Listen to this article
Ministers in London have misled Scottish voters over how much it would cost to set up an independent government in Edinburgh, according to the man whose analysis underpins the Treasury’s case for Scotland remaining in the UK.
Patrick Dunleavy, politics professor at the London School of Economics, told the Financial Times the Treasury had manipulated his research to make the one-off costs of setting up a new government look 10 times larger than they were likely to be.
His claims undermine part of the Treasury’s case for staying in the union, as both sides in the referendum battle are to unveil their contrasting claims about the economic costs and benefits of Scottish independence.
Prof Dunleavy said: “The Treasury’s figures are bizarrely inaccurate. I don’t see why the Scottish government couldn’t do this for a very small amount of money.”
Danny Alexander, the Treasury chief secretary, is due on Wednesday to unveil his “union dividend”, or the final estimate of how much independence could cost Scottish taxpayers. He will publish the last and most significant of the government’s papers into Scottish independence – the data-rich analyses with which they hope to quash separatist sentiment ahead of September’s referendum.
Alex Salmond, Scotland’s first minister, will try to overshadow Mr Alexander’s announcement on Wednesday, giving his own “independence bonus” assessment of Scotland’s fiscal position just before the Treasury chief secretary speaks.
He is expected to announce an figure that could run into several thousand pounds per household, although it is not clear what projections for future oil revenue will be used in this figure.
The first minister said in a statement that Scotland is “more prosperous per head than the UK, France and Japan, but we need the powers of independence to ensure that that wealth properly benefits everyone in our society”.
However, Prof Dunleavy’s intervention threatens to overshadow what Treasury officials call the “most serious piece of work we have done since the decision to stay out of the euro”.
Prof Dunleavy estimated in 2010 that setting up a new Whitehall department costs £15m. The Treasury applied this figure to the 180 public bodies the Scottish government says it would need after independence to suggest independence could cost £2.7bn in one-off costs.
But Prof Dunleavy points out three problems with the Treasury’s working. First, not all 180 bodies would be major departments; second several departments already exist in Scotland and would simply need to be enlarged; third, his estimate applied to the “chaotic” way in which the last Labour government established new departments, not to a planned, orderly transition. He estimated the set-up costs would be closer to £150m-£200m.
He told the FT that based on an advance briefing last week the Treasury’s release “is seriously misleading”.
The Treasury said the £2.7bn that appeared in its briefing paper last week did not represent its official calculation. Instead it says it is focusing on the figure of £1.5bn, which it says is based on research by Robert Young, politics professor at Western Ontario university.
“The £2.7bn is based on the Scottish Government’s own estimate for the number of public bodies needed and that, along with other estimates – such as ICAS’s statement that changes to the tax system could cost considerably more than £750m– illustrate the range of potential start-up costs. The Scottish Government still refuses to set out any start-up costs whatsoever, which is not credible.”
Prof Young told the FT however the £1.5bn estimate was not his, but rather was extrapolated from the top of a range of estimates provided by academics looking how much it would cost Quebec to separate from Canada. The lowest of those estimates would put the cost at 0.4 per cent of Scotland’s output, equivalent to £600m.
Mr Salmond said the Treasury “have been caught red-handed trying to cook the books”. “These were figures presented publicly by Treasury officials and presumably signed off from the top, so serious questions now need to be answered, including whether this work was approved by the Treasury’s permanent secretary,” he said.