Intolerance & Money: Scotland's Subsidy Increases

Scotland's annual subsidy from the UK has shot up to a record 2_200/head, according to official government figures, having more than doubled since New Labour Party came to power. The UK Chancellor of the Exchequer, Mr.Gordon Brown's spending bonanza has pushed First Minister Mr.Jack Mcconnell's budget to Scandinavian levels at a time when Scotland's tax burden dropped below that of England & Wales, Poland and Canada. The figures from 'The Scottish Executive' sparked a political storm yesterday 2005-12-14 as MSPs asked why it has failed to translate world-class spending into world-class public services. In its annual survey of the Scottish economy, 'The Scottish Executive' said the government spent 45_300_million_GBP in 2003/2004, putting Scotland in a rare club of countries where state spending is more than half of the entire economy. But only 34_000_million_GBP was generated in tax. This leaves an 11_000_million_GBP gap, which has to be filled by tax collected in England & Wales. Northern Ireland is also heavily subsidised. The figures do not include North Sea oil and gas; but the study shows that even if Scotland had collected every penny of tax raised offshore, it would still have required a 7_000_million_GBP subsidy from the UK. The Scottish Conservative & Unionist Pasty last night demanded to know what was going wrong. Mr.Derek Brownlee, their finance spokesman, said that while some of Scotland's higher spending needs are due to sparse population, the real culprit is
'the Lib-Lab Executive's refusal to look at real reform in public services'.
'The Scottish National Party' has long argued that the annual study, entitled 'Government Expenditure and Revenue in Scotland' ('GERS') is a piece of statistical 'propaganda'. It says that if oil wealth is counted, then Scotland is subsidising England. But The SNP economic spokesman Mr.Jim Mather, said he was alarmed at the growing disconnect between economic growth and government spending in Scotland.
'If the figures are correct, the [Scottish] Executive has serious questions to answer about their stewardship of Scotland's economy,' he said. 'Is there any other country in Europe that has experienced such a devastating slip in revenue against expenditure?'
The SNP spokesman then said that rising oil prices would help Scotland, but only if the country was independent. The tax haul from oil is expected to almost treble, from 4_300_million_GBP in 2003/2004 to 11_700_million_GBP in 2006/2007. New Labour seized on the 'GERS' report to say it destroyed the case for Scottish independence.
'This is a hammer blow to those who talk about independence, or even fiscal autonomy. This shows that there is money that Scotland gets from being part of the UK which it wouldn't get if it was independent,' a spokesman said.
The SNP counters that, even if an independent Scotland was in deficit, it would simply borrow money on international markets as the UK does. For more than a century, Scotland has received a greater share of money than its population would indicate. 'The Scottish Executive' has long defended this, saying the greater role of agriculture, fisheries and forestry and greater deprivation demands more spending. But the subsidy -- which was just 1_055_GBP/head in 1997/1998 -- is becoming increasingly controversial in England & Wales, where a growing number of MPs want a new system for dividing government funds across the UK. State spending in Scotland is next year forecast to soar to 51_600_million_GBP -- or 52.2 per cent of the national economy. This is not only higher than the UK's 45.2 per cent, but also any country in the developed world save Sweden, Denmark and France. But the tax revenue for Scotland in 2003 -- the last full year where figures are available -- shows Scotland has the seventh lowest tax take among the world's 30 most developed countries. Under the rules of devolution, 'The Scottish Executive' cannot save money -- or even turn down the sums sent from the UK Treasury each year. Its annual budget increase is decided by a system known as 'The Barnett Formula'. 'Political row brews as Scottish subsidy soars to record high', FRASER NELSON AND HAMISH MACDONELL, The Scotsman2005-12-15


Anonymous Anonymous said...

I don't know the barnett formula but does £2200 per head include prisoners, pensioners, children, unemployed, insane....

12/20/2005 07:54:00 am  
Anonymous Anonymous said...


12/20/2005 08:00:00 am  

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