Saturday, 26 July 2008

Does Scotland really need England?

It has long been received wisdom that Scotland is dependent on English taxes. Commentators will quote the unfairness of the Barnett formula, and from time to time the papers will get themselves into a froth over per capita government expenditure in Scotland being £3k a year higher than England. Or whatever. So I was a little surprised this week when a report from Oxford Economics virtually slipped under the radar.

The 'Standard' carried a paragraph yesterday:
London and the South-East's subsidy to the rest of the country is rising rapidly and is now nearly £40 billion a year compared with just over £20 billion in 2004. The study by Oxford Economics balances Government spending against tax revenues in each region. It shows that London, the South-East and the Eastern regions made a net contribution of £37.7 billion to the UK public finances in 2007. The North, the Midlands and the South-West joined Northern Ireland, Wales and Scotland as a net drain on the Exchequer.

Which prompted me to find the original report to see exactly how much Scotland's deficit is running at. And was astonished by the data - most easily understood in the graphs below. Scotland is very nearly fiscally balanced; Salmond would only need to raise an additional £2bn a year in taxes from the Scots to break even. It seems what London and the South East is really paying for are public services in Wales and Northern Ireland. Which makes the DUP's recent treachery over 42 days even more galling.

3 comments:

Blue Eyes said...

I am shocked that the worst "offender" is the north-west which has supposedly been re-defining itself recently. It turns out this renaissance has been entirely at my own expense!

Newmania said...

I have thought for a long time that Scotland was pretty much balanced and if you take the Oil into account they are not doing all that well.
What strikes me is how badly the South West does

Oh I am blogging again on ocassion

hatfield girl said...

At a general election victory for the Conservatives, Scottish former Labour voters will move to the SNP in Labour Westminster seats as they did in Glasgow East. There will have to be a rebalancing of the Union or we will lose it altogether. Scotland is a rich country in every aspect, and its diaspora is as supportive as are the Jews to Israel. (well, there are obvious exceptions, but he's a bit odd).