5 things you should know about our new report on division of assets & debts in an independent Scotland

Ben Wray

Common Weal break down the five key things you should know about our new report Claiming Scotland’s Assets: a discussion paper on the division of assets and debts to an independent Scotland.

  1. UK Government position “completely at odds with historical reality”

From the report: “The UK Government position that an independent Scotland would automatically be responsible for paying a full proportional share of the UK's debts whilst expecting nothing in return is a position completely at odds with the historical reality of separation negotiations.”

  1. The UK’s debt is older and more expensive, meaning an independent Scotland’s new debt likely to be “considerable financial benefit”

From the report: “At time of writing, UK bond yields currently range between 0.2% for 5 year bonds to around 1.3% for long term 30 and 50 year bonds. This means that the UK is paying higher rates of interest on bonds priced prior to the current levels. When one examines accounts such as GERS, it shows that the average interest paid by the UK on its debt in 2015-16 was around 2.2%. This implies that if Scotland were to become independent at a point when the current bond yield rate was lower than the average rate paid (even if it were higher than the UK's current rate) then it could be to considerable financial benefit to take on that debt on Scotland's own terms.”

  1. Negotiation approach based on additive model – only taking assets that Scotland wants

From the report: “Rather than accepting some agreed percentage of assets and liabilities and then subtracting from it according to circumstances, Scotland could take the opposite approach. It could accept the UK's claim to ownership of mobile assets and start from a position of claiming zero UK debt. From this position, Scotland could agree to take on a level of liabilities matching the value of any assets it is granted, effectively “mortgaging” them against UK debt.”

  1. The additive model only works if an up to date Register of Assets is commissioned in advance

From the report: “This model is obviously significantly more proactive on the part of the Scottish Government or Scottish separation negotiation team as each asset required or desired must be identified and costed. Lacking a recent official Register of Assets, this process may be difficult or even impossible, therefore a Scottish Government serious about campaigning for another independence referendum should ensure that one is available before that campaign. If the UK Government will not commission a UK wide audit then the Scottish Government should commission a Scottish one itself or make as detailed estimates as it can. This should be commissioned alongside an audit of assets that an independent Scotland would require but currently lacks, as well as assets currently owned but which may be superfluous.”

  1. Negotiating options outlined all “accrue varying levels of financial benefit to Scotland”

From the report: “The precedents and models outlined would likely all accrue varying levels of financial benefit to Scotland if utilised properly. A lack of up to date data makes precise figures impossible, but a conservative illustration of each model in the Scottish context would suggest a £800m per year financial gain from the subtractive model with refinancing; a £1.7 billion reduction in debt interest payments from the additive model without refinancing; a saving of over £2 billion per year from the zero option; and, in the case of historical net contribution, a possible financial contribution from rUK to Scotland.”