Scotland

Public finance figures reignite debate on Scotland's future

Scottish notes Image copyright PA
Image caption Gers is an assessment of how much Scotland raises in taxes and how much is spent by the government on Scots

The latest public finance figures have reignited the debate about Scotland's future.

The statistics suggested the picture has improved but remains worse than the UK average.

In 2013/14, people in Scotland paid £400 more in tax than the UK as a whole but they also received £1,200 more in spending.

The revenue includes taxation from the oil and gas industry deemed to be in Scottish waters.

Opponents of independence seized on the publication of Scotland's annual accounts as evidence that the country would have been worse off had it voted "Yes" last September.

But the Scottish government insisted the document proved the fundamentals of the economy were strong.

According to the figures, Scotland was £12.4bn in the red in 2013/14, down from £14.3bn the previous year.

In the same 12 months the country raised £54bn in taxes, or £10,100 per person.

Public expenditure in Scotland, which has 8.3% of the UK population, was 9.2% of the UK total at £66.4bn, or £12,500 per person.

ANALYSIS

By Douglas Fraser, BBC Scotland business and economy editor

Scotland is running at a loss. And you'd be forgiven for also being at a loss about the conflicting use of statistics over just how much it's in the red, or how badly.

You can emphasise that tax paid in Scotland, and from its offshore oil and gas, was £400 per head more than the UK figure, during the last financial year, 2013-14.

Or you could choose to highlight the figure showing that spending was £1,200 per head higher. Or you could pick a fight over the deficit's share of Gross Domestic Product.

The £400 extra tax revenue is the one that puts Scotland in a better position than the UK.

The others don't look so good for those arguing for full autonomy over taxation and spending, or independence.

Whichever way you read it, it's worth remembering that running government at a loss isn't as bad as it sounds. It's not a business. The overspend can be to help growth, if it's well managed.

And while Scotland runs at a loss, the UK government continues to run at a similar scale of loss, with a huge debt, and nothing to show in the bank for 40 years of oil and gas tax revenue.

So those from the three main Westminster parties, who wish to pick holes in the case for Scotland having more tax powers, might also bear in mind that their own record of running deficits, failing to control deficits and building up debt is hardly an inspiring example for others.

Read more from Douglas

Measuring the deficit as a share of economic output, Scotland performed substantially worse than the UK average.

Scotland's deficit as a share of GDP was 8.1% in 2013/14, down from 9.7% in 2012/13 but well above the UK average of 5.6%.

The data is contained in the annual publication Government Expenditure and Revenue Scotland (Gers). The publication also revealed that notional tax revenue from oil in Scottish waters fell to £4bn in 2013/14, down from £6.2bn in 2012/13.

Unveiling the figures at Heriot-Watt University in Edinburgh, First Minister Nicola Sturgeon said Scotland had paid more tax per head of population than the UK average for 34 years in a row.

Ms Sturgeon stressed that the deficit was coming down "despite lower oil revenues", which she attributed to "higher levels of capital investment" in 2013/14.

But she argued the figures "tell us nothing at all about how Scotland would perform with greater economic and fiscal powers", insisting the government in Edinburgh could have spent and invested more wisely.

The First Minister confirmed she would use the general election campaign to argue for "full fiscal autonomy" for Scotland.

Ms Sturgeon added: "Having power in our own hands to grow our economy and boost revenues is a much better position to be in than continuing to be at the mercy of UK austerity and Westminster cuts.

"The fundamentals of our economy are strong. Scotland is and continues to be a very wealthy country."

She also pointed out that Scotland had paid more in tax per head than every other part of the UK except London, the south east and the east of England.

But her opponents jumped on the figures as proof that a vote for independence last September would have been an economic disaster.

The UK's Scottish Secretary Alistair Carmichael said the data "put the case for remaining in the UK beyond all doubt".

Pointing out that the figures were based on a relatively high oil price of more than $100 per barrel, the Liberal Democrat MP called them "concrete proof" of "secure and stable levels of funding" for Scotland within the UK, "alongside the ability to absorb economic shocks more effectively".

He added: "Today's figures will force the long overdue retirement of a number of economic myths used by those who argue for Scotland leaving the UK. There is no way to avoid these hard facts and attempting to do so would simply be irresponsible."

ANALYSIS

By Glenn Campbell, BBC Scotland political correspondent

There have been major revisions to last year's Government Expenditure and Revenue Scotland (Gers) figures.

The 2012/13 bulletin said Scotland's deficit was about £12bn or 8.3% of economic output.

This figure formed the basis of much of the economic argument in the independence referendum campaign.

This year's bulletin revises the 2012/13 deficit to 9.7% of economic output, compared with 7.2% for the UK.

The Scottish government says these are technical revisions based on European accounting rules, affecting all EU governments.

The revisions were required to be made after the referendum.

ANALYSIS

By Brian Taylor, BBC Scotland political editor

Nicola Sturgeon's statement opens with the point that Scotland's tax take for the financial year in question was £400 per capita higher than the rest of the UK.

Alistair Carmichael notes that Scotland's deficit, even including a geographical share of oil, was 8.1% of GDP compared with a UK figure of 5.6%. (The comparable figures for the current, day to day, balance, incidentally, are 6.4% Scotland, with oil, and 4.1% UK.)

Mr Carmichael says he wants to enforce the retirement of "myths" about the Scottish economy, emphasising in the process the case for the Union. The figures are, he said, "concrete proof" that the majority opinion on September 18 was wise.

Ms Sturgeon insists the figures are "testament to the inherent strengths of the Scottish economy." She insists further that, over a ten year period, Scotland's current budget balance - current, note - has been on average stronger than the UK.

Which, opponents argue, is one way of saying that the figures for the year in question are less than helpful to her cause - as, perhaps, was always to be expected in the light of the oil figures.

Read more from Brian.....

The Scottish Labour leader Jim Murphy said the SNP's plan for "full fiscal autonomy" would mean an end to the Barnett formula, by which Scotland's relatively generous share of UK public spending is calculated, which would impose "austerity-max" on the country.

Nationalist plans would have left the country £4bn or £800 per person worse off in 2013/14, he argued.

"The contrast between Scottish Labour and the SNP couldn't be clearer," said Mr Murphy.

He added: "We want massive new powers for Scotland whilst keeping the higher public spending that we get through Barnett. The SNP want to ditch Barnett and rely on volatile and declining oil revenues, which means big cuts to our NHS and pensions.

"After years of paying into the UK kitty, with plummeting oil revenues we need the security of the Barnett formula now more than ever."

The Scottish Conservatives said the SNP's plan to cut all financial ties with the UK would require the equivalent of an 8p hike in income tax, "significant spending cuts" or "vastly increased borrowing."

The party's finance spokesman Gavin Brown said "Scotland is part of a family where everyone puts in and shares the proceeds.

"That security was jeopardised last September, and it's the SNP's sole, stated aim to jeopardise it again in May.

"The SNP wants full fiscal autonomy, and as we can see from these figures that would mean absolute chaos for Scotland's finances."

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