Home Economics Of Course Scotland Has A Budget Problem

Of Course Scotland Has A Budget Problem

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Another day another report showing that an independent Scotland would have a budget problem. Of course, this means that we are mere moments away from an intemperate outburst from Richard Murphy – it’s all lies cooked up in London no doubt.

The base point being made is that Scotland is slightly poorer than England therefore taxes levied at the same rate – as they largely are – raise less money. Scotland also spends slightly more on everything. So, the deficit between taxes and spending is larger.

Note that this isn’t an insurmountable problem. Scotland could carry on doing what it’s doing by tweaking – well, a bit more than tweak, but perhaps move to Scandi levels of taxation – the revenue side and continuing to spend. It could also slice away at the spending side a bit and balance that way. It could even go for the Singapore on Clyde model, get some serious economic growth going and get out of it that way.

We could even say that this would be the point of Scottish independence. They get to work out which they’d like to do without interference from the English. And there’s no rational insistence that independence must be purely economically beneficial – Brexit may or may not turn out to be in these first few years, Irish independence certainly wasn’t.

People in Scotland benefit from a ‘union dividend’ of more than £2,500, almost 30 times higher than the average English resident, research by an influential think tank has found.

The Institute for Government (IfG) found that in 2018/19, the most recent year for which full UK-wide figures are available, Scotland ran a deficit of more than seven per cent while England’s was just 0.3 per cent.

From the report:

Most of the difference between the deficit per person in Scotland and England is
explained by higher levels of spending in Scotland on domestic public services.
Spending in Scotland is higher per person on all areas of public services. The
biggest absolute differences are in spending on education (in part reflecting free
university tuition), housing and community amenities (including greater investment
in building and maintaining social housing) and transport (including higher spending
on roads and subsidies for ferry and air services to the Scottish islands).

At which point we English should be gagging for that IndyScot thing. That may be how the Celts and Picts wish to live. Great, off they go then and we can stop paying for them to do so. Have fun, good luck, Sayonara and all that.

They’ll just have to work out how to cover that gap between income and expenditure themselves.

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