Time for serious home economics

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by Hazel Lewry

Now that the post-election dust has settled, the question of what Scotland is worth needs to be answered before any in depth discussion of voiding the treaty of 1707 should take place.

Scotland and England both need to sit down and be frank, open and honest with each other about the current state of each respective nation’s finances. Who is supporting who? Are both in the red? One thing is certain, both are not in the black. This frank discourse will not happen without a fight from Westminster and even then both countries are unlikely to get an accurate accounting from Whitehall, who give every appearance of being past masters of obfuscation.

Knowing their true value is the only possible way both nations can get past the propaganda. Get past the media blitz that will tell us Scots we are “too wee, too poor or too stupid” to make it on our own. The media blitz that will tell us we are going to “tear apart” a nation (not place two back on their proper course). The media blitz that will tell us “divorce is costly” reminding us to “think of the consequences” while hammering home that there are rarely winners in a divorce. The media blitz that will try to undermine Scotland’s confidence in herself. England can expect to be largely unaffected by this propaganda war.

The “war” has already started, but even the English media can’t figure out the numbers, so well are they hidden by Westminster/Whitehall. The Independent asserts: “Public spending in England is significantly lower than in Scotland and, thanks to the idiosyncratic wonders of the Barnett formula, each Scot is subsidised by more than £1,500 per person per year from the Treasury. And there are also cultural reasons for envying the Scots. They seem to enjoy an intense feeling of national pride, for no reason other than that they are a small nation with a tiny GDP which exists in inverse ratio to their national ego.”

The Daily Mail believes: “The exact figures are disputed but the Labour Party calculates that UK subsidies are worth £14billion a year to Scotland – that’s £2,600 for every person in Scotland. And still the rotten sporran-danglers complain!” Actually, the Daily Mail appears to have the number almost exactly correct, at £14billion. They just have it the wrong way around.

The mainstream media will wage this ongoing war of confidence destruction with Westminster’s backing because David Cameron knows propaganda is the only real weapon remaining in his arsenal.

So before we can have any other serious discussion a most fundamental one is required – the finances and footings of the nations need to be laid bare in complete honesty. The GERS reports, Whitehall accounting et al, are magnificent exercises in obfuscation. They often under-report Scottish income (corporation tax is a prime example – an office in London equals the income allocated to England). They overstate expenses – Scotland’s share of the military and her portion of UK debt being excellent examples.

So if we cannot believe, or at least have reason to be highly sceptical of “official figures”, it must still be possible to verify their accuracy by other means, although only approximately. Investigative research indicates an examination of the revenues allocated to Scotland, then determining the taxable value. 5% plus or minus would seem a margin of error that could be accepted, any more would be heading past the sublime to the ridiculous.

The real issues are simple, they (UK proponents) are fighting for control of an economy worth in the region of £104,447,200,000 according to ONS, (multiplication of per capita GDP by population). The net value to the exchequer is around 37% of that number (the tax take).

This base calculation shows a number in the region of £38,645,464,000. This number might be expected to include all of Scotland’s “domestic product”. Nothing could be further from the truth.

Income from UK companies that derive revenue from the North Sea and are headquartered in London are not reported as Scottish income, but reported against English, specifically the SE of England and Greater London. According to projected 2011 data, North Sea oil adds a nominal additional £13,500,000,000 to the number.

A great quantity of “foreign” owned Scots whisky manufacturing is also excluded – hard numbers are difficult to obtain with much going through Holland – but appear to add several hundred million more.

Adding oil revenues to those bleeding offshore through foreign whisky holdings it is appropriate to allocate a very conservative £14,000,000,000 (£14 billion) to the above GDP tax take. This still leaves many other areas of potential revenue untouched/unreported/under-reported.

These figures show that Scotland, therefore, has a very conservative base economic value to the UK Treasury of about £38,600,000,000 + £14,000,000,000, or around £52,645,464,000. In simple numbers, that’s over £ 52.5billion.

Interestingly, the £52.5billion is a reasonable match for the Scottish National Accounts Project (SNAP) figure. Scotland’s block grant is about £30billion, and reducing.

Scotland’s share of the UK military should be around £3.5 billion, by capita, or 2% of GDP around £2billion. The UK spends far above normal levels on its military. Scotland’s share of diplomatic services and general civil service is about half that, or £1.2 billion. Somewhere around £1.3 billion is absorbed in unemployment payments. General social security gives the
appearance of accounting for another 3billion. The social security estimate was approximated from multiple sources.

Approximations of Scotland’s total expenditures should be somewhere around £38 billion. This is offset against a base projected income of £52.5 billion. A discrepancy of around £2.5 billion could have been discounted either way in these calculations, however a discrepancy approaching £15 billion, with swathes of potential income unaccounted for, begs some exceptionally serious questions of Whitehall.

These basic mathematics certainly answer why Westminster is, and has been in a state of desperation in its efforts to hold a disintegrating union together – Westminster can stop the obfuscation. It’s time to do so. Two nations need straight answers.

Until it does, will Holyrood have the guts to demand the answers of Westminster? Will Holyrood hold Whitehall to account?