No-one should underestimate the scale of investment Scotland must make to transform itself.
No-one should underestimate the scale of investment Scotland must make to transform itself – this can’t be done on the cheap because at heart it is a giant engineering project, and the things that are to be engineered are crucial to our lives. So we must pay to get us ready for the future – if we are to have one.
To many people the numbers will look enormous. The spending requirements identified in the Common Home Plan are summarised in the table below – but so big are some of the numbers that it simply hasn’t been worth counting expenditure on smaller tasks, even though smaller tasks may cost many millions. So to avoid underestimating the total cost we have rounded up the cost of each part of the plan and then rounded up the total to give a more accurate indication of the likely cost.
The total of £170 billion will look enormous to many people, but it’s not as big as it looks. First of all, the spending will be spread over 25 years and at different rates as work on different parts of the Plan begins and ends. So financing this will involve the Scottish Government issuing bonds at different times throughout the 25 years (bonds are a safe, secure and inexpensive way for governments to borrow). And this work will only ever need to be done once and after it’s completed it will serve the people of Scotland for a hundred years and more (in some cases many more). So we should pay the money back over two generations – 50 years.
So first, how much will that cost us? This will depend on how the spending is timetabled over the 25 years and how we plan to pay it off. For example, we could borrow it, just pay the interest for 50 years and then at the end pay of the borrowed amounts (the value of which would have been greatly eroded by inflation), or we could pay the whole lot off as we go. To demonstrate what this would cost the numbers have been modelled as if all £170 million was borrowed on day one and then financed over 50 years. If a decisions was made only to pay off the interest this would cost about £1.9 billion a year, and if we chose to pay it all off it would cost about £5bn a year.
Can we afford it? While it is difficult to do accurate economic modelling on the Common Home Plan because economic models work best when you only change one thing at a time, it is still possible to get an impression of what impact it would have. By putting this new spending into a standard model of the Scottish economy and then reducing the oil and gas sector to zero it is possible to get an impression of the results. There would be at least 40,000 new direct jobs created and once all the jobs in supply chains are included it is probably more like 100,000 new jobs. These are all good, well-paid jobs and so create a lot of tax revenue, and so does all the spending on goods and services in the Scottish economy. We estimate that the annual increase in tax revenue would be at least £4 billion.
But that’s not all the income the Common Home Plan would create. At the end Scotland’s energy system would be in public ownership and all the profits would flow into the public purse. That alone could generate another £2.5 billion if current energy prices were kept the same. There are lots of other sources of revenue too – public ownership of forestry crops, a hydrogen-producing industry and more. Plus the process of ‘Green Industrialisation’ will also create many new businesses and jobs in areas like food processing, light manufacturing, timber production, advanced materials, land- based industries and energy technology.
It’s not a question of can we afford this; it’s a question of what do we want to do with all the additional revenue that will be generated for public services even after debt costs have been paid off. It’s not a question of can we find good jobs for people, it’s a question of can we find enough people to fill all the good jobs. This isn’t a cost for Scotland to bear, it’s an opportunity for Scotland to grasp with both hands