Wednesday, 11 May 2011

World Renowned Economist says: 'Scotland subsidising rest of UK'

World Renowned Economist says: 'Scotland subsidising rest of UK'

A leading Professor of Economics, Andrew Hughes Hallett, has sensationally confirmed that Scotland has been subsidising the UK treasury in London for years and that the Calman Commission recommendations are unworkable and potentially damaging.
Professor Hughes Hallett (pictured) also rubbished claims by leading Scottish Labour politicians that an independent Scotland could not have survived the banking crisis by explaining that much of the liabilities suffered by HBOS and RBS would have fallen on England.
Hughes Hallett, who is a Professor of Economics at George Mason University in Washington DC and St Andrews University was appearing on Radio Scotland’s ‘Newsweek’ show when he undermined much of what Unionist politicians and Scottish media commentators have been saying about Scotland for years.
Professor Hughes Hallett confirmed that Scotland subsidised the UK and also described the perception that public spending in Scotland is 20% per head more than the UK average as “misleading”.  He gave, as an example, the defence figures where the actual monies spent in Scotland was £0.8 billion LESS than the official treasury figures.
Prof Hughes Hallett said:
“The usual perception is that Scotland spends about 20% on public services more per head than the UK average...
“Those numbers are very misleading mainly because the spending in that part is what’s spent on behalf of Scotland but not necessarily in Scotland.
“The estimate for Scotland’s share, that’s contributions to defence, is 2.8 billion but it’s roughly 2.0 billion are actually paid out in Scotland
“So there’s an implicit subsidy going south in that sense and you can think of lots of other examples ...”
Hughes Hallett added:
“At the moment, on the current account, there’s a subsidy going to London, which is helping London.
“When you get down to it, on the current account for the last five years at least, maybe longer, Scotland has had a current account surplus, which is currently according to the national accounts in Scotland £1.3 billion.”
Asked whether Scotland would definitely be better off, Prof Hallett replied: “You can definitely say that it [Scotland] would be better off in terms of the revenue.”
Scottish revenues and banksProf Hughes Hallett pointed to ‘missing’ income that is generated in Scotland but is actually attributed to London, giving the Crown Estate as an example saying: “The Crown agents who take fees for electricity generation and give it to the Treasury...”
Professor Hughes Hallett also destroyed one of the myths surrounding the bail out of HBOS and RBS claiming that their dealings in England would have meant that England would have shouldered a significant part of their liabilities.
Professor Hughes Hallet said:
“They [HBOS and RBS] have substantial activities in England as well as elsewhere and therefore the burden of bailing them out would have to have been shared in any case.
“And there are plenty of precedents for that.  The Dutch-French banks and the Belgium-French Banks that went bankrupt had to be bailed out jointly by the responsible authorities, and so it would have been shared.”
Professor Hughes Hallett’s experience has covered many areas and range from international economic policy to financial market stabilisation.  Apart from a wide range of academic posts with Princeton, St. Andrews and other universities around the world he has also acted as a consultant to the IMF, World Bank, Federal Reserve, UN, European Central Bank, UNESCO, OECD, numerous central banks, governments and other organisations.
His comments will have strengthened John Swinney’s case that Scotland would be better off financially with economic independence.  They also come on the heels of the assertion by former World Bank chief economist, and key aid to President Clinton, Joseph Stiglitz that successive Westminster governments had 'squandered' North Sea oil revenues instead of investing them.
Listen to Professor Hughes Hallett’s interview here: Download Embed " readonly="readonly" type="text">
SNP MSP Joe Fitzpatrick seized on Hughes Hallett's comments arguing that Scotland is not dependent on hand-outs as argued by his unionist opponents:
"Professor Hughes Hallet has confirmed what John Swinney and the SNP have been saying for years. It’s economically unviable for Scotland to remain part of the union and subsidise the rest of the UK. For years Scotland has more than paid its own way, only for unionist parties in Scotland to peddle the myth that it is the other way around."
As the crisis in Britain's public finances deepens and David Cameron's austerity cuts start to kick in, the debate in Scotland, in the lead up to the Holyrood elections next year, will focus on jobs and the economy.
With polls showing most Scots blaming the Labour Party for the critical state of Britain's public finances Iain Gray, Labour's Holyrood leader, will try to shift the focus of the campaign onto Tory cuts. As the SNP government's principle rival though, Labour will be forced to defend a union in economic dire straits and explain why voters should trust them to get Scotland out of a hole dug by Labour.
With world-renowned economists such as Stiglitz and Hughes Hallett endorsing the SNP's case and with London spending deficits ballooning, nationalist leaders will calculate that the burden of proof of economic credibility will shift from the SNP to Labour.

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