Scotland’s century of lost wealth

HeraldBusiness for Scotland’s research on Scotland’s economy has delivered solid proof that Scotland subsidises the UK, not the other way around.  Initially anti independence campaigners claimed we were wrong, we’ve since produced so much evidence they’ve since backed off.  That evidence clearly demonstrates Scotland has paid £64bn in interest on debt incurred by the rest of the UK, not Scotland.

Quashing the volatility myth

Additionally the historical Government Expenditure and Revenue Scotland Reports (GERS) show that every year, for the last 32 years Scotland has generated more tax per head than the average for the UK. This quashes the oil volatility myth because a low oil price has never seen Scottish tax revenues, per head, go below that of the UK average.

UK Regional Revenues

UK Regional Revenues

Having been forced to accept the reality of the situation the No Campaign then claimed Scotland’s stronger fiscal position was all to do with North Sea oil and that Scotland’s higher GDP and tax revenue per head has only existed since oil was discovered. So we have researched that too and guess what we found?

As well as Scotland’s current economic position and the potential for economic prosperity, through localised self governance (independence), I have always been interested in the history of economics.  My gut feeling has always been that the claim Scotland is historically subsidised by the UK just doesn’t make sense.

De-industrialisation harmed Scotland’s economy

Prior to the de-industrialisation of Scotland by successive Westminster Governments, the nation was productive and, in particular, Glasgow was known as the “workshop of the world”. As Scotland and the UK lost its manufacturing sector Germany invested in small to medium sized manufactures – how did that work out?

Shipbuilding was amongst the key industries lost from Scotland under Westminster mismanagement. At one point in the early 1900s, a fifth of all ships in the world were made on the River Clyde in Glasgow. Before oil there was manufacturing and in particular heavy engineering to boost Scotland’s revenues.

Tax outflow Telegraph 1964

Evidence from 1965

A sharp eyed researcher spotted this archived article from the Telegraph in 1965 pointing out that the Church of Scotland in its annual report states that “Scots people should ask again to know more about their contribution to British revenue and the proportion of this taxation actually spent in Scotland.”

Its damming conclusion is that “A yearly drain from Scotland of between 20% and 25% of the total revenue raised in the country could scarcely have failed to have some influence on the level of Scottish unemployment, double that of England, and also on the continuous stream of Scottish emigration. During the last 13 years 345,000 people had left Scotland”.

These points demonstrate the massive drain on Scotland’s wealth, population and prosperity to England, a generation before oil was discovered.

How Scotland’s economy went south

The de-industrialisation of Scotland has left many communities, both rural and urban, without jobs and without hope. This deterioration accelerated rapidly as the UK focused on finances and allowing market forces to control economic policy, first under Margaret Thatcher but then even more so under consecutive New Labour Governments with their over-reliance on services, in particular financial services, in London and the South East of England.

Today without oil revenues, Scotland’s GDP (total wealth created) is almost identical to the UK’s. So Scotland’s GDP and revenues must have started far higher.  In the heyday of shipbuilding, Glasgow produced 25% of the world’s vessels. How can anyone suggest that Scotland didn’t have a higher GDP per head than the rest of the UK at that time?

Conclusion

Not just last year, not just for the last 32 years, not just for the last 70 years, but for much longer there is clear evidence of Scotland’s relative financial strength throughout the twentieth century. Scotland’s wealth subsidised investment in London and the South East to the detriment of the North. So much so that the “workshop of the world” became a country lacking in economic confidence. Is this not a case study in bad management and governance.

After a century of lost wealth as a result of distant, disinterested and often dysfunctional Westminster mismanagement, it is now time to invest in Scotland’s future. Put party politics to one side. Regardless of what colour of government Scotland votes after independence, one elected by the people, for the people, close to the people and with Scotland’s long-term rather than London’s short-term interests at heart we can and will create a more prosperous, fairer and confident Scotland.

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Category: Business for Scotland, Economic Strengths, Economics of Independence, Gordon MacIntyre-Kemp, North Sea Revenues, Prosperity

About the Author ()

Gordon MacIntyre-Kemp is the Chief Executive of Business for Scotland. Before joining Business for Scotland he ran a small social media and sales & marketing consultancy and was the founding member of Business for Scotland. With a degree in business and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G). Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging new school of economic thinking. Gordon Blogs for Business for Scotland and The Huffington Post.

Comments (20)

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  1. Steve Bowers says:

    Great article , I must have missed it first time around. By the way, my wife’s from down the road from you Corbridge ! ( she’s a YES too )

    • Gordon MacIntyre-Kemp says:

      Thanks Corbridge is a fantastic little town one of the best paces to live in England in my opinion. Always go there every time I head home for the weekend.

  2. Gary says:

    Like most I thought that we were a drain on UK. Since the 80s when my local area was destroyed by the loss of shipbuilding and all the associated engineering etc our incomes have dropped and dropped, as has the population. I was sceptical but having looked at both sides I see that the Pro Independence seem to be relying on hard facts from either UK Govt figures or OECD or similar. The Better Together is dependent really just on opinions or stories to scare us into voting NO. If the word gets out to everyone they must surely vote YES

  3. I think we Scots have more than paid our way in this UK,and not just in recent times.I think we have subsidised the UK for most of the 307 years,maybe not in first 30 to 40 with the building of forts and garrisons,to “protect us” but after that yes we have paid our way.We have paid our way in man-power for the Empire,cannon fodder and mopping up the dirty deeds of the government.Just my opinion and way I think of what I have read over the years.

  4. Niall M says:

    Hi Gordon,
    I think Business for Scotland is a great idea and you and other non party affiliated independence organisations should be taking a leading role in the debate/spotlight about an Independent Scotland. For me, the political point scoring between the parties is off putting and the amount of friends/family I have who are voting no just because of a dislike of Salmond is scary! Also, the igronance of facts and figures is a real worry.
    Ivan McKees you tube video about an Economics in an independent Scotland is about the best and most user friendly thing I have seen on the issue yet it has only had just over 3000 views! For me, this is the kind of info that will swing votes and needs to be put out there, everywhere, ASAP!!!
    Put plans, if any, have you guys got to achieve this? Tv/radio adverts? Social media strategy?
    There’s only 8 months to go, things need to start happening, Yes campaign needs a boost in polls, we need to get the word out.

  5. Tom Keatings says:

    As a student at the University of Glasgow in the late 70`s the McRone report was high on the topic of debate,it was buried out of sight for 30 years,it detailed the wealth Scotland would enjoy under Independence and put the fear of God into the UK government.The Daily Mail online has an article today,headline “Every Norwegian has just become a Krone millionaire” from the dividend accrued from Norway`s Oil Fund,the proof at last that the Scottish people ,with a similar fund,could be enjoying a similar windfall,and for all you Labour NAW supporters,you were betrayed by a Labour government,they lied then and are lying now.Its not too late to provide your children and grandchildren with the benefits of the Oil and Gas revenues still there,you have to make the Scottish Labour leadership change its NO stance to a YES stance to reap this benefit for future generations,YES for wealth,NO for poverty and austerity.

  6. Howard Kennedy says:

    I recall being gobsmacked at uni when in a lecture on Scotland and the industrial revolution we were told that between 1850 and 1885 Scotland received an average public expenditure equivalent to only 28% of its revenue contribution. The vast infrastructure projects of the Victorian era were effectively bankrolled by Scotland.

    • Hugh says:

      The Forth Bridge, for example, is a great example of how that isn’t true. Probably Scotland’s most iconic landmark, and we hope will soon be a world heritage site, it is also a microcosm of the benefits of the union.

      30% of the cost of building the bridge came from a Scottish railway company, the North British Railway. However, fully 70% came from two English companies, the Great Northern and the North Eastern, who would run trains on it to the north east and highlands. The steel came from Glasgow, but the bridge was engineered by an Englishman, and deliberately over-engineered to prevent something similar to the Tay Bridge disaster happening again.

      Let’s not forget, also, that when the Forth Road Bridge came along in 1964, it was constructed by MacMillan’s government through ‘regional aid’ – it was an early Tory attempt to win over the scots.

      • Gordon MacIntyre-Kemp says:

        Hugh I am sorry but that is one of the weakest arguments ever posted to this site.

        The Forth bridge was opened on 4 March 1890. The UK railway companies were private companies not nationalised, so not funded by the tax payer till 1947. Your argument is that privately owned companies headquartered outside Scotland investing in a project they thought would allow them to take profits out of Scotland is a benefit from the union. During the time when Scottish public revenues were massively subsidising the union anyway.

        You also have your figures wrong (presumably as you got them from the confusing entry in wikipedia)

        – North British Railways (NBR) contributed 35% (not the 30% you quote) – which is neither here nor there as it has nothing to do with the public revenues this article is about.
        – Midland contributed 30%
        – North Eastern 17.5%
        – Great Northern 17.5%

        You also should understand that the English HQ’ed railways companies had Scottish investors and your argument is further undermined by the fact that Scottish based NBR had extensive investments in England especially the North East including: Hexham (my home town), Morpeth and Rothbury, Berwick, Carlisle etc.

        Are you suggesting that foreign direct investment would never have happened in an independent Scotland or that if we do become independent FDI will stop when all the evidence says the exact opposite. See: Inward Investment to Soar with a Yes Vote http://www.businessforscotland.co.uk/inward-investment-to-soar-with-a-yes-vote/

        Also regional aid completely short changed Scotland then as Westminster’s current infrastructure investment plans do now. Darling’s HS2 blunder to cost Aberdeen and Dundee £316m a year http://www.businessforscotland.co.uk/darlings-hs2-blunder-to-cost-aberdeen-and-dundee-316m-a-year/

        Perhaps you would like to do some more wikipedia research and share with us how much of the new forth crossing (The Queensferry Crossing is being funded by Westminster?)

  7. Stuart Clark says:

    The big difference now is that with the internet and social media the facts are increasingly difficult to hide away! Basically we have been LIED to and ROBBED for generations.

    Stripped of self confidence the general population has been dominated and bullied into believing that the abusers were looking after them and it is that myth that the current breed of Colonialists are trying to perpetuate today.

    I can’t remember who said it, and I may be paraphrasing slightly but “There is nothing so powerful as an idea whose time has come!”

  8. Stephen Mc says:

    My main fear is that the great articles on websites such as BFS will never be seen by the majority of the Scottish voters prior to the vote.

    • Gordon MacIntyre-Kemp says:

      Well we have had 60,000 unique users in the last 4 days on two articles so the BFS message is getting out there. We have also had a dozen + good mainstream TV / ready and press interviews in the last few weeks – so its getting there.

  9. Matt L says:

    Very well timed article given the nonsensical questions from Lamont at FMQs today. She’s not content that 30 years is enough evidence that Scotland gets economically abused and would like to see the numbers either side… a) even if they were somehow massively off trend, they could never hope to recover what has been lost, and b) the economic truth for the coming years is the number of children in poverty, the cost of bedroom tax rent arrears and the number of food banks required with continued Westminster rule in shades of tory red/blue

    • Alex Grant says:

      Matt you are correct about Lamont’s comment at FMQ’s but Gordon would have demolished her nonsense whereas the FM only did half the job. I’m afraid the whole Yes team and the Cabinet should spend a day being trained by Gordon so that they are all up to the job!

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