Friday, 3 May 2013

A few home truths about Scotland in the British Union



According to right-wing newspapers and Tory MPs, the Barnett Formula is the mechanism that delivers financial largesse from England to the subsidy-junky Scots.

This definition is also regularly allowed to go unchallenged on television news and political programmes, such as Newsnight and Question Time. However, in reality, anyone who holds this view does not have a clue how the Barnett Formula actually works.

The bottom line is that the Barnett Formula is designed to ‘harmonise’ levels of government spending in England and Scotland. In other words, as Scotland currently has a higher per-head level of spending than England, Barnett works to reduce UK Government spending in Scotland. Far from being a mechanism that provides largesse to Scots, the Barnett Formula is designed to cut spending in Scotland.

The Westminster ‘Memorandum by the Independent Expert Group to the Commission on Scottish Devolution’ defines Barnett in these terms: “Other things being equal, and in particular the relative populations, Barnett will lead to convergence of public spending per head between the constituent parts of the UK.”

Another aspect of Barnett ignored by Tories and their right-wing friends in the UK mainstream media (including so-called Scottish newspapers and television channels), is that the reduction of spending in Scotland, compared to England, happens every financial year irrespective of need in Scotland. It should also be noted that what appears to be greater spending per-head in Scotland can, in many instances, be explained by the fact that it costs more to deliver the same level of service in Scotland where the disparate nature of our population-spread inevitably increases costs. For example, delivering a health service, roads network or policing to residents of the Highlands and Islands of Scotland cannot be done for the same cost as in much of England.

So, now that we’ve nailed the main lie about Barnett providing a good deal for Scotland, it’s worth looking at another aspect of the formula – what is often referred to in news reports as ‘Barnett consequentials’.

This is really important because, right now, UK Government decisions on policies applying only to England are actually having a negative financial impact for Scotland.

The Barnett Formula allocates to Scotland around 13p for every £1.00 spent by the UK Government in England and, as we saw above, this amount is reducing every year. The formula is applied to cover areas of government devolved to the Scottish Parliament. So, for example, for every £1.00 spent by the Tory-Lib Dem UK Government on delivering the health service in England, the SNP Scottish Government gets 13p by way of the block grant from Westminster to Holyrood.

However, the Tory-Lib Dem UK Government is currently privatising the health service in England and is slashing the amount of public money it spends on delivering the NHS. This means the SNP Scottish Government will have its funding correspondingly reduced – this is the ‘Barnett consequential’ of less money being spent in England – despite the fact the Scottish Government is committed to delivering what the people of Scotland want – a publicly-funded, publicly-run health service, free at the point of need and accessible to us from the cradle to the grave.

Scotland could also be about to suffer financially because of other decisions taken in London. Defence and the Armed Forces is ‘reserved’ to Westminster, so it is a policy area that is delivered directly by the UK Government, which means the Scottish Government does not receive any additional money. However, Philip Hammond MP, the Tory Defence Secretary, has publicly lobbied for no more cuts to his department’s budget, suggesting other areas of government should take bigger hits to allow Britain to retain its current level of forces and weapons.

Last week, the Daily Telegraph and the Times, both Tory-supporting newspapers, ran stories indicating the UK Government could be about to accede to Hammond’s demands by further slashing England’s spending on health and education to ‘protect’ defence funding. The difference is that both Health and Education are devolved to the Scottish Parliament, so further cuts in England will result in ‘consequential’ reductions in funding for Scotland’s services.

As for the lie that Scots are subsidy junkies dependent on hand-outs from England – a lie still being told by London-based politicians and their ‘Tame Jock’ partners in the pro-British Union ‘Better Together’ campaign – figures released in March show a very different picture.

Data published in Westminster’s Government Expenditure and Revenue Scotland (GERS) report for 2011/12 show unequivocally that Scotland had a stronger budget position than the UK as a whole – to the value of £4.4bn or £824 for every Scot.

GERS sets-out actual levels of tax and spending, revealing that, with a geographical share of UK North Sea oil and gas revenues, Scotland contributes a greater share of public sector revenues than it receives in UK public spending. The official statistics show Scotland contributed 9.9% of all UK revenues in 2011-12 but received only 9.3% of total UK public sector expenditure, including a per capita share of UK debt interest payments. Scotland’s population is 8.4% of the UK total.

The figures also show Scotland has significantly lower deficit levels than the UK. For 2011-12 the UK has a current budget deficit of 6% of Gross Domestic Product (GDP) or £92.3bn. Including a geographical share of North Sea revenues, Scotland’s current budget deficit would be £3.4bn or only 2.3% of GDP.

Current estimates of Scotland’s oil and gas resources put the wholesale value at around £1.5trillion, which alone represents more than 10-times Scotland’s share of the UK debt built-up by successive Westminster governments.

Even using the UK Government’s own figures, there is no doubt that Scotland more than pays its way. However, the reality of a devolved Scotland within the British Union is one where we continue to contribute our wealth to the UK Government and they allow us to have just some of it back.

Think about that situation: it is the equivalent of you receiving your wages but instead of taking them home, you hand them in to your neighbour in the big house next door. Your neighbour then gives you back some of your wages and allows you take some decisions regarding your home and your family.

You might be allowed a new carpet or to change the curtains in the windows, but your neighbour decides how much you get to spend on such things. Your neighbour in the big house next door also decides who comes and goes from your home, who you are allowed to talk to, your relationship with other neighbours, and even decides whether or not your children should be sent to fight with other children.

We would not accept that situation for our family or our home – so why do we accept it for our country?

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