Cuts after 1979 Referendum highlight Westminster threat to Scotland's finances

by Angus Millar

Scotland was singled out for draconian cuts by Westminster after Scots failed to back devolution by a large enough margin in the 1979 referendum, newly discovered UK Cabinet papers have shown.

The revelation, reported in today's edition of the Herald, that the UK Government of the time attempted to impose swingeing cuts over and above what should have been allocated to Scotland raises serious questions over the future of Scotland’s funding arrangements should there be a No vote in next year’s vote on independence, with some Tory politicians already calling for targeted cuts to Scotland’s budget.

The newly discovered papers show that in 1980, after Margaret Thatcher’s Conservative government came to power and began to massively reduce public spending, Scotland was in line for £256million (£743.4million in 2013 prices) worth of cuts under the Barnett formula, the system under which Scotland’s budget is set by Westminster.

But Scotland, unlike the other countries of the UK, was then targeted for an additional £150million of cuts – or £435.6million in today’s money.

The move was justified by the Tory Chief Secretary to the Treasury, John Biffen, on the grounds that public spending per head was higher in Scotland than in England, but Scottish Secretary George Younger tried to fight off the disproportionate cuts, saying that it would be a “political disaster” for Westminster.

Mr Younger wrote to Prime Minister Margaret Thatcher, arguing that

“to [carry out the cuts] within 18 months of the referendum and at a time of the highest unemployment since the war would be very hard to justify”,

and warned his Cabinet colleagues against “discriminating against Scotland”

The Scottish Secretary’s intervention managed to block some of the cuts, but Mr Younger was still forced to agree a spending reduction greater than Scotland should have been allocated under the Barnett formula.

The attitude of the UK Government at the time that Scotland gets more than its fair share in public spending is one which is still shared by many at Westminster today.

Tory MP Priti Patel last year suggested that a No vote in the independence referendum would provide a “good opportunity” to slash Scotland’s funding.

Ms Patel, whose parliamentary candidacy was fast-tracked by David Cameron and who is seen by many as a rising star of the Conservative Party, claimed that Scotland is “getting a better deal than the rest of the country” and called for the Barnett formula to be reformed so that Scotland would receive less money.

And last month it was reported that council leaders south of the Border are to campaign for the Barnett formula to be scrapped completely, with local authorities in England "envious" of the powers and comparatively high standard of public services that Scotland enjoys.

But the attitude of Ms Patel, and a great number of her colleagues at Westminster and in English local authorities, betrays a lack of understanding of Scotland’s financial position within the UK. Although Scotland does receive a greater level of public spending than England does, we also contribute a disproportionate amount in taxation.

In fact, in 2011-2012 Scotland, with 8.4% of the UK’s population, generated 9.9% of UK revenues but only received 9.3% of public spending back from Westminster. That gap amounts to £824 for every man, woman and child in Scotland.

And in each of the last 30 years our tax receipts have been higher than those from the rest of the UK.

Scotland more than pays its way within the Union, but in the face of Westminster austerity our financial position in the event of a No vote is uncertain. Scotland’s budget has been slashed repeatedly by Westminster in recent years, jeopardising our ability to provide high standards in vital public services like schools and healthcare, and the prospect of changes to the Barnett formula means we could see Scotland being even further disadvantaged.

With a Yes vote, Scotland will have full control of its own resources, harnessed to create a more prosperous future for our country. The powers of an independent nation would give us the chance to build on our strengths and deliver a more successful economy, meaning better quality jobs and more opportunities for the people of Scotland.

To leave control over our finances in the hands of a Westminster government which we didn't elect – and which has imposed upon Scotland an agenda of austerity cuts roundly opposed by a majority of our people and MPs – would be a decision which many in Scotland would live to regret.

But with Scotland’s future in Scotland’s hands, we can have control over how best to manage our wealth of talent, skills and resources. With a Yes vote, we will have the full say over our public finances, meaning we can protect and improve upon the public services we have chosen to provide – allowing us to create a more prosperous and successful society and increase standards of living for the people of Scotland.

Economy, Government, Welfare state