THESE ISLANDS RESPONSE TO THE SNP'S SUSTAINABLE GROWTH COMMISSION

23 July 2018

These Islands’ major new paper highlights flaws in the SNP’s Growth Commission Report, and argues that it actually strengthens the economic case for Scotland remaining in the UK.

Click here to read the full paper

Press Release

In a major new paper to be published at 9am on Monday 23rd July, pro-UK think tank These Islands offers a detailed response to the SNP’s Sustainable Growth Commission report.

These Islands believes that the debate about the constitutional structure of the United Kingdom must be about much more than economics, but also that economic arguments must be fairly and honestly presented. In this spirit, whilst welcoming many of the Commission’s ideas for growth, this paper scrutinises and challenges the report’s recommendations.

According to the report’s author, These Islands chairman Kevin Hague: “Our paper shows that the SNP’s Growth Commission report is objectively more optimistic than the 2014 White Paper, not more realistic as has been widely claimed. In fact the Growth Commission’s report contains highly misleading analysis, fails to address the key economic questions and – we presume unintentionally – actually strengthens the economic case for Scotland remaining in the UK.”

Peer-reviewed by the These Islands Advisory Council and several respected economists, the paper makes nine observations that challenge the way in which the Growth Commission’s work has been presented:

  1. The report does not make a case for small advanced economies being intrinsically superior to larger ones
     
  2. The ‘growth potential’ claims made are unrealistic and based on misleading analysis
     
  3. By failing to compare independence with any other scenarios, the report fails to make a case for independence
     
  4. Far from being more realistic, the report is objectively more optimistic than the 2014 White Paper
     
  5. Claims that the economic model proposed is ‘anti-austerity’ do not stand up to scrutiny. If the Commission’s first Fiscal Rule had been applied over the last decade, Scotland would have seen spending reduced by c.£60bn
     
  6. Even then, the Commission’s first Fiscal Rule (to get below a 3% deficit within a decade) is not sufficiently aggressive
     
  7. The report doesn’t attempt to model the likely impact of its recommendations
     
  8. The report’s currency recommendation is symptomatic of the weakness of the economic case for independence
     
  9. The Commission, by implication, makes a strong case for Scotland staying in the UK

Responding specifically to claims that the Growth Commission “rejects austerity”, the paper notes that had Scotland been independent and following the Growth Commission's recommendations, public spending would have been £58bn - £66bn less than actually occurred over the last decade, and in 2016-17 Scottish spending would have been £8.4bn (11.8%) lower. Furthermore, applying the Growth Commission’s recommendations to Scotland’s future (under the assumption that it becomes independent in 2020-21) would be likely to lead to austerity far greater than anything Scotland has recently experienced (or is forecast to experience within the UK).

Reviewer Comments

“I fully concur with this paper's evidence-based analysis and critique of the underlying economic and spending assumptions and conclusions offered in the Sustainable Growth Commission report” – Professor Brian Ashcroft,  Emeritus Professor in Economics, University of Strathclyde

“This is a very helpful and objective analysis of the Growth Commission report's attempts to side step key issues regarding the macroeconomics of independence.” – Professor Ronald MacDonald, Research Professor of Macroeconomics and International Finance (Economics), Adam Smith Business School, University of Glasgow

“The Growth Commission seems to rely on an overly optimistic economic assessment. The reality is that the links between Scotland and the UK are much deeper that those between the UK and the EU.” – Sir Andrew Large, Former Deputy Governor for Financial Stability of the Bank of England and member of the Monetary Policy Committee

“This important paper constructively examines the recommendations of the Growth Commission by taking a thorough look at the numbers. What emerges is in fact a strong, positive argument for the continuation of the UK as the best solution for the Scottish economy.” – Brian Quinn CBE, Former Honorary Professor of Economics, Glasgow University and Former Acting Deputy Governor of the Bank of England

“The SNP’s Growth Commission deserves careful and critical scrutiny, as we have to assume it would be the economic plan of an independent Scotland, and this paper is an important contribution.” – Professor Jim Gallagher, Visiting Professor, University of Glasgow, Associate Member, Nuffield College, Oxford

Click here to read the full paper

Comments

Galen Milne 23/07/2018 18:25:28

Some worthwhile analysis that needs to be widely advertised and shared. Keep up the good work.

David Wood 25/07/2018 15:58:57

After having read through your response, my first thoughts, particularly linking to the last section, are that the author appears to ignore the elephants in the room. 1. Brexit and its implications for Scotland. 2 A complete misunderstanding of Barnett formula. The report is extremely patronising, and to me, is one of the greatest own goals These Islands will ever score. Your evidence, from your so called experts is biased in the extreme. And most of all you miss the point of what the growth commission is all about. Your last section gives a clue, and its down to the sort of society we would want to be in Scotland. To me, the words used by the QC representing the UK at the supreme court yesterday sums it all up. Scotland is a colony of the UK/England. And These Islands want it to remain so. I really do not know what else These Islands stands for. Soon I suspect you will want to include Ireland in your vision. Admittedly, I am biased. But at least the growth commission report is not. It points to a way forward, unlike These Islands which appear to me to point backwards, and your feedback comments are also biased in favour of a union which frankly is as dead as the dodo. To me Britishness is simply the same as Englishness. Nothing wrong with that at all. But it is England and Britain which needs to find herself again. Scotland has already achieved that, as has Ireland. It is indeed time that England, to find herself, needs to let Scotland go. For me it is quite simple. If Scotland is such the basket case that you infer, then why not just let us go and stop being the burden to this union which your report infers.

Kevin Hague 26/07/2018 23:01:45

David - thank you for taking the time to read the report. To your points; 1. The Growth Commission factor the affects of Brexit into their forecasts and we choose to accept that analysis - so we haven't failed to take account of the implications of Brexit (unless you think the GC have as well). All we show is that adding a Scottish Exit from UK on top of a UK exit from the EU just makes matters worse. "Two wrongs don't make a right" (as we say in the report) 2. I'm afraid that you'll need to explain why you think we fail to understand Barnett, given that among the reviewers are people who were there when Barnett was put in place (and people who've often had to grapple with the implications of Barnett). I suggest maybe you read the Barnett briefings which we've published on here - search for "Barnett" and read "How does the Barnett Formula Actually Work" and "What is the Barnett Squeeze" -- and do please post comments if you think we are mistaken in any way. You claim bias from "so called experts", but offer no evidence of that bias. We have been very careful to detail the specific issues - analytical failings, omissions and misrepresentations - that we found in the Growth Commission Report. If you have specific points where you think we have erred, we'd be interested to know - I'm wondering if you read all of the Chapters or perhaps just the executive summary? You assert that the Growth Commission is not biased, which is quite a claim (to be fair, I don't think even the Growth Commission themselves would claim that) - It was a Commission established, funded and largely staffed by the SNP and chaired by an ex SNP MSP who is openly committed to independence. It doesn't even contemplate any options other than independence and makes demonstrably not just optimistic but analytically flawed claims to try an support their case. Most seem to agree that the paper we've written exposes some pretty fundamental flaws in the GC report. Finally - and I have to say this makes me strongly doubt that you have actually read our paper - you say "If Scotland is such the basket case that you infer ..." . I think the inference is yours, you're suggesting we *imply* that - but we don't, and I encourage you to read Chapter 9 of the report which makes it abundantly clear that we think Scotland does pretty well as part of the United Kingdom.

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