The Eurozone

After the announcement of the plan for the compulsory harmonisation of Corporate Tax and VAT across member states, do the SNP still advocate an Independent Scotland joining the EMU?

To do so would give away most of the economic levers - remember the Laffer curve, which proved that a 10% Corporate Tax rate meant that Ireland was the model for  tax strategy? - and pass the first stage of economic control to Brussels.  After you join, how can you actually leave Greater Europe?

Alternatively, are we be in control of our own destiny by keeping Sterling, and allowing yet another foreign institution to dictate fiscal policy and to effectively set Scotland's interest rate policy and determine Scotland's borrowing capability?

So under the current SNP proposals, which bunch of foreigners do they intend to have controlling an Independent Scotland's currency?

Hard questions: but one's that are going to be asked in the coming years, and to which there is no easy answers.

Europe - our future(?)

Just a few years back, the Celtic Tiger of Ireland was apparently the target that we should seek to attain.

This week, the basically announced their further, deeper, insolvency and their to cut, cut, cut and cut further into social spending and public services.

Then it was the Arc of Prosperity; until Iceland went 'behind over chest'.

Last month it was the Isle of Man.

Next year it is Scandinavia, apparently.

Perhaps at some point we might not need role models to aspire to, and actually become the leaders not the followers.

One could almost suggest that the Scottish Government were talking down Scotland.

There is no doubt that many of these countries have better levels of social services and more intensive public services, and we could properly consider these as valid aspirations.  So how are they paid for?

Well £8/pint is a start.  Higher taxes at lower income levels is another (and lower taxes at higher income levels!).  A fat bureaucracy is another.  No, make that a grossly obese bureaucracy.

I'm sure there are many good points and I look forward to hearing these.

(I remember having a 1/2 litre with a Norwegian in Denmark.  I paid £5.50 a pint some 10 years ago, and the Norwegian thought this was dirt cheap.  Our tax practice has lots of other numbers that will boggle your mind.)

Salmon exports to China

Whilst it is undoubtedly Good News that salmon exports to China are growing, the real reasons behind the growth are much less savoury.

These reasons bear some consideration, and the implications for Scotland are much less obvious and savoury than we might like.


It is not that Scotland has succeeded, but more that Norway has been punished.  Norway, you may recall, is held up as a model that Scotland should try to emulate.

So what did Norway do?

Well, the Norwegians had the temerity to award the Nobel Peace Prize to Chinese dissident, Liu Xiaobo, a move that the Chinese Government didn't like in the slightest.

The end result was a vast hike in import taxes, increased import controls, and a serious attempt at economic payback against a country that only hosts - not awards - the Nobel Institute.

I for one am concerned that Scotland is so happy to be seen to benefit from a superpower trying to gag opponents, and that we are allowing/encouraging the Chinese Government to repeat this effort should anyone else try to raise issues about human rights, executions or economic jiggery-pokery.

Alex Salmond has effectively allowed himself to be boxed into a corner, whereby condemning the abuses of the population in China or Tibet will be met by threats of economic sanctions.

It was not edifying to see Tony Blair cosy up to Gadaffi.  This is no different, and sells the moral high ground to the Chinese; a position we should try to occupy beside the Norwegians.

Our cuts are better than your cuts

The pantomime of false indignation continues as the Election grows nearer, with both Labour and the SNP trying to knock lumps out of each other over who is making cuts, and who is to blame.

So to try to cut through the verbiage and find some facts; if we can.

The SNP Government are making cuts. The Labour Government are making cuts. Both are going to have to make cuts as a result of the mishandling of the economy.

Anyone who claims that there aren't cuts is lying to you. It really is as simple as that.

The differences between the parties are potentially important, but only in theory, as they are not really saying anything much that is different.

Conjugate the verb "cut":

• I find efficiency savings
• You make cuts
• He cannot be trusted
• We will protect jobs and services
• They are reckless with the public services

The SNP have actually bitten the bullet (as they have to, given that their ability to spend is controlled by Westminster) whilst Westminster will dress up cuts as increased spending in the Budget and then make a mad dash for an election.

And the likely winners of that election?

No-one seems to be casting a critical eye over the Tory plans, and cleverly they are not giving too much away about these plans, but I suspect it is the most stringent - and will probably be th most overt - about the cuts that will happen.

Expect more of this nonsense over the next few months.

Glasgow NE result

What a disastrous result for almost everyone, but most especially for the SNP.

The one winner was Labour who couldn't energise it's voters - as evidenced by a 1/3 turnout - but still somehow manged to take nearly 60% of the vote and keep the majority at a respectable and healthy margin.

The LibDems must be putting the periscope up to see if they find dry land, and some prospect of survival, coming a very, very, poor fifth.

As for the SNP: this was disastrous for the natural party of opposition, who should have been able to capitalise on distrust and disillusion with the Government, and who should have been able to get their vote out. Instead the managed to lose 900 votes.

So why did this happen?

Simple - the SNP are the party of Government in Scotland and as such they are being blamed for economic mismamgement and the economic problems in exactly the same way that they have blamed Labour and Tories over the past decades.

It is a consequence of being the party of power that you stop being the party of hope, and start being just another party who says one thing and does another. Such is the price of power.

What makes that interesting is the impact that this new realism will have in Scotland at the next General Election.

I was surprised how well Labour did last night, but I think that it is more about how badly the SNP are doing. Or more accurately, how the imnpact of their policy decisions is feeding through to the voters.

I predict that Labour will do much better than currently forecast at the Election, and that the SNP will be hard pressed to get more than a dozen seats. I also think that there will be some surprise, local, results which will be more about the individuals than the parties, but that the overall political landscape will barely change.

As I have said before, the SNP's greatest set-back was becoming the party in power in Holyrood, which will prove a millstone rather than a springboard, and were Labour still running the show, you would be looking at the SNP being within spitting distance of a majority at this point in the electoral cycle.

However, it is the unexpected events that will drive the result of the Election; and I look forward to an exciting, incident-filled, campaign next year. Sadly, I expect a dull, dreary slog that will alienate the voters.

Scottish Budget

The series of announcements by John Swinney had the feeling of inevitability over the depth and nature of the cuts.

Were there cuts?

Let me explain the conflicting positions in simple terms.

Labour say funding has increased, the SNP say it has been cut. Who is right?

The total funding for next year has increased, but because of the effect of inflation and advanced capital expenditure, the available funding has reduced. Eh???

Let's forget inflation in the first instance. My annual salary is £20,000 so I can spend £20,000 each year. I buy a new car and the HP is £3,000 a year. Next year my available expenditure is £17,000 or a 15% cut. That is the effect of advanced capital expenditure.

Second instance - accounting for inflation. My salary increases to £22,000. I can now spend £22,000 or 10% more.

Adjusting for my HP payments my available expenditure is £19,000 (£22,000-3,000) compared to £20,000 before I bought the new car.

So in reality has the my available expenditure increased or decreased? Half-full or half-empty? You can argue whatever you like, but the real test is if the new car is a better use of expenditure than all the alternatives.

This is known as "prudential budgeting" in Council circles; and to the rest of us as mortgaging our future.

The cuts have to be deep: trying to protect all jobs whilst making cuts this deep is stupid. Really stupid. Face facts and bite the bullet.

Some impacts: a cut in the budgets of Scottish Enterprise and Highland and Islands Enterprise from £376m to £300m (20%); Educational Maintenance Allowances cut from £36.5m to £31.5m (15%). And these will not be the end of it, nor the worst.

All this comes around due to the economic mismanagement of Brown and Darling Blair which has now been dropped into the lap of the patsy, Darling.

The next decade is going to be tough, irrespective of who is in power wherever, so brace yourselves and start to act accordingly now.

Investing in an Oil Fund

The call for investment in an Oil Fund is in itself A Good Idea, spreading the benefits from oil and gas exploitation over a number of years - effectively creating a Trust Fund for future generations, in the way pioneered by Shetland.

But - and isn't there always a but - it doesn't come without pain, and trying to paint it as pain-free is just silly and dishonest.

An oil fund would work by ring-fencing some of the tax yield into a savings fund.

Think of it this way - you put some of your pay into a deposit account for your children and grand-children.

Of course, this means that you have less money to spend today, which is fine if your income exceeds your expenditure. Of sustainable if you put money away when times were good.

To continue the analogy, at present your income is less than your expenditure and there are also sudden unexpected call on your savings - house repairs, the car needing replacing, a daughter's wedding - and you have been funding your lifestyle on the credit cards.

So would the SNP accept a cut in the money from Westminster if an Oil Fund was set-up; no, it actually wants an increase in public spending - effectively trying to get an increased overdraft to pay for day-to-day expenses because the credit card are maxed out.

Show us how good an idea it is, and set up a Scottish Oil Fund out of the current budgets - or be seen to be doing nothing more than posturing.

New Nicolson Institute

The plans for the new school are available here as a Powerpoint.

The file is 66Mb, so it will take about a long time to download.

Any views on the proposals? I'll add mine when I get the file downloaded and I have time to look at the plans carefully.

The Scottish Economy

If any politican has come out of the Finanical Crisis with their reputation enhanced, then it is Vince Cable of the LibDems.

He has certainly got it less wrong than the rest put together, and whilst he has the ability to make incisive comment without the danger of ever having to put these views into practice, his opinion is to my mind the most accurate on how to redeem the situation.

He also makes some uncomfortable points.

The collapse of the Royal Bank of Scotland would have wiped out the budget of an independent Scotland, the deputy Liberal Democrat leader said.

Vince Cable said the RBS balance sheet was 15 times the size of Scotland's gross national product.

Yes; he is right.

Just like Iceland, we found ourselves with a economy that was founded on one sector and one sector alone, and when the crunch came it was hugely magnified because of that over-dependence. If we had been an Independent country when this happened, then we would have been cap in hand to the IMF, implementing huge spending cuts and seeing the currency collapse.

Had we been members of the Euro, then the impact would have been much larger, as the most basic economic tools would not have been available to any Finance Minister.

The lesson is clear, the economy needs to have a wide spread of trades, professions and manufacturing if it is to be robust and able to withstand economic shocks.

Crying wolf

The problem with crying wolf is that you look pretty stupid when you are caught doing it.

The failure to pass the Scottish budget last week was (we were told) likely to result in huge jobs losses, vast increases in council tax, meteor strikes and the slaughter of the first born; all orchestrated by the nasty Labour, Lib Dems and Greens and their ridiculous spending plans.

Well that was last week.

It looks like a deal has been done.

One of the key Lib Dem requests has been accepted; Labour plans have been watered-down and adopted; and the Greens ignored.

And, you know what, the world hasn't ended. I foresee much more horse trading over future budgets.

And the bad, evil, nasty plans of the opposition are now part of the Government plans, which is all part and parcel of being a minority Government; a position the SNP exploited beautifully in the 1970's to get Callaghan's Government to promise a Referendum.

With a very rash promise (and probably almost undeliverable) to have new school building in 2009 through the Scottish Futures Trust rather than PFI, and we all remember what happened to Callaghan when he failed to deliver.

Scottish Budget

In all the hot air and sanctimonious posturing that surrounded the vote, I think that a closer look at the role of the participants is informative.

SNP, Tories & Margo MacDonald
-v-
Labour, Lib Dems & Greens

What unholy alliances!

The threat by Alex Salmond to throw the toys of out the pram and call an election is just another negotiating tactic, as I don't think that any of the parties actually wants an election - probably as it will just result in another hung parliament, and the whole process will start all over again.

The budget will move closer to being passed today; if the negotiations with the Greens demonstrate any degree of maturity by the Parties.

If it doesn't get through today, then it will get through in February - when MSPs will have to give up a week of their holidays* - to discuss the Budget.

I think that the SNP Budget as proposed is (broadly) better than the amendments proposed by the opposition parties, but with the horse-trading continuing we are likely to end up with a curate's egg.

However, I predict that the deal with the Tories will come back to haunt the SNP.

Fishing licences

In September I wrote about a fisherman finding he was not able to sell his licence to an English buyer due to new restrictions that were sneaked out.

I know - through a client - that this matter was raised with the MP and MSP, but that the fisherman concerned have not received an answer some three months later.

Indeed, one person who sought clarification over what were the 'special circumstances' to permit a sale, was told by officials in the Executive to lie about the date that the deal was done, so that it was before the restrictions came into force!

Now the debate reaches Parliament today, and our MP has spoken:

Western Isles SNP MP Angus MacNeil said: “Labour MPs may believe in the discredited free market for quota trading. The SNP, however, is more worried about people and communities and is looking for ways to ensure a future, not just for this generation but future generations of Scottish fishermen.”

I know of a fisherman who wants to sell his boat and quota to a buyer in England and buy a bigger boat and more quota from another seller outside Scotland, but finds that the opportunity to grow his business is being prevented by a regulation imposed by those who have never worked for a living.

This fisherman's future is not being protected; in fact it is being undermined by the restrictions. But let's not let the facts get in the way of a party political barney.

Glenrothes

Forget the pyrrhic victory I wrote about yesterday, the reality has been a bloody nose for the SNP and a seriously good result for Labour.

It looks like everyone was shocked by the result, which suggests that the public might have been lying to the political parties and the pollsters. The naughty so-and-so's.

In many ways it is easier being the underdog, as Labour were.

As the incumbents at Holyrood and Fife Council the SNP seem to have found that being the target of discontent - rather than being able to grumble about Labour - is a very, very different place to be. And this will be something that Labour will target again and again.

HBOS takeover

With almost all the top jobs going to Lloyds directors; with the main HBOS directors retiring; with the name being changes to Lloyds Banking Group; any pretext of it being a 'merger' has been shed.

I'm getting more intrigued about the mysterious third party bid mainly "Does it actually exist?".

It was with some wry amusement that I noted that the AGM for Lloyds is being held in Glasgow on the 19th November and the HBOS AGM is being held in Birmingham on 12th December.

Which company is therefore the most Scottish? [As if that mattered to anyone except politicians]

With 'savings' i.e. cuts of £1.5bn now forecast for the combined group the truth of the takeover is that there will be large scale job cuts, and the Bank of Scotland locally expects the Lloyds TSB Branch in Stornoway to close and the staff to be moved into Cromwell Street, except that er... they won't need all the combined counter staff, or managers, or admin staff.

This is the legacy of the reckless lending by the wonderful bank that we are supposed to hold up as a trophy prize to be retained at all costs.

Glenrothes

Yes, that by-election is happening today.

Latest word I have puts the SNP slightly ahead, but the Labour Party not conceding defeat and determined to get the vote out. That last part might be the bit that is difficult, and may cost them the seat.

I'm not staying up tonight to wait for the result, as it is going to be an anti-climax whoever wins.

Indeed, whoever wins will have a somewhat pyrrhic victory: if it is the SNP, then the swing is much less than Glasgow East; if it is Labour, then they have seen their majority slashed.

But whoever loses is going to be fighting hard to justify their 'disastrous' performance to the media scrum looking for a story.

Scottish Futures Trust

To avoid having to pay usurious rates of interest to private lenders, in order to fund public sector expenditure on infrastructure projects, it is reported that Alex Salmond is looking to borrow from a Sovereign wealth fund to bridge the gap.

So why should borrowing from the Qataris be better than borrowing in the marker?

Well, the interest rate would normally be expected to be slightly lower, which is normally attractive.

The difference is that in this case the loans (oops we can't call them that) have to be Islamic compliant and will actually charge no interest. Instead, there is a non-interest return on the investment. The difference between the Western and Eastern banking systems appears to be largely semantics, and the necessary forms to prove that the appropriate systems are being applied.

All this does is underline the shortcomings of devolution and the problems that will face Alex Salmond as he tries to square the election promises with the absence of money to deliver. Much the same difficulties as is facing Labour in Westminster, only on a much smaller scale.

Is it all a good idea? In my opinion it is not, as it leaves Scotland more exposed to the vagaries of the global marketplace, and risks control of key assets being lost to Scotland. And who is to say that the Qataris will not sell the debt to a third party?

It is just another flavour of PPP/PFI, and as such is nothing more than HP on an enormous scale.

But, the devil will be in the detail, and it might just be the only game in town.

As Burns might have said:

We were bought and sold for Qatari gold!
Sic a parcel of rogues in a nation!

National electricity tender

The plan to launch a national tender process to supply power to all the public sector bodies is an excellent example of lateral thinking by the Scottish Government.

The public sector has the financial muscle to demand highly competitive prices and force its way into the wholesale market.

Assuming this doesn't take control away from the other public bodies, then this could be the start of a huge efficiency drive by Government that will streamline purchasing and save us all large sums of money.

Well done chaps!

Goodbye Gordon Brown?

With the death of John MacDougall MP, Gordon Brown faces a direct challenge in his own backyard.

MacDougall was MP for Glenrothes, and any result is going to be read as the public view on the neighbouring MP, our Glorious Leader, Gordon Brown.

The election will be delayed and delayed, simply to make sure that the Labour Party machine is working before any election is called.

And to find some mug to take the poison chalice that is the nomination.

The last results were:

Party	Votes	Share
Labour	19,395	51.9%
SNP	8,731	23.4%

Giving a majority of 10,664, which on current trends makes it a marginal seat.

The next Olympics.....

I know, hold me back from the excitement. But according to the official organising committee the handover of the torch from Beijing to London is capturing the imagination of the entire country....

Towns, cities and communities are planning their own celebrations with a series of events and initiatives happening across all nations and regions.

This includes a network of big screens in every nation and region of the UK showing live coverage of the Closing Ceremony and the concert in London.

Find your local screen on the list below:

Help wanted...

Frank Field has said he would be "very surprised" if Gordon Brown led Labour into the next general election.

Mr Cairns told BBC Scotland's Politics Show: "This hasn't been a good week for us and my thoughts are with the hundreds of thousands, of not millions, of Labour voters who are wondering what on earth is going on."

Scotsman: A referendum on Scottish independence now appears almost inevitable after Wendy Alexander, Labour's leader at Holyrood, announced yesterday that she would not block the SNP's referendum bill in 2010.

Press & Journal: Alexander: I was only calling the SNP’s bluff

Does anyone have the faintest idea what Labour is trying to achieve? If so, could they please advise Wendy Alexander on how strategy works.