Scotland

Viewpoints: Experts on White Paper

The Scottish government has outlined its plans for independence with the release of a 649-page White Paper.

The launch has come ahead of the independence referendum next September.

Voters in Scotland will answer yes/no to the question: "Should Scotland be an independent country?"

BBC Scotland asked several experts for their first opinions on the SNP's "Scotland's Future: Your guide to an independent Scotland" document.

Here are a number of experts writing about tax, welfare, EU and pensions.

Peter McGregor, University of Strathclyde (Economy)

"Many would endorse the aspirations of the White Paper to enhance productivity, grow population and participation and secure improved solidarity, cohesion and sustainability.

"However, rather fewer are likely to be convinced that independence is the best way to achieve these objectives: there is considerable uncertainty over the economic impact of such radical constitutional change.

"Firstly, as many commentators have noted, retention of the pound is something that would have to be negotiated with the rest of the UK (rUK). The concentration of Scotland's trade flows with rUK (around 70% of our exports go to rUK) makes this a sensible policy for Scotland, but rUK's trade flows are considerably less concentrated, so the incentives to establish a permanently fixed exchange rate are not symmetric. Even if successfully negotiated (perhaps with an agreement on debt sharing), a "one size fits all" monetary policy would prevail. It is difficult to envisage independence resulting in greater influence over Bank of England interest-rate setting. And freedom to pursue an independent fiscal policy would inevitably be constrained (as recent Eurozone experience testifies).

"Secondly, the concentration of Scotland's trade flows adds to the challenge of stimulating Scottish exports. Work on the impact of "border effects" suggests independence could be a significant threat to Scotland's rUK exports. Of course, assessing the extent to which independence would generate such effects is controversial, but it is far from clear how independence would stimulate trade with rUK as the Scottish Government appears to envisage.

"Thirdly, the plans for lower corporation tax, with the intention of stimulating economic activity through enhanced competitiveness assumes the absence of retaliation from rUK (though, in they also assume no beneficial spillovers from FDI and no tax haven effect). Retaliation could lead to a race to the bottom and a loss of tax revenues for both Governments. Clearly there are issues concerning the efficacy of the tax as a source of revenue in a globally integrated economy.

"There are some interesting policy ideas including the plans for significantly extended child care provision draw on experience from elsewhere and it would be useful to see a full cost benefit analysis of its impact. Certainly independence would mean that it could potentially be self-funding provided the stimulus to the female participation rate was sufficient. Furthermore, the approach to the labour market certainly looks distinctive relative to the present UK Government, and the idea of a social wage is one that might prove very useful to future Scottish governments.

"Better off under independence? Possibly, but "not proven" in the White Paper."

Angus Armstrong & Monique Ebell, National Institute of Economic and Social Research (Currency)

"Currency arrangements that survive the test of time need to be coherent in all circumstances and without ambiguity.

Part of any robust union is that there is a full commitment to make it work.

"The White Paper restates the Fiscal Commission Working Group's position that Scotland should enter into a Sterling union with the rest of the UK. However, the White Paper goes on to say it would be "open to people in Scotland to choose a different arrangement in the future".

"This implies that even if a currency union is agreed by 2016, it may not be Scotland's choice in the years thereafter. Presumably, in the same vein, there may also become a time when the people of the rest of the UK also change their mind.

"If citizens on either side of the border have no guarantee that the Sterling union will continue to be the preferred option in future, then the arrangement is fragile because of this possibility of future changes of heart.

"Suggesting that the currency union may not be permanent leaves the system exposed. We have argued that the higher the level of debt an independent Scotland inherits the more vulnerable the currency union would be.

"To unconditionally commit to a currency union in perpetuity requires political union. Indeed the Euro has survived precisely because there is a high degree of political commitment. Scottish independence is a political move in the opposite direction."

Stuart Adam, The Institute for Fiscal Studies (Tax)

"The general aspirations for the tax system set out in the White Paper, such as wanting 'a simple and transparent tax system', are admirable. But all governments espouse such goals. The question is what specific changes an independent Scottish government would implement that would make it more successful in achieving those goals than successive UK governments have been.

"Not unreasonably, the White Paper postpones most such specifics, proposing 'a more significant review of the tax system in the early years of independence'. Radical reform should not be rushed.

"Nevertheless, the White Paper does name a few priorities. Three of those are tax cuts: to corporation tax, air passenger duty and employers' National Insurance contributions.

"The White Paper is right to point out the economic benefits that all three of these would bring, though it does not mention the environmental downside to cutting air passenger duty. But the obvious drawback of tax cuts is the cost. Since an independent Scotland would face an even bigger long-term fiscal challenge than the UK as a whole, an independent Scotland might find itself looking for ways to increase, rather than reduce, taxes.

"Part of the cost of those tax cuts would be met by abolishing the transferable income tax allowance for some married couples that the UK government is due to introduce in 2015.

"As its main revenue-raising proposal, however, the Scottish government wants 'simplification' to generate an extra £250m annually by the end of a first term, including via 'fewer reliefs and exemptions'. But which reliefs and exemptions would it eliminate? The White Paper names only one: 'shares for rights', a poorly designed scheme that invites tax avoidance and is a prime candidate for abolition. It remains to be seen which other candidates the Scottish government would identify.

"The White Paper contains some admirable aspirations and some welcome proposals. But it is more specific about tax cuts than about tax rises. And postponing more a radical review until after independence does not make it any less necessary - or any less politically difficult."

David Wood, Institute of Chartered Accountants of Scotland (Pensions)

"Ensuring your retirement is adequately funded is a basic desire for every person in Scotland and the rest of the UK.

"Today's 'Scotland's Future' paper says the single-tier pension will be £1.10 higher a week than a rest of UK equivalent. It says the triple lock - where the rate would rise by at least 2.5%, inflation or average earnings - would apply for five years longer in Scotland.

"The paper raises the possibility of the retirement age being lower in Scotland than the rest of the UK - the Scottish Government says it will establish a commission to investigate the timescale for this rising to 67.

"Questions remain over the affordability of these proposals.

"It is also proposed that a Scottish Pensions Regulator would be created but a single UK Pension Protection Fund would be maintained. It's unclear how this arrangement might work in practice.

"In our paper Scotland's Pensions Future, ICAS asked questions about how EU rules would affect defined benefit schemes operating across the UK, which would become cross-border in the case of a 'yes' vote.

"EU rules mean these schemes would face enormous, immediate funding requirements. Today's paper doesn't shine any further light on what these would be. Instead, it says negotiations on transitional arrangements should begin immediately. It appears unlikely that the UK government would agree to this.

"Whatever the outcome of next year's vote, a pensions crisis looms. Those planning for their retirement face challenging times ahead."

Tony Mackay, Mackay Consultants (Oil & Gas)

"There is nothing new in the Blueprint about oil and gas because all the issues have been set out in detail in previous publications by both the Scottish government and other bodies.

"The Blueprint actually presents a more realistic assessment of the importance of the oil and gas industry than those publications, probably because of the criticisms of some of the more optimistic and misleading assumptions.

"There can be no doubt that the oil and gas industry will be very important to the future of the Scottish economy. The Blueprint estimates that about 90% of the current oil revenues come from fields in Scottish waters and that a similar proportion in the future can be negotiated with the UK.

"It also estimates that the oil revenues would account for up to 10% of the Scottish Government's annual income in the future.

"That may well be realistic in the period to 2020 but that percentage is very likely to decline significantly after then as oil production inevitably falls.

"The SNP propose setting up an Oil Fund to use the oil revenues for future generations, along the lines of a similar fund in Norway. That would have been a very sensible proposal in the 1970s but I believe is unrealistic now, for two main reasons: the declining oil revenues; and the SNP's commitments to a high level of public spending. There would be therefore be little or no money left to invest in an oil fund. "

David Phillips, The Institute for Fiscal Studies (Welfare)

"Designing an appropriate system of benefits and social protection is an important task for any modern state.

"The first thing the White Paper does is set out the broad principles that the Scottish government says would guide its long-term approach in an independent Scotland. These include the better integrating the design of taxes, benefits and public services, and an emphasis on a 'preventative approach' that is hoped to reduce costs and improve outcomes. These are laudable aims.

"But they are also uncontroversial and the UK Government would say that it is committed to the same approach - for instance, in its efforts to tackle child poverty. The difficulty is translating these aims into specific policies- and this task has largely been postponed.

"But there are a number of specific proposals for more immediate reform. Some we have heard before, such as "abolishing the bedroom tax" at a cost of £50m per year.

"Others are new, such as halts to the roll out of Universal Credit and Personal Independent Payments. Those already on Universal Credit would be able to have Housing Benefit paid as a separate benefit directly to landlords and split the rest of Universal Credit between different people rather than receive is as a single household payment, tackling two major criticisms of the new system.

"And earnings disregards for first and second earners would also be equalised. These changes are a substantial departure from the recent direction of travel for the UK benefit system, and are planned to continue under longer-term reforms.

"The White Paper unsurprisingly highlights the winners but there would also likely be losers - including those who would have gained under the halted Universal Credit. However, on average, these reforms- and those planned for pensions and benefits for the elderly - would be a giveaway to households and would cost the Scottish government money.

"IFS research suggests that even if oil revenues rebound strongly during the first few years of independence, an independent Scotland would need to raise taxes or cut spending by more than the UK in the longer term. Increasing benefit spending would make this task harder and it would not be surprising if the government of an independent Scotland felt the need to cut rather than increase the generosity of at least some benefits to help balance its books."

Myrto Tsakatika, University of Glasgow (European Union)

"The White Paper aims to reassure that relations with the EU after the referendum will mean business as usual for Scots.

"The transition 'from Scotland's EU membership as part of the UK to EU membership as an independent member state' envisaged is seamless. No substantive changes to the legal framework that currently regulates Scotland's relation to the Single Market are expected, while the intention is clear to maintain the UK's current opt-out from the Euro and to remain outside the Schengen open border area.

"An optimistic 18 month period is put forward as sufficient time for an Independent Scotland to renegotiate itself into a revised but continuing EU membership, while negotiating itself out of the UK.

"The optimism of the timeframe may in some respects be justified. Even if the Scottish Government's aim to bypass the cumbersome membership application process by appealing to Article 48 TEU (the provisions for 'simple' Treaty reform) were to fail, it might still be pointed out that when considering Icelandic membership the European Commission had hinted at a year-long process.

"However, there may be other reasons for which optimism is less warranted. After a referendum for independence, Scotland would not only be negotiating for the 'low politics' issues involved in continuing membership, but would also need to confront 'high politics' issues.

"Why would the positions of other member states for which Scottish independence sets a dangerous precedent or indeed of the UK itself be as accommodating in these negotiations as the White Paper reckons?

William Walker, University of St. Andrews [Ret.] (Defence)

"An independent Scotland will not aspire to be a great power.

"It will be a reliable member of the rule-based international society of states and contribute strongly to international organizations and alliances, including NATO.

"It will establish an effective military capability serving Scotland's particular needs, including a viable defence industry. After independence, decisions on whether to go to war will be taken by the Scottish people through the Holyrood Parliament. These aspirations frame the White Paper's statement on defence.

"Establishment of a defence capability appropriate to Scotland's needs would take around a decade. The task, beginning immediately, would include a defence review mounted after 2016 by an independent Scotland's first elected government.

"The White Paper lists the envisaged capabilities in some detail, including strengthened maritime defence, a fleet of fighter aircraft, and a total of 15,000 regular and 5000 reserve personnel.

"Although the commitment to have Trident removed from Scotland remains, the SNP's language has softened. Withdrawal of Trident will now be secured "as quickly as can be both safely and responsibly achieved", giving some flexibility on timing. There is no detail on how it will be secured, mirroring London's silence, nor on how Faslane's conversion to a conventional base and HQ might be managed. Whether to ban the basing of nuclear weapons in Scotland will be decided by the proposed constitutional convention.

"As is acknowledged, much will depend on negotiation with rUK and foreign governments. Their friendliness after a yes vote is assumed, rightly or wrongly.