RICHARD Murphy’s article on the debt Scotland would receive on achieving independence is a welcome contribution to the debate on Scotland’s supposedly poor finances (A question of debt, July 29). Obviously, things are not as bad as Unionists would wish the Scottish people to believe. Much, if not all, of the current alleged “Scottish deficit” is comprised of paying off interest on the UK’s almost inconceivably large national debt and letting the North Sea off with next to no taxation.

In the case of the former, Professor Brian Ashcroft (emeritus professor of economics at Strathclyde University) published a paper in 2012 titled “Has Scotland already spent its oil fund?”. In it he finds, using 19 years of Government Expenditure and Revenues Scotland (GERS), that Scotland’s share of UK debt interest amounted to £83 billion at 2001-12 prices.

Subtracting this from total estimated Scottish spend of £1440bn, he calculated a debt-interest-adjusted estimate of spend of £1357bn, with total estimated tax revenues of £1425bn. He thus found that Scotland was in overall surplus by about £68bn.

In other words, Scotland had contributed not one penny to the UK’s national debt but was still having billions added to its so-called deficit in interest payments on that debt. With a fair settlement on independence Scotland would only pay interest on any debt it actually accrued prior to independence which, in all likelihood, would be £0 or even a rebate.

Similarly with North Sea revenue. Gordon McIntyre Kemp wrote a paper in 2018 titled “Why UK’s oil and gas revenues are dwarfed by Norway’s”. In it, he found that if the UK’s oil and gas policies were run like Norway’s, Scotland would have a multi-billion-pound surplus. For example, in 2015-16 (during the depths of the oil price slump Unionists gleefully revelled in) Norway accrued revenues of more than £29bn from the sector while the UK actually GAVE the sector £23m!!! With a fair independence settlement, control over the North Sea could see more realistic policies implemented that would more than compensate for the loss of the Barnett Formula.

There is no moral or legal requirement for Scotland to take on any more debt than it really has to. We did not create the UK’s huge debt. Why should we shoulder any of the burden of paying it off?

Stuart Allan

PROFESSOR Murphy presents perfectly valid arguments for why Scotland is not due to pay any of the UK national debt (or really the UK national savings when seen from the citizens’ side of the accounting ledger). However I think it is even simpler and clearer when considered from the international law perspective.

If the UK wishes to divide up the debts and the assets then it is very simple. All they have to do in international law is to declare that the UK as a state has come to an end and dissolved and that there is no continuing state. Scotland and the Kingdom of England, Wales and Northern Ireland will start off as new states and there will need to be a division of all the assets and liabilities.

All current UK treaties and other international obligations would be null and void and both countries would have to apply to join the UN, Nato etc. The Security Council seat, and all other UK positions on the IMF, World Bank etc, will be vacant and re-allocated as appropriate.

Since they do not want to do that, and declared that to be so in 2014, the UK has chosen of its own free will to keep the assets, the liabilities and the international positions. Scotland owes nothing, and neither has any other of the 60 countries that have left the empire.

The national debt is really the national savings and it is absolutely nothing to be bothered about in any case. The Treasury could repay the entire amount (except the £70 billion of bank notes which are a part of the debt) by simply instructing the Bank of England to do so.

There is no cost to taxpayers and the economic impact in accounting terms is nil as this is simply £1.35 trillion that moves from gilts (which are really just a term deposit account at the BoE) into the commercial banks’ reserve accounts at the BoE (as they credit the amount to the current accounts of the holders). Gilts are money, so there is no change in the money supply.

If, on the other hand, the Treasury decided to repay it by taxing the public by £1.35 trillion, then that £1.35tr is simply destroyed and the money supply falls accordingly. There are distributional effects to the latter route, as those being repaid their savings are not the same people as are having £1.35tr of their money taxed away and destroyed.

Tim Rideout

SCOTLAND will start with no national debt. Westminster will agree to that because if they don’t, they would have to pay Scotland the same share of the national assets. The largest amounts of these assets are in England and abroad. These assets must be well above the debt, otherwise Britain would be a third world country by now.

William Purves

IN his letter of July 28 (We lack the powers to borrow in a crisis) John Hamilton correctly acknowledges that England, with its larger financial resources, would no doubt refuse temporary borrowing to independent Scotland, precisely because we would be no longer part of the Union and would be too wee (and poor and stupid) to arrange this for ourselves. This is point is all too often made by Prime Minister Johnson and his lackeys, during their disingenuous havering.

However, as an independent country our lockdown (and border closures for unnecessary travel) could have been made much sooner, with a much lower Covid 19 death toll, and our national finances far less affected. The example of New Zealand has been well publicised, who have the advantage of being surrounded by oceans and 2000 km from Australia, their nearest sizeable neighbour. Of greater significance to our situation is Slovenia, with a population of 2.1 million, with four neighbouring countries including Italy, and is part of the EU. Their latest reported Covid-19 deaths total 117.

If Slovenia and many other small countries can do it, we could also.

J Edwards
West Lothian