A Bright Economic Future for an Independent Scotland

THE SLESSER REPORTS

  1. Introduction and Aims
  2. Natural Capacity Accounting
  3. The UK Scenario - Business As Usual
  4. Scotland in The UK - Business As Usual Scenario
  5. A Devolved Scottish Parliament
  6. An Independent Scotland Within Europe
  7. Policy Objectives for An Independent Scotland
  8. Likely Consequences of the Above Policies
  9. Points To Note
  10. References
  11. The Slesser Reports - Summary

1- Introduction and Aims

This briefing aims to summarise the findings of two reports published by the Centre for Human Ecology at the University of Edinburgh. These reports (published by Malcolm Slesser, David Crane and Jane King) examine the Scottish economy using a model, which unlike conventional models, takes into consideration environmental effects.

The first report (Scotland's Political Options) gives a projection of the UK and Scotland under different constitutional arrangements. The second report (Searching for a Sustainable Scotland) details policy options for an Independent Scotland in order to achieve sustainability.

2- Natural Capacity Accounting

BACKGROUND

These studies use the technique of Natural Capacity Accounting, which examines environmental effects and not simply the interactions between man and man as conventional models do. The ECCO models used in this approach reflect the feed-back structure of the economy, and are essentially dynamic input-output models expressed in physical terms.

THE MODEL OF SCOTLAND AND NECESSARY ASSUMPTIONS

This was developed from an ECCO model of the whole of the UK, which was then partitioned into Scotland and the rest of the UK.

In developing the model, it was necessary to assume future government policies. Current government policies were assumed therefore to continue. While this is neither realistic nor desirable, it does provide a useful benchmark.

THE CRITERIA OF SUCCESS

The following were postulated to be measures of success with regard to the economy, the environment, and the national quality of life.

3- The UK Scenario - Business As Usual

The model was run under the condition that current government policy did not change. The results of this after 25 years (ie for 2019) were as follows: The most significant outcome of all of this is the decline in a potential for employment. Full employment in the UK, as envisaged by some parties is not a realistic option.

4- Scotland in The UK - Business As Usual Scenario

In comparison with the rest of the UK, Scotland performs relatively well, due to its inherent advantages of huge natural resources and small population.
  1. Short term economic sustainability would be better than the rest of the UK.
  2. The long term physical sustainability is about eight times higher than for the rest of the UK (extensive natural resources and a small population).
  3. The growth rate of the material standard of living is initially slightly higher, though it starts from a lower base.
  4. Work available declines at a slower rate than in the rest of the UK.

5- A Devolved Scottish Parliament

The policies for devolution are vague, consequently the authors report that until clarification is given of the powers of a devolved Scottish Parliament, the closest representation of Scotland under devolution is the model of Scotland in the UK.

6- An Independent Scotland Within Europe

This postulates that Scotland gains Independence in 2001, as a consequence of this Scotland would gain access to oil and gas revenues, and under current government policy, this would create a huge balance of payments surplus in the first year (£4.3bn / $6.4bn).

If current government policies were pursued, the authors advise that the sudden access to oil and gas revenues would stimulate the Scottish economy to such an extent that the rate of recovery would be too great to be maintained, and after 10 years the country would be plunged back into the red.

For this reason, the authors felt it necessary to impose the constraint (effectively a change in government policy) limiting the rate of rise in consumption goods expenditure to 1.8% (an arbitrary value).

With this in mind, the following results were obtained:
  2. Material standard of living rises more quickly than in the rest of the UK
  3. Available work rises instead of declining as in the UK scenario.
  4. Tax rates decline markedly.
  5. Short term sustainability rises.
From the above, it is possible to concluded that from an economic point of view, there is no reason why an Independent Scotland should not prosper if properly governed - ie. there is no economic argument against Scottish independence. The question of what policies would be most suitable for an Independent Scotland, and just how successful an independent Scotland would be are addressed by the second report - Searching For A Sustainable Scotland.

7- Policy Objectives for An Independent Scotland

The authors proposed the following series of policy objectives:

8- Likely Consequences of the Above Policies

The report concluded that the model predicted the following outcomes if the above policies were followed in an independent Scotland. As can be seen from the above, the material standard of living would rise, and unemployment would fall. The authors state that for the period of the survey (ie for the next 25 years), Scotland would perform well as far as the living standard of the population was concerned if the above policies were applied. They also stress that although the concept of long term environmental sustainability is elusive, Scotland is:-

"In many ways one of the best placed parts of the world to create a sustainable environment" - (Scotland On Sunday 23 April 95)

It should also be stressed that the authors undertook an examination of only one set of policy options for an Independent Scotland, these may not be optimum, and alternative results may be obtained with different policy options which may be more suitable to Scottish needs at the time.

9- Points To Note

The following points should be taken into consideration when examining these reports.
  1. Although the performance of Scotland (as part of the UK) is better than that of the total UK average, this model takes no account of the difference in prosperity in the rest of the UK; ie. between London and the SE, and the poorer areas in the North. The report does not show the difference in performance between Scotland, and the comparatively rich London and the SE.
  2. The structure of the model takes into account only a limited number of environmental effects, which seem to be heavily biased towards greenhouse gasses. The structure of the model therefore allows nuclear power to be seen as "green", and a policy of expansion of nuclear power is proposed. This is contrary to party policy of using coal reserves as temporary measure until research and development yields sufficient green energy. It also appears to take little account of the environmental improvements which technology has allowed in the burning of coal. Limitations of the model do not allow the full advantages of the SNP's energy policy to be examined.

10- References

Scotland's Political Options  -  Malcolm Slesser and David C. Crane
Searching For A Sustainable Scotland - Malcolm Slesser and Jane King
(Both of the above were published by the Resource Use Institute and Centre for Human Ecology, University of Edinburgh.) 
Scotland On Sunday - (23 April 95)

11-The Slesser Reports - Summary

Assuming Independence in 2001, the following would be affordable policies in an Independent Scotland Note that the policies implemented to arrive at these conclusions are NOT necessarily the optimum policies for Scotland.

Quotes
"In passing, it might be noted that the SNP's Scottish budget (1993) can be accommodated within the policies we have explored here"

*(Searching For A Sustainable Scotland: Jane King & Malcolm Slesser)

"What is clear is that from an economic point of view there is no reason why an independent Scotland should not prosper if properly governed. There is a potential for a higher material standard of living and more jobs. "

(Scotland's Political Options: Malcolm Slesser & David Crane)

"Scotland is in many ways one of the best placed parts of the world to create a sustainable environment."

(Malcolm Slesser, Scotland On Sunday, 23 April 95)

* Note, this quote was taken from the draft report.
This Report was published by the SNP Research Department in May 1995
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