Friday, September 05, 2014

Scotland's figures just don't add up

Dodgy statistics dog the Scottish independence debate. How will an independent nation survive without North Sea oil revenue if the wells run dry? Can it survive financially even with the oil money?

I’ve had a look at some of the figures and all I can say is it’s no wonder the politicians on either side of the great divide can’t agree on anything.
For instance, HMRC has tried to split up its revenue by country.

On the basis of HMRC’s sums, Scotland delivered tax receipts of £42 billion in 2012-13, nine per cent of all UK tax revenues, if you include North Sea oil revenue (£37.8 billion, or 8.2 per cent, if you don’t).

But the BBC says Scottish revenue was £53 billion in the same year.

Curiously or not, this is the sum the Scottish Government also says the country raised in the same financial year.

There is, therefore, a huge gap between the supposed income from taxes in Scotland claimed by its Government and the sum claimed by HMRC.

SNP leader Alex Salmond says Scotland generated tax revenues, in 2012-13, £800 higher per head than the UK as a whole.

‘For every one of the last 33 years, tax receipts have been higher in Scotland than the UK,’ he said.

That’s questionable. What is less debatable is that Scotland’s public sector spends more than the rest of the UK per head. Again the figures vary wildly but one version puts the figures at £10,125 per head in Scotland compared with £8,788 in England.

Another has it at £12,300 for Scotland, £11,000 for the UK as a whole.

The UK Treasury says Scotland gets 14-16 per cent of Government spending; the Scottish Government puts it at 10-12 per cent.

What is less in dispute is that Scotland spent £65.2 billion in 2012-13. That’s a deficit of £12.1 billion (or considerably more depending on where you start from).

Still, the UK is overspending too, so what does it matter?

Well, Scotland’s deficit, even if you give the Scots all the oil money, represents 9.3 per cent of the UK national debt. Yet its population is only 8.3 per cent of the population.

That means the country is earning less and spending more than the nation as a whole. The UK overspent in 2012-13 by £2,031 per head; Scotland overspent by £2,285 per head.

It’s not a yawning chasm but it means Scotland is about 12 per cent more profligate than the UK as a whole even if you hand the country all the oil revenue.
If the oil dries up, it will have to borrow more money to balance the books – or it will have to impose the sort of spending cuts Mr Salmond rules out at every opportunity.

The Treasury’s Office for Budgetary Responsibility reckons North Sea oil revenue will fall from £5.581 billion in 2012-13 to between £3.6 billion and £3.2 billion over the next few years to 2019.

Luckily the Scottish Government has the answer.

The Scottish Government has decided its oil revenues won’t decline at all, or only by a small amount. Its statistics claim oil money will come in at between £4.8 billion (a fall of £900 million) and £8 billion (an increase of £2.5 billion).

Of course if we could predict future oil prices we’d all be millionaires. But as the Scots seem interested only in short-term pain or gain, it’s a pity, if not an impending national tragedy, that the numbers vary so wildly.

It is no wonder the two sides of the independence argument can’t agree on anything.

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