BFSCaseforIndy_Nov13

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Can Scotland Afford to be Independent? The key question to be answered in respect of an Independent Scotland’s economy is that of affordability. How can we manage without Westminster to pay our bills? The perception that Scotland needs external financial support to survive is simply untrue. Scotland generates 9.9% of all UK revenue (taxes) and incurs only 9.3% of UK expenditure. In fact Scotland’s accounts have been far healthier than the UK’s for the last 30 years, so the 2011-12 data isn’t a one-off. Of course, these are percentages of two different numbers and that in cash terms the expenditure number is higher than the revenue number. Across the UK as a whole expenditure exceeds revenue. This is called a deficit, and almost every country in the Western world is currently running a deficit (with the notable exception of Norway). The point is that were Scotland to run the same % deficit as the UK then we would have an extra £4.4bn to spend based on 2011-12 figures. (£4.4bn being the difference between the 9.9% and the 9.3% in cash terms). Alternatively we could decide to spend the same as we are today and have a deficit which was £4.4bn lower, or a combination of the two. So the real question is can Scotland afford not to be independent? http://www.businessforscotland.co.uk/breaking-news-9-3-is-a-smallernumber-than-9-9-indyref/ http://www.businessforscotland.co.uk/independence-thebusiness-case-for-scotland/ GERS gives quite a bit of detail on the various elements of both the revenue and expenditure sides of the equation. On the expenditure side there are a couple of things worth pointing out. The vast bulk of Scotland’s public expenditure is based on actual numbers (Scottish Government spending on Health, Education or Police for example). This clearly identified expenditure comprises about 86% of the total expenditure. http://www.scotland.gov.uk/Resource/0041/00418420.pdf The other expenditure within Scotland’s accounts is what is called ‘Non-Identifiable’ expenditure. This 14% equates to about £9bn of spend and the two biggest items by far are Defence (£3.3bn) and Debt Interest Payments (£4.1bn). The concept here is that while that money isn’t necessarily spent ‘in’ Scotland it is judged as having being spent ‘for’ Scotland (a distinction explained in more detail within GERS itself). So just to be clear Scotland’s 9.3% share of UK spending already includes those non-identifiable items. Both the Defence and the Debt Interest payment numbers are simply calculated by using a pro-rata population share of the total UK numbers. These are considered in more detail below.
Revenue The average tax paid per head in Scotland is £10,700, the average for the UK is £9,000. Tax revenues per head in Scotland have been higher than the UK average every year for the past 30 years. http://www.scotland.gov.uk/Resource/0041/00418381.pdf For the first time HMRC also explicitly produced disaggregated revenue figures for UK countries in 2013 (although this data was already available from historical GERS reports). The data, as you would expect, confirms the picture from GERS. http://www.hmrc.gov.uk/statistics/receipts/disagg-info.pdf Expenditure The issue of spending per head is also worth understanding. In summary Scotland represents 8.4% of the UK population, but as we saw while it generates 9.9% of UK taxes it also accounts for 9.3% of UK spending (this is where the ‘subsidy’ myth arises). So while our tax take is higher than our spending in % terms, spending per head is higher in Scotland than the UK average. There are some reasons for that, historical, to do with calculations in the Barnett formula which defines the Scottish Governments annual budget, geographical factors and the fact that some services that are privatised in England still fall under the Public Sector in Scotland. Under the current system, the majority of revenue is paid directly to HM treasury and the Scottish Government receives a block grant from the Westminster Government. The size of this grant (9.3% of UK total in 2012) is calculated using the Barnett Formula. The formula is named after Joel Barnett, who devised it in the late 1970s, while Chief Secretary to the Treasury as a way of allocating additional or reduced finance based on population (and not need) as a short-term solution to minor Cabinet disputes in the run-up to the planned devolution in 1979. The Barnett formula is said to have "no legal standing or democratic justification", and, being merely a convention, could be changed by the Treasury at will. In recent years, Barnett has called for a review of its long-term viability. http://www.publications.parliament.uk/pa/ld200809/ ldselect/ldbarnett/139/9012802.htm
Page 1: The Case for Independence Who are B
Page 5 and 6: Deficit Despite higher spending, du
Page 7 and 8: He also suggests that Scottish and
Page 9 and 10: Pensions Pensions come in a variety
Page 11 and 12: The number of MEPs sent to the Euro
Page 13 and 14: The Euro According to the Fiscal Co
Page 15: If the economic case for Independen

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