“UK government figures make it absolutely clear that Scotland has subsidised the rest of the UK in most of the last 40-year period.” Ian Blackford
Ian Blackford, the leader of the Scottish National Party in the House of Commons, has been making the case for Scottish independence ahead of the general election.
The SNP are calling for a second independence referendum and say: “Next year we intend to offer the people of Scotland a choice over their future.”
The last referendum in 2014 was marked by heated debate over the economic prospects of an independent Scotland, and Mr Blackford repeated a claim that was put forward by nationalists at the time, that Scotland has historically “subsidised the rest of the UK”. Is it true?
Ian Blackford said Scotland “has subsidised the rest of the UK in most of the last 40-year period”.
The only statistics we know of that cover four decades of Scotland’s finances are these experimental data published by the Scottish government in 2013.
But there are a few difficulties. The stats only cover 1980/81 to 2011/12 (that’s 32 years), and recent years are missing.
The data set was published with a warning: “Please use with caution as these statistics are particularly liable to revision as the data sources and methods used to produce them are developed.”
But they haven’t been updated or revised since 2013.
Higher tax revenues from Scotland
Bearing all that in mind, the 2013 figures do show that Scotland paid more per head into the coffers of the UK government than Britain as a whole in every year from 1980/81 to 2011/12.
This is at the heart of the “Scotland subsidises the rest of the UK” argument. The higher tax revenues are largely explained by the fact that most of the UK’s oil and gas assets are located in the North Sea, off the coast of Scotland.
The geography is important because nationalist forecasts of an independent Scotland’s future wealth often depend on the idea that would be given a “geographical share” of the North Sea assets after independence.
This point has never actually been conceded by the UK government. Its position throughout the 2014 referendum was that the division of UK assets and debts would all be up for negotiation after an independence vote.
Nevertheless, official statistics on Scotland’s finances calculate how much tax revenue from a “geographical share” of North Sea oil and gas flows into UK coffers.
If you accept that the most of the oil and gas assets are really “Scottish”, it’s right to say historically, Scotland did often contribute more per capita than that UK average, particularly in the 1980s, when oil prices were sky-high and North Sea hydrocarbons were very lucrative for the UK.
The other side: public spending
But there is another side to the argument: tax receipts have often been higher per head in Scotland, but so has public spending.
Back in 2013 Professor Brian Ashcroft of the University of Strathclyde looked at these experimental figures and found that the extra spending per capita on Scotland cancelled out the extra tax revenue almost exactly over the 32 years covered by the stats.
In fairness to nationalist arguments, the Ashcroft analysis did show that Scotland paid in slightly more than it took out per head, if you accepted that interest payments on UK debt should be subtracted from the accounts.
The idea here is based on a counterfactual that an independent Scotland would have generated a large surplus when oil prices peaked in the 1980s, and would have had lower borrowing costs than the UK.
So it is possible to construct the argument from these figures that Scotland paid slightly more in tax than it received in public spending per head from 1980/81 to 2011/12 – largely driven by the oil boom years of the ’80s.
But the calculation all depends on which years you include in the analysis, the assumption that most North Sea oil and gas is “Scotland’s” and the controversial idea that taxpayers in a hypothetical independent Scotland of the past would have paid little or no interest on national debt.
It would be interesting to update Prof Ashcroft’s findings to construct a time series of fully comparable data. But the Scottish government has not updated the experimental statistics since 2013.
We do have official statistics on Scotland’s finances, covering subsequent years.
These Government Expenditure and Revenue in Scotland figures cover 1998/99 to 2018/19, and include revisions to some of the historical data included in the experimental release.
But they don’t cover the 1980s, or tell us whether estimates for those years included in the experimental data would now be revised.
The only figures we can find that go back far enough to shed any light on Ian Blackford’s claim are experimental stats published in 2013 which cover the 32 years from 1980/81 to 2011/12. They were marked “particularly liable to revision” – but the Scottish government has not revised them.
Back in 2013, it was possible to use these figures to back the idea that Scotland paid slightly more into the UK’s coffers than it took out. That’s if you add up the tax and spending in those years cumulatively, and if you make a number of assumptions about Scotland’s finances, all of which are subject to argument.
But the overall balance was close, according to one detailed analysis: even making concessions to nationalist arguments about Scotland’s likely historic debt, higher UK public spending on Scotland almost completely cancelled out any surplus created by “Scottish” oil.
The fact that the Scottish government has not updated or revised these figures since 2013 makes it impossible for us to stand up Mr Blackford’s claim at the moment.
The lack of directly comparable data for the most recent years is particularly important, because oil prices crashed after these experimental figures were published, weakening the fiscal position of a notional independent Scotland.
An SNP spokesman told FactCheck: “We have demonstrated to you using official government statistics that Ian Blackford’s comments are correct. The evidence shows that tax revenues per head in Scotland have been considerably higher than the UK – that has unquestionably subsidised UK public spending over the period.
“We have also demonstrated how your argument about public spending does not take into account the costs to Scotland of servicing UK debt that would not have been required had we been independent. There is nothing you have presented that suggests Ian Blackford’s comments were not true.”