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Wednesday, January 11, 2012

Citicorp Dispute Shows "Independence Debate" Isn't Real

   This is my latest ThinkScotland article up here now. Please put comments there
 Alex Salmond has been righteously annoyed about a report Citicorp wrote to advise their investors whether to  put their money into Scottish windfarms. In fact the report sticks rigidly to the investment opportunities of their clients and steers clear of the political question of what windmillery does to us punters.

   That this can be considered controversial shows how unconcerned with economic, engineering or any other reality the Holyrood "consensus" is.

     The starting point of the report is that both England and Germany can get power far cheaper (essentially French nuclear) than Scotland will ever be able to sell it at and then question whether they will, for political reasons, buy it anyway. They skip that wind is so variable that it can provide no part of baseload (as Scottish Renewables have acknowledged) or that, because of that intermittency, Scotland will be the one dependent on electricity from (or via) England. For obvious reasons, even were price not a factor, most customers would prefer reliable rather than intermittent supplies

    Ignoring the fact that wind power is intermittent is proper for the report if the only consideration is their client's revenue as it should be - Holyrood is where the Scottish people's wellbeing should be considered - and if they can be certain these countries will pay the full price for intermittent power even at times of low demand when they don't need it. This latter assumes a triumph of politics over reality which may or may not be justified..

    Last December only 0.2% of UK power came from wind and a wind powered Scotland would have needed massive supplies, indeed larger supplies than the interconnector can handle and probably much larger than England, if it were also depending on wind, would have had spare, to keep lights and heating on. This is not a consideration for Citicorp but it should be for Holyrood.

    Citicorp's question is who will pay the massiver promised subsidies in the event that Scotland ceases to be part of the UK. They accept that Scotland can't. Their 3 questions are whether,  if we become "independent" England will continue to subsidise the windfarms already built; whether they will subsidise as many new ones as Scotland authorises; and whether this can be guaranteed for the next 25 years. Alex may decry them asking this but it is an obvious doubt.

     In fact their answer to the three questions assumes a new English government would sign up to this & is only doubtful on the 3rd part. I find that optimistic but even so my understanding is that "no Parliament can bind its successor" so that the answer to the last has to be No whatever the Parliament of the moment says. What Parliament, 10 years from now, when everybody realises how useless windmills are (or is that 6 months from now) is going to feel bound to pay billions to a foreign country, who no longer has any votes in that Parliament?

   Without subsidies, indeed massive subsidies, even wind turbines already built aren't worth keeping running which is why 14,000 of them already stand, abandoned, in the US. I hope Citicorp's customers know that because it is a question "renewables investors" in Spain are already facing as that country decides it can no longer afford to pay enough for it to be profitable for an "investor" to invest in running a searchlight all night to keep his solar power cells producing.

   Anybody, anywhere in the world relying on governments being elected keen to pour tens of billions into subsidising windmills, for the next 25 years, either has more faith in the promised impending catastrophic warming becoming highly visible or in the electors not rebelling, than I.  To rely on the electorates being willing to fork out to help what would be a foreign country seems even more disconnected from reality..

   What this whole episode reveals is that independence is not being treated as a serious issue but merely a standard to wave. A party seriously committed to independence would be able to tell us what currency we would have. A party seriously committed to independence would not be making Scotland totally dependent on England to keep the lights on, if we are lucky. A party seriously interested in independence would not be relying on continuing to receive billions in subsidy after independence.

     On non wconomic matters, a party seriously interested in independence would have some idea of what its future constitution would be - even something as simple as would Scotland be one of the very few countries with a unicameral legislature and power in the hands of the Prime/First minister rather than a President. A party seriously interested in independence would have come up with some serious plans for the state broadcasting organisation. A party suggesting a willingness to compromise on "devo-max" would even be able to say what it was. The refusal to consider these matters suggests they aren't serious and the failure of the other parties to bring them up suggests they also are merely engaged in kabuki theatre.

     I suspect there is nobody more worried about Alex Salmond winning the independence referendum than Alex Salmond. What on Earth would he do then?

      The role of the SNP has always been to threaten to throw their toys out of the pram if Westminster doesn't give them more, which is not something a country should be proud of, and something very destructive of Scotland's sense of self reliance, as we can see.

       If  Scotland's political class continue to act as if politics is simply the art of extracting subsidy we may  get a Czechoslovak solution. When the Wall came down the Slovak political class metamorphosed into Slovak nationalists, calling for independence but willing to accept more subsidy instead. The Slovaks voted for them on that basis and the Czech leaders forced them to live up to their promises by "letting them go" without a referendum which would certainly not have secured a majority.

      Polls in England show a minority but a growing minority there in favour of Scots independence and a Czechoslovak solution is no longer an impossibility. But what would the SNP, or indeed any of the other parties, for this is very much a race to the bottom, do then?

       I should also point out that the shock of being thrown in at the deep end prompted the Slovaks, long considered a stronghold of old fashioned socialism, to embrace the free market more enthusiastically than their neighbours and have, consequently, prospered. Independence would certainly force us, sooner or later, to acknowledge reality but would any of our current political institutions acknowledge it before national bankruptcy?

      I personally would prefer to remain part of Britain. Britain is, still, one of the world's important countries while Scotland, however successful, won't be  Scotland's role in world history, as great a role per capita as any people apart, possibly, from the Jews, is virtually all within the Union.

      Size is not related to running a successful economy. China, the world's largest country is growing at 10% annually, Singapore, one of the smallest, at 14%.  India was one of the slowest and now one of the fastest growing without gaining or losing an acre. An independent Scotland, or a Scotland within the Union could easily be the richest or the poorest part of the British Isles. The relevant factor is having competent government and Alex Salmond, attacking Citicorp for, only partially discussing reality, shows what the real problem is.

      A recent poll which shows that 2/3rds of us would choose independence if it were worth £500 a year and only 1/5th if it cost £500 shows that for most people the economy is indeed of far more importance. What I would choose is a federal UK with sufficient fiscal autonomy that Holyrood would be visibly to blame for economic idiocies and visibly rewarded for allowing the economy to grow. Even so it might take a couple of elections for a party committed to competence to appear or evolve.

      A Federal system encourages good government because the well run parts provide a good example and the badly run bits an 'orrible warning (this is feedback, vital to any dynamic system, in politics as much as engineering). It has largely worked for the US and could for Britain.

    If the SNP were serious about "independence" they would welcome Citicorp pointing out what they had apparently not noticed - that we would have to be able to keep the lights on without foreign subsidy.

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Born and living in England, I favour retaining the Union. We have so much more in common, including genetics, culture, language, Common law legal system (yes, I know it is not identical) and sharing this island, than either of us have with any other country in the EU (even Denmark).

Nevertheless the issue is about splitting the Union, not just "independence for" Scotland. It would be like a divorce. So England has as much right to specify conditions as Scotland does in the lead up to a referendum and a possible split up.

Although I try to persuade fellow English people otherwise, many are losing patience with SNP, and especially Salmond's, posturing.
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