The subsidy myth BUSTED

Does Scotland really have a £12.6 billion deficit?  Here's why Government Expenditure and Revenue Scotland (GERS) figures would have very little to do with the finances of an independent Scotland.

Scottish money

If anything, Government Expenditure and Revenue Scotland (GERS) figures are actually an argument for independence, and not against.  Because they only cover the current situation, and they expose exactly how badly Scottish tax payers cash is wasted by London.  When you compare the amount that Westminster spends on Scotland's behalf in a variety of areas to the budget of other countries with a similar population, it really doesn't make any sense.

First of all, take a look at the video above, of a Tory MP called David Mowat, actually admits in the House of Commons that Scotland is not in fact subsidised, and that any extra spending allocated to Scotland is merely based on oil revenues previously generated in Scotland.

Mowat explains, that rather than being subsidised, the Barnett Formula means that Scotland is being drip fed money that's actually owed to us by England, because we have paid more than our fair share into the union.

Mowat explains in the video "The extra money that Scotland gets, sixteen hundred per head, has been paid for by Scotland's oil."

Now let's look at where the UK Government claim that Scotland's money goes, and let's compare this with how much money we could spend in these areas if we were an independent country.

Scotland's share of the UK defence budget - £4.2Bn

An independent Scotland could follow Ireland's example and spend £0.6Bn by being militarily neutral.

Potential saving = £3.6Bn 

Scotland's share of the UK foreign aid budget - £1.2Bn

An independent Scotland could spend - £0.5Bn. (Ireland spends around that amount.)

Potential saving = £0.7Bn 

Scotland's share of the UK debt repayments - £4.3Bn

An independent Scotland could negotiate this down to just £1Bn. That's widely believed to be a sensible compromise.  Remember, it would be highly unusual for a break-away state to contribute to the debts of the country it becomes independent from - can you think of a single example where this actually happens?  But let's be generous and say we would honour "our debt" and pay £1Bn per year.

Potential saving = £3.3Bn

Scotland's share of the UK Capital Investment budget - £7.4Bn

An independent Scotland could spend £5.4Bn (roughly the same as Ireland) and it would still mean more is actually spent in Scotland.  (At the moment, Scotland pays a share of massively overpriced English projects that will never benefit us, such as the HS2.)

Potential saving = £2Bn

Scotland's share of UK wide General Government costs is currently £2Bn.

An independent Scotland would not have to pay to run Westminster, the House of Lords, or the various UK Government departments so could reduce this to £1bn in line with Ireland.

Potential saving = £1Bn

So that's £10.6Bn total savings.

That means Scotland's "deficit" on day one of independence would be a very healthy and normal deficit of just 1% of GDP, and not the ridiculous 7.2% of GDP as is the current situation, while a part of the United Kingdom.

So in real terms, you could say that Scotland is subsidising the UK by £10.6 billion per year when you compare it with the amounts that an independent Scotland would need to spend.

This also means, that Scotland's budget deficit would be around HALF of the UK's as it currently stands. The UK's budget deficit was 1.9% last year.

It also means that we could potentially increase spending in essential areas such as health, housing, pensions and education.

Scotland sent £62.7Bn tax revenues to London in the last financial year.

However, this year the Scottish Government's budget will be just £34bn.  The Scottish Government balances the books to the penny, and even had surplus funds left over at the end of the last financial year.  ScotGov had £450 million pounds left over last year, so far from having a deficit, the Scottish Government spends money very wisely, and very much within budget.

The rest of Scotland's finances are spent on our behalf by the UK Government.  The spending decisions in relation to these funds are currently made by Boris Johnson and the Conservative party. 

And in any case, the UK Government actually decide how much the Scottish Government will be allocated as our budget, so any "deficit" in Scotland is entirely a decision for Westminster, and the Scottish Government actually don't have any power to make this decision in the first place.

So the very premise that Scotland has a deficit is disingenuous at best and deliberately misleading at worst.

Ireland had £49.2Bn in tax revenues last year.  Scotland had £13.5bn MORE than Ireland and with a similar population.  Scotland therefore is a relatively rich country with massive potential.

Of course, Scotland would do things differently than Ireland.  There is a very strong belief in Scotland for example, that the health service should remain free at the point of need, and that social housing should continue to remain a priority.

Now let's not forget, that there could potentially be lots of other areas where savings could be made.  I am not an economist, or an accountant, but it doesn't take a genius to take a look at the figures, to compare them to a country with a similar population and to recognise that something doesn't quite add up.

It doesn't take a genius to figure out that an independent Scotland would no longer have to contribute to English infrastructure projects, the House of Lords or the House of Commons, would not need to spend ridiculous amounts on defence, would spend less on capital Investment and would not be forced to pay massive amounts of debt racked up by Westminster.

The Scottish Government are discussing the idea of releasing an alternative to the Government Expenditure and Revenue Scotland figures, detailing how the finances of an independent Scotland could compare, to the current financial state of Scotland's place in the union.

It is absolutely imperative that the Scottish Government begin to release that alternative set of figures this year, and that we begin to combat the subsidy myth properly.  Because the simple truth is, most working class people are too tied up in their own lives to sit down and study these things by themselves.

We need a clear, simple and concise response that can be brought to the attention of the masses every time the UK Government wave around the 'GERS' figures.  We need to say, "and here's what it would be like if we were independent."

Come on ScotGov, get it sorted.


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