An independent Scotland and the pound

[Updated below] This is one of the crunch issues in the will-we-won’t-we debate on the independence referendum.

Today, 23rd April, in a well flagged position, UK Chancellor, George Osborne came to Scotland to raise issues around whether or not Scotland would retain the pound were it to decide to leave the Union on 18th September next year, 2014.

With plenty of advance warning on what the Chancellor was to say it was no surprise when First Minister Alex Salmond was, literally, on his toes at his residence in Bute House in full rebuttal mode.

The issues being batted around are things like whether Scotland would be permitted to use the pound; whether so-called ‘Scottish’ banks would be permitted still to print their own branded currency notes; and the risks to Scotland and to the then three nation Union if Scotland were using the pound. Some of this is essentially fluff but some has substance.

Basically, Scotland, may, if it so wishes, use the pound anyway – but without the benefit of the Bank of England acting as lender of last resort – a very necessary guarantee for an emerging country, both for its residents and for its lenders.

If Scotland wanted – and it would need – the reassurance of being a member of a full currency union, it would have to cede control of monetary policy to the Bank of England.

This raises two major issues:

  • Monetary policy governs what is possible in taxation, spending and borrowing – so where would any genuine independence come from in having monetary policy decided outside the country?
  • Our current situation is that the Bank of England controls monetary policy throughout the Union. So what would be different in the major essential of statehood between the way we are now and the way we would be if we voted for independence? The difference would be the level of debt we would incur from the huge set up costs of all aspects of an independent state – added to our inherited share of the national debt [£110 billion] – all of which we would have to service alone.

The risks to a Scotland either in using the pound without the Bank of England as lender of last resort or as the user of a brand new currency are the steep initial costs of borrowing – to service the serious debt level noted above.

Without a guarantor, our use of either of these currency modes would mean that our loan charges would be much higher than those paid by the UK – because we would be an unknown factor. That’s the way lenders set their rates. It’s not a one-size-fits-all thing. We would have to earn our way to lower borrowing rates by becoming a reliably secure growth economy – and there is no economic development strategy before the public at the moment. No one currently knows how we would propose to manage our economy.

Of course it is in the interests of the UK as a whole that we have a currency union.

Who wants to visit family and friends or buy goods and services from either side of the border – and get into the faddle of currency exchange rates and having the right currency for the moment in your pocket.

But we’ve already got that ease of movement and purchase because we are already part of a currency union.  Why go into serious debt to achieve the appearance of independence and the right to live as we currently live?

If Scotland were to opt for independence, of course the three nation UK would make a currency union possible, whatever the disingenuous George Osborne or anyone says in the games-playing of the moment.

They UK would, however, have to protect itself from risk from the unpredictable performance of a new state. It would have no choice but to require monetary policy to continue to be controlled throughout that union by the Bank of England – and Scotland would have no choice but to accept that.

If an independent Scotland were sufficiently strategically unhinged as to join the eurozone and adopt the euro, we would simply have our monetary policy determined by the European Central Bank rather than the Bank of England – and there would be no way around that for either side.

In fact, German Chancellor, Angela Merkel, is yesterday reported as saying that eurozone member states must accept that the EU will have to govern national budgets. She said: ‘We seem to find common solutions when we are staring over the abyss, but as soon as the pressure eases,, people say they want to go their own way. We need to be ready to accept that Europe has the last word in certain areas. Otherwise we won’t be able to continue to build Europe.’

The First Minister’s rebuttal took some pretty fantastical turns, managing – simply by saying so -  to sever tax and borrowing from the influence of monetary policy.

He also did his usual chucking into the ether of various sums of billions of pounds to ridicule any risk from Scotland to a currency union.

But the problem here is that this too is smoke and mirrors.

Scotland is not potentially a much richer country than the rest of the UK.

Gross Domestic Product [ GDP] which is calculated from the revenues of, for instance the oil, whisky and salmon farming industries, is not a true or a safe measure of our wealth. Why? Because almost all of these industries are owned outside Scotland and the revenues are exported.

Conversely, earnings generated by Scottish companies operating elsewhere, are repatriated here and do not figure in GDP.

GDP per head is therefore not an accurate way to measure standards of living.

If you use GDP per head as such a measure, it is correct that, in 2010 and in the developed countries within the Organisation for Economic Co-Operation and Development [OECD] a separate Scotland would have come 6th, where the rest of the UK would have been 15th in the list.

However, if you use the much more accurate indicator of gross national income per head as your measure, a 2010 list of the countries in the OECD with the highest standards of living, would have seen a separate Scotland and the rest of the UK in equal 13th place.

A study from Glasgow University’s Centre for Public Policy for Regions [CPPR] has just concluded that, were Scotland to become independent, standards of living would be no better than they are at present.

So the First Minster’s fast segueing to the balance of payments in his televised response to the Chancellor at lunchtime today, simply disguises the fact that the CPPR study emphasises: that the issue here is neither for nor against independence per se, but is the imperative to have far greater clarity and consistency over how the Scottish economy is measured, were it to be an independent state.

Update 21.00 23rd April: The First Minister also said today: ‘These negotiations [Ed: the currency Scotland will use] will take place after [Ed: his emphasis] the vote.’

This means that the First Minister seriously expects responsible Scots, voting on an irreversible decision on their country’s future, to take that decision with no idea whether the country would go on to hand over to another authority – the Bank of England or the European Central Bank – the responsibility for its governing monetary policy.

In such an event they would not get anything like the independence they thought they were voting for. They would have been asked to vote on a false prospectus – and, tellingly, a knowingly false prospectus.

There will be some who vote blindfold but these days these are far fewer than in days of yore. This is a concerned electorate that will interrogate the key issues – and, quire reasonably, the financial issues are the heart of the matter.

The most idiotic suggestion of the day was a carefree Patrick Harvie, Convenor of the Scottish Greens. On the currency issue, Harvie actually said Scotland might introduce a new currency of its own very gradually and over a much longer time. What right would a separatist Scotland have to expect the three nation Union loyalists to let us use the pound for as long as it suited us, alongside introducing something else as yet unknown.

And how exactly would we introduce it ‘very gradually’? Would our children get mixed currency pocket money to improve their maths on exchange rates – a bit of the GBP and a bit of the newbie?

And which currency would be used to pay the pensions the Cabinet Secretary for Finance himself is on the record as saying he is concerned Scotland may not be able to afford?

Would the Bank of England act as lender of last resort for our use of the pound – while who exactly would underwrite our use of the newbie currency?

And the First Minister and the Greens Convenor are frontline figures in the Yes Scotland campaign. Are the lifejackets under the seats?

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145 Responses to An independent Scotland and the pound

  1. Utterl and completely incoherent economic nonsense.

    Obviously you have been asleep.
    I’ll just write some simple stuff you might inderstand
    Scotland now has a higher percentage of people in work than the UK
    Scotland has lower unemployment levels than the UK
    Scotland has a higher per capita export level than the UK
    Scotland per head contributes more in tax to the UK than any other region of the UK except the South East of England and city of London.
    Scotland’s economy is growing. The UK’s is contracting.
    Our share of the national debt is just as servicable on a per capita basis as is the UKs. We have of course our share of the national assets including our share ,for instance of the Bank of England and all its assets.
    The Scottish economy has been in comparative surplus for all of the last thirty years – the UK’s rarely.
    They are of course hanging onto us because the benefit runs the other way
    Or are you trying to sell us the ludicrous idea that they are hanging onto us to provide us a with subsidy.
    You are insulting the intelligence of your readership and a continuous basis now.

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    • Has it not dawned on Dave McEwan Hill that perhaps all his comments have come about because we are part of the union. This vote is not. For Christmas but for ever

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      • Sorry plugit you are wrong no one can tell future generations that they must adhere to their ancestors decisions anymore than I am bound by my Grand father or great grandfathers opinion

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    • 1. The Scots have a better way of life than the rest of the UK, because they are all subsidized by the English taxpayer.

      2. If you live in Scotland you’ll get treated better and will enjoy a larger slice of the gross national product due to the generous grants from England

      3. Hadrian’s wall is to be rebuilt. (OK don’t get upset, Scottish brickies will rebuild it, and the English will foot the bill.

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      • Scotland is not subsides by the english taxpayer, Mr Hill at 1 above is perfectly correct, and you can see this if you look at GERS (which is produced by the civil service from UK Government statistics). If the “English” grant you refer to is the block grant then you need to know that it represents a small part of the taxation paid by Scotland and the Scots into the UK exchequer.

        I also have to take issue with the article and the faithful reposting of the CPPR work. I suspect that this work might have suffered from an excel spreadsheet error too. As to the article it is not Revenue that is exported, but the aligation is that profit is exported, a very different thing.

        But I would ask the editor to think where the £100 billion, for example, currently slated to be invested in offshore oil and gas in the next 5-7 years comes from? Also to speculate on what it is spent on give there are several hundred indigenuous oil service companies in Scotland, and there are 350k scots working in the indigenous industry, as well as tens of thousands of Scots working in foreign projects and repatriating their substantial incomes back to Scotland.

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      • @spinnin’ in the wind

        1. Can you provide any actual empirical evidence of this?

        2. Can you provide any actual empirical evidence of this too?

        3. Hadrian’s Wall is actually in England, in some places by @90 miles – so if you rebuild it you cut off many, many English folk ( who live in Northumberland and Cumbria) from er. er England – a wee clue is that the town of Wallsend is just outside Newcastle

        You need to check your spellchecker to as subsidised isn’t spelled witha “z” in the UK

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  2. The Deputy First Minister has much less ebullience than you exhibit on the matter of Scotland’s ability to cope with its share of the national debt.
    Just over a week ago she made an impassioned plea for Scotland NOT to get its share per head of population of this debt [variously given as between £92-£110 billion].
    Her argument was on the tortuous grounds that historical tax contributions should be taken into account.
    Another matter to which we have repeatedly drawn attention is the apparent intention of the Scottish Government – were Scotland to vote for independence – to use oil revenues to create a feel good bubble for the first years – subsidising more giveaways and paying for our current inflated social costs, including the universal benefits no sane country can or should attempt to afford – and which the First Minister has recently defended and pledged to retain.
    What on earth is the logic for raising tax revenues and public sector costs to give so many people subsidies they do not actually need and can afford to pay for?
    An independent Scotland would only grow if every petrodollar were to be spent only on infrastructure and economic growth.
    Otherwise, the feel good bubble gained by wasting oil revenues would leave us flat broke with nothing in the cupboard, as the oil reserves decrease.
    Leaving the union does not begin to stack up – and the set up costs are dead money.
    Establishing all of our independent administrative, regulatory and governmental systems will cost huge sums and require massive borrowing we will pay deary for over a prolonged period – yet will leave us no better off than we are today, where these systems already exist and support us within the union of which we are a part.
    Scotland’s public sector and its social costs are at a scale that will bring the country down – and its public sector would become even more grossly inflated with the addition of an army of additional public servants to develop and man the spectrum of public sector functions for which we would then be solely responsible; and to build and man the rather vainglorious plans for a full diplomatic service, embassies and a major defence establishment that fall so lightly from the First Minister’s lips.
    Thanks in no small measure to the spirit and freshness of the SNP’s 2007 minority administration, Scotland has acquired an independent sense of itself that has changed its energies to a degree.
    That is useful – but is a long way from making sense of a proposal to walk out of the union, with no knowledge of how things are going to work afterwards and with no reversal of that decision possible.
    The First Minister’s blithe assurances that all things will be sorted out ‘after the vote’ asks folk to buy a pig in a poke, disables rational engagement with coming to a decision and is an insult to the intelligence of the electorate.

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  3. The issue of an independent Scotland being forced to automatically adopt the Euro through as some suggest Scotland being a new EU member state seems to have evaporated.

    Focus on the terms of a Sterling zone now look to have come to the fore of this part of the independence debate. Pound sterling, just as the SNP have advised for long enough is their preferred currency. Now that this is being recognised and Scotland having to accept the Euro presumably dismissed for the time being, we are bombarded with, it’ll no work and we’re no willing to debate it. How on earth can this Scottish government give the sort of definitive clarity voters seek when the UK govt’s only interests are putting a spoke in the wheel with the pretence that it is in Scotland’s people’s best interests when doing so, aye right!

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  4. Perhaps not entirely germane to the issue but worthy of a moments ponder regarding National Debt and the banking crisis. The recent report naming the culprits behind the Bank of Scotland disaster was interesting, especially if one views the CV of the folk involved. For some reason, every single one of them were from Halifax Building Society, tending to suggest the merger was actually a complete takeover as none of the senior management actually had bank experience!

    Makes me wonder who the RBS bloke who’s been demonized was listening to?

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  5. I’m afraid at the end of the day if Scotland wants independence then that is what they shall have. This means independent from Armed Forces, Banking System NHS etc. So this means that the pound is the British currency and if you do not want to be a part of Britain then I’m afraid you don’t get the pound. I’m sorry but you can’t pick and chose the best bits. You want on your own then take it or leave it.

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    • This is just the latest deployment in the propaganda war. If there is a YES vote Westminster will negotiate for a sterling zone because it will be in both countries’ best interests. Even Darling has said that.

      Did anyone see Newsnicht last night? Brewer asked Osbourne to his face if in the event of a YES vote rUK would refuse/block a Sterling zone THREE times and Osbourne refused to answer the question.

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        • Why not? Everybody expects the SNP to answer many questions NOW about what happens after Independence, even though they may not form the first Government of an independent Scotland. Sauce for the goose?

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        • Darling never said a currency Union would be in an Independent Scotland’s best interests.

          EDIT – Assuming you mean Alistair Darling and not using your pet name for Alex Salmond? :D

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          • On Newsnight Scotland on Thursday 10th January Alistair Darling made the following remarks in an interview with Gordon Brewer:

            Of course it would be desirable to have a currency union, but you also have to understand there are consequences. Because a currency union means you have both got to agree your budgets. You’ve both got to agree how much you can tax, spend and borrow.”

            However, the ex-chancellor immediately seemed to contradict himself by suggesting the this would only apply to Scotland’s budget, saying: “This is something we all agree on, you’ve got two partners who have to agree Scotland’s budget.”

            When pressed by Brewer on whether a monetary union with Scotland would be in the interests of the rest of the UK, Darling replied: “Of course! If you have independence, or separation, of course a currency union is logical.

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          • So let me extract the key point here (in terms of the debate (see what I did there).

            “Because a currency union means you have both got to agree your budgets. You’ve both got to agree how much you can tax, spend and borrow”

            This is the point he was making – how can you be independent when you are dependent on another country approving your budgets.

            Let’s remember – it’ll be the SG approaching the UK government asking to join, not the other way!

            ‘We’re leaving, but by the way, can we come back?’

            LOL. Shambles!

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          • Jamie,

            It’s a currency union for the mutual benefit of the participants we are discussing, not a writ of servitude.

            Adding the words ‘LOL shambles‘ to the end of your post doesn’t make it something else. I can’t believe that is your idea of rational discussion; surely you can do better than that?

            This ‘it’s not proper independence if you keep the pound/queen/drive on the left/still speak English’ argument is childlike and facile. All modern nation states are co-dependent with other nation states to a greater or lesser degree. The UK’s budget is subject to EU constraints, its legal system has to take cognisance of the ECHR, its defence policy is tied in with NATO and of course its much vaunted ‘independent’ nuclear deterrent is in reality under US control.

            At the moment Scotland has only a very small range of independent action available. We have no control over our own currency, so it is hard to see how a currency union would make that worse. We have very limited taxation and spending powers, and no say in defence matters.

            To claim that becoming independent while keeping the pound and retaining EU and NATO membership would make us less independent than we are now is arrant nonsense.

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    • The NHS in Scotland has always been a seperate entity from the rest of the UK NHS

      The £ sterling is an internationally traded currency – no one can stop any country from using it.

      I would suggest doing something about your rather excessive ignorance level before commenting again – you’re not even funny to laugh at, never mind with

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  6. Was I the only one that laughed when Alex Salmond called on Mr Osborne to grow up?

    Mr Salmond’s performance last night was cringetastic and not worthy of a First Minister of Scotland – he was acting like a smart little school boy with all the answers. There may have been a lot in what he said to genuinely counter Mr Osborne’s comments, but the manner in which he conveyed them was so dismissive and immature.

    Why the Nationalists are in such a stew, I don’t know. Mr Osborne made no commitments, promises or threats. What he DID do was offer an alternative view on the consequences of proposals from the SNP.

    The people of Scotland should be entitled to understand the risks and downsides of Independence without the SNP dismissing them as nonsense without a second thought.

    So, the only people here who really need to grow up fast are the SNP. To dismiss alternative scenarios as scaremongering says it all about how serious they are on informing the public. What Mr Osborne said is fairly clear, and accurate – and it might NEVER happen I agree totally, but that does not mean the comments should be dismissed blithely.

    I think there are such huge risks with Independence that not to talk about them is folly.

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    • “Why the Nationalists are in such a stew, I don’t know”

      Yep, maybe they should just sit back and lap up all the wonderfully constructive positivity directed at the ‘Yes’ campaign and SNP’s proposals for an independent Scotland.
      Can’t for the life of me think why they should be so retaliatory and defensive of their perfectly rational proposals.

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  7. The issue of Scotland’s share of the national debt is one of the most concerning ones for me because the lack of honesty about the actual number is creating false economic arguments. The figure of £93bn which has been touted about as Scotland’s share is based on 8.4% of the UK’s public sector net debt as at the end of the 2011/12 fiscal year (£1,104bn). This makes sense because Scotland has 8.4% of the population.

    However this is purely current debt and takes no account whatsoever of future liabilities which the country is already committed to and will also need to be shared. The main ones are public sector pensions, PFI/PPP projects and others including the future cost of decommissioning nuclear power stations (remember we were told elsewhere nuclear isn’t subsidised). In the Fiscal Sustainability Report published by the OBR these liabilities (as at 31/03/2011) were:

    Pensions – £960bn
    PFI / PPP – £32bn
    Others – £108 bn

    Clearly a proportion of these belong to Scotland. Whether they can be separated exactly or whether they are also allocated on the population basis remains to be seen however I would think it likely that they would be split on the population basis. This then adds £92.4bn to Scotland’s share of the debt (therefore doubling the number being touted about).

    In the main article Newsroom raises a valid point about the loan charges Scotland would face. The existing terms of the debt could not simply be transferred to change the ‘identify’ of the borrower. The terms and conditions of the original loans will be subject to a material change which would require new T&Cs to be agreed on the outstanding liabilities. Scotland would be taking on a massive debt level and would need to enter the loan market without credit history which would classify it as a high risk borrower. Therefore the interest rates they would be quoted would be higher than those currently paid by the UK.

    I think it might be possible that, in the event of independent Scottish banks, the Bank of England would still act as a lender of last resort to provide emergency liquidity to Scottish banks however don’t forget that isn’t the end of the liquidity food chain. The BofE would also require a guarantee from someone (just as they currently get from the UK government) – that guarantee would likely be required from the Scottish Government and therefore the Scottish public purse.

    As for the issue of tax paid per person in Scotland compared to tax paid by person in the UK – this also needs to be bottomed out. In the Government Expenditure and Revenue Scotland 2011/12 report they talk about spending and revenue in Scotland however the spending is based on actuals and the revenue is predominantly assigned / calculated from UK data. This is entirely relevant when it comes to tax revenue. The majority of taxes in the UK are paid direct to the HMRC and a portion is then returned to Scotland via a block grant. There are no official figures (certainly not that I know of) which show the amount of tax paid by people living in Scotland (or any other part of the UK – we have never needed to measure it). Now that doesn’t mean this is necessarily a problem. An independent Scotland would raise its own taxes and remove the need for the block grant. This COULD result in a tax reductions rather than increases however without knowing what the actual tax yield is in Scotland at the moment it seems a little finger in the air to be making claims about tax contributions and the possible affect on them.

    The more I consider the potential financial and economic implications of independence the more I find myself, not so much opposed to independence as a concept, but concerned that those in charge of the movement are either ill equipped to manage it or being too ‘slippery’ about what it entails. The former worries me for obvious reasons, the latter worries me because it begs the question ‘Why the lack of transparency?’ – independence should be sold to people professionally, not in the manner of a second hand car salesman.

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    • That is a very clear, honest appraisal, Integrity.

      Others here should read and take note.

      I know lots of folk who are attracted to the general concept of independence but who, when they do this sort of deeper thinking, realise that the outcome perhaps won’t be as they wished. Frying pan to fire, and all that.

      And crucially as Integrity states, the process by which you reach it is so important. How you carry out something is often as important as what you do.

      And there is too much vagueness from the SNP who after all are the very proponents of massive change. They’ve had a long time to think this through. But they can’t even get a clear, coherent answer on some of the basics. Like the money in our pockets. Poor show.

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    • On debt there are many points that can be made. The first is that the UK debt levels are horrendous and getting worse by the day. There is good evidence that a separate Scottish economy would be in a better position to service and indeed reduce our population share of the debt than the UK economy is. The real danger to Scotland is not independence, it is staying with the hugely indebted UK.

      Next and to deal with Lynda Henderson’s point about credit status and interest rates. For all new debt, she is probably correct and Scotland’s credit worthiness is likely to be lower than it is immediately post independence until the new Scottish Government’s budget is revealed. However, backed with oil, a strong GDP and a fiscally mature budget and we can expect Scotland to quickly attain the credit ratings of similar sized countries such as Denmark and Norway. But what about the national debt? The UK debts cannot be simply divided between Scotland and rUK – this would mean splitting bonds and the such like. Much more likely is that Scotland will agree to service a proportion of former UK’s debt and at an appropriate rate of interest. This means Scotland is immune to any problems created by its credit status. The actual level of debt is an interesting topic. The SNP has assumed a population share of debt (Ms Sturgeon’s musings were a warning shot to those unionists who seem to assume that Scotland will take the debt but none of the assets – which include the BoE’s reserves if we are not to share the BoE). This seems fair enough but is contingent on the rUK being prepared to throw some bones the way of Scotland. The Westminster Government’s case is that rUK will be the continuity state of the UK rather than both Scotland and rUK being equal successor states. Scotland can be pretty relaxed about this but as a new state, Scotland has no claim on either the assets of or the liabilities of the former state – at the moment the liabilities far exceed the assets.

      Simple fact is that the rUk actually has very few negotiating cards post a successful Yes vote. Despite the bluster, they will want a currency union and the conditions will tend to be dictated by Scotland rather than Mr Osborne because, truth is, that a currency union is more in the interests of the rUK than it is for Scotland. Personally, I would unilaterally use sterling as an interim currency before we set up our own currency. Most countries in the world have their own successful currencies and I can see no reason why Scotland should not do the same.

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  8. I don’t see where the problem is. Many other countries have used sterling after independence, Australia, New Zealand and South Africa are just a few of them. This is just another scare tactic from Westminster and an attempt to muddy the waters even more. The UK Government know that this is in their interests too but will not admit it as this could ease some peoples’ worries and encourage them to vote “Yes”, and we can’t have that, can we? They are getting dirty and desperate.

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  9. “Scotland would be taking on a massive debt level and would need to enter the loan market without credit history which would classify it as a high risk borrower. Therefore the interest rates they would be quoted would be higher than those currently paid by the UK.”

    Just repeating this in case anyone missed it.

    Funny, my stance on Independence as a concept as softened greatly over the last few months. But similarly, I’m not convinced that it would result in a better Scotland, or, selfishly, a better life for me, my family or friends.

    The only people crying out for it are not showing them selves as beacons who would lead us into a bright future – they now being found out as just a mishmash of all the other parties, nothing new to offer apart from a string of promises that are likely never to be delivered.

    I see a bright future for Scotland as part of the UK, and with it’s own government. The Scottish Government have control over the things that matter to me.

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    • nuclear weapons ?- oh I know your answer and that one leave it to London and Washington Dc to decide

      Bright future – even sorry Osborne crying last week– maybe he seen that economic world expert guru Alistair Darling giving advice on economic matters. what a joke

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    • “Scotland would be taking on a massive debt level and would need to enter the loan market without credit history which would classify it as a high risk borrower. Therefore the interest rates they would be quoted would be higher than those currently paid by the UK.

      UK public sector net debt at the end of 2011-12 was £1,100 billion, which amounted to 72% of UK GDP. Applying a per capita share to Scotland produces an estimate for Scottish public sector net debt of £92 billion. This amounts to only 62% of Scottish GDP.

      So we would be starting from a lower baseline in terms of debt versus GDP, which would obviously go some way towards these notional higher interest payments. In truth, no-one can predict what interest rate Scotland would be charged.

      George Osbourne was right about one thing though – an independent Scotland won’t inherit the UK’s AAA rating !

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      • But you ignore totally the point I made in the post above which is that you are basing those figures purely on current debt and ignoring the future debt which Scotland (and rUK) is already committed to.

        Your figures are spot on for current debt. Scotland would be about 62% of GDP and rUK would be about 73%. However when you then factor in the future debt (see my post on 24 April at 9.41am) Scotland’s debt rises to about £185bn which would be 123% of GDP (once you factor in the share of North Sea Oil in the same ratio as the debt is allocated).

        Current projections are that the UKs public sector net debt will be significantly higher by the time of targeted independence in early 2016 which means this percentage will likely be even higher (for both Scotland and rUK).

        Of course rUK’s percentage of GDP will also rise so there may still be the argument that Scotland would be better placed than rUK however I am not convinced it would have much impact on the rates of interest they get on their debt (at least not in the short to medium term). You are right that we can’t predict what rate they would be charged but I think it is reasonably fair to say it would be higher.

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    • “I see a bright future for Scotland as part of the UK”



      comedy brilliance there jammie – who writes your script byraway – is it johan lament?

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    • The currency would be called sterling. Andy is absolutely right that there is no issue regarding Scotland keeping sterling – a monetary union between Scotland and rUK is what the Scottish government favour and that is understandable. It keeps the BoE as the UK central bank and charges them with responsibility for financial stability across both rUk and the newly independent Scotland. However whether that is in the interest of the rUK is unclear and any such agreement regarding a currency union would be subject to a lot of negotiation.

      As far as I know the only way Scotland could retain sterling without the consent of rUK would be to adopt dollarization (i.e. use a ‘foreign’ currency) however that has a lot of downsides. Scotland would be an independent country entirely at the mercy of the BoE as they would have ceded all influence. Given Scotland’s substantial financial sector, and the extent to which it is built on sales of services to the rUK this would be a very dangerous road to go down.

      The SG have put forward a proposal that the BoE structure should change (in the event of independence) which would mean Scotland becomes a shareholder of the bank (with a stake in the region of 9%). In terms of the influence this would give Scotland is not all that clear although there are suggestions out there about what they could and couldn’t influence in terms of the way the bank is run. This would be a governance model unheard of in the bank’s history and the chances of the UK Govt buying into it seem slim.

      If you talk to ‘Better Together’ campaigners they will always trot out the fact that there will be huge complications due to having the same currency whilst potentially having different monetary policies, two regulators, exposure of the taxpayer to economic down turns etc. There is some merit in some of that although I would like to think that, in the event of independence, there would still be sufficient co-operation between Scotland and rUK for some of these issues to be managed sensibly to avoid duplication of costs. If Scotland does gain independence it would be petty bitterness for rUK to incur greater costs simply to get their own back. However I see no way that Scotland will be granted any influence over the BoE and that does give rise to great concern.

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  10. The CPPR study referred to in the article above [Glasgow University's Centre for Public Policy for Regions] also showed that, in spite of recent positive indications, Scotland’s economic recovery is slower than that of the rest of the UK.
    While last quarter figures showed that 39,000 Scots had found a job, the underlying situation is very different and of serious concern.
    According to the CPPR study, economic inactivity in Scotland has become mush worse since 2008, with around 300,000 Scots now not even looking for work.
    In contrast, economic inactivity in the rest of the UK has fallen over the same period, alongside a growth figure of 4.4%, compared with Scotland’s slower growth of 3.3%
    The report shows that, in the five years since 2008, growth in the health and social work sectors in the rest of the UK has grown by 15.4%, where in Scotland it has grown by 4.3%.
    Importantly, CPPR show that there has been a slump in North Sea oil production which, had it been included in the official figures, would have shown Scotland still in recession.

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        • If the revenue from the oil has been invested wisely for the future, then there is not a problem. It is an opportunity for us to invest in the Scotland we want for our children and grandchildren, not for building huge projects in the south east of England or funding unemployment as has happened in the past.
          But as it does begin to run out over the world, the price will rise, also oilfields which were previously uneconomic to develop will become more viable.
          It is very sad that there are many (Unionists) like Mr Black who see the oil as a problem. It is a fantastic opportunity which only a few countries are given and we should grasp it with both hands.
          The arguments used by the Better Together campaign are becoming increasingly bizarre and tortuous. The one thing they all have in common is an assumption that we are all like chidren and need to be led by the hand, that we are incapable of making our own decisions about our future.
          I am still waiting for a Labour contributor to tell me when that party decided to do the Tories’ dirty work by leading their Better Together campaign for them. When did this Unionism become Labour policy? I’ll keep asking but I won’t hold my breath while I wait for a truthful answer. Labour don’t do truth.

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          • 94 countries throughout the world are oil producers, i wouldn’t call that a few.Conidering there are only 193 countries thats not bad 48% produce oil

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          • Interesting Andy. Please, in the interests of a proper debate, can you quote where I said Scotland’s oil was a ‘problem’?

            I sure I’ve never stated that, or anything like, but if I have, feel free to let me know.
            What I do have a problem with (and looks like many others) is the SNP attitude to oil, as the ‘be all and end all’ in funding an independent Scotland.

            The SNP want a greener, fairer Scotland. That’s fine, so do I.

            This according to them will be achieved by Independence. Which relies completely on this rather dirty, toxis and polluting substance called oil.

            Now, oil is needed, and oil is not always burned as fuel, granted. But it’s a filthy thing that is playing a huge part in killing our planet as we know it. And yet the SNP want to burn every last drop to create ‘greener, fairer Scotland’ and save some money for the future. You’d have thought they’d want it banned, like nuclear power, but let’s not go there.

            The Independence arguement seems to come down to oil – the SNP are claiming we are about to hit a new oil-boom. Oil provide £xbillion in revenues and so on.

            And so, the second issue around using oil as a selling point for Independence. When the supplies run dry, we’re stuffed. Might not be for 40years or more (still in my lifetime), but it WILL happen. Sure, it’s an important asset, and will provide some security NOW.

            But consider – the Union in it’s present form has lasted 300years. Do you think oil will last 300years? How long do you, as someone who supports the Nationalist cause think Scottish Independence will last?

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        • Jamie: If an independent Scotland doesn’t extract the oil then you can be sure the UK will so the argument is nonsensical. Actually, Scotland makes a lot of oil derived products and they form a major part of our exports.

          Scotland is less dependent on oil in its economy than Norway but it is an important facet of our economy. There is a very good reason why the North east of Scotland is our most prosperous region.

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          • Having a greener Scotland and extracting every drop of oil without a say in how it is used are not complementary.

            They are completely contradictory.

            If you can’t see that, then it’s pointless trying to get you to understand.

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          • Jamie: your first sentence is equally true of the current situation within teh union. At least after independence we will have the opportunity to spend the revenues of oil production on areas of concern to Scotland. I totally agree that we need to move away from fossil fuels but an independent Scotland merely not using our oil reserves will make diddly squat difference to a greener world.

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          • “but an independent Scotland merely not using our oil reserves will make diddly squat difference to a greener world.”

            It’s not often I’m left speechless, but I’m reading those words thinking ‘did he really just say that?’

            Out of curiosity, does the same apply for the wind turbines? Just rip them down then?

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          • My point being that until we have technologies that don’t rely on fossil fuels we in Scotland will still have to burn oil in our cars, ships, aircraft and we need oil for our fertilisers, plastics etc etc. If Scotland were to stop producing oil then all that would happen is that we would have to import oil to meet all of these needs. Yes, losing North Sea oil supply from the Scottish sector would cause minor perturbations to the global oil market but other sources would just be used faster to compensate. So, same amount of oil burnt just a poorer Scotland.

            Wind is a fine example of a technology that displaces the need for fossil fuels but until we have more technologies that are not reliant on fossil fuels we are stuck with oil. Better that we use it for the betterment of our society than someone else does.

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      • That’s because they cut the apron strings from Sweden over a hundred years ago – they to were warnedd the sky would fall in if they did so

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  11. view as: list / slideshow / map
    ▲ Country GDP per capita

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  12. For me the issue about oil is less about ‘how much is left’ and more about ‘is it a stable enough revenue stream to base an economy on.’

    How much is left is clearly important as hopefully everyone with a desire for independence isn’t just selfishly looking at their own lifetime and maybe that of their children. However it is so hard to predict that it becomes an argument without a reasonable answer.

    It is the volatility which an independent Scotland must be careful about. We all know oil prices are as reliable as a royal at a fancy dress party – in one year alone (between 2008/09 and 2009/10) revenue from North Sea taxes plummeted from £13bn to £6.5bn before picking up gradually in 2010/11 and returning toward the £13bn figure in 2011/12. It of course peaked at a ridiculous amount in the early to mid 80s and nearly hit rock bottom in the early 90s.

    If too much reliance is placed on a volatile revenue stream it makes it bloody hard to make any sort of medium to long term strategic planning credible (in terms of public spending, both revenue and capital).

    Of course this currently affects the UK at the moment as well so I guess the question is ‘if the UK as it currently exists can cope with this then why Scotland wouldn’t be able to.’ For me the answer is that the larger a nation is the less dependant it is on one material revenue stream and therefore the less vulnerable it is to major fluctuations.

    There is no doubt Scotland would, and should, benefit enormously from the tax revenue from North Sea oil but I question whether it is sufficiently stable (or whether there is sufficient alternatives) to support the economic policy of an independent nation. Of course there are no exact figures available but I think there is an approximate understanding that in an independent Scotland oil would contribute about 20% of tax revenue. If that fluctuated a little it would probably be manageable without too much difficulty but the impact of a material drop in oil price could be devastating (granted the impact of a material increase would be very beneficial).

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    • On the nail.
      The fluctuation in the revenue stream from oil is a serious and uncontrollable issue – and one germane today.
      The CPPR report has just shown that the slump in North Sea oil prices in the last five years – if it had been taken into account in the figures – would have taken Scotland into recession.

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      • Not at all on the nail. Pity the poor Norwegians with their greater dependence on oil than Scotland. They must be quaking in their boots every second of their existence. The answer is an oil stability fund. When tax revenues are high then you add to the fund, if they fall short you use some of the fund (or borrow against the fund). You thus smooth out income fluctuations. The idea that you run your economy based only one one year’s revenue is school boy economics, Lynda Henderson thinks that the SNP will piss away revenue surpluses to maintain electoral popularity. What voters actually want to see is sound fiscal management – which is what the SNP have demonstrated year in, year out while in government and in complete contrast to the shambles emanating from London.

        In any case oil isn’t the only tax revenue that can be difficult to predict: corporation tax is another one that jumps up and down pretty frequently.

        This concept that oil is somehow a curse is just laughable. Try telling that to the Norwegians.

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        • You are absolutely right in that economic planning will not be on a year by year basis and I am sure Scotland, like Norway, would create a oil fund (I think, but am not 100% sure, that in Norway it is actually a legal requirement to pay into it).

          I suppose the question is whether it is too late to be adopting that model with a long term plan in mind. Norway have already adapted their long term fiscal plans to account for a decline in oil revenue and it is an area of concern for them due to the fact they currently have what is considered to be a very ‘supportive’ welfare state. The fact that Norway (who as has rightly been stated are even more dependent on oil revenue than an independent Scotland would be) have recognised this issue does suggest that reliance on an oil fund to act as an economic stabiliser is a short term solution.

          I am not for a second (as some have tried to claim) saying that oil is a noose around Scotland’s neck – it is, of course a fabulous asset, but I am worried that too much faith is being placed in it to support Scotland financially over an unrealistic timescale.

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    • 30 years ago I was writing up a project on oil revenues and was told off by my tutor that crude oil prices could go not go higher than $40 a barrel.

      As a finite resource it must be used wisely for Scots as the previous decades has shown how it can be misused eg M25, pay for unemployment, wars etc by London.

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  13. This is a very helpful contribution to the debate from Prof John Kay, a Scots Economist who was once one of Salmond’s chosen advisors.
    High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email to buy additional rights.

    “When Czechoslovakia broke up at the end of 1992, the new states agreed to use the same currency pending further negotiation. This resolve lasted 19 days. The scale of speculative transfers from Slovakia to the Czech Republic forced immediate action to stabilise the banking systems of the two countries. Three weeks later there were separate Czech and Slovak korunas.
    … “

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      • And also a fine example of how perilous it can be – vast amounts of wealth left Slovakia in those early days. Lots of Slovaks lost significant sums of money. You advocating that, Fletcher?

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        • Ah but Mhairi in our case just who is Slovakia and who is the Czech Republic?

          This currency furore is, as Lynda Henderson put it, mostly fluff. Personally, I don’t see us entering into a formal currency union with rUK on independence but we will continue to use sterling as a currency of convenience – something no-one can stop us doing. When the time ir right we will launch our own currency and be just like our rather successful Scandinavian cousins in Denmark, Norway and Sweden. Someone elsewhere today suggested we use the Norwegian Kroner as our economies will be so similar. It was a joke but probably makes more sense than an independent Scotland staying shackled to the UK’s rapidly failing currency for a moment more than is necessary.

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          • It’s obvious neither Fletcher nor Dougie read the actual article. Or did, and haven’t digested it contents. The lessons are clear for those who want to hear them.

            And – for the umpteenth time – it’s Mairi. Use the lenited form – Mhàiri – only in the vocative case.

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  14. Scotland is the hub of all the expertise in the oil industry. Foreigners see Scots as Gods and bring them all their problems. It was the same when we were the hub of all the expertise in ship building, engineering and steelmaking. We are just good at doing difficult things.
    Today Scottish people are in huge demand developing all the industry in all the nations of the world. We are head and shoulders above the rest except in our own country.
    There we worry about breaking free of a neighbour who has bled us dry for three centuries, and is now busily brainwashing us to keep them in new airports, seaports and fast trains to anywhere but Scotland. Are they putting something in our water?

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  15. Next you will be telling us you were the hub in the industrial revoloution and started it? Nothing like blowing your own trumpet is there. You must be AS or his wee brother.

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    • Now that you mention it, Scots were indeed at the hub of the industrial revolution. James Watt harnessed steam with the invention of the condensor.
      It’s not a personal thing, it’s the way I see it all over the oil industry. I take great pride in meeting great Scots leading the world’s great projects.

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  16. I think you will find the Midlands were more the Hub Google “The Black Country” and you will see Chain, Steel, iron, Canals, Nails, Glass, Galvanising, Keys/Locks/Scales. I’ve worked in the oil industry for quite a few years now and the only technology is French, German or Norwegian. Do another search for oil company’s preferences if Scotland becomes independent and see. Also Google where all the offshore companies based in Aberdeen are actually registered and the reasons why. Then you will see that independence and oil the industry is not what you say it is.

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    • the only technology is French, German or Norwegian

      Well, you obviously haven’t been around much in the oil industry have you? From Andergauge (variable gauge stabilisers and other directional drilling equipment) to Zenith (data analysis and completions solutions) Aberdeen and the North-East is packed to bursting with small, dynamic Scottish companies deploying unique Scottish technologies that are in demand worldwide wherever oil is being produced.

      Why exactly does it please you and your ilk to run Scotland down so? I genuinely don’t understand your motivation.

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  17. I’m not running Scotland down has you state. I’m just trying to explain that if Scotland gets independency some of these companies will pull the plug altogether, read the papers. You are relying on oil and that’s it, I don’t know how you can run a country on one commodity as volatile has oil with markets up and down so much. Just look back 2 years when oil was $138 a barrel and what is it today less than $100. Can you really stabilize an economy on that NO is the answer. The majority of Aberdeen based companies are all registered overseas and for one reason Tax/NI because they do not have to contribute to the government and if Scotland gains independence this will become even worse because of of a newly formed country.

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    • You are relying on oil and that’s it

      Oil revenues would represent a considerably smaller percentage of Scotland’s GDP than they do of Norway’s, yet Norway does not seem to feel it is doomed as a result.

      Do you know any countries other than Scotland that are cursed by having plentiful oil reserves?

      As for the daft idea that oil companies will ‘pull the plug’ and leave an independent Scotland – well, yes, they mightif an extremely stupid hypothetical future Scottish chancellor decided to impose a sufficently onerous tax regime to kill the golden goose. Otherwise it will not sway them in the slightest. Oil companies operate in active war zones where they think they can get away with it, and of course nearer home they operate in Norway where the government takes a major stake in developments – so why on earth would they flee the North Sea just because Parliament sits in Edinburgh rather than Glasgow?

      And there you go again – running the country down with your ‘that’s it‘ comment. It’s pretty obvious to most that there is far more to Scotland’s economy than oil. If (or rather when) oil declines there will be plenty of new technologies to embrace – and you can bet that a load of canny Scots will be in the vanguard. Oil industry technology is transferable to other fields, most notably renewables.

      (As an example, the foremost three companies in the development of wave power, Pelamis, Aquamarine Power and AWS, are all Scottish)

      Yet again we see nothing but negative arguments here. No positive reasons for staying in the Union, just the ‘too wee, too poor, too stupit’ stuff spouted over and over again in a myriad of guises and flavours in the hope that eventually we will come to believe it and Scotland will settle down into a long slumber once more.

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    • Any suggestion that businesses will pull out of Scotland just because of independence is plain daft.

      Business will always come first. Even when Beijing temporarily pulled out of the trade talks with Norway because Norway honoured a Chinese dissident a state owned Chinese oil service announced a deal with Norway’s Statoil to drill in the North Sea.

      That sort of talk is nothing more than schoolboy scaremongering and adds nothing to the debate.

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  18. Not to mention our academic institutions’ involvement in the industry, eg:

    ~ University of Aberdeen Oil and Gas Centre

    ~ University of Dundee Centre for Energy, Petroleum and Mineral Law and Policy

    ~ Heriot-Watt University Institute of Petroleum Engineering

    ~ Robert Gordon University Centre for Research in Energy and the Environment

    Scotland’s oil industry expertise is something we really can be proud of. I’ve worked all over the world in the industry in the past, and everywhere I went I met Scots engineers running Scottish products and technologies.

    Now, let’s bring on those thumbs down for Scotland’s oil industry expertise from the usual cringers shall we?

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    • I don’t work in the industry now, no, but my son does and I still have a lot of contacts in Aberdeen.

      What exactly is your contention that ‘foreign’ companies will pull out of Scotland in the event of a YES vote based on ?

      You can bet that there is frantic behind the scenes skullduggery going on as both sides in the debate try to get oil industry pundits to speak out, but by and large I expect they will stay out of it. The truth is visible worldwide . . . oil companies go where the oil is, and the political situation has to be pretty tumultuous to make them down tools and leave.

      We were in Aberdeen last week and the astounding amount of new oil company offices going up to the West of the city was a clear indication that no-one is thinking of leaving any time soon.

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      • Agree on that they tell you nothing (Politicians or oil companies) anyway it will be interesting to see the outcome. Thanks for the debate and by the way I’m not against Scotland, Can’t be the wife’s Glaswegian and the fishing is first class. Cheers

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        • ‘Blowin’, thank you for the debate, and apologies if I got too personal or heated at any point. I know it can happen :-(

          It is only by getting these issues out into the cold light of day and away from the lurid glare of the tabloid headlines that we can illuminate the debate.

          I really do believe though that the oil industry is full of venal opportunists and it will take a lot more than a YES vote to see them off !

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      • Oil companies will work where there is money to be made. If they are happy to go into a war zone then a change of government and status in a peaceful country will not bother them in the slightest.

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  19. WRT Zeneith, If you notice from the bottom of their web site it actually states they are a Lufkin Company which is an American owned company.

    © 2013 Lufkin Industries, Inc. All rights reserved. · 601 S. Raguet St. · Lufkin, Texas USA · +1 936.634.2211

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    • Irrespective of their eventual owners Zenith are a Scottish company working in Scotland with technologies developed in Scotland. Why on earth would their parent company choose to kill that operation off because of a (to them) minor change in Scotland’s constitutional arrangements?

      I hesitate to repeat the over-used mantra of ‘scaremongering’, but that is all this is I’m afraid – and it’s not even top-drawer scaremongering, it’s decidedly second-rate, barely registering on the national scarometer.

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  20. Lynda et al.:
    In the 70s and 80s IBM, which was then the biggest computer company in the world (Snowwhite and the seven dwarves was the name for all of them!)ran what was for a long time a highly successful marketing strategy. It was based on FUD, Fear, Uncertainty and Doubt. They would get hold of the MDs and the Finance Directors of any companies where they had the idea that the Computer heads were even considering another supplier, and sowed the FUD – very often successfully. But it didnt last. Others had better inventions (the PC eg)and eventually they reduced their dominance cos people no longer believed the FUD. And so will the Scots.
    Lynda, you have Irish experience, may even have studied Irish history around 1921/22. Why look at the crystal ball when you can read the book. The precedent for a nation leaving the Union was in 1921. The Irish kept the Pound Sterling until 1970. Did they accept control over their budgets? Were they more popular with the Treasury and the Bank of England than the Scots? Did they not fight an economic war which that devil Dev provoked and still survived, though weaker than they could have been?
    And would the Treasury turn down the £40 billion betterment to the Balance of Payments, which started in the 70s and which has removed that statistic as a worry since then, as against the previous 30 years?

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      • IforE:-

        My personal view is that a modern constitutional monarchy would provide a better Head of State, representing all of its citizens than an elected President with his/her party bias for sale.
        In this, as in so many things I would follow the Norwegian precedent, who asked a Dane in 1905 when they left the Union with Sweden to become their King. He said “Yes” on condition that they had a vote to approve him – they did and he was approved by a large majority and accepted and changed his name from Hammersjold to Haakon. The Norwegians have never felt the need for a rerun for his son.
        More in line with the Scottish principles of the Declaration of Arbroath than the subsequent Stewart line of the Divine Right, which is why I have never been a Jacobite!!!

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  21. Jeez, the Scottish cringe is well and truly alive! Hecklers and hecklees rising to each other’s bait.

    This thread was supposed to be about currency. Gideon Osborne has been making political mischief. He’s a politician. He’s thrown a squib in Scotland’s direction. When subsequently asked direct questions pertinent to the currency issue, he obfuscates. He disappears back to London leaving the Scots to carve each other up. Surprised? It’s his job!

    An inescapable fact is that, with the exception of Canada and Hong Kong, every single country to have gained independence from Britain used Sterling, either directly or by having their currency pegged to Sterling, until shortly after Britain joined the EU in the 1970s. That amounts to a quarter of the population of the world. Ireland left as late as 1979 (not to join the Euro but to float the Irish pound); that’s 57 years after gaining Dominion status and 42 years after proclaiming independence from the British Empire.

    If sticking with the pound is to be impossible, then that’s a special rule that’s been newly concocted for Scotland alone. That would be an indisputable historical fact. If so, why? Did anyone raise this with Mr Osborne? If they didn’t, then we (Scotland) continue to suffer from lazy and partisan journalism, feeding the masses with misinformation and disinformation (aka propaganda).

    Never mind the Norwegians, the Dutch were warned their currency would be far too volatile and that their domestic economy would collapse after they discovered the world’s biggest gas field off their coast in the late 1950s. Plus ca change.

    Judging by the resultant chatter across all the media, Osborne achieved his objective. He knows the Scots collectively are feart (or “frit”, in the sainted Margaret’s lexicon). He played that card. He won.

    True independence means having your own currency, your own (non EU) legislature and the resilience to live with the consequences. Period.

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  22. No-one said it was impossible. Not even George Osborne. In fact, I even heard him state on Radio 4 that of course Scotland do not need permission to use Sterling (ref: Panama situation).

    He pointed out some risk with a currency union, and basically gave a very fair and appropriate warning – don’t take anything for granted.

    At the risk of sounding like Johann Lament, it’s high time the SNP stop taking everything for granted and accept risks, and maybe, just maybe, discuss them like adults.

    IF the SNP and Yes campaign keep responding to Westminster in such a dismissive manner, it’ll not be long before people don’t take them seriously. Sorry – before even more people stop taking them seriously.

    It’s like telling a kid they’re not getting any sweets – BOOM – Nationalist outcry :)

    However, I do honestly think that the Tories don’t give a hoot about Scotland being in the UK.

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  23. Bugger these floppy currencies; the euro is on life support and sterling is beggared to the Square Mile. Bring on the Scottish Groat and Bawbee! :)

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  24. For Gerry Fisher – Comment No 24 above.
    Gerry – the thing about life is that times change. As problems change, so do the means of addressing them.
    The 60s and 70s were very less fiscally sophisticated days – and simpler days too, with the EU layer not fully engaged.
    Today – we’re looking at a situation where the profound threat to the continuation of the euro, the eurozone and the EU itself has arisen from the lack of central fiscal control.
    The political agenda behind the EU, which saw it begin as the European Community and which drives it still today – the ambition for a United States of Europe – continues to exist in some quarters, mainly Germany, the economic and financial engine of the EU.
    It is inconceivable that from now on the European Commission will not insist that the European Central Bank controls the monetary policy of all members states choosing to be in or to remain in the eurozone.
    The weak economies, which are the net receivers from the pot [and who were admitted despite their endemic weakness, for political reasons - to jack up the numbers of member states] will accept this – what other option do they have? The stronger economies will pay.
    Major economies – like the UK’s – outside the eurozone, have learned the lesson both as spectators and creditors.
    It is inconceivable that the Bank of England will licence use of the pound without central fiscal policy control. It has no choice. It cannot risk what would then be its home economy on the back of what an uncontrolled Scotland might do.
    In assessing this risk, it would be an unavoidable concern that Scotland has no economic policy for the future which is calibrated on a responsible use of oil revenues or takes any account at all of the uncontrollable fluctuation of these revenues. For any lender of last resort, this has to be viewed as a real risk of unintentional default.
    Of course Scotland could use the pound anyway – as Panama uses the dollar – with no underlying security whatsoever.
    But why would we choose to put ourselves in such a daft position? This would leave a post-independence Scotland very vulnerable with no shelter at all in bad times – which, even if we had a robust and sustainable economic development policy, are as often as not, outside our control.
    In terms of the theoretical alternative of being in the eurozone, with fiscal policy ceded instead to the European Central Bank, the EU’s Committee of the Regions yesterday [25th April] rejected by 110-28 an SNP-led motion to review the membership position of breakaway states. It ruled instead that any region that becomes a sovereign state must formally apply for EU membership in the usual way – with no fast track.
    You refer to Ireland at a period where it was preparing to become a member of the EEC.
    The then government of the Republic of Ireland instituted a series of rigorous – you could say merciless – scrutinies of each of the country’s then industries – through the Committee on Industrial Organisation.
    The CIO reports led to the junking of unsustainable sectors – protected by tariff barriers, amongst other things; and the focus on those that could withstand the
    competitive circumstances of EEC membership.
    This was done in good time so that Irish industry was ready for membership of very different economic circumstances.
    Nothing of that level of intellectual and governmental engagement and strategic action – which was as unpopular as it was admired – has been a part of the SNP Scottish Government’s preparation for the independent Scotland which is its raison d’etre.
    Yet it has had opportunity and reason to get down to serious preparation since May 2007.
    This failure – and it has been the most serious possible failure because it speaks of inability, irresponsibility, lack of serious address to the reality of the issue – is why I personally have no doubt that the case for independence has already been lost.
    No responsible attempt to found an independent nation to fly solo in the toughest times, should rest on what is no more than a sales campaign.
    There is no time now to get serious work done on what are massively complex and interconnected financial, governmental and political issues.
    With no revolving door on a vote for independence, only the tribal and the emotionally persuadably ignorant will vote to leave the union.
    What we have had instead of serious and honest engagement has been a focus on fripperies, like ‘celebrity’ endorsements, many of which have backfired; and, frankly, lies. Do not forget that in answer to Andrew Neil’s straight question on whether or not he had actually had the questioned legal advice on immediate Scottish membership of the EU, the First Minister’s first word – and deliberately chosen since it was not immediately offered, was ‘Yes’.
    And the nation later learned that he had not even sought such advice.
    Anyone who lies when it suits him – and in the most public forum of all – will continue to do so. It is naive to expect anything else.
    Only a mug would now vote to walk out of the Union.

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    • “Anyone who lies when it suits him – and in the most public forum of all – will continue to do so. It is naive to expect anything else.”

      Lies, on the BBC. Well I never. Only a mug would watch that channel, who told the world that the Solomon building had fallen 20 minutes before it actually happened. There are little lies and BBC lies.

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  25. “the EU’s Committee of the Regions yesterday [25th April] rejected by 110-28 an SNP-led motion to review the membership position of breakaway states. It ruled instead that any region that becomes a sovereign state must formally apply for EU membership in the usual way – with no fast track.”

    Can you tell us more about this? I’ve never heard of it. Must be the Biased Broadcasting Corporation stifling any pro-union debate.

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    • It was actually on the 12th of April and a summary can be found here:

      You are right in that it is surprising that this hasn’t been picked up by the MSM. Of course, the Yes camp position is that Scotland is a country not a region and to simply ask by what article would Scotland be removed from EU membership if it votes for independence? I think everyone accepts that there will be a process of re-application but the signs are that this will be neither lengthy nor onerous.

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      • And you forgot to mention it.
        What is germane is probably existing statehood.
        It is curious, though, since you say that the ‘Yes’ campaign’s view is that Scotland is not a region, why it was SNP MEP’s who chose the Committee of the Regions to take this issue to for a ruling?
        Would the ‘Yes’ campaign have rejected a favourable ruling on the grounds that Scotland is a country and not a region?

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        • I’m not sure what the SNP’s strategy was and presumably they pursued it in concord with their Catalonian friends to whom this is more relevant.

          In essence though this is nothing new. The view expressed by the Commission and member states has consistently been that independence questions are internal matters for the states involved and that new states which form out of these processes will have to re-apply to the EU. What is entirely unclear is how this is supposed to occur given that the emerging states are already in the EU and their citizens are EU citizens. There is absolutely nothing in the EU Articles that deals with the case of new states arising from existing member states.

          It is actually more instructive to consider Belgium rather than Scotland when considering this question. The Flemish independence movement is gathering momentum after recent election successes. At the moment they are not looking to secede from Belgium but there is a very real probability that Belgium will cease to function as a state given the difficulties in forming the national government and this may lead Flanders to declare independence. What would the EU’s reaction to this be? Remember that Brussels sits within Flanders so resolving the membership status of Flanders would be of acute importance to the European Commission. It is obvious that the solution would be to immediately grant the Flemish interim membership status so that there is no discontinuity in either the citizenship of the Flemish nor suspension of EU rules on movement of goods, services and (importantly) people. Anything else would be madness as all of the EU officials who were not Flemish would suddenly have no right to work there. Wallonia could not be recognised as the sole the successor state to Belgium because of its inferior population size and economic strength compared to Flanders.

          When you consider the question of how the EU would deal with the fissiparity of Belgium it is obvious that they would act with alacrity and common sense to stop the development of lots of anomolies that would hinder the operation of the EU. Why should Scotland be any different?

          By the way, your statement that “only a mug would vote to walk out of the union” displays an arrogant contempt for the ideas and aspirations of others who do not share your view. You are entitled to your views but so are others to theirs without being subjected no insults.

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          • Julian: really, perhaps you should seek professional advice about this obsession you have concerning Mike MacKenzie. For the last time, I’m not Mike MacKenzie. I’m not related to Mike MacKenzie, I don’t read his press releases (maybe he plagarises me – Mike Russell once plagarised me in a press release though I didn’t mind). Anyway, as other people on here will tell you confidently, I’m Webcraft.

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      • The UK has the membership of the EU, Scotland is currently a region of the UK. To become independant Scotland must leave the UK and become a sovereign state and re-apply to the EU as such; and you seriously think that the process (we’re talking Brussels here!)will be neither slow nor onerous…………..
        Sorry, I can’t stop laughing…………

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        • Are you laughing at your own comment? Scotland is part of a union with England, not a region or whatever else you think it is. If the EU start playing politics with Scotland there will only be one winner.

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          • Murdoch: Scotland is a region as classed by the EU government, (UKM is Scotland title) and if you look at Salmonds actions let’s just pick his police state (force) which is an EU policy each region shall have its own single police/military force this single force will then take direction from the franco/german main enforcement unit.
            Salmond has also embraced Agenda21 and is rolling it out all over Scotland. So yeah your right if the EU starts playing politics in Scotland there will be only one winner (the EU troika)

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        • Iain: Look at the unification of the Germany. It involved negotiating with the occupying powers, completely re-aligning NATO, writing a constitution, replacing the cuurency, pensions, welfare systems and state apparatus of East Germany not to mention incorporating 11 million new citizens into the EU who were not only not previously in the EU but were from a communist country. The whole process took one year despite opposition from the UK and France.

          How hard is it to rewrite the articles to accommodate two new states that have previously been a former member state. All of the EU laws are already in place, everyone is already a citizen and to deal with Lynda Henderson’s point about Scotland not making the sort of preparations the Irish Republic did: that’s because we are already members and our industries, democratic and legal conventions all comply with EU law.

          Changes to the articles have to be ratified by each member state so allow a year for that to be done but it is hardly controversial. If anything crops up that takes longer to sort out the EU Commission will just grant interim membership with Scots and rUK having all the rights of their existing membership.

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    • Poor old BBC eh? Both sides in the debate claim it is biased.

      Seems to me that means that they have got it just about right – especially now someone has apparently had a word in Gordon Brewer’s shell-like.

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  26. Lynda: ( I use that name rather than Newsroom because I am commenting on a point you make as a political commentator rather than a professional, impartial journalist )
    Of course you are right about the effect of the Eurozone crisis on moves towards Political and Economic Union. These arguments were well known to the proposers of the Euro, but they knew that the consequential changes needed in sovereignty of the member countries would not be accepted by the electorate, so they let the disaster happen so that it could force the changes in governance necessary without ( as ever ) any vote from the “interfering electorate”
    On Ireland as the precedent you, of course, chose to ignore the year concerned. It was not when Ireland was preparing to join the Euro to which I referred but to the situation after the Treaty. The Bank of England, then totally under Govt control, unlike as at present, made no attempt to stop, or even protest, the Free State from using the Pound, even during the war years when the Republic was neutral.The lender of last resort never arose even when the Republic was in a parlous economic state – why should Scotland with 1500 billion of reserves under the sea be in a worse state. There are arguments that Scotland is actually in a stronger economic position than RUK, very little evidence that it is weaker – though it is undoubtedly weaker than it would have been if we had gained Independence in the 70s, proved the McCrone report sound and established a sovereign oil fund which would now be greater than the Norwegian.
    As for the junking of uneconomic industries that was done for and to us by Lady Thatcher, without any of the necessary social allowances to and for the people concerned which any Scottish government would have wanted.

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  27. Fear, Uncertainty and Doubt – I have expected the No campaign to concentrate on that rather than the facts.
    I had hoped for better from impartial journalists, even from intelligent political analysts.

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  28. Everyone keeps bringing up Norway’s Oil. This is not the biggest asset Norway has. Norway’s largest export is GAS they are also in the top 5 in the world producers of Aluminium. So it is totally a different ball game keep comparing Scotland with Norway.

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    • Aluminium is by far the most abundant metallic element in the Earth’s crust. Its ores are dirt cheap because, well, they’re dirt and they’re abundant. Converting them to metal is a hugely energy intensive process. That’s the bit that adds enormous value to what was originally dirt. Norway has abundant energy. So has Scotland. Can you guess which part of this particular equation you’ve misunderstood, BITW?

      My more general gripe here is to do with how quick and gleeful people are to do down Scotland like this on the basis of ignorance, falsehoods and, too often, downright lies. No wonder so many of my contemporaries bailed out; maybe I’m not too late to follow.

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    • Norways biggest asset is it’s people. Independent and industrious, they control every dollar that they make from their natural resources. That’s why they have kept the EU out and invest in infrastructure that makes access across their beautiful country so much easier for their liesure time.
      Scots can vote YES and follow the same path as Norway, they can vote NO and be even worse off than now, or they can vote YES and stay glued to Europe and the English Pound.
      As a Scot I only see a totally Independent Scotland as the way forward. The YES vote is just the first step into our glorious future. Will we be brave enough to ditch Europe and London and emulate Norway, or are we just kidding ourselves?

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      • Correct! However,the Scottish oil industry would have to emulate Statoil to make it work. Also, you need to get rid of the spineless SNP who don’t have the guts to be truly independant, run by Salmond who only wants to make a name for himself and to retire on a fat Euro pension leaving the rest of us to clear up the mess.

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        • Mr Campbell:-

          It wasnt the spineless SNP who refused to set up a Statoil, it was that well-known Socialist with a habit of changing his mind on history Mr Antony Wedgwood Benn.
          And, having disagreed with Alex for more than 30 years, ubtil we declared a “Truce” 3 years ago,I can assure you that he is neither spineless nor in it for himself. He is a true Nationalist now.

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  29. Argument? Some people always have to turn everything in to this and I thought this forum was all about discussion. You mentioned that not me. I don’t see Scotland producing that much Aluminium to contribute to the country’s wealth. Have a look at this site follow their progress over the last few years. Look at their turnover. View their stock market ratings and reports. Look at their partnerships within other countries and then come back and tell me. You state Scotland has an abundant amount of energy (UK I think) so then why is Scotland (UK again) not producing aluminium?

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    • I’m not downing Scotland and I’m English and yes I choose to live here because I on the whole think it is a far better place. I also think there are so many lies being told on both sides of the fence once all these are out in the open then we all might have a better chance of making our minds up on the subject. Anyway its been a long night but interesting yet again what would we do without this blog


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    • Err, we do produce aluminium. The world’s first aluminium smelter was built at Kinlochleven and we still have an operational smelter at Fort William. The attraction to locate in Scotland was of course hydro power – the same reason that Norway is a large producer of aluminium. Given the early lead in aluminium production you may rightly ask why that industry is not as successful in Scotland now as it is in Norway and for the answer to that I think you have to look at differences in the way Scotland and Norway are governed.

      As to power production, Scotland is more than self sufficient in oil, gas, coal and electricity production (and food production).

      The Yes campaign expressed this very well the other day: given that Scotland would be number 8 in the world by GDP rankings (UK 17th) and given our abundant natural resources, world class universities and successful manufacturing industries such as whisky: how come our families are so poor? Again, I think we have to look to governance. Norway is one comparator but Denmark is more revealing: about the same population as Scotland, much smaller land mass, limited natural resources and despite this they have a standard of living far in excess of what we enjoy in Scotland and well ahead of the UK.

      People need to wake up and realise that the UK is crap. It is broken and probably not fixable. Scotland has a much brighter future as an independent nation than we can ever hope for by remaining within the UK.

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  30. And 68% top rate tax? I think helps. Car 80% mark up on import duty? also has something to do with it. Try living there and before you say higher wages NO I have worked on Norwegian contracts and have paid Norwegian tax and its not nice. Still thats your choice in 2014.

    At what point did I say Scotland do not produce aluminium?

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    • Post 33: “so then why is Scotland (UK again) not producing aluminium?”

      Scandinavian countries do tend to have higher taxes but much better public services. Low tax is a illusion if you merely have to spend the money you saved on tax (and then some)to buy services from the private sector that taxation paid for anyway. Look at the USA which spends something like 3 x the proportion of its GDP on health care than we do. Or if you want look closer to home then consider the high cost of child care.

      Fact is that the Scandinavians have higher standards of living than we do and higher disposable incomes (which is what really matters).They are also happier (despite national stereotypes).

      In an independent Scotland we will indeed have the opportunity to pursue economic policies that are inclusive and build social cohesion rather than continue with the neo-liberal fantasy that creates inequality, huge national debt and only benefits the very rich. Time for a change.

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  31. “I don’t see Scotland producing that much Aluminium to contribute to the country’s wealth”.
    This is what I said in the first sentence, If you intend to be so picky then why should one bother even contributing to this pointless debate with you. O and one last point they also have 50+ year mortgages to pass on to their children, Fantastic you to could have one by voting YES.
    Regards BITW

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  32. “As a Scot I only see a totally Independent Scotland as the way forward. The YES vote is just the first step into our glorious future. Will we be brave enough to ditch Europe and London and emulate Norway, or are we just kidding ourselves”

    Murdoch, I like you will most definately be voting ‘Yes’ for Scotlands self determination in 2014.

    You ask if Scotland will be brave enough to ditch London, I genuinely think it is only a matter of time, the status quo cannot remain, welfare, taxation and defence the few powers left to devolve which won’t happen. We cannot go back the way, i.e lose devolved powers.

    I am undecided about Scotland remaining a member of the EU and do not believe we will have to accept the Euro as our currency regardless of Baroso’s claims.
    A Norwegian model appeals, however, if as you, I and many others hope Scotland progresses to independence, within an independent Scotland, will as is not the case now, there be a political party who’s manifesto includes Scotland’s exit from the EU i.e a Scottish equivalent of the UKIP? If not then Scotland is left with the party in power come a ‘Yes’ vote who have taken this decision for us.
    I suppose if the appetite is here in Scotland to exit the EU then a referendum’s the answer.

    Any thoughts?

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  33. My thoughts are that I’ve made this point many times and had it pooh-poohd by SNP or Yes voters. I reckon in time the SNP will annouce a referendum on the EU within 6 months of a Yes. It’s the only thing that might get them out of the massive hole they have dug themselves on Europe. How did they get so out of touch on this issue?

    They will never ask the question on Trident – although Scot’s may not like it in prinncipal , I can’t see them saying yes to the loss of thousands of jobs and destroying communities along with it. We’re not like that.

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    • Jamie
      Not too sure if the SG are out of touch r.e EU membership. Support to remain is pretty much 50/50 if most recent poll is anything to go by.
      Trident is a whole different ball game, for a starter if the SNP are in power after 2016 the wheels will be set in motion to have all nuclear missiles removed from Scottish soil. I’d be surprised if there was a referendum as its their policy, in their manifesto, so would be given a mandate by the electorate to do just this if re-elected.
      Btw Jamie, you say “the loss of thousands of jobs and destroying communities along with it”. The MOD spokesperson told the Glasgow Herald back in January that those who rely directly on Trident being situated in Scotland are approximately 520 civilian jobs, that’s Coulport & Faslane.
      Also, do correct me if I’m wrong but weren’t you championing Margaret Thatcher and her actions during the 80′s? Wasn’t she “destroyong communities”. The difference here would be if the Trident programme were to up sticks the aforementioned two communities would of course take a hit but the devastation Thatcher left almost the length and breadth of the UK without re-investing obviously completely dwarfs this,many communities permanently scarred.
      The money saved from not having to finance our share of Trident I’m sure would be put to far more morally constructive use.

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      • It’s got to be asked, even if it sounds cheeky.
        Do you actually understand the difference between the MOD, Navy, contrators and so on? See figures below.
        The SNP stance on trident in terms of job loss is worthy of Thatcher, it really is. Total hypocrits. I know understand where the term ‘Tartan Tories’ comes from.
        Just wish thousands of jobs out the window as if they don’t matter

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    • On the EU referendum, you should know that the SNP policy on this remains the same, in the view of some of us who do not believe that anyone has the right unilaterally to change Party policy.
      As for Trident the policy will remain the same because most Scots agree with it – even those in the pay of the Labour Party – and the jobs total affected is less than 200, in truth.

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      • I should have added to my point on the EU – the SNP will have to so return, because its fundamental belief is that no-one, Party or Government, has the right to change the constitutional position of Scotland, now or in the future, other than the sovereign Scottish voters.

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        • 200? Keep it up – keep the alienation going.

          Curiously, I noticed that the US have charged the remaining Boston bomber with using a weapon of mass destruction.

          Funny how this peace loving SNP only call nuclear weapons ‘WMDs’, all these conventional bombs that can kill hundreds at a time don’t really count then? Yet another curious thing that shows the SNP policy on Trident as nothing more than window dressing.

          Their thinking maybe is ‘It’s not okay to have one bomb that can kill 10,000, but it’s okay to have 100 bombs that will kill the same amount’.

          Please tell me the official democratic process used to identify that Scot’s want it out Gerry? No saying you are wrong, but I would love to know how you got to that conculsion to assuredly.

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      • 200 lol keep on smoking the stuff did you not read or did you not undersatand the MP’s statement. 200 Lockheed and 40 drivers thats already more than you say and these are directley to do with trident?

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  34. 520 Directly what about the indirect jobs? Local businesses? Guest houses, cafes, bars, taxi companies, coach companies, garages, estate agents the list goes on and on. On a normal day over 40 coaches come in and out of HMNB Clyde and RNAD Coulport so there are 40 drivers for a start. Not to mention the other communities on the other side of Scotland Rosyth Dock yard also the RM Base Condor. Also you say 520 if you check just the Trident main contractor Lockheed Martin employs approx 200, kitchen and waiting staff for all 3 messes approx 200, NAFFI approx 30, stores approx 50, Transport section approx, 65 so I think your figure of 520 is a little out. You then state two communities? Yes Helensburgh, Kilcreggan, what about Dumbarton, Greenock, Port Glasgow, Arrocha, Balloch? So I think your facts are not quite correct.
    If you could post the link of the MOD spokesman’s comments I would be very interested in seeing the article

    Not counting MOD Police.

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  35. Scottish Affairs CommitteeAdditional written evidence submitted by Philip Dunne MP, Minister For Defence Equipment, Support And Technology, Ministry of Defence

    I regret to inform you that an error has been identified in the written briefing provided to the Scottish Affairs Committee on 22 June 2012, regarding the structure of the Armed Forces, following the evidence session held on 13 June 2012 with my predecessor as Minister for Defence Equipment, Support and Technology (Mr Peter Luff MP) and the then Minister for the Armed Forces (Sir Nick Harvey MP). The error concerns the number of personnel who work at Her Majesty’s Naval Base Clyde, and was in Annex C of the briefing material. The original text reads as follows:

    As of June 2012, there are approximately 6,300 personnel working at Her Majesty’s Naval Base (HMNB) Clyde, including the Royal Naval Armaments Depot Coulport. This consists of approximately: 3,350 service personnel; 1,300 MOD civilians; and 1,650 civilian contractors. This number includes all lodger units at the Naval Base, and excludes contractors and subcontractors who are not resident on site. It should be noted that the total number of personnel will fluctuate on a daily basis as staff are posted in and out of the Naval Base, and contractors’ taskings vary.

    The correct information should be as follows (with corrections in bold text):

    As of June 2012, there are approximately 6,700 personnel working at Her Majesty’s Naval Base (HMNB) Clyde, including the Royal Naval Armaments Depot Coulport. This consists of approximately: 3,400 service personnel; 1,600 MOD civilians; and 1,700 civilian contractors. This number includes all lodger units at the Naval Base, and excludes contractors and subcontractors who are not resident on site. It should be noted that the total number of personnel will fluctuate on a daily basis as staff are posted in and out of the Naval Base, and contractors’ taskings vary.

    I apologise for the error, and I hope you will understand that it was not the intention of the Ministry of Defence (MOD) or its Ministers to mislead the Committee in any way. The error was primarily a result of a misunderstanding when compiling the figures. In addition, it is now apparent that the precise figures had not been rounded consistently when the evidence was prepared. The error came to light when MOD officials were preparing an answer to written parliamentary questions to the hon. Member for Islington North (Jeremy Corbyn), answered on 30 November 2012, Official Report Col. 560W. This written answer now provides the latest manpower figures available for Her Majesty’s Naval Base Clyde. I have enclosed the written answer for your information.

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  36. The point on the jobs is that no-one is talking of closing the Faslane base. What is being projected is the withdrawal of the weapons of Mass destruction and the jobs associated with them – a very much smaller percentage of those employed in the base.
    Has any-one noticed the total failure of the NO campaign to run with the line ” Vote No to keep Trident on the Clyde”
    Cant imagine why – its a great idea for Fear U and D to tell the Scots voters that they really are Better together with WMD in the Union.

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  37. The people of Scotland are independent already that a simple fact! This independence crap is about the “Body Corporate” state becoming independent from the Body Corporate UKPLC
    Yes people you live in a corporation not a country
    Salmond wants to be the head CEO of the company Scotland so he can get a chair at the EU dictatorship table, he is playing on the illusion that the Scots have of their country
    I want kim jung fats salmond to provide his SNP vision for an independent Scotland before I vote for the change in our company structure

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