Falling revenue figures question Scots’ have-it-all approach to autonomy

People should start looking over their shoulder in search of approaching trouble when they hear politicians accusing critics of talking a country down. Bertie Ahern did it a few years ago. The Scottish National Party is doing it now.

This week, the latest Government Expenditure and Revenue Scotland statistics (better known to those who are interested in such arcane subjects as the GERS figures) were published in Edinburgh.

They show that Scotland was £12.4 billion ( €17.4 billion) in the red last year, even when it is given a geographical, rather than a population-based share of oil revenues – though oil prices were then about double what they are now.

Despite a belief in the home counties that Scots are feckless layabouts, the numbers show that each Scot generates about £400 more per head in tax than the UK as a whole, but they also enjoy public spending that is £1,200 a head higher.

The reality is that Scotland is running a deficit nearly 50 per cent higher than the UK as a whole – a gap that would have to be made up by borrowing or higher taxes if Scotland were entirely responsible for its own finances.

Febrile debate

Last September, Scots had the opportunity to go for independence but turned it down. However, the ongoing constitutional debate is just as febrile, if not more so, than it was six months ago.

Scottish first minister Nicola Sturgeon says the SNP's price for any post-election deal with Labour will be full fiscal autonomy, in which Scotland has control over all of its taxes and decides its own spending.

In Sturgeon’s eyes, this week’s figures – which will be even more in the red next year because of falls in oil taxes – are proof that Edinburgh must have greater economic independence to increase growth, while protecting public spending.

“Such analysis tells us very little about the choices and opportunities with greater autonomy,” she said. “It shows Scotland under the status quo, without full access to the levers to grow our economy and use the proceeds to invest in public services.

“We have the capacity and the resources to grow our economy, address inequalities, grow small businesses and put more people back to work,” said the first minister, who has proposed a £180 billion increase in UK public spending for the next five years.

However, there are more than a few problems with Sturgeon’s argument, even though anyone who voices any doubts, or raises even a question about Scotland’s finances, is automatically accused of lacking patriotism.

Since 1999, Scotland, if it had enjoyed full fiscal autonomy, would have had to have had higher taxes, lower public spending, or greater borrowing than turned out to be the case in all but two of those years.

The figures have prompted debate on Scottish social media, with the pro-independence camp arguing that the figures are meaningless since they include defence spending, which would be much lower if Scotland was independent.

Equally, it is argued that Scotland’s finances would be totally different from today if the country had been independent in the heyday of North Sea oil revenues, since it would now be debt-free, with money in a Norwegian-style savings pot.

Always moderate

In a world where it could have been guaranteed that an independent Scotland would always have taken the right road and always have been moderate and sober in its deliberations, this could very well have been the case.

However, it is at least debatable that such fiscal rectitude would have been accepted. And the London-based Institute of Fiscal Studies (IFS) says that existing plans to give Scotland limited extra tax and spending powers would have limited impact.

Scotland would, it said, face some risks because part of the treasury block-grant – the so-called Barnett Formula – would be replaced by Scottish- raised income tax and other lesser revenues, which could be higher, or lower, than the rest of the UK.

“However, existing levels of funding would largely be maintained as the Barnett Formula will remain in place,” it said. “

And as North Sea taxation is not being devolved, Scotland will remain insulated from the fiscal risk associated with these revenues.”

Sturgeon’s plans go much further. In that case, Scotland would, the IFS estimates, have to fill a £6.6 billion gap in 2015/ 2016, nearly equal to Scotland’s entire education budget and nearly half its spending on the National Health Service.

Such predictions may or may not be right, but they deserve debate without charges that questioners are talking down their country.

Those who require such bile to defend their belief in Scottish independence do Scotland few favours.