Labour left with red faces

'Far from being economically dependent, the Treasury's own figures - never denied by Labour - show a subsidy from Scotland to England which reached a total of £27 billion in the Tory years. This was indeed described by Donald Dewar as a 'fact' before the referendum. We also know that an independent Scotland would be, according to the House of Commons library analysis, the seventh richest industrial nation in the world.' SNP Chief Executive Michael Russell in the Scotsman, 16 th November 1998.

Subsidy claims fail to add up

By Denis Campbell, Political Correspondent in the Herald

It emerged that a Cabinet Minister had previously attacked the firm behind the report as a "two-bit accountants" and that its author was a Liberal Democrat policy adviser.

Lord Macdonald of Tradeston, the Scottish Office Industry Minister, warmly welcomed the research claiming that income tax would more than double in an independent Scotland.

However, the reliability of the report, produced by London accountants Chantrey Vellacott DFK, was widely questioned.

The SNP predictably dismissed it as "back of the envelope economic gibberish which simply recycles London Labour's fiddled figures about Scotland's finances".

However, their suspicion about the Chantrey Vellacott DFK analysis of public spending and taxation patterns within the UK was supported by several other sources.

In September, the Health Secretary Frank Dobson branded the firm "two-bit accountants" for the work they do in monitoring NHS waiting-lists.

Then Mr Maurice Fitzpatrick, the report's author and the firm's chief economist, was revealed to have advised the Liberal Democrats. "So he has an axe to grind," fumed the SNP.

In addition, the highly-respected Institute of Fiscal Studies also advised caution when weighing up Chantrey Vellacott's claim that personal income tax would have to go up from 23p to 49p in a separate Scotland, if current levels of public spending were to be sustained.

Mr Carl Emmerson, the IFS's research economist, said there was little dispute that Scotland gets more per capita public spending than the rest of the UK.

"While it's certainly true that it would require higher taxes in order to continue that, don't forget that income tax represents only a quarter of all Government spending," Mr Emmerson said.

Earlier, Lord Macdonald had proclaimed the disputed research as incontrovertible proof of recent Labour warnings that a Scotland run by the Nationalists would mean Scots ending up with either higher taxes and/or worse services.

He lauded the Chantrey Vellacott report as "the latest piece of independent and reputable research which destroys the SNP's economic policies". But there was serious doubt over whether the document was either independent or reliable. - Dec 4