Treasury figures ‘bizarrely inaccurate’ says LSE Professor

Setup Government Departments


Estimates of costs to set up Government departments in an independent Scotland (Billions)


By Russell Bruce

The UK Treasury is not known for getting its sums right which is a dire indictment of a department supposed to be in charge of keeping the UK’s books in order.

A furore has broken out over estimations of the cost of setting up departments in an independent Scotland, which the Treasury first announced would amount to £2.7 billion. Admitting an error, something muttered about a junior member of the team – where have we heard that before – they then produced a revised estimate of £1.5 billion.

The figures, the Treasury and Danny Alexander originally trailed in advance of the launch of their blockbuster report calculating Scotland’s post independence department set-up costs of £2.7billion cost were based on work carried out in 2010 by Professor Dunleavy, politics professor at the London School of Economics.

Professor Dunleavy said his research had been manipulated by the Treasury to produce a figure 10 times what he would expect the one-off costs of setting up a new government. Speaking to the Financial Times, Professor Dunleavy said, ‘The Treasury figures are bizarrely inaccurate. I don’t see why the Scottish Government couldn’t do this for a very small amount of money’

The Treasury mandarins had bounced on a figure of 180 public bodies that Scotland would have following independence overlooking the inconvenient fact that many are already in existence – Health boards, Police, Fire services etc.

Professor Dunleavy’s estimate of £15m was based setting up a new major Whitehall department and ‘calculated taking into account the ‘chaotic’ way the last Labour government established new departments’.

The Treasury multiplied £15m by 180, thinking they had found a significant cost for an independent Scotland when all they achieved was to make a fool of themselves and Treasury minister Danny Alexander.

A competent Treasury minister would be expected to have the costs of running a government at his fingertips and have questioned the calculation before the news releases were sent out. Instead of doing his job, Danny Alexander blindly accepted the £2.7 billion calculation and was hung out to dry by his mandarins.

Sarah Smith, interviewing Danny Alexander on the new BBC Scotland late evening news programme, let him off rather lightly over the cock-up. We miss you already Gordon Brewer!

Caught with figures in a magic balloon, Treasury mandarins went off in search of a new source and buzzed the abacus to produce a figure of £1.5 billion. Almost half their first estimate.!

Their new expert was Robert Young, professor of politics at the University of Western Ontario. Contacted by the Financial Time, Professor Young disowned the figures. They were not his, but ‘the top end of a range of estimates produced by academics’ who had looked at the cost of Quebec separating from Canada. Professor Young estimated the costs for an independent Scotland at ‘0.4% of Scotland’s output amounting to £600 million’.

So the costs are less than a quarter of the Treasury’s original figure, 22.22% of the first figure plucked out of the hat.

Professor Dunleavy, perhaps more aware of the fact Scotland already has a significant governance infrastructure, has calculated the additional costs as being closer to £150 to £200 million.

About russellbruce

Writer, journalist and blogger. Worked in advertising and publishing. Former board member Loch Lomond National Park Authority, Chair of Borders Writers' Forum
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