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June 10, 2007

Can The Union Survive?

At some point, the difference in the treatment of the Scottish will really start to rankle with the English. Might this be the breakthrough issue?

BRITISH taxpayers are to meet the £2 billion cost of reintroducing free university education in Scotland – but students from England and Wales will still have to pay the full fees.

But the latest plan is the most divisive yet. All tuition fees in Scotland will be scrapped from 2009 for Scottish students.


The move provides an ironic twist to the introduction of tuition fees as Tony Blair had to rely on the votes of Scottish MPs to push through the introduction of £3,000-a-year fees at English universities.

Students from the European Union will also receive free education from 2009 unless they come from England, Wales or Northern Ireland.

What fun, the West Lothian question and the Barnett Formula all in one.

June 10, 2007 in Your Tax Money at Work | Permalink


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Exactly. I alsways said it would save England a lot of hassle if we just left the UK, thus automatically leaving the EU at the same time.

Posted by: Mark Wadsworth | Jun 10, 2007 9:02:57 AM

We have now to take on a new issue for the Climate Change agenda:

"A lack of sunshine in winter months could be contributing to Scotland's high rate of heart disease, researchers have said."

That amazing novel insight must come as a relief.

Scotland's problem with heart disease evidently has less to do with excessive regional consumption of alcohol, deep-fried, battered Mars bars, dislike of green vegetables or inclinations for violent behaviour as dicovered in a United Nations survey.

The obvious solution is straight forward - change the Earth's orbit.

Posted by: Bob B | Jun 10, 2007 12:05:50 PM

It's not the orbit, Bob, it's the tilt.

Posted by: dearieme | Jun 10, 2007 1:02:26 PM

Can you just do something like rent a house in Scotland, get your kids signed up and get out again?

Or is there some sort of Scottish test, like having to state that Archie Gemmell's goal against Holland in 1978 was the greatest ever?

Posted by: Tim Almond | Jun 10, 2007 1:18:00 PM

"It's not the orbit, Bob, it's the tilt."

Whatever, reason enough to amend the Barnett formular to compensate Scotland for the wicked injustice inflicted by the Earth's tilt and also for a few grants to uni's in Scotland to fund research projects into means for adjusting the tilt to reduce the scale of cardiac ailments in Scotland.

Posted by: Bob B | Jun 10, 2007 3:52:33 PM

It's their country, and they can do what they like there. The injustice of the Barnett formula is another matter, but I don't know enough to know if it is or is not unjust. However, Scotland being fully independent will make everything transparent.

If Scotland were to go independent, lower taxes and rip up all the illiberal Blair legislation, I know where in the EU I'd be moving to. I think Mr. Salmond would see what the Laffer curve can do for his little country too..

Posted by: Kay Tie | Jun 10, 2007 7:31:02 PM

Alex Salmond would be committing ritual suicide to attempt Laffer curve taxation in Scotland where public spending is taken as a sure sign of political virility.

Posted by: Bob B | Jun 10, 2007 7:48:16 PM

Btw credit where it is due. The high economic theory - and it is very high indeed - underpinning the Laffer curve comes from Nobel laureate James Mirrlees, a Scot whose alma mater is Edinburgh University.

It was James Mirrlees's academic papers on income tax policy during the early 1970s - reprinted in his collection of selected papers: Welfare, Incentives and Taxation (OUP, 2006) - which stimulated the debate at the time on "progressive income tax rates" motivating first the New Zealand government to undertake tax reforms and then in 1979 and after the Thatcher government to hack away at the ridiculously high UK marginal income tax rates of 75% and 83%.

On the prior history of UK income tax rates and allowances from 1973/4 onwards, see the data in this Excel spreadsheet from IFS:

For insights into Mirrlees's seminal contribution to the debate, try this piece in 2003 by John Kay:

" . . In a virtuoso performance in 1971, Sir James Mirrlees, who received the Nobel Prize for his ability to disentangle these sorts of problems, used complex mathematics to determine the ideal rate structures for income tax. His most paradoxical result was that you would want to have the lowest marginal tax rates on the very richest people - the people whom you could also expect to face the highest average rates. . "

For a textbook account of Mirrlees' contributions to the theory of taxation, try Gareth Myles: Public Economics (CUP 1995).

There have been no Nobel prizes for Laffer. Try this from James Mirrlees on his Nobel prize:

Posted by: Bob B | Jun 10, 2007 8:20:45 PM

"It's their country, and they can do what they like there."

Yes, but they're not using their own money. If the SNP want to prove that Scotland can act as an independent nation, what better way than by refusing all financial aid for things controlled by the Scottish Parliament - of which education is one? Were they to do that, I could not object. But instead they are to use English taxes to finance Scottish higher education, just as Student Debt in England tops £3billion. Nice of them, that.

Posted by: ThunderDragon | Jun 11, 2007 12:07:10 AM

"Yes, but they're not using their own money."

Too true - London taxpayers are being ripped off to fund the addiction for public spending in Scotland:

"London is a major net contributor to the Exchequer: Our estimates suggest that London continues to be a substantial net contributor to UK public finances, by between £6 and £18 billion in 2003-04, despite the deterioration in public finances at a national level, with the mid-point of the range of estimates implying a net contribution of £12.1 billion."
Oxford Economic Forecasting: London's Place in the UK Economy 2005-6

But there could be hope. Just on the news wires:

"Scotland is the worst performing small country in western Europe, according to a report by business leaders. The Federation of Small Businesses' annual Index of Wealth compared 10 countries' on economic performance, employment rates, health and education. Scotland's life expectancy rate was a major factor in it coming bottom. . . Mr Willox added: 'That Glasgow is the worst performing part of Scotland on all but one of the indicators is deeply troubling.'"

What's the political betting there will be more calls for greater public spending in Scotland to halt the decline?

Posted by: Bob B | Jun 11, 2007 2:19:39 AM

Union? What Union? The Act of Union was abrogated when the Scottish Parliament came into being, because the whole point of Union was that the people of Scotland and England/Wales were to be ruled by one Parliament as one people from that point on. National Devolution to Scotland, Wales, Northern Ireland but NOT England has broken that agreement.

There is no example of a Union surviving anywhere in history in which the largest partner is given a second-class status. But that's what has happened to us English. More to the point, the very fact that such as idea could be not only considered but actually carried out shows that the British State can never be trusted to act in our best interests.

There is no "We" any more. Just "Us" and "Them". It's time to make the political reality match the reality on the ground by formalising the breakup of the Union. That way we might actually get some sensible cooperative politics rather than the usual Blame the English whilst simultaneously demanding "Celt Geld" as we have at present.

Posted by: David B. Wildgoose | Jun 11, 2007 8:27:05 AM

Personally, I'm not at all surprised at the mounting campaign in Scotland for separation from the UK and independence.

It seems pretty clear to me by now that increasing numbers of Scots regard the union an unnecessary restraint on their inalienable right to consume alcohol. For a start, the present taxes on alcohol are onerous and then there are the age restrictions too.

Come to think on it, if I lived in Scotland with its limited amount of daylight, I'd probably feel impelled to consume a lot of alcohol too.

Posted by: Bob B | Jun 11, 2007 10:29:25 AM