I've just finished watching Scotland Tonight's debate on the economics of Scottish independence again, which was very interesting indeed. Nicola Sturgeon from the SNP and Michael Moore from the UK government went head-to-head live on national television, and both were given the opportunity to make an opening pitch and put forward their case, before cross-examining each other and asking questions.
So who came across better in the debate? The short answer, without a doubt, is Nicola Sturgeon. What she was able to do was forcefully put across her arguments to Michael Moore, who was not able to do the same. Her questions to the Secretary of State were also much more pressing.
I normally think Michael Moore comes across quite well on TV, in his interviews for instance, or on Question Time. But on Scotland Tonight it was an entirely different ball game. To be fair, Moore's opening pitch was a good one. He decided to focus on the broad macroeconomic benefits to Scotland of being part of the larger economic unit that is the United Kingdom. But when he went head-to-head against Sturgeon he failed to build on that positive start.
The main discussion points were on the currency issue, and poverty. On both of these points Moore should have done much better. I'll discuss the later first.
Sturgeon read out a range of statistics showing unacceptably high levels of poverty in Scotland (which occur for many reasons, not one of which is the constitution). This was effective, because Moore was unable to provide a satisfactory response. He simply tired to defend the government's record without turning the question around. The Scottish government is largely responsible for all domestic policy in Scotland, and can vary the rate of income tax by 3p in the £1 (soon to be devolved fully) without using that power once. Why, therefore, would shifting control of air passenger duty or corporation tax from a building in London to a building in Edinburgh result in a more equal society? Do the SNP not take responsibility for anything happening in Scotland just now? And on that point, why is it Scotland has poorer outcomes than the UK in areas such as health and education, which the Scottish government are fully responsible now? There is no proof that a change in the constitution would help inequality. Rather, we are better pooling our resources together and taking advantage of a broader and more dynamic tax base to address problems in society.
Then we have the currency, which is the nationalists' weakest position beyond all else. Yet Moore did not put across questions to really test Sturgeon on the issue. For example, why do the SNP think they have a robust currency position when fellow nationalists, Yes Scotland board members, former Bank of England experts, senior economics, and Alex Salmond's former economic advisor all say an independent Scotland would have to have its own currency?
To her credit, Sturgeon kept repeating the recommendations from the Fiscal Commission, which suggests an independent Scotland should attempt to enter a sterlingzone with the rest of the UK. But Moore did not highlight the fact that the Commission takes the position that Scotland is independent. In other words, it does not analyse whether Scotland should be independent, like the UK Treasury paper does. He also only highlighted the flaws of independence and inconsistencies in the SNP's policies, such as the fact that the SNP want Scotland to be independent - only to remain within a UK framework. But he did not discuss why the current system works best. To win, the UK government and Better Together must do both.
Generally speaking, for a currency union to work, the states sharing the currency need synchronised business cycles, deep trade integration, wage and price flexibility, and fiscal transfers. All of these would change under a separatist scenario. The Scottish and rUK economies would diverge, fiscal transfers would end, and monetary policy needs in Scotland and the continuing UK would differ at different points in time. The current system works well because of the deep integration of the Scottish and rUK economies, and the ability to use fiscal transfers across the United Kingdom to adjust to economic difficulties in different parts of the country.
There were other things Sturgeon was allowed to get away with too. Highlighting that oil revenues account for a much larger proportion of GDP in Norway than in Scotland, she suggested Scotland wouldn't be overdependent on oil for revenue if it was independent. Yet Moore did not point out that whereas the UK's oil companies are privately owned Norway's are state owned. The country therefore has a bigger role in deciding on the rate of production. It also does not use oil to fund current expenditure like the UK does.
All in all I do not think Moore effectively put forward a strong enough case, and he allowed Sturgeon to walk all over him. I do not think she talked much sense, but she put forward her arguments strongly enough and did well. Polls show that around 30% of Scots will vote for independence no matter what, while around 40% of Scots will vote to stay in the UK no matter what. So the people in the middle who are undecided will largely decide the outcome of the referendum. These are also the same type of people who will only tune into the debate when it makes big news in the media, and so these TV debates will help them make up their minds.
The one positive thing coming out of Moore's exchange with Sturgeon is that she failed repeatedly to say if the SNP have a Plan B if a sterlingzone could not be agreed; and if so, what would it be? I suspect we'll be coming back to that issue again at some point in the future.