‘Scots give £853 a head to England’

DOUGLAS FRASER, Scottish Political Editor
July 04 2006

A NEW front opened up yesterday in the political war over Scotland's financial relations with the rest of the UK, with the SNP publishing figures that claim the UK depends on Scotland.

Alex Salmond, the Scottish National Party leader, set out figures that suggest the surplus being sent from Scotland to the Treasury this year will amount to £853 per person in Scotland. That assumes Scotland can be credited with most of the booming revenue from North Sea oil, and that Scotland can avoid its share of this year's UK budget deficit, estimated at £38bn. The claimed surplus would fall by more than three-quarters if Scotland carried its population share of Gordon Brown's borrowing requirement.

The SNP claims contrast with those made by opponents of Scottish independence that the imbalance in spending between Scotland and the rest of the UK means a "subsidy" of £1500 per head is spent by the Treasury on Scotland. They reflect the party's concern that the current debate about Scotland, being fuelled by Tory opposition to Gordon Brown as Labour's next leader, is seeing the idea that Scotland is subsidised by England becoming more firmly established. Mr Salmond attacked Jack McConnell for supporting that argument, saying the First Minister should be doing more to argue Scotland's position, instead of courting controversy with his support for England's opponents in the World Cup.

The new analysis by Stewart Hosie, the party's economic spokesman at Westminster, takes British government estimates of the share of expenditure and revenue, and adjusts them for spending on defence and the civil service in London, which the SNP sees as a net benefit to England. There are also adjustments for spending that is not counted in parallel for England and Scotland.

For instance, the SNP says the government's figures count Scottish courts and prison costs as Scottish expenditure, but English courts and prison costs do not count as such in England.The latest figures address the current or static position for the national accounts, adding to a complex picture in which Nationalists and their critics also argue over the historic position of money flows between Scotland and the Treasury, and the potential Scotland has in transition to independence and afterwards to sustain current spending levels.

The battle has become more important 10 months from the Holyrood election, with opinion poll evidence that the SNP is gaining at Labour's expense.A more sceptical view of independence was yesterday published by economists at the Fraser of Allander Institute, an economic think tank at Strathclyde University, which found that full taxation powers at Holyrood would lead to an unstable economy, services being cut and tax increases.

Mr Salmond yesterday dismissed the work, authored by the institute's director, Professor Brian Ashcroft, as politically biased.The SNP is stepping up its campaigning, even though the Holyrood parliament has just begun its summer recess, with Mr Salmond setting out environment policy in a speech later this week and then seeking to pre-empt Whitehall's energy review.

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