Treasury accused of exaggerating cost of Scottish government

The Treasury's analysis of the costs of Scottish independence has been criticised for "misrepresenting" some of the research underpinning the findings.

Professor Patrick Dunleavy from the London School of Economics criticised the government earlier this week for "badly misrepresenting" his and others' research into the costs of setting up or merging government departments in an independent Scotland.

The Treasury had taken the study's estimate of £15 million as a cost for a new policy department or a 'mid-sized' merger and multiplied it by 180 - the number of bodies estimated by the Scottish government to be needed under independence.

In other words, the cost of new public bodies for Scotland could be £2.7 billion in total, according to the Treasury.

Mr Dunleavy told the Financial Times that this wasn't a fair use of the research: the 180 bodies would not all be major departments incurring anything like £15 million as a cost each, and some existing Scottish departments would simply need to be enlarged. In addition, a planned transition could save further money.

This could leave the costs for Scotland around 10 times smaller than the Treasury's estimate, according to the academic.

The £2.7 billion figure featured in the Treasury's analysis today into the overall cost of Independence, placed at £1,400 per person per year for the next two decades.

It wasn't used directly to reach this £1,400 estimate, but it did inform the government's interpretation of different research based on the costs for an independent Quebec from Canada. The Quebec study had found that between 0.4% and 1% of the region's GDP would be the cost of new institutions.

The Treasury took the upper end of that - 1% - and applied it to Scotland's estimated GDP, resulting in a £1.5 billion cost for new public bodies. It justified taking the upper end by referencing the £2.7 billion figure and other research, saying these cost estimates has been higher.

The government says the £2.7 billion figure didn't represent its official calculation, and stands by the £1.5 billion figure.