New figures show Scotland’s finances are worse than the UK’s

The findings will reignite the debate about the sustainability of a fiscally independent Scotland

 

Scotland’s public finances remain worse than those of the UK as a whole, according to the latest official data published today.

The annual Government Expenditure & Revenue Scotland (GERS) statistics for 2013-14 have shown that falling tax revenue has resulted in a financial deficit north of the border that is more than 40 per cent higher than the rest of the UK.

According to the data, with North Sea Oil revenues included, Scotland was £12.4bn in the red in 2013/14, down from £14.3bn the previous year. This represents a deficit of 8.1 per cent of GDP, compared to the UK figure over the same period of 5.6 per cent,

Meanwhile amidst dramatic falls in the value of oil, more concerning still for Scotland is the news that excluding North Sea revenue, the deficit was £16.4 billion, equivalent to 12.2 per cent of GDP.

The difficult financial position faced in Scotland can be traced to the news that, excluding oil, Scottish onshore tax revenue in Scotland was £50 billion or £9,400 per person, £300 less than the UK average figure.

Including an illustrative geographic share of North Sea revenue, however, total public sector revenue is estimated in Scotland to be at £54.0 billion. This represents £10,100 per person, £400 more than the UK average.

The figures will reignite the debate about the sustainability of a fiscally independent Scotland that would be so reliant on revenue from North Sea Oil.

The GERS data comes also as first minister Nicola Sturgeon’s assertions on debt under SNP plans were contradicted by the Institute for Fiscal Studies.

In February Ms Sturgeon argued that limiting real terms growth in departmental spending to 0.5% a year “would reduce debt as a share of GDP in every year from 2016-17.”

Speaking yesterday to the David Hume Institute seminar in Edinburgh last night Paul Johnson, director of the IFS, argued that such a policy would in fact see debt increase slightly.

He noted also that there ‘is not a huge amount of difference between Labour and the SNP’ plans to tackle the defici,t despite Nicola Sturgeon’s assertion that the SNP plans would break Westminster’s ‘cosy consensus’ on austerity.

Politicians on all sides will make of the figures what they will in the ongoing debate about Scotland’s place, or otherwise, in the UK. But the IFS’s assertions will place yet  more pressure on Ed Miliband to rule out a deal with the SNP after the General Election.

Already taunted by accusations from the Conservatives that he is in the pocket of Alex Salmond, Miliband will need to think carefully about the impression it would give to voters nationwide if he appeared to be preparing to do a deal with the SNP whose plans would, on the IFS’s assertions, increase debt.

But then again, if he rules it out, could it close of his only real hope of making it to Downing Street?

It’s a tough shout, but no one ever said it would be easy leading the Labour Party.

Ed Jacobs is a contributing editor to Left Foot Forward. Follow him on Twitter

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