GERS: Scotland’s got firm financial foundations to be a successful independent state

The evidence for Scotland’s strong financial and economic position is building with the publication of the latest Government Expenditure and Revenues Scotland report, covering the financial year 2012/13. What we know is that:

  • Scotland has generated more tax per head than the rest of the UK for each and every one of the past 33 years.
  • Our finances have been stronger than the UK’s over the past 5 years to the tune of £1,600 per person or £8.3 billion.
  • Looking forward, the White Paper confirms that our finances will be healthier in the year we become independent too.

GERS estimates the revenue raised in Scotland and the cost of public services in Scotland under the current constitutional arrangements. It covers all revenues and expenditures raised and spent for Scotland. It does not include different policy choices, like the £600 million we would save by no longer paying for things like nuclear weapons or sending politicians to Westminster.

The figures also show that, over the past 5 years, Scotland has generated 9.5% of UK taxes but received just 9.3% of UK spending.

Today’s figures provide strong backing for the recent findings by the Financial Times that “an independent Scotland could expect to start with healthier state finances than the rest of the UK”. It is no wonder that Standard & Poor’s, the global credit rating agency, has confirmed, “even excluding North Sea output and calculating per capita GDP [the size of our economy] only by looking at onshore income, Scotland would qualify for our highest economic assessment.” 

Tax revenues in Scotland are higher per head than in the UK

Total Scottish receipts in 2012-13 were equivalent to £10,000 per person in Scotland compared to £9,200 per person in the UK as a whole. We generated 9.1% of UK tax with 8.3% of the population in 2012-13.

On average over the past 5 years, public spending in Scotland as a share of national wealth was lower than in the UK. 

As in last year’s GERS, Scotland has been in a stronger fiscal position than the UK in four of the last five years. In cash terms, Scotland’s relatively stronger fiscal position compared to the UK over the period 2008-09 and 2012-13 was equivalent to £8.3 billion or £1,600 per person. This means public services in Scotland have been consistently more affordable than for the UK as a whole.

Scotland wealthier per head than UK

The GERS figures follow confirmation that Scotland is the 14th wealthiest nation in the developed world (OECD) compared to the UK at 18th. Once again, this backs up the findings of the Financial Times which said Scotland’s wealth per head was higher than the UK’s. Including oil & gas, the FT said, we are also wealthier per head than France, but even excluding oil & gas we are still wealthier per head than Italy.

We spend a smaller share of revenue and total wealth on things like pensions and welfare – making them more affordable

In each of the past five years, a smaller percentage of our tax revenues was spent on social protection, which includes welfare and pensions, compared to the UK. Spending on social protection as a share of GDP has also been lower in Scotland than in the UK in each of the past 5 years:

Healthier public finances than the UK

GERS provides two measures of Scotland’s fiscal position, the current budget balance (the money spent running public services) and the net fiscal balance. The net fiscal balance includes capital investment, such as the construction of roads, hospitals and schools, which yields benefits not just to current but also future taxpayers. 

On average over the past 5 years, Scotland had a stronger current budget balance than the UK as a whole

We ran a current budget surplus in 2005-06, 2006-07 and 2008-09.  The UK last ran a current budget surplus in 2001-02. 

On average over the past five years, Scotland had a smaller net fiscal deficit than the UK as a whole

Taken together, what the latest GERS report confirms is that Scotland is very well placed for independence. We've got what it takes, financially and economically, to be a successful independent nation.

Economy, Government


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