

Surprisingly, the tax gap issue did not cross into the referendum debate.  At a time when HMRC prepared figures were being used by the Scottish Government and then fed into arguments over whether Scotland could afford to become independent, it was somewhat strange to see widespread acceptance of those figures at a point when HMRC were being accused of not being effective enough in gathering tax and spinning figures to hide the extent of the problem.  After all, if the £119.4 billion figure, which HMRC refused to confirm only saying the true figure was lower, is close to the truth then it would impact on the GERS figures.  This means that Scotland’s tax take could potentially be a lot healthier.

That Murphy then has a reputation for challenging HMRC’s figures should not have been a shock to pro-Union campaigners.  What is surprising is that the intervention in relation to the GERS figures came from Murphy himself.  Granted, it would have taken the mother and father of all reverse ferrets for the Scottish Government, however both the wider “Yes” supporting community and Business for Scotland should have made this argument.  In the wake of Murphy’s posts on GERS, both groups look to be spectators in an argument they should be in the thick of.

That intervention in the spring had essentially lit the fuse on the economic debate ahead of an at that point likely second Independence referendum.  Murphy’s posts make two arguments, continuing the tax gap argument over HMRC’s poor data gathering into specific country-by-country data that is the GERS figures themselves and by highlighting that the GERS figures themselves are “estimates”.

Yip, you read that right.  HMRC’s figure gathering does not extend to accurate figures on region/country by region/country tax receipts so all figures are estimates.

Of course, Hague does have a point that most economists produce estimates and forecasts.  The problem is that the forecast debt/deficit for Scotland on day one of Independence is not reported as forecasts or estimates.  Hague’s produced figures are reported and circulated as cold sober fact.  The pro-Union politicians talk up those figures as fact.  Pro-union journalists, including friends of Hague in the national media (yes, you Nick Cohen and you John Rentoul), talk of a profligate Scottish government running up a debt in the billions as if the Scottish Government had those powers...  with those figures as fact.  Indeed, there is something of a cottage industry surrounding these factually reported estimates that it is often forgotten that alongside the figures being estimates that economists are not the one homogenous group thinking the same thoughts.  They have different thoughts and different opinions.  As an example, Monetarism still divides opinion, though not as much as it did when it formed the economic centrepieces of the nascient Thatcher and Regan administrations.

That fact seems to have evaded Hague as any time the ‘estimates’ line is raised with him on Twitter, he deliberately attempts to denigrate Murphy’s work and smugly shows off the people who agree with him without any attempt at discourse.  On Murphy’s more pertinent point, if there was no tax gap then how does Hague explain away the conduct of one Dave Hartnett.  Consultant at Deloitte, former Permanent Secretary of Tax at HMRC and the person responsible for HMRC’s notorious sweetheart deals with such companies as Vodaphone.  HMRC not being fit for purpose regarding cracking down on tax avoidance has been a regular fixture of the pages of Private Eye for years, and yet Hague and his increasingly Wings-esque union jack brandishing supporters seem oblivious to this and HMRC’s other failings while they trumpet statistical estimates as cast iron fact in a fashion that Stuart Campbell would be proud of.

I had started this post in April and had thought of the title at the time as Hague had taken to calling pro-Independence supporters “GERS deniers”.  A couple of weeks ago, during a spat with your’s truly, he went as far as drawing parallels with climate change sceptics, holocaust deniers and GERS sceptics. Instead of discourse, Hague attempt’s to lure people into a cut’s versus tax argument.  All very Osbornesque, intolerant and deeply petulant.

The problem with Hague’s tax versus spend argument is that the question of what you’d cut, a favourite question among pro-union econo.. coment... bloggers, is a simplistic one.  Independence means the opportunity to start afresh and raise revenue that would be to the benefit of the Scottish people and not be tied to the structures of the UK’s tax architecture.  Looking at how we gather money in, it must surely be in the interests of Independence supporters to look at ways of raising living standards as a whole and raise the income tax take purely through higher wages and generating jobs rather than glib 'We could all have had a bar of gold if we were independent' thinkpieces from MacIntyre-Kemp.  After 10 years of stagnant wage growth, an average wage of £27,820 seems a tad small (even if this is just above the UK average).  Of course the other area that could be looked at could be some form of land tax system.  Of which the Scottish Greens no doubt have several thoughts on that subject.

Much like everything else in Scottish politics, this debate is deeply coloured by the debate on Independence where everything is either right or wrong depending on where you sit on the great divide.  While we do not need Hague’s penchant for hallucinogenic graphs to tell us that Independence would be a bumpy ride at the start – and for that matter the SNP & BFS’s disingenuousness on this subject only feeds the cult of Hague.  We surely should have known before Murphy’s spring intervention that HMRC as a tax gathering and tax reporting organisation is simply not fit for purpose.  What Murphy has successfully done therefore is to create reasonable doubt surrounding the GERS figures.  Something the combined forces of the SNP and Business for Scotland failed to do in 2014.

Monday, 21 August 2017

The Next First Minister?

Of all the reaction’s I had received from last month’s record breaking post, the most thought provoking was one from Ergasiophobe who wondered if the infighting which infects losing parties would infect the SNP.  Thought provoking because I hadn’t thought about any internal disputes regarding the SNP.

The daddy of political splits and acrimony is still the Labour Party, It somehow seems astonishing that they should put on 10% points in the middle of something you can describe as a civil war.  We do forget though that the SNP have had periods in the past with serious disagreements over direction.  The most serious being in the early 1980’s when the SNP has a classic left versus right split.  More pertinently there has also been a split between ‘the gradualists’ – people who believed that the route to Independence was a process and that the best route was through a Scottish Parliament and powers coming to that parliament – and the ‘fundamentalists’ – people who want Independence yesterday. This debate rumbled on within the SNP for years and was only won by the ‘gradualists’ in the mid 1990’s when the possibility of a Scottish Parliament became real.  Except that now in the post Indyref climate, everyone in the SNP is pretty much a fundamentalist.

In this respect, there looks as if there are two potential flashpoints that could trigger some infighting or introspection.  The most likely point being the loss of Indyref 2, which as I’ve discussed previously looks less and less winnable in the light of the SNP’s rush to tie EU membership to the Independence question.  The other flashpoint of a possible SNP civil war breaking out would be a possible defeat at the next Holyrood elections in 2020. Of course, we have seen some disagreements among SNP members since the election with SNP members (most recently the former MP Michelle Thompson) noticing that there are issues with the party’s Chief Executive being married to the party’s leader.  If it’s taken SNP members nigh on three years for that particular penny to drop, then we better get used to a long wait for the SNP to discuss elections that they’ve lost.

That there is now outright contemplation of the end of the first SNP government at Holyrood is an indication of the trouble that the SNP are in.  Never mind a second Independence referendum, there is the possibility of the SNP being turfed out in three years time.  Scotland’s own Mystic Moog, George Laird, at the start of the month predicted that Ruth Davidson would be Scotland’s next First Minister.  It is a brave prediction, not because Davidson won’t for certain be the next First Minister but because it’s not certain at this point that the SNP have done enough to have lost the next election.

For Davidson to win, we would obviously need to see some policies and an indication of what the Tories would do with the tax powers.  A repeat of the mantra to vote Tory to stop Indyref 2 will simply not be enough to propel Davidson into Bute House.  One thing you can count on will be that Davidson will be helped along the way by her cheerleader in chief, STV’s former IT comment person and the only person in Scotland to be a fanboy of both Wings and Spanner. There are, however, two other roadblocks to a Tory win.

Firstly and probably more importantly there is the performance from now until Election Day of the incumbent government.  While the SNP have taken the important step of putting a second Independence referendum on the backburner (where it should remain until either the SNP figure out how to win or it becomes winnable) how the SNP use the next 3-4 years will be key.  Top of the must do list should be not simply to get back to the day job but to get and retain a firm grip on the job of government.  This is two distinctly different things.  Doing the so called day job has been what the SNP have been doing since...  well 2011.  What they have not been doing is gripping the job, focusing on it firmly and being completely on top of the job.  Without the distraction of Independence, would the SNP have let education standards slide as an example.  It is really for this reason that Keith Brown is slowly emerging as, if not the heir apparent then certainly the most likely successor to Nicola Sturgeon given his steady handling of his brief at Transport & now as Scotland’s Economy minister.

The other thing that the SNP can control is of course public policy.  For all that Baby Boxes is a good sound idea...  it was the only real policy the SNP had during the last Holyrood elections.  There is a real debate to be had about reform of education and the NHS, especially pertinent given the silence emanating from Edinburgh regarding the fate of the RAH’s children’s ward, and the SNP are in prime position to start and shape that debate.  That they have not in 10 years of government adds fuel to the fire that the SNP government only wish to conserve our public services and are not interested in looking at ways where they could work better.  Sooner or later, that disinterest in reform will come back to haunt the SNP.  Quite possibly when the decision regarding the RAH is announced.

The second roadblock for Davidson will be the fate of Scottish Labour.  We saw a flavour during the election just how badly the hierarchy of Scottish Labour judged the electorate by sidelining a campaign which gathered votes in England in favour of aping the Tories ‘Tough of national self determination and tough on the causes of national self determination’ message.  If they continue along the lines of ‘SNPBad’ and continue to relentlessly criticise the SNP without putting forward any constructive critiques or policies, then you will really fancy Davidson’s chances of pushing the SNP.

However, if Scottish Labour stop trying to out ‘Yoon’ the Tories and advocate more left wing policies (sidelining the ‘No to Indyref 2’ line, saying it’s up to the Scottish people) then you could see Lauren’s “red shoots” flower into a full tilt itself at Bute House, knocking the Tories back into third place.  The one problem with this is that Scottish Labour is still very much dominated by Progress wing people who do not get Corbyn or Momentum-ism.  The very people who thought they should be running a locally focused election campaign rather than one based on Corbyn’s policies.

This fear of Corbynism also explains why SNP supporters online have turned their fire on Corbyn, he is ‘apparently’ no friend of Scotland for not wanting a second Independence referendum and for supporting Trident.  That it is his party that does want Trident renewal (Corbyn himself is not in favour of it) and that the public support Trident (or some sort of nuclear deterrent) seems to have bypassed those SNP supporters.  Similarly that Scotland is itself split on the subject of a second Independence referendum seems to have not registered with those selfsame people.  The adoption of negative arguments by SNP supporters is designed to obscure the rather bare policy cupboard that the SNP have.  If anything, it is Scottish Labour that have the policy ideas, nationalising Scotrail once Abello’s franchise is complete and putting up taxes to protect public services.  Whether they are the correct policies, or as well formed as they should be is another matter but at least there is a sort of policy debate from Scottish Labour.

Scottish Labour still has a long way to go before they are capable of putting their leader into Bute House.  Their issues though are not as insurmountable as that for the Tories and Davidson.  There is still a large constituency in Scotland where the Tories are utter poison for their role in destroying Scottish heavy industry and working class culture.  That reason above all means that the next occupant of Bute House is more likely to be Keith Brown than Ruth Davidson.