Ten reasons Scotland can't afford to stay in the UK any longer

Campaigners for the union try to make people fear that independence somehow risks damaging Scotland’s prosperity. Indeed, it sometimes appears to be their only tactic. All the evidence suggests that Scotland has what it takes to thrive as an independent nation - it will be the most advanced and wealthiest nation ever to achieve its independence. Within the Union, Scotland is not as wealthy as many similar-sized northern European nations, many of whom lack Scotland's massive natural wealth and economic advantages. In fact, it trails behind even Northern Ireland in terms of growth. There is a cost to staying in the UK too, both in financial terms and in the opportunity cost. The Union Scotland is failing to realise its true potential and it looks set to continue on that path for as long as it is held back by a combination of Westminster incompetence and a lack of care for Scotland's interests.

1 The windfall tax on Scottish assets is bailing out the UK

The windfall tax on oil and gas companies' profits, combined with tax takes from the energy companies and petrol taxes levied at the pump are going to raise billions for the UK Treasury. Bloomberg reported the Treasury will collect £12 billion of tax from the oil and gas sector in 2022 - before adding the £5 billion windfall tax. That does not include fuel duties on petrol and heating oil which are expected to raise £26.2 billion this year.

This money is being raised largely from Scotland’s natural assets. And yet Scots pay more than anyone else in the UK to fuel their cars and heat their homes. To add insult to injury, headlines at the time of the last independence referendum told voters Scotand’s oil was about to run out. ​​In May 2014, one of the BBC’s leading stories reported “In just over five years Britain will have run out of oil, coal and gas.

The windfall tax also carries a tax ‘super-deductible’ that is designed to encourage more fossil fuel extraction. The UK Government is continuing a half century of mismanaging Scotland’s energy potential the same way. 

2 The UK Government has demonstrated it can’t be trusted to invest fairly

In an act of breathtaking political hubris, the UK Government passed over the Acorn carbon capture project in one of Europe’s biggest energy producing areas, Aberdeen. The Scottish Cluster – comprised of major industrial emitters, as well Acorn’s developers Storegga Geotechnologies, Shell and Harbour Energy – would have been an obvious choice for the technology. Instead, the UK Government decided to invest in marginal constituencies in the North of England. They demonstrated they cannot be trusted to help Scotland realise its potential to become the renewables powerhouse of northern Europe. 

3 For Scotland to realise its green energy potential requires a massive investment in the national grid

Scotland could power the whole UK and more. The Northern Isles alone could power the whole of Scotland. Right now, wind farms in Orkney have to pay financial penalties for creating more energy than the outdated grid can take. It doesn't matter how much tidal, wind and hydro energy they can produce, it is worthless - even a negative cost - without an efficient, renewables-based grid. The UK’s privatised National Grid is still configured around coal-fired power stations in the north of Engand that no longer exist. Creating a grid that could support Scotland’s transition to green power would require a multi-billion investment. 

Robert Gordon University recently calculated that for Aberdeen to become a global hub for renewable energy would take a £17 billion investment - and the money needs to start coming in now.  The ‘Making the Switch’ review says that “urgent capital investment” is urgent - without it the UK will miss its climate targets and Aberdeen will miss the boat. Yet the UK Government is investing only paltry, tiny sums for this important work.  Instead, the UK Government passed a law putting a levy on all UK energy bills to fund outdated and increasingly expensive nuclear power that Scotland doesn’t need.

If Scotland was independent and produced 100% of its own energy requirement from cheaper renewable sources it could provide cheaper energy across the country. There are many ways to store renewable power nowadays - including pumped storage hydro. 

4 Scotland’s economy is visibly shrinking due to Brexit

The Centre for European Reform (CER) has concluded that by the end of last year the UK economy was 5.2%, or £31 billion, smaller than it would have been if the UK was still in the EU. 

Scotland is being hit worse than other areas of the UK. It has one of the oldest populations in the world, with an average age 42, two years higher than the UK average, and no immigration levers. Losing free movement and the pool of EU nationals who could come here to work means that hotels across the Highlands and islands are restricted to residents only for dinner; or even shut; restaurants are shut more of the time; care homes are reducing capacity and crops are not being planted

5 Northern Ireland’s economy is growing - Scotland’s isn’t

Data released by the Office of National Statistics ONS this week shows that Northern Ireland is doing way better than Scotland. It is outperforming all the rest of the UK, except for London. Only those two regions have gone back into economic growth since the pandemic. 

That is because Northern Ireland is protected from some of the worst effects of Brexit on trade by the NI Protocol. It still has a foot in the single market while also trading freely with the UK. 

After the Brexit vote, the Scottish Government suggested a compromise position which would mean Scotland having a similar half-in, half-out status to Nothern Ireland but that was rejected out of hand. 

6 The UK has the worst inflation in G7 - and the worst economic growth in the  G20 bar Russia

The 9% rise in the UK consumer price index is the highest since records began in 1989, outstripping the 8.4% annual rise posted in March 1992 and well ahead of the 7% seen in March of this year.

The UK is expected to have the highest inflation in the G7 not just this year but also in 2023 and 2024, according to economists. A Financial Times analysis of the causes of price increases across the world’s leading economies shows that Britain — where the inflation rate hit a 40-year high of 9 per cent in April — combines the worst aspects of other G7 countries. 

The OECD has predicted that the UK will have the worst economic growth of any G20 country bar Russia. The reason things are so bad for the UK is Brexit. 

7 The pound has lost 20% of its value - pushing inflation upwards

Since the Brexit vote, sterling has been on the slide and has lost 20% of its value. Oil is priced in dollars and is bought on the international markets - so petrol, heating oil, fertiliser and many other vital imports cost more and that adds to inflation. 

Mathew Lynn wrote in the Daily Telegraph recently: “We can no longer rule out that sterling will fall all the way to parity with the dollar for the first time in its history. Our departure from the European Union has worsened the trade deficit at precisely the wrong moment. It hit £278bn in the first quarter of the year, the highest figure on record, and equivalent to 1.8pc of GDP….this is a big enough deficit to merit concern about the stability of sterling.” 

8 The UK Government is squeezing Scotland’s budget - and it has to spend millions mitigating UK policies

The Scottish Fiscal Commission confirmed in December that: “Overall the Scottish Budget in 2022-23 is 2.6 percent lower than in 2021-22. After accounting for inflation the reduction is 5.2 percent.”

The situation is significantly worse The Scottish government gets no extra money in recognition of the huge sums being raised from taxing Scottish assets. Instead, it has to spend almost £600m, from its limited, fixed budget, mitigating policies which are out of step with Scotland’s electoral choices and designed to make life harder for the poor - such as the bedroom tax and the so-called rape clause which limits benefits to just two children per family. 

9 Loss of EU support for the Highland and Islands, food production and education

Scotland’s universities are being debarred from applying as associate members to the EU’s Horizon fund, the biggest science funding stream in the world. In the first retaliation for the UK Government’s posturing over the Northern Ireland protocol and Brexit, the EU has barred the UK from applying. Scotland's unis will lose a billion Euros

The Highlands and Islands are also set to lose large sums of money in vital funding - it seems the UK Government mislead voters when it promised to match at least the EU structural funds - its current plans won't do that. The structural funding is just one stream of EU support among many - and as the EU recognises "peripherality" which the UK Government doesn't, the Highlands and islands looks set to be a heavy loser from Brexit. Agriculture also looks set to lose out as the replacement for CAP won’t be as generous - more of the cost of food production will be paid by the consumer, and less by the taxpayer. 

10 The UK Government broke its promise on the triple lock, exposing pensioners to inflation and poverty

The UK Government broke its manifesto commitment to raise pensions in line with average wage growth at the worse possible time. Prices have soared. Pensioners, particularly those who are ill or disabled, are especially exposed to hardship caused by rising energy prices. Inflation on basic foodstuffs is also affecting their quality of life. Pensions rose by just 3% this April while inflation is running at around 9%. Even if the triple lock were reinstated in the autumn it would leave pensioners worse off and how could we trust the UK Government's pension promises ever again?

Scotland can no longer afford to sit by and let Westminster decide

An independent Scotland would be smaller and more agile than the UK, it could start making better decisions for Scotland on day one of independence. It could make decisions that are in line with the electoral priorities of Scots, such as rejoining the EU. It could use taxes raised on Scotland's assets to invest in the infrastructure that is needed for the next century of energy production.

By Jackie Kemp