New figures confirm that Scotland would have been £8.3 billion better off as an independent country

| 12/03/2014 | 35 Comments

Scotland's strong fiscal positionOver the past 5 years Scotland’s would have been £8.3 billion better off as an independent country, when taking account of the new report published into Scotland’s finances today.

The new report also demonstrates that Scotland generated £800 more in tax per person than the UK average during the last financial year. Scotland’s spending was also lower than the UK average over the past 5 years. Scotland’s spending was 44.2% of GDP over the last 5 years. The UK average was 45.4%.

Spending on social security last year was also lower in Scotland than the UK average. In Scotland it was 15.5% of GDP compared to 16% for the UK.

The front page of The Herald today reports that Scotland’s economy is 11% better off in terms of GDP per capita than the UK.

The Government Expenditure and Revenue Scotland Report continues 33 years of strong performances by the Scottish economy. Had Scotland been an independent country, it would currently have a net cash surplus of over £50 billion and no public debt.

Scotland’s economic position, relative to the UK finances, would have been £8.3 billion better off in the past 5 years alone. Scotland is clearly a wealthy nation with the resources to be a successful independent country.

Scotland is one of the world’s wealthiest countries

This means that an independent Scotland will be one of the world’s wealthiest countries.

Scotland’s economic strength is built upon a diverse economy, a skilled workforce, vast natural resources, strong exports and increases in inward investment.

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Independence can make Scotland better off

However, without the full economic powers of independence Scotland cannot grow its economy, support domestic businesses or improve its economic competitiveness.

Control over issues like taxation, employment, immigration, exports, and industrial policy provides many opportunities to improve these areas.

The extra £8.3 billion over the past 5 years would have allowed a Scottish Government to increase investment, reduce tax for key growth sectors and reduce overall government debt.

In contrast, Westminster has created a crisis in public finances with total debts of £1.3 trillion.

Westminster costs included in figures

Despite the strength of these figures, they still contain a number of substantial ‘Westminster costs’ which are placed on Scotland.

Scotland had to pay £4.02 billion in debt interest last year to Westminster. This is despite the fact that Westminster ran up this substantial debt. As a report by the Reid Foundation and the Fiscal Commission confirmed, an independent Scotland would not have needed this debt. This has cost Scotland £68.12 billion.

The Scottish figures also include service charges for spending outside of Scotland. This includes substantial costs for military services and nuclear weapons. Scotland also pays for the large civil service bureaucracy based in London. Scotland has paid £15.8 billion for military costs over the past 5 years, which will have been increased by the war in Iraq.

Scotland also has to contribute to the UK’s £3.5 billion tax administration costs,  £1.5 billion border control costs and hundreds of millions in Westminster expenses. Through efficiencies and common sense, an independent Scotland can save money in these areas and improve the economy. This will provide a large independence dividend.

Conclusion

Growing business support for an independence is based on the knowledge that an independent Scotland will prioritise the interests of business in Scotland. This means that public policy will benefit distinct growth areas and allow Scotland to promote goods and services across the world.

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Category: Economic Strengths, Economics of Independence

About the Author ()

Michael is Head of Research with Business for Scotland. A graduate from the University of Glasgow, he has carried out a series of interviews with academics, politicians and the public in Denmark, Iceland and Ireland. Michael's on twitter @GrayInGlasgow.

Comments (35)

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  1. Rab says:

    Eu membership fees for Scotland? Currently 55,000,000 gbp per day for UK. Assuming it’s 6m per day for scotland, that’s 2.2 billion a year.

  2. Dennis Gurr says:

    The figures are highly improbable but like most people the thought of an independent Scotland sounds nice. Currency is a huge issue but besides that the Nationalists want to be part of the European Union – not very independent at all. Anyway they may not let us back because we would have to leave them first.

    • Gordon MacIntyre-Kemp says:

      Independence and separatism are two different things Germans want to be part of the EU and see themselves as independent. In an ever interconnected and interdependent global economy separatism (UKIP style independence) is not healthy ideal the modern thought out style of independence within the EU make sense. As for EU membership there are differing views on that I can see no way to leave the EU other than to have an in out referendum and negotiate your way out which takes years (Greenland) and so voting yes would have started negotiations but ones to agree how Scotland stays in rather than leave. We might have ended up with a different deal to the rest of the UK but that is not to say it would be worse.

    • Gordon MacIntyre-Kemp says:

      Oh by the way you say “highly improbable” but the figures tare 100% fact and not disputed by anyone. What the unionists seat is ayes over x number of years and then say but last year it wasn’t so great and they are right but i think you need to look at the longer terms to see whether the union has benefits Scotland and it clearly hasn’t.

  3. This is typically what the UKGovernment intended, brainwash the Scots with balderdash and they’ll toe the line. We as a Nation are more than capable of being Independent. The pound doesn’t belong wholly to England. Our resources are numerous. It’s high time we had our own Country back and contrary to the Uk namely England , we as a Nation give more than we get in return. The only reason Cameron and co wanted Scotland to remain in the Union was because they have 1.3 trillion of debt and would go bankrupt if we had gained our Independence. There are numerous reports published about Scottish Wealth and how it has been mismanaged by consecutive Goverments(UK). McCrone Report, very interesting read then Craig Murray just for starters.

  4. john says:

    What are the cost’s for an independent Scotland to operate excluding oil?

    how much did Scotland earn excluding oil?

    It was something that should have been reported during referendum.

    it would show how viable Scotland is even without oil.

  5. Suzanne says:

    The BBC is not known for unbiased reporting where Independence is concerned.

    In case anyone ELSE misses the link to the report in the first paragraph, here it is.

    http://www.scotland.gov.uk/Resource/0044/00446179.pdf

  6. john says:

    Can someone tell me how with a population of just over 5 million (half of those not working ie under 16s oaps disabled etc) we can fund hospitals police schools roads colleges universities social security welfare etc etc etc ? I’d love an independent Scotland but I can’t see how financially we could cope . And all this with a tax cut? Plus companies saying they would pull out of an independent Scotland what currency would we use ? Any money in the bank account would be useless if we can’t use the pound we can’t use the euro if we have to wait to apply for eu membership ..A financial disaster waiting to happen in my opinion .

    • roger choate says:

      With a population of only 1.6 million, independent Estonia is managing very nicely

    • Andrew says:

      Population size doesn’t matter much in this instance; for example a nation of 1 billion would need to pay for hospitals to service 1 billion people, i.e the costs are proportional.
      Currency was just used as a scare tactic during the referendum period, a currency union where we share the pound was the best option and would have been allowed if scotland did gain independence. It would have had a negative effect on England’s economy if Scotland had a different currency as Scotland is their second largest trading partner.
      Also the companies leaving was misunderstood and contorted by the media; these companies were only going to change their registered head offices and not stop servicing Scotland. If money is made on Scotland the taxes still have to be paid in Scotland so there wouldn’t really be a loss.

    • Radio Jammor (@RadioJammor) says:

      “Can someone tell me how with a population of just over 5 million (half of those not working ie under 16s oaps disabled etc) we can fund hospitals police schools roads colleges universities social security welfare etc etc etc ? I’d love an independent Scotland but I can’t see how financially we could cope .”

      You don’t seem to understand the premise that the tax being deducted from Scots will stay in Scotland and not head south. That’s how this gets paid for. The tax already being taken.

      Why do you think Scotland would not be able to cope? The report is pointing out that Scotland makes enough money to cover the costs, especially if you cut out the spending forced on it by being part of the UK. Read the above.

      Also, tread the following from Channel 4 News:

      http://blogs.channel4.com/factcheck/factcheck-who-loses-if-scotland-goes-it-alone/6524

      The summary follows:

      “The verdict

      None of the economists FactCheck contacted thought there was a serious risk of an independent Scotland failing to survive.

      As David Cameron signalled this week, Unionists need to move past “threats or by saying that small countries can’t make it”.

      Control of North Sea oil has been a constant refrain for the SNP, but our experts think it may be a mistake either to bank on oil or to assume that an independent Scotland would fail without it.”

      SO everyone agrees Scotland can go it alone and that it would work with or without oil. It’s just that the politicians didn’t want Scots believing that so that they could retain power over Scotland from Westminster – and its resources.

      Oil and gas is still 100% reserved to Westminster per The Smith Commission proposals.

      As for currency, the £ issue was a purely political one. The UK Government would have cut off its nose to spite its face over currency by saying it would refuse to allow Scotland to use the £. How the hell would existing businesses based in England be able to do business with Scotland if The Treasury did that? Salmond was right, it was bull, but the Yes campaign failed to allay the fears of Project Fear.

      Indeed, you still seem to be suffering from such. Your fear about your money becoming useless is not worth responding to. As for the companies leaving Scotland crap, that was Cameron and The Treasury strong-arming business to put Scots off voting ‘yes’. What self-respecting business would up-sticks away from its existing customers and let a competitor take their place? This is why the nonsense from the likes of the Tory press was all about creating fear for the likes of you, who just took what they said at face value.

      Plenty of other countries have gone independent and had no financial basis or currency to work with. It makes complete sense to keep the £, at least as an interim measure.

      If the UK Gov should turn around and spitefully refuse to allow that to occur, it would be political and economic suicide – which is why it won’t happen. England & rUk cannot afford to screw an independent Scotland over. There’s too much business going on.

    • Matt Ripley says:

      You could look towards Scandinavia. Especially Denmark…. (not that it doesnt have its faults), the System here is working. I’m not saying you should copy it, but maybe let it serve as an inspiration on how to solve the issues in you’re question. Just an idea. :)

  7. Robert says:

    I’m convinced! I just followed the GERS link .. there is do doubt about any of the figures.. they are clear to see .. we’re rich! No wonder they want to hang on to us!

    • Robert Stephens says:

      Robert. GERS does not confirm that ‘we’re rich!! As before:

      ‘1/Where in the GERS does the claimed ‘£8.3bn better off’ come from ? That figure does not appear in GERS.
      2/Yes, revenues per Scottish citizen are £800 a year higher than for whole UK ( probably because of higher proportion of public sector workers, who on average are better paid than private sector workers), but Public sector exp per Scottish citizen is £1,300 higher (£12,300 vs £11,000) than whole UK.
      3/ GERS shows that a separate Scottish economy would be dependent on volatile Oil tax revenues, which have swung between £4bn and £12bn over past 12 yrs..
      4/Assuming Scotland takes its fair share of the UK debt, it is currently getting revenues including North Sea oil of £48-56bn a year and spending £59-65 bn a year (high and low figures over the past five years) meaning the deficit has never been lower than £4bn and as high as £14bn – in the past year it was £12bn, when the onshore economy is only £125bn in size

  8. Robert Stephens says:

    1/Where in the GERS does the claimed ‘£8.3bn better off’ come from ? That figure does not appear in GERS.
    2/Yes, revenues per Scottish citizen are £800 a year higher than for whole UK ( probably because of higher proportion of public sector workers, who on average are better paid than private sector workers), but Public sector exp per Scottish citizen is £1,300 higher (£12,300 vs £11,000) than whole UK.
    3/ GERS shows that a separate Scottish economy would be dependent on volatile Oil tax revenues, which have swung between £4bn and £12bn over past 12 yrs..
    4/Assuming Scotland takes its fair share of the UK debt, it is currently getting revenues including North Sea oil of £48-56bn a year and spending £59-65 bn a year (high and low figures over the past five years) meaning the deficit has never been lower than £4bn and as high as £14bn – in the past year it was £12bn, when the onshore economy is only £125bn in size.

  9. John says:

    This is the exact type of nonsense that is muddying the water of this very serious debate. Wavering of totally unsubstantiated figures with no credible source. Or put simply “guff”.

    • Gordon MacIntyre-Kemp says:

      No, you will find it is a factual statement based on evidence produced from Scotland’s national accounts. When mentioned on TV has any unionist politician said its not true? No, then there is your proof, watch them they just refocus on this years numbers and point out they are not as good as last years – but it is Westminster policy that has caused the dip in oil revenues (just in time for the referendum) – so the fall in oil revenues is an argument for independence!

      I take it you noticed that taxation per head for Scotland was far higher again than for the UK? You are posting unsubstantiated statements go look at the GERS report and present data to back up your claims and disprove ours – you won’t be able to because we are making a statement of fact.

      Why would you be so sure if you haven’t even looked!

      • Neil says:

        OK, I have found BfS reliable in the past but where does this £8.3 billion get calculated?

        • Gordon MacIntyre-Kemp says:

          Hi Neil.

          £8.3 billion is Scotland’s stronger economic position over the past 5 years in the Government Expenditure and Revenue Scotland reports.

          Scotland has raised 9.5% of UK tax and received only 9.3% of UK spending (even including spending outside Scotland that the Scottish accounts are still charged for).

          That difference is tax and spending means that Scotland was in a stronger economic position by £8.3 billion.

          • Neil says:

            But figures for total UK revenue and total UK expenditure are different because borrowing makes up the difference. How is the calculation made?

    • Julian Gibb says:

      John

      I would have been far more impressed if you had identified ONE piece of data as inaccurate with a source.
      I have now examined several documents ranging from the FT to independent economists. We have variations in the exact values. However the general thread common to all is that Scotland is paying interest on funds that were not spent in Scotland.

      You may not like facts entering the debate. Standard and Poor and the FT are not regarded as sources of “guff”.

      Whereas the BBC and BT are, shall we say, renowned for it!

  10. Craig says:

    Without provable sources or clickable links to credible sources these are all just hyperbole although I’d dearly love it to be true. If more than one person / group echoed these then that’d be fine but I don’t see it

    • Gordon MacIntyre-Kemp says:

      Do you mean like the link we put in the first paragraph of the article to this document? http://www.scotland.gov.uk/Resource/0044/00446179.pdf

      I state again our analysis is not challenged by anyone and anyone can access the information so go look for yourself.

      All analysis of Scotland’s fiscal position state that over a five ten or even longer period – in fact as long as historical Scottish Expenditure and revenue reports go back – that Scotland has been in a stronger fiscal position than the UK.

    • Radio Jammor (@RadioJammor) says:

      http://blogs.channel4.com/factcheck/factcheck-who-loses-if-scotland-goes-it-alone/6524

      “None of the economists FactCheck contacted thought there was a serious risk of an independent Scotland failing to survive…

      Control of North Sea oil has been a constant refrain for the SNP, but our experts think it may be a mistake either to bank on oil or to assume that an independent Scotland would fail without it.”

  11. Ken McDonald says:

    Is there an accurate total figure for ‘allocation costs’ to Scotland’s P&L which would not exist in an independent Scotland ?

  12. jrewen says:

    thats great but wheres the link to these figures? is it the new GERS report?

  13. Bill says:

    Figures on BBC website today show a deficit of 12 billion for 2012 – 13! Including oil revenues.

    • Roxy says:

      It says 8.3 billion better off in the last 5 years, not this year

    • Julian Gibb says:

      Bill

      Did you see a figure for the UK for comparison – No! (It wouldn’t fit the agenda because it is eye watering)
      Did you see a figure for the rUK without Scotland’s contribution to the UK – No. This really would have changed the debate

      The BBC only supply “a big number” in isolation to fuel unease. The data is out there. The figure for London is almost double Wales. It gives you a good average but hardly a balanced society.

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