SELECT COMMITTEE ON ECONOMIC AFFAIRS - Parliament

Malcolm Chalmers RUSI—Written evidence
prices).4 It may even be significantly less, were Scotland to follow the low-spending route
followed by Ireland, which is similarly protected by geography from external military threats,
or newly-created states (such as Lithuania and Latvia) which have sought to create armed
forces from scratch. These three countries spend, respectively, 0.6%, 0.8% and 1.0% of their
GDP on defence.
An independent Scotland could therefore expect to ‘save’ at least £1 billion in its annual
defence outlay, compared to its current contribution to the UK defence budget. It might be
more vulnerable to external threats than it is at present, especially if these develop in ways
that are currently unforeseen. As with other small West European states, however, the new
state’s security from external threat would depend more on its ability to draw on the
capabilities of more powerful allies than on its own capabilities.
The rUK, by contrast, would not be starting with a blank sheet of paper. Faced with the
damage to the UK's international reputation as a result of Scotland's departure, its leaders
would be likely to place a high premium on being able to demonstrate that it remains a
major military power. The UK may already be struggling to maintain a broad spectrum of
high-end capabilities. But Scottish independence could (at least initially) make it more
politically sensitive to launch a new round of capability reductions.
Scottish independence, however, would not substantially reduce the tasks that the UK
armed forces are asked to fulfil. Because their capabilities are now largely optimised for
expeditionary operations, a reduction in territorial defence requirements will make little
difference to defence requirements. Nor could the rUK assume that Scotland's forces would
always be available for use alongside its own. In order for the rUK to maintain military
capabilities for power projection comparable to those that the UK would have had,
therefore, it will have to maintain a defence budget at a comparable level. Total postbreakup
defence spending by the two successor states, therefore, would be likely to be
greater than that previously being spent on Union armed forces.
Whether the rUK could afford to maintain the UK defence budget would depend on the
wider economic context created by separation. The proportion of GDP devoted to defence
would rise somewhat compared to the pre-independence situation. But the rise would be
relatively small, perhaps amounting to around 0.2% of rUK GDP. Other elements in the
balance of fiscal advantage – such as the end of Scotland's spending bonus as a result of the
Barnett formula, and/or decisions on the allocation of hydrocarbons revenue - would be
proportionately more significant.
Division of Assets
A transition period would be needed to carry out the separation process, dividing assets and
liabilities, amending procurement and personnel contracts, and relocating equipment and
stores.
As of 31 March 2011, total UK MoD net assets (assets less liabilities) totalled £106.6 billion.
Divided strictly on the basis of population share, an independent Scotland would be entitled
to 8.37% of these assets, valued at £8.9 billion.
4 The defence policy statement issued by the SNP in 2012 proposes an annual ‘defence and security budget’ of £2.6 billion.
Adjusted for the exclusion of ‘security spending’ of around £200 million per annum (Scotland's notional share of £2.4 billion
UK annual spending on the Single Intelligence Account) and inflation, this amounts to around £2.1 billion at 2011/12 prices.
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