London are Subsidy Junkies

There is a myth, started in the London media, and perpetuated by both Conservative and Labour Party apologists, that Scotland is heavily subsidised by England. The general basis for this accusation is on Treasury produced statistics of "identifiable Government Expenditure".

On 8th Oct 95, co-incidentally the day before the Conservative Party Conference started, the Scottish Office released figures for 1993/94, claiming that Scotland ran a budget deficit of some £8.1bn ($12.2bn) in that year.

There are several flaws in the figures produced in both cases.
  1. Can we trust the Government to produce impartial statistics that do not serve it's own political ends ? (The Conservatives are totally against the principle of Scottish self-determination). Bear in mind how many times unemployment figures have been manipulated for political reasons. Why should this be different ?
  2. If the economy is as poor as the Scottish Office would suggest, who is to blame ? Surely this is the result of 16 years of Conservative mismanagement in Scotland ?
  3. The figures ignore the fact that for the UK as a whole, the budget deficit for 93/94 was £53.5bn ($80.2bn), Scotland's pro rata share would therefore be approx £5.3bn ($8bn).
  4. The figures ignore oil and gas revenue (why?), which by Treasury accounts amount to £1.2bn ($1.8bn) in 93/94, and £2.2bn ($3.3bn) in the current year. In fact Scots oil revenues have contributed some £120bn ($180bn) to the London Treasury since 1975.
  5. The figures ignore Scotch whisky duty (currently 66% of the price of a bottle) which for 94/95 raises some £2bn ($3bn) in the UK.
  6. The figures ignore higher public spending in Scotland. This is mainly as a result of poorer health, greater poverty and more widespread rural communities, leading to inevitably higher costs.
  7. The figures ignore substantially greater defence expenditure in the South-East of England, cost of Foreign Office expenditures, London weighting allowances and public subsidies to Canary Wharf and the Docklands area in London.
  8. The figures ignore the disproportionate amount of Mortgage Interest Tax Relief paid to a much greater percentage of homeowners in the South-East.
  9. The figures ignore that Scots pay proportionately more in VAT for domestic fuel (the average bill in Aberdeen is 40% higher than the equivalent in Bristol, consequently VAT paid is 40% higher).
  10. The figures ignore that a Scots resident, employed by a company registered in London will have his income tax considered as if it was being paid in England.
In fact, the Scottish Office figures show that while Scotland has 8.9% of the UK population, she contributes 9.3% of the income tax !! Scotland is actually subsidising London to the tune of at least £10 per week !!
Taking all these factors into account we find that far from running a headline deficit of £8.1bn ($12.2bn) as claimed by the Scottish Office, relative to the UK, Scotland is actually some £200m ($300m) in surplus. Who really subsidises who ?

Looking at other similar small European nations, Norway and Denmark have budget deficits (1993) of around £7bn ($10.5bn) and trade surpluses of around £4.7bn ($7bn). Contrast this with the UK's trade deficit (1991) of £33.5bn ($50.2bn).

Scotland is a net exporter, and after independence will be able to capitalise on this. Currently as a region of the UK, all economic plans are tailored toward the centralist London market. Only the Scottish National Party promises to deliver an Independent sovereign Scottish Parliament. For an economic report of how an Independent Scotland would flourish read The Slessor Report
If you have any comments (good or bad) on these pages contact hamish@rmplc.co.uk.
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