Spending £20 to save a tenner
This week it was claimed by Stuart Adam, senior economic researcher at the Institute for Fiscal Studies (IFS), that taxes would have to rise almost 14% in an independent Scotland, if they were the sole method used to fill the Scottish budget deficit.
It’s a dramatic headline, for sure. But is it an accurate reflection on the relative finances of an independent Scotland and one that remained part of the United Kingdom? As ever, you have to dig a little deeper to find out what’s really going on.
According to the 2011-2012 GERS report, the total public-sector expenditure of the Scottish government, local government, and money spent “on behalf of” Scotland by the Westminster government (including Scotland’s share of UK debt-interest payments of £4.1bn) was £64.5bn – equivalent to 9.3% of total UK public-sector expenditure.
At the same time, Scottish public revenue including a geographical share of North Sea oil was estimated (conservatively, but more on that shortly) at £56.9bn.
Despite this disproportionate contribution, it remains an arithmetical fact (and one endlessly and gleefully highlighted by “Better Together”) that £56.9bn is less than £64.5bn, and that therefore Scotland is running a deficit, amounting for 2011-12 to £7.6bn (or 5% of Scotland’s GDP of £150bn).
We know from Treasury figures that total UK tax receipts for 2011-2012 are £543bn (suggesting that Scotland’s £56.9bn in fact accounted for 10.5% of the total UK tax take, rather than the 9.9% commonly cited), and that Westminster spending was £695bn in that year – a deficit of £152bn, or 10.1% of the UK’s GDP of £1.5trn.
If we use the same criteria as the IFS but apply them to the UK, then, we see that in order to eliminate the UK budget deficit in the manner the IFS have used for Scotland – that is, using only tax increases – logically the UK would have to increase taxes by 28%, as its deficit is proportionately twice that of Scotland’s.
This is clearly not a realistic scenario, yet we’re nevertheless told it’s what would happen to an independent Scotland, and the media don’t question the assertion.
The IFS report goes onto state:
“To give a sense of possible scale, previous IFS research has found £2 billion of tax rises or spending cuts would be needed during 2016/17 and 2017/18 to match the UK Government’s plans. If a Scottish government also wanted to offset the decline in oil revenues by 2017/18 as forecast by the Office for Budget Responsibility, another £3.4bn would be needed.”
But are those figures accurate? There are four vital pieces of information missing from this simplistic equation, and they’re pieces that are almost always missing whenever doom-laden projections about an independent Scotland’s finances are aired.
1. The figure quoted is dependent on Scottish spending remaining the same post independence. This causes a few issues for the report writers as it assumes Scotland will still be paying towards infrastructure projects in England – like the £7.92bn Scotland will pay towards HS2 if we stay in the union, hundreds of millions a year on Trident replacement, the London Crossrail project, refurbishing Westminster for £3bn, the £4.2bn London sewer upgrade, and so on.
2. It omits the £800m annual saving on defence proposed in the SNP’s projected plans for a Scottish military, the £60m saved a year on Scotland’s contribution to the running of Westminster and the Scotland Office, and finally the economic benefits accrued by having the expansion of government positions required post independence (i.e. replacing the civil servants we already fund in London with ones in Scotland instead). So that’s at least £860m in savings overnight, plus the economic multiplier effect of thousands of new civil service jobs.
3. It’s dependent on Scotland NOT closing any tax loopholes and continuing to fail to collect the estimated £2.8bn in tax currently “lost” by HMRC in Scotland.
As we examined previously, independence offers the opportunity to introduce simple, transparent tax rules to replace the current UK tax system, which is horrifically complicated, inefficient and loophole-ridden. The result would be a Scottish Treasury that could work more efficiently to collect what it’s due.
4. Finally, the analysis conducted by the IFS uses the Office for Budget Responsibility figures for oil revenues – figures which are at odds with nearly every other projection of oil prices.
The chart above shows the projections for oil prices which have been made by six official forecasting bodies. The only downward-trend projection among the six is that of the OBR – which foresees a fall in oil prices to about $92 per barrel at the same time as the Department of Energy and Climate Change (the UK government’s own experts on oil and gas) are predicting a rise to over $130 per barrel.
Why the OBR decided not to use the projections of the UK government’s own experts, and why the IFS decided to use the OBR forecast over the other more favourable trends, we can’t say. However it was Alistair Darling who, when speaking to the Financial Times in 2010, noted that the OBR had been politicised:
So readers can decide for themselves how impartial this IFS report is. They might also want to take a moment to ponder a like-for-like comparison: if an independent Scotland would need a 14% tax hike to balance its budget and a Scotland in the UK would require taxes to rise by 28%, which country would you rather live in?
(Readers who’d like to spend £20 to avoid having to pay £10 should drop us a line, as we have a cunning scheme to help them with their energy bills. – Ed)
Excellent, verifiable facts that will presumably have all the Unionists who ‘need to know’ running in the opposite direction with their fingers in their ears.
One small point; I believe London Crossrail has been designated as England only expenditure, therefore resulting in a ‘consequential’ payment of £500m to Scotland. This of course may or may not be proportional to the higher per capita tax taken from Scotland.
Yes Iain, and no doubt the English Government will find another way to cut Scotland`s budget by £500 million when it holds the purse strings.
This article alone has just made explaining some of the financial and economic arguments for indy much much easier! Excellent article!
You can add to that the cost of paying 8.4% of UK Public Sector Debt Interest every year.
Using the GERS numbers, my own back of a fag packet calculations (with the caveat that these rough and ready calculations could be inaccurate) show that over the last 7 years, Scotland has racked up 6.92% of the accumulated UK Debt during this period but has paid for 8.4% of the total interest. The interest overspend works out at around £5bn which has potentially been sucked out of the Scottish budget.
A forensic accountant would do a better job of providing an accurate picture but it certainly makes you think just how much money leaks out of the country in this way.
Excellent analysis Stu, you are setting yourself an ever higher bar, there is little need to look anywhere else for real answers. These things you “expose and question ” will undoubtedly help in gaining our Independence.
Great article Scott, it’s this kind of information thats vital to all of us in persuading the undecideds.
What I would find helpful is to see an oil chart price that shows the OBR’s predictions against the reality of where oil prices actually are. I realise the OBR has only been in existence for 3 years, but we must have some info that shows how wrong they are getting it.
On second thoughts, how about an article where we can look at the forecasts of the OBR across the board. We know that they have managed to get nearly every quarters growth figures wrong, is there any other info we can add to this that will give us a comprehensive list of their failings ?
If we were able to discredit them, then the whole unionist economic scare stories will begin to fall apart. The same can be said of McLaren at the CPPR who uses the OBR forecasts extensively in his research.
Well done again Stu. I suggest you send this stuff to George Kerevan as he could get it published in the Scotsman (or what it’s worth.) which I presume you couldn’t.
Hello Iain,
You are right that Crossrail is indeed an England project and hence has Barnett Consequentials – in fact we will get £500m additional on Barnett (which hasnt gone down too well in London)…
BUT… at £16bn to build we are paying just under £1.6bn to the project in the first place – so still over £1bn worse off.
Thanks Scott. This yet again demonstrates that the numbers are actually on our side and the Unionists have only deception, misrepresentation, lies, threats and coercion in their armoury. What an unprincipled and uncivilised lot they are.
CROSSRAIL ARTICLE FROM LONDON EVENING STANDARD
Scott I admire the way you can articulate these facts and figures while I am still spitting tacks days after the IFS/CPPR reports. Thanks for the article. I never listen to these ‘think tanks’ anymore I take it as a matter of fact they are ‘selective’ with the data they use.
Superb article, but also we would not be paying for overseas military bases, imperialistic embassies around the world, illegal wars, our share of “English” courts and prisons, UK Royal protection whilst still paying 100% of Scottish Royal protection and scores of other costs deemed to be British, we would also have all the VAT/Corporation Tax/Income Tax and other taxes raised in Scotland paid direct to the Scottish Exchequer.
I know that several years ago a guy did a forensic analysis of the GERS report and found several areas where expenditure such as English Prisons and Courts were deemed British so we had to pay our share of the running costs and not all income was credited to Scotland. Has anybody done similar to the most recent GERS report?
They’ve had the dodgy calculator out again.
Also the massive tax hikes prophesised by the IFS rely on predicting NO growth in the Scottish economy after independence.
Think about that, it’s a prediction that with independence Scotland would be unable to grow economically from an 8 year (by that point – 2016) slump in economic activity.
That wages would remain at recession levels, we would have no new private sector jobs, and the new public sector jobs required after transferring some civil service jobs to Scotland would have no economic impact.
This is an incomprehensible view of the future of Scotland, one where the nation is stuck in a time-warp and where today’s economy is as good as it gets, an even more absurd point of view given that arlier this year, Finance Secretary John Swinney said he did “not envisage increases in personal taxation in an independent Scotland”, preferring instead to utilise fiscal levers to “grow the economy and thereby grow the tax base”.
I see here, as in many other revenue related articles, that only oil is cites as a revenue.
What about Scotland’s gas revenues? Scotland produces around 60% of the total UK gas production and I never see no figures to reflect this in any anti Independence stories.
Is it me or are the unionists (IFS) deliberately not mentioning gas revenue to down play Scotland’s contribution?
@Scott Minto (Aka Sneekyboy)
Thanks Scott, I suspected it might be that kind of a give-and-take set up!
If I set aside my Scottishness for a minute and consider the UK as a hypothetically viable entity, it really is London that’s ****ing the whole thing up. Another London dividend:
link to tinyurl.com
As I’ve been telling waverers for a long while, the information that answers the supposedly unanswered questions is largely out there in the public domain. Unfortunately, folk need to go out there and check it for themselves, which is precisely why sites like this one are so important.
“I’m absolutely passionate about funding arts and culture in the regions…”
“In the regions”
What, most of the country is just wild outback that’s not *really* the UK?
The best thing to do is raise taxes anyway, by more than that required to balance the budget as massive investment is required in self sustainability. This is the Asia century, and as (predominantly) China’s wealth and manufacturing dominance grows, everything becomes more expensive in the west.
I for one will pay higher taxes to ensure the likes of the bedroom tax is never even considered nor the unfettered borrowing that created the debt mountain – which will explode anytime now when inflation starts to rise.
Here’s an article from The Telegraph on March 25th, 2011.
In it, Stephen Nickell, a member of the OBR’s steering committee comes out with this quote:
” But, Mr Nickell added: “Forecasting oil prices, as anyone knows, is a mug’s game.”
You can read the full article here:
link to archive.is
Very good article Scott. It really beats me why people like Stuart Adam, who presumably is a bona fide economist, is willing to put his name to an IFS Report like the one you quote, particularly when the wholly discredited OBR is used for its oil forecasts. I don’t think the OBR has got even ONE forecast about ANYTHING right since it came into existence.
Let us hope that the White Paper will be as hard hitting as this.
This article was of course referred to last night by Blair No. As has been pointed out several times previously, it’s pointless plucking figures from one side of the balance sheet (usually the spending part) without then showing the other side of the balance sheet.
Similarly any illustration of costs post-Independence needs to be counterbalance with the costs associated with staying in the Union. This article makes the point very well. Thank you for this, Scott.
@alexicon
My understanding is that most references to ‘North Sea oil revenues’ are inclusive of gas, and it’s just a shorthand usage.
I know it isnt a vote winner or what newspapers want to print but theres plenty of people out there willing to pay higher taxes to work towards the Scotland that we want and its people deserve.
Factor that in with the Rev and others analysis and its all huff and nonsense. Scare stories were so 2012.
And what about the extra dosh coming in when the SG starts getting companies like Starbucks and Amazon to pay even SOME taxes…eh?
Ker-ching!
I tried to make the following comment on the Herald article about this, but there must have been some kind of technical problem, cause it didn’t seem to appear…
Don’t be fooled.
Nov’10: OBR predict 2013-14 oil price of $87/barrel (and static thereafter)
Nov’11: OBR predict 2013-14 oil price of $101/barrel (then falling $3-4 per year)
Dec’12: OBR predict 2013-14 oil price of $106/barrel (then falling $4-5 per year)
Mar’13: OBR predict 2013-14 oil price of $113/barrel (then falling $4-7 per year)
In 2010 OBR were 25% out on a three year prediction, then having to appear more realistic as the outturn approaches.
Despite prices remaining stable coming on for 3 years, with each publication the OBR forecast a steeper decline leading to a $90-93 price point in 2017-18, indicating a deficit scenario in Scotland’s early years of independence.
The OBR have already admitted Oil price prediction is impossible, so have chosen a ‘magic number’ which suits the Westminster agenda and are working backwards to create the illusion of a ‘forecast’ with this endpoint. They only have to maintain this strategy until September next year.
I predict OBR predictions following September next year will revert to an upward trend as all other agencies are forecasting.
I set about this report with a metaphorical baseball bat on the Guardian the other day. As I said there, somebody point me to a single correct OBR forecast in the short term never mind their remarkable long term long term oil projections..
Our GDP is about the same as the rest of the UK excluding oil. Oil on current prices provides us about 118% GDP compared to the Uk and our spending 110%. However, there are things we simply don’t want to do as an independent country and it is by no means certain that our spending needs to remain at 110%. Whether oil fluctuates or not it iwill not be a minus figure (although it is hard to keep that in mind the way Better Together talk). Therefore the returns will be our 100% + oil. Managed well, of course, our GDP could grow and therefore we could better that 100% figure + the oil.
There is a clear issue with Better Together trying to set the agenda and determine what our spend and priorities should be (exactly the same as the UK strangely enough). They recoil in horror when people say, “No, we are not going to spend billions replicating GCHQ and other follies of paranoia”. “But the terrrrrrerists!” they cry.
Cutting through the crap, the IFS lays out that there is a perfectly viable country sitting amongst those figures.
Great article Scott, but “why oh why” was the claim not refuted by the Scottish Govt. or Yes Scotland?
Re revenues from Scotland going to London can it really be true that fines imposed by Scottish Courts do go to the Treasury? I thought I read somewhere that this happens but now can’t find the source. Anyone with the facts?
Scott, thanks for doing this article. What we need is someone in the Yes campaign to put out a leaflet with all this up to date info (with sources – so people can check) in a easy read format for canvassers and for leaflet drops.
@Seanair
The truth about Scottish Court Fines
Since the introduction of devolution the total paid to the Treasury amounts to approximately £370 million,
Brilliant analysis and debunking of IFS claims.
You could never imagine the Douglas Frasers and Alf Youngs of this world being able and willing to do the same.
You are as well going to Mystic Meg or Paul the Octopus than rely on the OBR.
In 2010 the UK government OBR forecast for oil price this year was $87 a barrel.
To-day’s price is $109.86 and one year forward price is $111 so it is going up not down as OBR claim
So about 25% out for a three year forecast (on the low side as usual), and yet unionists seem to take the OBR predictions as gospel for a 30 year forecast.
I suspect YES are just biding thier time, allowing this kind of scare story to really permiate, before the white paper blows it apart (if it doesn’t then we really are fecked).
When you get the facts after you’ve been fed a load of bullshit it does hit home alot harder.
Something I’ve been trying to get a handle on is income tax collected in England on behalf of employees working in Scotland. When I was working my salary was paid to me in Edinburgh, but as my company was based in London, my tax was collected in Manchester. What I want to know is, does this tax then get credited to Scotland or the North West of England? Presumably after independence all tax collected from employees in Scotland will be credited to Scotland.
If you have any questions you would like to ask Mr Adam you can contact him here.
link to ifs.org.uk
Thanks for an excellent article Scott.
How would these figures be affected when, following independence, the duties on exports such as Scotch etc. are attributed to Scotland’s side of the ledger instead of being shown as English exports?
Brilliant article, that snips the lies away about taxes. Well done!
Thanks for this article Scott – great source of factual information.
I would be OK with paying higher taxes in Scotland. For me, it’s more a matter of the Scottish government setting out the vision they have for improving the country and everyone (including companies) contributing to it on ability to pay.
We need to start again with the tax system. It is an ancient system that has been tinkered over the centuries. The simpler and more transparent it is then the easier it will be to enforce (and also save everyone some admin time and costs).
(Readers who’d like to spend £20 to avoid having to pay £10 should drop us a line, as we have a cunning scheme to help them with their energy bills. – Ed)
Is that like Ed balls or as in Ed, the guy wot wrote this stuff?
Thanks Sneeky Boy.
Speaking personally I regards these disingenuous reports, analyses and “mights, maybes and warnings” are simple lying.
To paraphrase Donald Rumsfelt; there are lies we know, see, identify and expose , there are lies we do not yet identify as lies and there are lies as yet unspoken.
Lying does not just amount to saying a direct untruth, it encompasses all the tricks and techniques of the Blair McDougals, Ptere Mandelsons, Damien McBrides and basically all the Labour SPADS; paid liers.
We have safe houses like WoS, Newsnet and now Derek Bateman to expose their malfeasance.
We are on to them, and their collective sphincters are quivering. That is why they NEED the MSM to continue to cut their own collective throats, for the sake of the Union. With a real balanced MSM, they be be exposed for what they are.
L
I
A
R
S
Hope the rev doesn’t bustabloodvessel with my extravagant use of hard returns?
There are known knowns; there are things we know that we know.
There are known unknowns; that is to say, there are things that we now know we don’t know.
But there are also unknown unknowns – there are things we do not know we don’t know.
“Hope the rev doesn’t bustabloodvessel with my extravagant use of hard returns?”
I wouldn’t mind if you’d BLOODY WELL PUT SOME IN THE REST OF THE COMMENT.
How many times, readers? PRESS RETURN TWICE FOR A PARAGRAPH BREAK. TWICE. TWO TIMES. THAT’S ONE TIME PLUS ANOTHER TIME.
Good article here from Bill Mitchell, an Australian economist who takes apart some of the myths of the TINA economic debate centred around Scotland. Time we looked at MMT?
link to bilbo.economicoutlook.net
Great anaylsis once again, there is huge potential in terms of simplifying the tax regime which would obviously make it both cheaper to administer and ensure better compliance (meaning less tax evasion and loss through errors). Currently, tax compliance is a huge burden especially on small businesses and when it comes to vat legislation, well it can descend into the ridiculous:
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000118#P67_4124
just watched the best FMQs ever, especially the last two minutes with the by election leaflet. he said Labours problem is that they say one thing in public, but another thing in public. The Labour faces a sight to behold. cant stop laughing …sorry.
Hey this can’t be right what about UKOK ?
Taxes need to go up 14% in Independent Scotland. We know that; the impartial (?) IFS told us so.
But 28% tax increase just for staying in the UK must be a made up figure surely !!
No, No , No Scott this can’t be right. You can’t have done the analysis properly this is just propaganda surely – we’ve been told to expect these kind of lies from YES side.
Surely the IFS would’ve mentioned this aspect in their purely impartial report ?
This is just scaremongering about us being worse off as part of the UK, these can’t be facts, must all be made up.
Can’t be true; we get such a good deal from our UK Govt and a 14 % increase is a purely Scottish issue because we aren’t as good on economic issues as others in the UK.
So how could we in Scotland afford a 28% increase if we are to stay in the UK ?; Surely IFS would tell us this fact if they are impartial ?
Seriously; Brilliant piece Scott ! – very thorough & illuminating, how the figures and interpretation have a wider meaning of fact in a UK camparison scenario.
I’ll be using this if you don’t mind.
Bunter
Excellent!
BTW, I notice on the IFS link I posted above that Mr Adam has done very well out of grants to come up with all this stuff.
——————-
Research grants
‘The impact of social security contributions on earnings: evidence from administrative data in France, Germany, the Netherlands and the UK,’ responsible for the UK part of a cross-country project, Economic and Social Research Council, 2012–2015, £440,000.
‘The impact of the UK government’s welfare reforms on labour supply in Wales’, Welsh Government, 2012, £56,020.
‘Reforming Council Tax Benefit in Wales’, Welsh Government, 2012, £18,000.
‘Reforming Council Tax Benefit’, Joseph Rowntree Foundation, 2012, £45,715.
‘An examination of how the tax and benefits system relates to ageing and care’, Nuffield Foundation, 2011–2012, £23,112.
‘A retrospective evaluation of elements of the EU VAT system’, leading a consortium of 12 organisations from across the EU for the European Commission (DG TAXUD), 2011, £455,000 (IFS component £125,000).
‘Dynamic scoring’, OECD, 2008–2009, £9,200.
‘Integrating income tax and National Insurance’, Chartered Institute of Taxation, 2004, £5,000.
Andrew Morton
Tax is allocated by post code, see HMRC disaggregation rules at: link to hmrc.gov.uk
Income tax is on page 5.
Thanks Scott. I thought it was further back than June of this year that I’d read about it, but just shows that my memory is not what it used to be. What’s Lewis MacDonald’s excuse??
Damned disgrace that the money goes south, and hardly an incentive to gather it…..
Excellent article, Scott – and indicative of the kind of analysis our ‘investigative’ journalists in the ‘Scottish’ MSM would have neither the wit nor the desire to initiate.
@Gus
Ah, thanks.
Damn!
@BTP
Could you say all that again. I didn’t catch it the first time. 😉
@Bunter
I eagerly switched over to the BBC’s live text account of FMQs only to discover that they don’t say a word about Alex’s quip. Plainly it never happened.
Bunter, was watching it coming up to the end when the phone rang, so will try to see it on catch-up TV.
More seriously I thought Lamont bringing Milly Dowler into her attack on AS was deplorable and I hope the Presiding Officer speaks/writes to her about it. Just shows how low Labour has sunk.
Thank you Scott – great to has some real economic analysis that presents the whole of the picture.
Truely fed up of BT, “their” experts and the media just focusing on one figure without giving us the relevent comparison. They did the same when talking about the “13,000” Defense jobs at risk in Scotland, but forgot to mention that across the whole of the UK there are said to be “300,000” Defense positions.
link to telegraph.co.uk
Did they take account that all of the corporation tax from Scottish companies that currently goes to the London treasury will in future be paid into a Scottish treasury?
Have they accounted for the fact that Westminster will no longer have access to a very large amount of free North Sea oil, and they will in future, if they want Scottish oil, have to purchase it at the going rate?
Did they tally in the 40% of surplus Scottish produced electricity, that Scottish companies have to pay for the privilege of putting it on the National Grid to send south, that will in future have to be paid for at the going rate?
FMQs – how lucky you are to have seen it.
On broadband – this content doesn’t seem to be working – which admittedly may be more to do with crappy rural b/b speeds than the BBC.
But on DAB radio, where it usually is, there was only Mr Beattie and his chums. It was on MW, as I found out when I jumped into the car in time for the last question. But what happened to DAB? Is it another cunning ploy from the state broadcaster to limit the number that can witness Johann in full flow? I think we should be told.
Why would Scotland need to take any debt from the UK. This idea that we automatically take a population percentage of the debt goes against the UK government approach to Scotland as regards UK treaties.
The other point is that much of the debt is related to previous unbalanced spending down south, so accepting it is accepting legitimacy of historic spending ratios.
SG should be saying we’re taking nothing and start from there.
Will be interesting to see how the state broadcaster edits FMQs as their woman, well she took one helluva beating lol….
Another quality article Scott.
Kenny @ 1.18 p.m
Fully agree, but if we do take “our share” of the debt, there is an easy way of reducing it immediately – by offsetting it against our share of UK fixed assets which we have paid toward over decades but get no use from, as most of them are not located here:
link to official-documents.gov.uk
As far as I know this is the latest edition, the list will have no doubt grown since then..
@Andrew Morton
Gus
Tax is allocated by post code, see HMRC disaggregation……
Indeed, but the HMRC figures somehow show actual 2011-12 income tax in Scotland was £286million more than the GERS figures had accounted for.
Another great article Scott.
Another biggie is the billions of pounds in the form food and drink packaging, distribution and marketing of Scottish produce currently accredited to England. Repatriation of the value added in that sector is inevitable since it ticks all the boxes, strategic, commercial and political.
As well as making logistical sense from a Scottish distribution view point the jobs created will reduce the welfare burden and contribute tax revenue, the value added will contribute to Scottish GDP and export value and the potential for increased usage of the Scottish brand, which is a very valuable asset in that sector.
OT Anyone else notice the live interview on Radio Scotland with Len McCluskey? I refer to the bit where he extolled praise for Alex Salmond’s handling of the Grangemouth situation, albeit as a stark comparison to David Cameron’s saber rattling.
Readers here will not be astonished that it somehow ‘went missing’ for subsequent broadcasts, and of course from BBC North Britain TV broadcasts.
Brilliant FMQ’s. So good BBC could not show any of it!
Famous15,
FMQs is now available online at
link to bbc.co.uk
Alex Salmond was in fine form. He began by welcoming Cara Hilton and congratulating her election and said “Based on her campaign literature, I’m looking forward to her support for the budget and this government’s key policies.” 😀
Johann Lamont was even more dismal than usual, accusing AS of taking two weeks off during the Grangemouth crisis (!!!). She really does live in her own parallel universe. Maybe it’s something in the air in her bunker?
AS got in digs about Lamont’s silence over Grangemouth and her denials of ever having said “something for nothing”.
Last night on the Scottish News on the BBC, they discussed the fact that the Scottish Economy grew in the last five quarters in succession (by more than 1%) and is predicted to grow by 1.4% or more in the next two quarters. The British economy however, has grown by 0.8% for the last two quarters only and growth is obviously much slower.
This is concrete evidence that the Scottish Economy is doing better than the British Economy. It would be interesting to know whether the above figures were based on the forecast for the British Economy and used to measure the Scottish one, because surely higher growth means greater revenues so less reason to increase taxes?
It would be good to see some charts showing the comparison between the growth of the British Economy and the Scottish Economy that we could share – obviously the Scottish stats were only on the Scottish news and there doesn’t seem to have been a direct comparison on any on the MSM.
Why oh why do people still go to the BBC for FMQs when Holyrood has (and always has had) it’s own internet TV? You can get it streamed live, or watch past recordings. Just search for Holyrood TV using the search engine of your choice.
Scott gives a good rebuttal of the IFS claims but he shouldn’t have gone to the bother of doing the sums. The whole deficit argument is a smokescreen.
The deficit is not the problem. The man from the IFS is either economically illiterate or (more likely) he’s ideologically opposed to “big” government.
This article from JK Galbraith explains how government borrowing/deficits are just another way of moving money through the economy and why they are essential during a recession when private money is largely stagnant:
link to thenation.com
Matching Osborne’s deficit reduction plans in an independent Scotland would be a monumental mistake, pushing us further into economic stagnation, making it even harder to absorb the costs of separation.
But worse, continuing with the charade of deficit reduction would divert us from the real problem which is private debt. Our insane system of allowing banks to create the money that we need in the form of debt means that the only way out of recession is to get deeper into debt.
At some point the repayments on our private debts will overwhelm the rest of the economy. This will happen sooner or later unless we reform our banking system.
The rest of it – deficits, independence, Trident, monarchy – is frankly irrelevant compared to the private debt problem.
great article scott, you never mentioned crown estate though, nice little earner
link to thecrownestate.co.uk
“We delivered a strong financial performance for the year ended 31 March 2013: our net revenue surplus (profit) of £252.6 million represents an increase of £12.4 million, or 5.2 per cent on last year’s profit. Capital value was £8.6 billion, up 7 per cent on 2011/12.
During the past 10 years we have seen our net revenue surplus grow by 43 per cent and delivered a total of over £2.1 billion to the Treasury for the benefit of the nation. We have also seen an increase in the value of the property portfolio in the last decade and generated capital growth of 105.6 per cent and an annualised total return of 11.96 per cent.”
“unanswered questions is largely out there in the public domain. Unfortunately, folk need to go out there and check it for themselves, which is precisely why sites like this one are so important. ”
This is of course a bit of a red herring often brought up by people wh either havn’t asked the questions that “havn’t been answered” or have asked and then looked away as they passed the answer by.
Scott, excellent analysis as always, but do we have any figures for the oil exploration and production licences? That’s a figure I don’t think I’ve seen anywhere, but I would imagine it is probably quite a large figure.
The other thing, as pointed out by schrodingers cat, that should be considered is the Crown Estates. This is an anachronism that should be sorted out post independence. Another heap of money there.
As Holebender says, why use the BBC when we have our own Parliament with its free for everyone TV.
Watch FMQs live or any other debates you fancy:
link to scottish.parliament.uk
If you want to catch up on the latest Lamont rant, so be it:
link to scottish.parliament.uk
No Iplayer needed and world-wide, voila!
Furthermore, if Scotland is independent and takes our geographical share of oil revenue, doesn’t that make the rump UK needing to raise tax even more?
@Truth
Yes. The stats for the rUK are worse than for the UK (incl Scotland), however this article was looking at the impact on Scotland in either option.
@Truth
BUT if you’re interested, for the rUK they would be £486.1bn raised in taxes and £630.5bn in spending (based on 2011-2012 figures) – a deficit of £144.4bn and requiring taxes to rise by 29.7% to plug the gap (IF as the IFS say about an independent Scotland – ONLY taxes were used)
Can someone tell me what happens to the tax revenue from sales of petrol – what is the value of that to the treasury and what would it be to the SG after independence. We hear a lot about corporation tax from oil companies (ie “oil money) but how much is the tax we pay on fuel?
I agree with dissection of rubbish article in The Herald but there is definitely a short term trend downwards in crude oil prices. Retail gas in Tennessee, Arkansas & Texas fell below $3 a gallon this week & I haven’t seen that for some time
WTI Crude is trading at under $97 while Brent is under $109. There is definitely a Q3/Q4 trend downwards but crude is still trading at double the price it traded at 5 years ago.
Lamentable wants blackouts
Remember Labour’s three day week.
The UK gov has failed to invest in Energy, using the North Sea Gas/Oil revenues to keep taxes low/evaded in London S/E. Energy companies hav to keep reserves or the lights go out, and they would be running to to the Gov for bail outs. Now the North Sea Gas has become more expensive (taxed by the UK gov at 34%), Gas is being imported in the rest of the UK putting monies on the UK balance of payment deficit. Statoil has been awarded Gas supply contracts.
Coal is much cheaper/plentiful than Gas. Hulne refused permission for a CC Project at Longannet in Fife. A tridal barrage Project (Humber?) was abandoned £9Billion as too costly.The Dinard Tidal barrage was built in 1960. Yet Westminster is conspiring to commit £15Billion (without decommissioning costs) to a nuclear plant beside the sea. The dearest, dangerous and dirty. Where will the waste be stored. Nuclear plants being built in Finland/France are years over tim and budget. (7years)
Renewables are the cheapest and the safest. Westminster has cut solar buy back from 42p to 21p. Now older peole who could afford to install them will not see a return on the investment. Scotland is self sufficient in fuel and energy. A 25% surplus but pays a higher cost because it Is colder. A 10% tax on the Scottish economy. Scotland should pay 10% less per unit. The rest of the UK should pay 1% more for equality.
This article should be printed in the MSM. The MSM want the right to freedom of speech while it censors others.
The present trial Karma.
Just great Scott. I love the way you deconstruct all this stuff. Makes me mad reading what’s printed about the impending doom of independence when it’s all bollocks. And I just loved the Evening Standard piece. Their apoplexy about the scrounging jocks is simply hilarious.
Like a most people in this thread, I’ll definitely use this analysis.
Excellent forensic economic analysis. More of the similar available at the Business for Scotland website, superbly analysed by Gordon McIntyre-Kemp. He has dissected the GERS reports to produce unchallengable conclusions on Scotland’s ability to go it alone in Europe.
The big challenge for us is to transmit this message to the man in the street who is going to go to the polls on 18th September 2014, in the face of stunningly biased coverage by our supposedly neutral national broadcaster.
[…] from last month’s report from the IFS telling us much the same thing is not entirely clear. That was the one that said an indy Scotland would have to double taxes, as it would be magically unable to raise revenues any other way due to a curse put on it at birth […]