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SNP manifesto: Is Scotland better off staying a part of the UK?

  • Video report by ITV News Scotland Correspondent Peter Smith

The Scottish National Party explains that, as it is not going to win the General Election, there seems little point publishing details of tax and spending plans for the UK during the next parliament.

Which is, of course, true.

Although in the event of a hung parliament the SNP could play a decisive role in shaping the next government’s priorities.

The SNP manifesto offers glimpses of the party’s instincts which seem to be to spend more and tax less.

An extra £35 billion a year is pledged for the NHS in England by 2023/24 - that’s more than any of the other main parties are promising and almost £7 billion a year more than the Conservatives. Although it’s not clear where the SNP intends to get this additional funding from.

The SNP would halt Universal Credit, abolish the Bedroom Tax, end the two child cap on welfare payments, protect the triple lock for pensioners and, like Labour, would oppose any rise in the state pension age.

These are expensive commitments.

Scotland may have views, but it does not raise the taxes it needs to sustain itself. Credit: PA

The SNP also wishes to reverse austerity, which it calculates has left Scotland’s annual budget for spending on public services 5% lower in real terms that it was in 2010. In reality all three of main parties are committed to delivering this anyway. The Conservatives only just, Labour and the Lib Democrats by some margin.

The SNP’s big pitch to the people of Scotland is on Brexit, which the party claims will be costing Scotland £1600 of lost GDP person by 2029. The promise is that by leaving the UK and rejoining the EU an independent Scotland will thrive and prosper.

This is not a given.

Most economists think that leaving the EU will reduce the size of the UK economy, in the short and indeed the long-term. But it doesn’t follow that an independent Scotland would gain economically from throwing its fortunes in with the EU.

Oil is Scotland's gold, but it is enough to sustain the economy? Credit: PA

For a start, Scotland runs a large implicit budget deficit - it spends more than it raises in tax. It is able to do because, like many others parts of Northern England, Wales and Northern Ireland, Scotland receives a transfer of funds from other parts of the UK, like London and Southern England, which raise more in tax than they spend.

The Insititute for Fiscal Studies (IFS) calculates that Scotland receives an implicit subsidy of around £10 billion a year (£2323 per person). Even the SNP accepts that a deficit of this scale is not sustainable.

In the event of independence, Scotland would suddenly find itself short of funds and would have to either cut spending or increase taxes.

This could be avoided of course if there was a sudden resurgence of North Sea oil production or the Scottish economy suddenly found a sixth gear.

Neither of these is likely to happen.

Edinburgh Castle through trees in the Scottish capital. Credit: PA

Indeed in the the short-term it is very possible that economic growth in Scotland would be damaged if it quit the UK and joined the EU.

That’s because while trade barriers with EU would be removed, trade barriers with the rest of the UK would be erected and the lion’s share (60%) of Scotland’s exports go to England, Wales and Northern Ireland.

In the short term, the costs of leaving the UK may well outweigh the benefits of joining the EU, in economic terms at least. But then there’s more to life than GDP.