Alex Salmond Addresses Business Leaders On Referendum Plans
© Getty Images

The two sides in the Scottish independence battle unveiled starkly contrasting assessments of the economic costs and benefits of Scots voting to leave the UK.

Alex Salmond, Scotland’s first minister who is leading the campaign for independence, said on Wednesday that each household would receive an annual “independence bonus” of £2,000 – or each individual £1,000 – within the next 15 years if the country votes to leave the UK.

The UK government, in contrast, claimed that if Scots rejected independence each person would receive a “UK dividend of £1,400 . . . for the next 20 years”.

Launching his assessment of the country’s fiscal position, Mr Salmond said the windfall, based on the country being £5bn a year better off by 2029-30, was “a realistic assessment of the benefits of independence”.

An hour later, UK Treasury minister Danny Alexander, unveiled the Treasury’s analysis, and said Scots could regard the UK dividend as “fourteen hundred reasons why we are better off together”.

The No campaign’s claims were undermined on Tuesday when Patrick Dunleavy, politics professor at the London School of Economics, told the Financial Times that the Treasury had manipulated his research on the one-off costs of setting up a new government to make them be £2.7bn – 10 times larger than he believes they are likely to be.

Mr Salmond claimed on Wednesday that Scotland’s share of UK assets was worth £110bn.

The Yes campaign’s release on Scotland’s fiscal position said the £5bn figure by 2029-30 was based on a “0.3 percentage point increase in our long-run productivity growth rate, which . . . could see tax revenues increase by £2.4bn a year by 2029-30.”

It also said increasing the employment rate by 3.3 percentage points could lift revenues by £1.3bn a year, and increasing the population by an extra 2,000 a year could bolster revenues by £1.5bn a year by 2029-30.

Mr Salmond said that despite the rival claims being hotly contested, “economics is central to the campaign, a key to winning the campaign”.

Mr Alexander said the UK dividend was based on Scotland having a higher deficit; savings from not having to set up an independent state; not having to pay higher state debt interest rates; not having to finance Scottish government policy promises; and being shielded from full impact of falling North Sea oil revenues and relatively rapidly ageing population.

Officials said it was the additional tax each Scot in an independent Scotland would have to pay every year to 2035/36 to ensure debt was 37 per cent of GDP, in line with the UK, instead of it rising 100 percentage points higher.

Mr Alexander told the BBC’s Scotland 2014 programme on Tuesday that he stood by the Treasury figures. “Our ability to pool resources within the United Kingdom is one of the greatest benefits,” he said.

On Prof Dunleavy’s claims, Mr Salmond said the Treasury had 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.

Scots vote on September 18 on whether to leave the UK. Opinion polls suggest they will reject independence but that some 15 per cent of voters are still undecided.

Get alerts on Scotland when a new story is published

Copyright The Financial Times Limited 2022. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article