It’s all about the money.

It’s always been about the money; colonial expansion, government, business or just household budgets, it’s all about the money. Domestic fights, most of those rotate around the money.

For the increased rhetoric and personal “anti-Salmond” attacks in the Unionist media, it’s all about the money. The Union has good reasons to use every dirty trick in the book to keep Scotland on board, in fact it probably has somewhere around £15 billion of these reasons every year. Throw enough mud, eventually some will stick in the common perception, justified or not. It’s called propaganda and the Union army has the propaganda troops in form of Union media firmly in its trenches.

This forces the unbiased individual to try to understand why this is, what motivates the need to so virulently protect the status quo? In the end, it’s all about the money, UK plc is effectively bankrupt, but with Scotland still on board the final reckoning may be delayed somewhat. The fact it destroys the aspirations of a nation is as relevant to the Union as the feelings a banker has towards those about to be made homeless through the banking systems own profligacy.

The London perspective towards Scotland is very much the “I care not for thee in the rubber dinghy, for I am in the admiral’s barge mentality”. Boris Johnson confirmed this with his “Devo Max” for London and “Spending in Croydon will help Strathclyde” nonsense.

Untying Scotland’s share of UK income/outgoings is difficult indeed if Westminster accounting is used, GERS is still wildly inaccurate, though no longer quite so laughable as it was. London is a master of fiscal obfuscation. They tell us the finances are “too interdependent and complicated to unravel” – we’re expected to actually believe this spin in today’s computerized world.

Examining the unitary state which is today’s United Kingdom, the money aspect is stark indeed. As austerity bit and has progressed the United Kingdom is now paying out more in benefits than it raises in both income tax and national insurance.

The benefits to income tax situation is only a microcosm of the big picture. For 2011/2012 the projected level of all HMRC receipts is expected to be marginally over £580 billion. That’s being added to at an extra £120 billion or so yearly, getting on for 20% of income.

The UK has, by various accounts, total “on the books” public debts of about £1 trillion, not including unfunded pension liabilities and that the “off the books” or more difficult to ascertain debt such as PPI/PFI/PPP commitments with underwriting required for the banking debacle, the true number is said to be somewhere approaching £4 trillion.

Excluding the pension aspect, we’ve typically always paid for that from current year contributions, a “nice” real number for UK state debt is around £2 trillion.

To put that into numbers we can appreciate, £2 trillion is a debt to income ratio of almost 4:1. Using the banks own mortgage methodology they’ll loan, if we’re lucky enough to qualify, perhaps 3 times our income to us to buy a house [3:1]. So we have a situation where UK plc is in negative growth, couldn’t qualify for a mortgage, spends more than it receives every month and can still borrow.

Effectively, by the banks own rules, the UK is bankrupt – they wouldn’t lend to it as an individual. The only item preventing default is that the banks themselves can’t afford the UK to go belly up, they stand to lose too much, so they keep loaning more money. It’s Greece without the panic. Right now they’re loaning it at the ridiculously low level of about 1.8%, so our cost of that debt is artificially low. When, not if, interest rates creep back up towards 4% our cost of the debt will double. It is not unusual for nations with ongoing liquidity problems to see the cost of credit double or triple in as short a period as six months or less.

The cost to the treasury of a simply normalized interest rate will see repayments increase by about £40 billion a year, or substantially more than Holyrood’s annual budget. Add that to the £120 billion or so of increasing debt which will annually add another compounding £4.8 billion a year and there’s a realistic scenario that by the close of 2016 UK plc will be spending well over £100 billion a year on interest alone. Three times Holyrood’s budget.

The alternative for Scotland is to go it alone. In theory we’d be held liable for 8.3% of that present £2 trillion, or about £166 billion in debt. That’s an overly fair assessment as it overestimates our share of the banking crisis, reflecting it by population. If the accepted accounting for that banking bailout was used where share is allocated to each country by percentage of revenue, we’d be in far better position.

A probable worst case scenario is a UK demand to assume £166 billion of national debt.

Now we should take time to look for the deductions.

Holyrood has given notification to Westminster that it should be prepared to pay for nuclear power station decommissioning in Scotland, perhaps some £30 billion as its share. London was also advised it will need to proportionately stump up for another £30 billion or so as its cost of field decommissioning in the North Sea. The outpouring of indignation in the House of Commons at this announcement can be ignored – this obligation is the reality. If Westminster refuses to accept it Holyrood simply effectively deducts it from any potential obligation. We just don’t pay as we’re neither legally nor morally bound to.

Fixed and mobile global assets of UK plc is very difficult to quantify, but appears set to be somewhere under 100 billion, not including such items as Falklands oil, to which the UK through Cameron’s statements has renounced claim. This doesn’t include items solely within or the property of individual nations within the UK. Scotland’s share would possibly be negotiated around 10 billion.

There are substantial other costs that UK plc should properly bear, at least proportionately, such as clean ups around Dalgety Bay and Dounray.

Using these figures with the banking crisis bailout included there’s a residual value in Scotland’s portion of the banking debt of around 50%, the shares are worth an average of about half what was paid for them. Selling these shares would give Scots another offset of around £50 billion.

At day’s end we’d inherit somewhere around £200 billion in “UK debt”, and we’d expect offsets in excess of £120 billion. Not including those unfunded pensions that’s what we’d owe. The picture improves under almost any other scenario.

An £80 billion tab is about the worst to be presently expected.

Gross tax receipts per capita in the UK are about £9,500 per person, with Scots contributing substantially more than UK average that’s over £10,100 per Scot. With 5.5 million of us that’s right at £55 billion. This figure now includes a dead reckoning on Scotland’s assets allocated to “The City” simply because companies are headquartered there. It will also reflect all revenues from all sources, many of which are not included in GERS such as the exclusion for oil revenues because they are in “UK waters” or liability for Trident because it’s “in Scotland”.

Scotland has somewhere around £45 billion in outgoings, that’s a 10 billion plus surplus.

Scotland will have somewhere up to a £15 billion surplus in the event of independence, the SNP says it will be over £500 per person better off, but they’re using GERS. The tax income here was calculated using the national average per person tax paid and multiplying that by the higher ratio paid in by Scots. Quick and dirty perhaps, but exceedingly difficult to counter, spin or obfuscate. Taking the per capita contribution effectively removes the opportunity for Whitehall’s obfuscation.

The net result is a Scotland that can either be in surplus by the end of 2016, or remain part of the UK where it will have spiraling debt, a negative balance sheet, increasing austerity and in all likelihood be well on its way to following Greece, Spain and Portugal to financial oblivion.

The side effects of remaining within UK plc will be massive youth unemployment, increasing adult unemployment and substantial losses of rights and benefits across our entire society because with the upcoming pocket-money reductions from Westminster, Scotland simply will not be able to afford to maintain services and there’s absolutely nothing Holyrood will be able to do about it.

There are three Union parties with the same message: Stronger together. This message could be individualized with each proclaiming a simple truth; unity in deprivation, unity in austerity, unity in bankruptcy.

Survey of UK Tax System

The Telegraph