EXPERTS CONFIRM SNP SIGNED UP TO AUSTERITY WORSE THAN THE TORIES

The SNPs manifesto fell apart today after the Institute for Fiscal Studies (IFS) exposed the
impact of full fiscal responsibility within the UK.
In a devastating report, the impartial and independent experts at the IFS said that by the end
of the decade the gap in Scotlands finances because of full fiscal responsibility is due to grow
to 9.7 billion a year. The IFS conclude that full fiscal responsibility would likely entail
substantial spending cuts or tax rises in Scotland.
The report shows the SNPs claims on fiscal autonomy to be untrue. Here, we quote the
experts conclusions on the SNPs claims.

SNP CLAIM ONE: WE DONT NEED TO WORRY ABOUT THE ADDITIONAL AUSTERITY
CAUSED BY FISCAL AUTONOMY BECAUSE IT WOULD TAKE YEARS TO IMPLEMENT
Nicola Sturgeon: That would take several years to implement and Scotlands fiscal position at
the point that we became financially autonomous would depend on our economic
performance between now and then.1
Nicola Sturgeon: The other thing about fiscal autonomy of course is that while yes I support
it, it would take several years to fully implement.2
Nicola Sturgeon: Well, the 7.6bn is a complete red herring, I mean thats a figure that the IFS
has put forward for Scotlands fiscal position this year, it would take no account of the fiscal
agreement and framework that would have to be negotiated Scotlands fiscal position is
improving, full fiscal autonomy even if we could agree on it this year, would take several years
to fully implement.3
The IFS make it clear that the SNPs suggestion that delaying Full Fiscal Autonomy will help
deal with the extra gap created does not bear scrutiny:
Delaying a move to full responsibility for a few years would not on its own deal with
the fiscal gap though. Indeed, if anything, given current spending and revenue
forecasts, the gap would likely grow rather than shrink over the next few years. It
would remain the case that full fiscal responsibility would likely entail substantial
spending cuts or tax rises in Scotland. While a big and sustained rebound in oil
revenues or significantly higher growth in Scotland could mitigate this, there can be
no presumption that either would occur.

Nicola Sturgeon, Andrew Marr Show, BBC1, Sunday 19 April 2015.

Nicola Sturgeon, Five Live Phone In. 14 April 2015.
3 Nicola Sturgeon, 13 April 2015.
1
2

It is important to remember that the gap created in Scotlands finances by Full Fiscal
Autonomy is in addition to the current Tory austerity plans. These are extra cuts or tax rises. If
made up only through cuts they would be more than double Tory austerity to date.
The IFS project the amount of additional austerity needed as a result of Full Fiscal Autonomy
grows to 9.7 billion by 19-20. This is larger than Fiscal Affairs Scotland (8.7bn) or the
Treasury (8.4bn) forecast the gap to be by the end of the Parliament:

Net fiscal
balance
% of GDP
Scotland
UK
Difference
Cashterms
difference

201314 2014-15

2015-16

201617 201718 2018-19

2019-20

-8.1%
-5.6%
-2.5%
-3.8bn

-8.6%
-4.0%
-4.6%
-7.6bn

-6.8%
-2.0%
-4.8%
-8.2bn

-4.6%
+0.3%
-4.9%
-9.7bn

-8.6%
-5.0%
-3.7%
-5.9bn

-5.4%
-0.6%
-4.8%
-8.5bn

-4.6%
+0.2%
-4.8%
-8.9bn

SNP CLAIM TWO: WE CAN GROW OUR WAY OUT OF THE ADDITIONAL AUSTERITY CAUSED
BY FULL FISCAL AUTONOMY
Nicola Sturgeon: Fiscal autonomy is about giving us the power to grow our economy faster,
to create more jobs and to grow our revenuesthe way out of deficit is to grow your economy
and the more powers you have over your economy the faster and better you are able achieve
that.4
Nicola Sturgeon: You take control to try to grow your economy and get your finances into
much better shape.5
Stewart Hosie: We want as many powers as possible and the powers we would like to see
quickly are those in order to create jobs, to grow the economy, to make Scotland fairer,
effectively the devolution of tax and employment powers, the devolution of welfare powers.6
The IFS make clear that the SNP cannot credibly claim to grow their way out of the additional
austerity. Just to stand still Scotland would have to grow at double the rate of the UK as a
whole:
It also provides information to assess how much faster growth would have to be to
close the gap. To close the gap by 201920, for instance, Scottish revenues per person
would need to grow by more than twice as much as forecast for the UK as a whole
4.5% in real terms per year between 201314 and 201920.
Even closing the gap over a longer ten or fifteen year horizon would require a stepchange in Scottish economic performance, and revenue generation. Such a change is
not impossible, but is much easier to promise than it is to deliver.
And the IFS also point out that the policies the SNP claim would grow the economy are largely
tax cuts which would increase the fiscal gap, rather than close it:
As we have highlighted before, the types of policies previously outlined by the SNP
as potential ways to boost growth, such as cuts to corporation tax and air passenger
duty, and increases in childcare spending, would, at least in the short to medium run,
cost the government money, and widen rather than shrink the fiscal gap, even if they
did boost growth.
Based on figures from the impartial Scottish Parliament Information Centre, the growth
required to close the fiscal gap would require:

More than double the IMFs predicted growth for Advanced Economies (2.4%)

Higher than the IMF growth rate for Emerging Market and Developing Economies in
2016 (4.7%)

Nicola Sturgeon, Good Morning Scotland, Radio Scotland, 31 March 2015.

Nicola Sturgeon, BBC Debate, 8th April, 2015.
6 Stewart Hosie, Sunday Politics, 20th April, 2015.
4
5

SNP CLAIM THREE: 15 BILLION MORE IN ONSHORE TAXES BY THE END OF THE
PARLIAMENT WOULD CLOSE THE GAP
Nicola Sturgeon: But our onshore revenue as a country, and non-oil revenues, are estimated
to be 15 billion higher than they are just now.7
Nicola Sturgeon: By the end of this decade [oil revenues] are projected, assuming the oil
price stays broadly as it is just now, to be about 3bn lower than they are at the moment but
our non-oil revenues, our revenues onshore that have got nothing to do with oil, they are
projected to increase by 15bn over the same period, so five times the estimated decline in oil
revenues and having more powers over our economy, our fiscal decisions.8
Stewart Hosie: If Scotlands expected to have 15bn of extra revenues by the end of the
parliament, thats clearly twice the gap theyre suggesting we have at the moment.9
The IFS are clear that Nicola Sturgeons argument that 15bn additional onshore revenues
over the period cannot close the gap because their figures assume a similar amount of
onshore tax growth:
The figures assume Scottish onshore revenues per person will grow at 1.9% per year
in real terms between 201314 and 201920 the same rate of growth that the OBR
forecasts for the UK as a whole. In cash terms, growth in onshore revenues is
projected at 14 billion, very similar to the 15 billion growth the SNP have cited,
based on similar projections by Fiscal Affairs Scotland.
This also makes an utter nonsense of Stewart Hosie, SNP Deputy Leader and Treasury
Spokespersons claim that the 15 billion of onshore revenues was more than double what
was needed to close the gap. The SNP must have known this was misleading when making
the claim.

The full IFS report can be read here: http://bit.ly/1K1Ccla

Interview with the Economist 10th April 2015. http://www.economist.com/news/britain/21648188-fulltranscript-our-interview-snp-leader-which-she-discussed-her-partys-recent-surge

8 Nicola Sturgeon, 5 Live Phone in 15th April, 2015.
9 Interview with Stewart Hosie, Sunday Politics, 19 th April.
7