Conflicting reports on independence

Hampshire Chronicle: John Swinney said an independent Scotland would start life with a 'healthy budget' John Swinney said an independent Scotland would start life with a 'healthy budget'

Scotland's two governments have published conflicting reports on the economic impact of independence in a bid to persuade voters to back them in September's referendum.

First Minister Alex Salmond declared it was a "watershed moment" in the campaign as he said people could be £1,000 a year better off in 15 years as a result of an "independence bonus".

But Chief Secretary to the Treasury Danny Alexander branded that a "bogus bonus" as he said remaining in the union would give everyone in Scotland an annual £1,400 "UK dividend".

The UK Government minister visited Edinburgh to make his case as the Treasury published a new report assessing the fiscal position of an independent Scotland over the period from 2016 to 2035/36.

At the same time Mr Salmond unveiled a rival publication which claimed an independent Scotland could be £5 billion a year better off in 15 years' time without having to raise taxes.

The London and Edinburgh administrations also clashed over figures which Mr Salmond claimed showed the Treasury had been ''caught red-handed trying to cook the books''.

Analysis released in advance had cited a possible cost of £2.7 billion for setting up a new state, but Professor Patrick Dunleavy of the London School of Economics told the Financial Times this was "bizarrely inaccurate".

Mr Alexander insisted Prof Dunleavy's work was not part of the Treasury report.

Meanwhile, the First Minister said no detailed work has been done by the Scottish Government to work out its own total figure for the cost of independence.

He said: " Today has been a watershed moment in the referendum campaign.

"The Treasury had been briefing that this would be a defining day in the independence debate - it certainly has been, but just not in the way they had planned.

"Westminster's figures have been blown to pieces as they have been disowned by the very experts the Treasury were citing, while we have set out the positive case for an economically successful independent Scotland.

"Mr Alexander's figures are in meltdown, and the Treasury have been left without a single shred of credibility."

He added: " People across Scotland will now be looking at the competing visions of our nation's future outlined today - our vision, based on the extraordinary wealth of Scotland and the ability of the people who live here to run their own country, or that of a Tory-led Westminster Government intent on running Scotland down and whose bogus figures have been brutally exposed."

Mr Salmond said his Government's paper ''gives a very clear picture of what independence could deliver in economic terms".

An increase of 0.3 percentage points in the productivity growth rate could raise an additional £2.4 billion a year in revenues by 2029/30, according to the report.

Upping the employment rate in Scotland by 3.3 percentage points - taking it to the level of the five best-performing countries in the developed world - could provide additional revenues of £1.3 billion a year, it claimed.

Meanwhile, a rise in the population that is less than the UK as a whole is expected to see could net a further £1.5 billion a year by 2029/30, the report stated

"We project that over a 15-year period, the tax revenue addition is £5 billion - around £1,000 a head for every man, woman and child in Scotland, or some £2,000 for each Scottish family," Mr Salmond said.

"We describe that as the bonus of independence - the independence bonus. Not caused by increase in taxes, but by increase in productivity, increase in the working age population and an increase in employment."

Mr Alexander argued leaving the UK would mean lower tax revenues north of the border and increased public spending, as he challenged the Scottish Government to "come clean with people that there is a significant cost to setting up a new state".

The UK Government minister said a separate Scotland could face higher interest payments on government debts, at the same time as it had to deal with declining oil revenues and an ageing population.

''Today we have shown that, by staying together, Scotland's future will be safer, with stronger finances and a more progressive society," he said.

''Because as a United Kingdom we can pool resources and share risks, it means a UK dividend of £1,400 a year for every man, woman and child in Scotland.

''That dividend is our share of a more prosperous future. It is the money that will pay for better public services and a fairer society.''

The Treasury's £1,400 UK dividend - which effectively represents the UK Government's figure for the cost of independence - is calculated using a number of components.

The majority of the dividend comes from higher public spending in Scotland and lower onshore tax revenues at present and by 2016/17 that are not covered by higher oil revenues. It also includes people in Scotland avoiding direct costs that would come with independence, Mr Alexander said.

He claimed: "An independent Scotland would have to spend more to deliver the same services as now. So where does that leave us? A worse starting point. The cost of setting up a new state. Unfunded policies. Declining oil revenues and an ageing population.

"All of that, easily avoided by staying within the UK, is worth £1,400 for each person in Scotland for the next 20 years. That's the UK dividend."

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