Scotland’s ‘Deficit’

  

Basic Facts

1. For 2020-21, Scotland's Revenue was £62.3bn

2. Scotland's devolved Total Managed Expenditure in 2020-21 was £49.3bn

3. In 2020-21 total expenditure “for the benefit of Scotland by the Scottish Government, UK Government, and all other parts of the public sector” was £99.2bn

4. Hence in 2020-21, Scotland had a notional deficit of £36.9bn

 

Underestimate of Revenue

The UK government takes 91.7% of Scottish Oil and Gas revenue, and gives back 8.3% of it to Scotland.

Last financial year this made little difference but in the past years this has resulted in the UK taking trillions of pounds of revenue that was generated Scotland. With comparable oil and gas revenues, Norway has become one of the world’s wealthiest nations.

Another example of underestimating Scottish revenue: whisky consumed in the UK is subject to VAT and alcohol duty. The receipts are assigned to Scotland on the basis of how much whisky is consumed in Scotland. The rest is taken by the UK Government.

Other tax revenues generated in Scotland are often allocated to company headquarters in London, with the tax revenue consequently not being accounted as Scotland’s.

Tax revenues generated from land and property in Scotland but owned by landowners whose main residence is in England, are not accounted as Scotland’s.

Even if goods are produced in Scotland, if the port shipping the goods is in England, the tax revenues are not accounted as Scotland’s, under the accounting system used by the UK Government.


Overestimate of Spending

‘Spent for the benefit of Scotland’

The UK Government’s measurement of Scotland’s deficit rests on the claim that all the money it takes out of Scotland is spent on Scotland’s behalf. Proof for this is not provided in its accounts. It is on a ‘take our word for it’ basis. It does however include spending on HS2 and Crossrail. It also includes nuclear weapons, a London-based civil service and overseas embassies.
 

Population Share of the ‘Debt’

The UK Government further apportions a ‘population share’ of its ‘debt’ to Scotland. This is added to the ‘deficit’. However, a little further examination reveals that the UK never pays off this ‘debt’ and has never claimed that Scotland would have to, because it is not actually debt, but savings such as gilt bonds, and past spending, which it accounts for by stating that it owes money to itself.  This is accounting procedure dressed up as a burden to Scotland.

 

Conclusion

Scrutiny of how Scotland’s deficit is calculated shows it to be a result of taking money out of the Scottish economy and false claims about tax revenue and government spending. It is an entirely spurious picture created to make Scotland look like an impoverished region of the UK. A true picture of Scotland’s position post-independence, and how much has been lost by the lack of it, can be seen by comparing Scotland with the economic strength of Norway. 

There is an easy way to end all the arguements about GERS. Let Scotland keep all of its revenues to spend as it sees fit. If Scotland was being heavily financed by the UK, you would think they would be anxious to introduce this fiscal responsibility.