London are the 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 1995, 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 were several flaws in the figures produced in both cases.
  1. Could we trust the Government to produce impartial statistics that do not serve it's own political ends ? (The Conservatives were totally against the principle of Scottish self-determination). Bear in mind how many times unemployment figures were manipulated for political reasons. Why should this be different ?
  2. If the economy was as poor as the Scottish Office would suggest, who was to blame ? Surely this was the result of 16 years of Conservative mismanagement in Scotland ?
  3. The figures ignored 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 have been approx £5.3bn ($8bn).
  4. The figures ignored oil and gas revenue (why?), which by Treasury accounts amounted to £1.2bn ($1.8bn) in 93/94, and £2.2bn ($3.3bn) in 1995 (£3.5bn in 1999). In fact Scots oil revenues have contributed some £150bn ($220bn) to the London Treasury since 1975.
  5. The figures ignored Scotch whisky duty (66% of the price of a bottle) which for 94/95 raised some £2bn ($3bn) in the UK.
  6. The figures ignored 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 ignored substantially greater defence expenditure in the South-East of England, cost of Foreign Office expenditures, London weighting allowances and public subsidies to Canary Wharf, the Millenium Dome, the Jubilee Extension and the Docklands area in London.
  8. The figures ignore the disproportionate amount of Mortgage Interest Tax Relief (now abolished) paid to a much greater percentage of homeowners in the South-East.
  9. The figures ignored 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 ignored 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 and the company profits treated as if all profit was carried out in London.
In fact, the Scottish Office figures showed that while Scotland had 8.9% of the UK population, she contributed 9.3% of the income tax !! Scotland is actually subsidising London to the tune of at least £10 per person 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 was 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, currently suffering from the strength of the pound sterling, higher UK interest rates than then the euro-zone, and greatky increased fuel and transport costs . Currently as a region of the UK, all economic plans are tailored toward the centralist London market.  For an economic report of how an Independent Scotland might  flourish read The Slessor Report
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