So here's a quick summary of the realities of Scotland's finances as presented in the Government Expenditure & Revenue Scotland (GERS) figures. These figures are produced by the Scottish Government and I show the numbers here assuming we Scots get to keep "our" oil & gas revenue.
I'm not trying to make any political point and will try to avoid revisiting old independence referendum arguments. My intention is merely to inform the debate, help the intellectually curious consider the implications of Full Fiscal Autonomy and - perhaps more constructively - help us all think about how our national economy works and what choices our elected representatives face.
Public Sector Revenue
All the figures here are most recent (2012-13) GERS figures quoted on a per cap (i.e. per person) basis. I often see Scottish figures compared to UK (including Scotland) which can lead to confusion - so the comparisons I use here are between the Scottish figures and the "Rest of the UK" (rUK) where rUK = UK - Scotland (which I think is less confusing).
So let's look at where public sector revenue is generated in Scotland
Revenues from consumption & transaction taxes (i.e. VAT and duties) are
+£36/cap or 1% higher in Scotland
+£36/cap or 1% higher in Scotland
- VAT revenues/cap are almost identical
- Stamp duties (i.e. property transaction taxes) are -£59/cap or 40% lower in Scotland
- Alcohol (+£28/cap, +18%) and Tobacco (+£67/cap, +47%) duties alone raise +£95/cap more in Scotland
Council Tax revenues are -£38/cap or 9% lower in Scotland (where we have of course had a council tax freeze).
Revenues from other wealth taxes (Capital Gains, Interest and Dividends) are only -£11/cap or 4% lower in Scotland.
Profits generated by publicly owned assets appear in National accounts as Gross Operating Surplus (G.O.S.). Mainly because Scottish Water remains in public ownership, G.O.S is +£194 or 47% higher in Scotland.
The sum of all the above largely explains why (before North Sea revenues are considered) Scotland raised -£163/cap or 2% less revenue than rUK in 2012-13.
Attribution of North Sea Revenues is clearly a controversial topic, but assuming we allocate the North Sea revenues to Scotland on a geographic share basis (as the Scottish Government prefers) in 2012-13 Scotland generates an additional
+£1.032/cap more than rUK.
The net effect is that Scotland can be shown to have generated +£869/cap or 10% more revenue than rUK in 2012-13
+£1.032/cap more than rUK.
The net effect is that Scotland can be shown to have generated +£869/cap or 10% more revenue than rUK in 2012-13
The relative significance of North Sea revenue to Scotland's finances is clear. In 2012-13 these revenues represented 10.5% of Scotland's Public Sector Revenue (1.1% of the UK's). In 2008-09 North Sea revenue was 20.9% of Scotland's Public Sector Revenue (2.4% of the UK's).
To put this 2012-13 figure into context let's look at North Sea Revenues over time. The figures below are total North Sea revenues (of which Scotland's geographic share ranges from 95% to 84% over the last 4 years). The dark grey bar is 2012-13; 2013-14 is now known (although full GERS accounts are yet to be published) and the OBR forecast for 2014-15 can be expected to be pretty accurate given we are now in Feb 2015. The dark red bar is the - ahem - "low" scenario used in the Independence White Paper (the lighter red the "high" scenario).
In absolute terms Scotland's North Sea revenues in 2012-13 were £5.6bn (£1.3bn below the White Paper figures) and we now know that by 2014-15 they will be around £2.4bn (£4.7bn below the White Paper low scenario).
We therefore already know that on oil & gas alone Scotland will be about £3.2bn worse off in 2014-15 than we were in 2012-13 (that's about £600/cap).
It's worth noting that of course some level of oil recovery is possible - but there are complicating factors that rarely seem to be considered
Of course with the figure above this still means we'll be generating more public sector revenue per capita than the rest of the UK to the tune of about £250/cap in 2014-15.
I guess that's what the SNP mean when they refer to oil & gas as merely a bonus. As long as we don't spend considerably more than the rest of the UK we shouldn't be any worse off as a fiscally autonomous country - so let's look at the spending side of the equation.
Public Sector Expenditure
Using the same methodology as for Revenue;
Expenditure on Welfare and Unemployment benefits are +£296/cap or 8% higher in Scotland than rUK. Given unemployment rates are almost identical this is presumably largely a function of greater levels of in-work-poverty in Scotland. This topic (in particular with respect to the National Minimum Wage level) is one I hope to return to.
Health expenditure is +£190/cap or 10% higher in Scotland than rUK. I haven't investigated this further but factors here will include the fact that the Scottish NHS is fully devolved, free prescriptions are given and (I think) the Scots are simply on average less healthy than those in rUK. The significantly higher alcohol and tobacco consumption implied by the duty figures above must be a factor here.
Education spend is +£75/cap or 5% higher - presumably largely due to the abolition of tuition fees in Scotland. Wiser heads than mind are grappling with the question of whether or not the Scottish education system is delivering a better education to all as a result of this.
Transport spend is +£240/cap or 85% higher as a result of lower population density and remote Scottish communities. This factor is rarely acknowledged when people complain about high profile transportation infrastructure investments in the rest of the UK.
Public Order & Safety (i.e. Police) spending is -£19/cap or 4% lower in Scotland than rUK.
Other areas which can be broadly defined as "social expenditure" are all materially higher than rUK. Across Public & Common Services, Environment Protection, Housing & Community Amenities and Recreation, Culture and Religion Scotland spends +£396 or 57% more than rUK. I must confess this figure intrigues me.
Expenditure on Enterprise and Economic Development is +£125/cap or nearly three times that in rUK. Agriculture, Forestry and Fisheries expenditure is +97/cap or more than double that of rUK.
International Services and Defence are allocated on a per capita basis already (and Full Fiscal Autonomy is normal interpreted as everything except foreign relations and defence - so the GERS figure are consistent with that principle).
It is worth noting that Public Sector Debt Interest is already allocated on a per capita basis in the GERS figures. This is consistent with Scotland having a per capita responsibility for the UK debt (which was widely accepted as the fair basis for allocation during Independence discussions). This should be remembered when the likes of Ms Sturgeon make wild statements about Scotland "putting in more than we get back" from the the UK. This statement is normally justified with dodgy comparisons of percent of tax raised with percent of spending received. The main flaw in this logic is that if you gave Scotland the same share of UK expenditure as it's share of UK revenue, Scotland would be responsible for its revenue share (not population share) of debt. It's also worth noting that even on this flawed basis of comparison, in fact in 2012-13 Scotland was responsible for 9.16% of revenue raised and received 9.29% of expenditure.
So when you add all of that up we actually spend +£1,382/cap or 13% more than rUK. Of course this higher spend more than offsets the higher Revenue we generate due to North Sea Oil such that the Scottish deficit is +£512/cap worse than rUK in 2012-13. In absolute terms that means we need to find about £2.7bn simply to be no worse off than the rest of the UK.
The higher Scottish spend/cap figure has been remarkably consistent over the last five years (ranging between £1,225 and £1,438).
Now may be a good time to remind ourselves that in 2014-15 we are likely to have a Revenue advantage over rUK of only maybe £250/cap - so we can expect to see a deficit difference to rUK of nearly +£1,100/cap.
Let's pause and think about that for a moment. If we tax and spend as we do today the accounts for a fully fiscally autonomous Scotland are likely to show that - for every man, woman and child in Scotland - we would be £1,100 a year worse off than if we continue to pool our lot with the UK.
Something would have to be done. Tax take would need to go up or public expenditure would need to be reduced. These are the economic realities from which we can't hide. Of course economic growth would help but it's hard to imagine how or why a fiscally independent Scotland would miraculously create growth (or how long it would take before it materially affected the deficit). We already spend a relatively high amount on Enterprise and Economic Development as well as Agriculture, Forestry and Fisheries - and it's worth remembering that EU rules constrain the level of government support that can be given to industry.
Now whether or not Scotland is fully fiscally autonomous (or indeed independent) the economic challenges we face are clear (and largely shared with rUK). To put absolute numbers against this - the GERS deficit for Scotland in 2012-13 was £12.1bn and the Oil & Gas revenues in 2014-15 are likely to be another £3.2bn lower giving us roughly a £15.3bn deficit problem to address.
The graphic below (a work in progress) attempts to put the sources of revenue (in Green) and areas of Expenditure (in Red) is some kind of relative context. All you have to do (given we know the oil & gas number is now much lower) is work out how you might find £15.3bn through higher taxes or lower expenditure to eliminate the deficit.
If that defeats you - on the basis that we appear set on devolving away Barnett benefits and driving to full fiscal autonomy - try and find £6.0bn or so to make us at least no worse off than being within the UK.
Please drop me a line when you've worked it out.
Addendum
Here is how the absolute Scottish figures have shifted over the last five years, which may be helpful in considering what it takes to move these numbers by £6.4bn (to be no worse off than the UK is now) or £15bn+ to eliminate our likely deficit right now.
Taking sources of funding first:
To put this 2012-13 figure into context let's look at North Sea Revenues over time. The figures below are total North Sea revenues (of which Scotland's geographic share ranges from 95% to 84% over the last 4 years). The dark grey bar is 2012-13; 2013-14 is now known (although full GERS accounts are yet to be published) and the OBR forecast for 2014-15 can be expected to be pretty accurate given we are now in Feb 2015. The dark red bar is the - ahem - "low" scenario used in the Independence White Paper (the lighter red the "high" scenario).
In absolute terms Scotland's North Sea revenues in 2012-13 were £5.6bn (£1.3bn below the White Paper figures) and we now know that by 2014-15 they will be around £2.4bn (£4.7bn below the White Paper low scenario).
We therefore already know that on oil & gas alone Scotland will be about £3.2bn worse off in 2014-15 than we were in 2012-13 (that's about £600/cap).
It's worth noting that of course some level of oil recovery is possible - but there are complicating factors that rarely seem to be considered
- 86% of the 2012-13 North Sea revenues came from corporation tax - that is taxation on profit. A halving of the oil price is likely to lead to far more than a halving of profits available to be taxed. This is what I mean when I say there is a non-linear relationship between the oil prices and North Sea tax revenues
- There is (sensible) talk of reducing the taxation burden on North Sea companies in response to the oil price slump. This may help save jobs - but again the North Sea tax revenue generated per barrel will of course be lower.
Of course with the figure above this still means we'll be generating more public sector revenue per capita than the rest of the UK to the tune of about £250/cap in 2014-15.
I guess that's what the SNP mean when they refer to oil & gas as merely a bonus. As long as we don't spend considerably more than the rest of the UK we shouldn't be any worse off as a fiscally autonomous country - so let's look at the spending side of the equation.
Public Sector Expenditure
Using the same methodology as for Revenue;
Expenditure on Welfare and Unemployment benefits are +£296/cap or 8% higher in Scotland than rUK. Given unemployment rates are almost identical this is presumably largely a function of greater levels of in-work-poverty in Scotland. This topic (in particular with respect to the National Minimum Wage level) is one I hope to return to.
Health expenditure is +£190/cap or 10% higher in Scotland than rUK. I haven't investigated this further but factors here will include the fact that the Scottish NHS is fully devolved, free prescriptions are given and (I think) the Scots are simply on average less healthy than those in rUK. The significantly higher alcohol and tobacco consumption implied by the duty figures above must be a factor here.
Education spend is +£75/cap or 5% higher - presumably largely due to the abolition of tuition fees in Scotland. Wiser heads than mind are grappling with the question of whether or not the Scottish education system is delivering a better education to all as a result of this.
Transport spend is +£240/cap or 85% higher as a result of lower population density and remote Scottish communities. This factor is rarely acknowledged when people complain about high profile transportation infrastructure investments in the rest of the UK.
Public Order & Safety (i.e. Police) spending is -£19/cap or 4% lower in Scotland than rUK.
Other areas which can be broadly defined as "social expenditure" are all materially higher than rUK. Across Public & Common Services, Environment Protection, Housing & Community Amenities and Recreation, Culture and Religion Scotland spends +£396 or 57% more than rUK. I must confess this figure intrigues me.
Expenditure on Enterprise and Economic Development is +£125/cap or nearly three times that in rUK. Agriculture, Forestry and Fisheries expenditure is +97/cap or more than double that of rUK.
International Services and Defence are allocated on a per capita basis already (and Full Fiscal Autonomy is normal interpreted as everything except foreign relations and defence - so the GERS figure are consistent with that principle).
It is worth noting that Public Sector Debt Interest is already allocated on a per capita basis in the GERS figures. This is consistent with Scotland having a per capita responsibility for the UK debt (which was widely accepted as the fair basis for allocation during Independence discussions). This should be remembered when the likes of Ms Sturgeon make wild statements about Scotland "putting in more than we get back" from the the UK. This statement is normally justified with dodgy comparisons of percent of tax raised with percent of spending received. The main flaw in this logic is that if you gave Scotland the same share of UK expenditure as it's share of UK revenue, Scotland would be responsible for its revenue share (not population share) of debt. It's also worth noting that even on this flawed basis of comparison, in fact in 2012-13 Scotland was responsible for 9.16% of revenue raised and received 9.29% of expenditure.
So when you add all of that up we actually spend +£1,382/cap or 13% more than rUK. Of course this higher spend more than offsets the higher Revenue we generate due to North Sea Oil such that the Scottish deficit is +£512/cap worse than rUK in 2012-13. In absolute terms that means we need to find about £2.7bn simply to be no worse off than the rest of the UK.
The higher Scottish spend/cap figure has been remarkably consistent over the last five years (ranging between £1,225 and £1,438).
Now may be a good time to remind ourselves that in 2014-15 we are likely to have a Revenue advantage over rUK of only maybe £250/cap - so we can expect to see a deficit difference to rUK of nearly +£1,100/cap.
Let's pause and think about that for a moment. If we tax and spend as we do today the accounts for a fully fiscally autonomous Scotland are likely to show that - for every man, woman and child in Scotland - we would be £1,100 a year worse off than if we continue to pool our lot with the UK.
Something would have to be done. Tax take would need to go up or public expenditure would need to be reduced. These are the economic realities from which we can't hide. Of course economic growth would help but it's hard to imagine how or why a fiscally independent Scotland would miraculously create growth (or how long it would take before it materially affected the deficit). We already spend a relatively high amount on Enterprise and Economic Development as well as Agriculture, Forestry and Fisheries - and it's worth remembering that EU rules constrain the level of government support that can be given to industry.
Now whether or not Scotland is fully fiscally autonomous (or indeed independent) the economic challenges we face are clear (and largely shared with rUK). To put absolute numbers against this - the GERS deficit for Scotland in 2012-13 was £12.1bn and the Oil & Gas revenues in 2014-15 are likely to be another £3.2bn lower giving us roughly a £15.3bn deficit problem to address.
The graphic below (a work in progress) attempts to put the sources of revenue (in Green) and areas of Expenditure (in Red) is some kind of relative context. All you have to do (given we know the oil & gas number is now much lower) is work out how you might find £15.3bn through higher taxes or lower expenditure to eliminate the deficit.
If that defeats you - on the basis that we appear set on devolving away Barnett benefits and driving to full fiscal autonomy - try and find £6.0bn or so to make us at least no worse off than being within the UK.
Please drop me a line when you've worked it out.
Addendum
Here is how the absolute Scottish figures have shifted over the last five years, which may be helpful in considering what it takes to move these numbers by £6.4bn (to be no worse off than the UK is now) or £15bn+ to eliminate our likely deficit right now.
Taking sources of funding first:
If you follow the chart up from the bottom you can see;
- Frozen Council tax
- (Surprisingly?) Stable Business Taxes - although it's worth noting the GERS figure is a guess as no-one how business would report profits and hence pay taxes between Scotland and rUK. (HMRC estimate this figure would be almost £1bn lower)
- Duties fairly stable - creeping up slightly
- "Wealth taxes and other" have declined since 2008-09 due to reduced Capital Gains Tax and lower dividend & interest taxes (presumably because of lower dividend & interest payments)
- Employment (Income Tax and NI) is of course the biggest contributor and has increased by nearly £1bn over this period
- VAT has grown by nearly £2bn due to the VAT rate increase to 20% in 2011
- Gross Operating Surplus (GOS) is mainly Scottish Water profits - reasonably stable
- Oil & Gas is of course the volatile element
- The balance of funding required not met by theses taxes raised is of course deficit - the required increase in debt each year
Looking now at where that money is spent:
Again if you follow the chart up from the bottom you can see;
Addendum II
The initial response to this post on social media was interesting with some suggesting this data presentation was some sort of "spin" applied by me to the numbers or me in some way applying my "model". In fact all I have done is summarise the data all of which (with the exception of oil forecasts) are taken directly from the Scottish Government's own GERS data tables available here
There are also a surprising number of commentators who appear to get very confused about percentages and some - I'm looking at you "Wings over Scotland" - who don't seem to realise that we ran a large deficit in 2012-13 and that it was worse than the rest of the UK on any measure ... and that this was true before we factor in the known £3bn+ subsequent loss of North Sea oil revenues.
Others have highlighted how these figures compare to OECD international comparisons - I think this is because those figures are current account balances (i.e. before capital investment or consumption).
To save time in debates and on Twitter I have created the following table which I believe comprehensively summarises all of the different deficit figures over the last five years for Scotland, UK (and by implication) "rest of UK".
Finally - as I have aggregated GERS categories into my own sub-totals to make it easier to digest - here are the tables mapping most detailed GERS figures onto my categories;
Done.
- The biggest chunk of spend is Social Protection (welfare and unemployment) and this has increased by £4bn over the period
- Other Social (Housing & community amenities, public & common services, recreation, culture & religion, environment protection) is reasonably stable
- Health spend has increased by £1bn
- Education, Transportation and Public Order & Safety (Police) expenditures are fairly flat
- It is worth noting at this point we are already roughly spending about what we generate in public sector revenue (the black line)
- Other Commercial (Enterprise & Economic Development, Agriculture, Forestry & Fisheries, Science, Tech & Employment Policies) have declined a little
- The unhelpfully titled (in GERS) Accounting Adjustment is (I think) mainly cash versus reported cost accounting differences (e.g. when capex exceeds depreciation). GERS is a little opaque on this - comments welcome
- All we have to do now is pay our share of Defence (fairly stable) and Debt Interest (which of course grows with debt and varies with interest rates)
Take time to ponder these numbers - its what our politicians are (or should be) doing ...
Addendum II
The initial response to this post on social media was interesting with some suggesting this data presentation was some sort of "spin" applied by me to the numbers or me in some way applying my "model". In fact all I have done is summarise the data all of which (with the exception of oil forecasts) are taken directly from the Scottish Government's own GERS data tables available here
There are also a surprising number of commentators who appear to get very confused about percentages and some - I'm looking at you "Wings over Scotland" - who don't seem to realise that we ran a large deficit in 2012-13 and that it was worse than the rest of the UK on any measure ... and that this was true before we factor in the known £3bn+ subsequent loss of North Sea oil revenues.
Others have highlighted how these figures compare to OECD international comparisons - I think this is because those figures are current account balances (i.e. before capital investment or consumption).
To save time in debates and on Twitter I have created the following table which I believe comprehensively summarises all of the different deficit figures over the last five years for Scotland, UK (and by implication) "rest of UK".
Done.
22 comments:
I see one big problem with analysing Scotland's finances
These are the figures while scotland is NOT independent.
Take all reserved powers. Give them to Holyrood.
Then what do the figures say.
Aren't we only getting FFA after we declined full independence?
This is what the figures say - my point is now show me where you find £6bn to make us not worse off than being in the UK and another £10bn to eliminate the deficit.
These are the revenue and cost numbers you have to play with - this is what Holyrood would control - so how? Make some assumptions about growth, tax, spend ... it's quite tricky.
Unless you believe that being independent means we can defy maths.
Let's not be political. Let's not call our "land" our land in case someone might think it actually is our land. Oh please, God forbid if we even consider talking about our "air" or even our "water".
Other words fail me...
Another top, top piece of work, sir. I suspect you know your way around these figures better than any politician in Scotland.
The answer, of course (and I think it's what the SNP were trying to get at yesterday, but I was having trouble following their line of thinking) is: increase borrowing!
Now, while I believe that the Scot govt would have, initially, no problems borrowing such vast sums (as presumably Scot govt bonds would be underwritten by the UK taxpayer), unless this borrowing splurge yielded huge addtional tax revenues (which simply ain't going to happen), the Scot govt will find itself having to increase taxes and slash public spending within two years. Either that, or it deliberately bankrupts itself, in order that it can blame somebody else amidst all the chaos. My money would be on the latter.
Cheers, Derek
Presumably a Scotland borrowing in this scenario would be in exactly the same position as Greece inside the Eurozone - as there would be no longer any fiscal union.
Great stuff Kevin. I was going to suggest on reading this yesterday that the only thing missing was a view over time, to show the volatility in different revenue streams, but it seems you have already added this.
For any future debates it is the volatility that needs to define how we view the Scottish situation as much as the current position. It was this that made Salmond's case so poor and is still largely ignored by Nats - you can see this in the bizarre "we would not have been independent now, so the current oil price does not matter" line.
One small point. The Welfare figure that is creeping up contains provision of pensions as a key element (I assume). As such, we can only expect the pressure on this figure to continue to be upward. Worth noting I think as people often confuse welfare with unemployment benefits etc, which can drop with an improving economy.
PRELIM 13/14 Offshore Oil revenues:
CT 3.556bn of which Scotland geo 82.1%
PRT 1.118bn of which Scotland geo 71.5%
Oil tax is complex, usually try and read Prof A. Kemp for expert opinion.
Last Gov. bulletin shows UK total OIl revenue CT as Sept 14, 860m (1,306m) and PRT to Nov. 14 as 364m (515m)
Numbers in brackets are 13/14 equivalent periods.
OIl CT is paid 3 times annually and PRT monthly.
Total disaggregated prelim ALL tax revenues for 13/14 with geo oil revenues is 41.894bn.
£41.9bn seems very low ... if that's true deficit would be way worse than I'm suggesting
Should have made clear these are the HMRC collected taxes.
A link to the monthly & historical Tax & NI receipts.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/396949/20150114_Decmonthlyreceipts.pdf
Note: Offshore CT for Dec 2014 was 685m (1,229m Dec 13) PRT 83m (121m Dec 13)
My guess, is that the Scotland portion of Oil & Gas revenues will be circa 1.75 billion for year 14/15.
But who knows what may happen to the oil price!
Thanks Ron - you've looked closer than I haveon the specifics of N Sea Oil - so your £1.8bn compares to my £2.4bn which means the picture would be £0.6bn worse than I have painted for 14/15.
I was erring on the side of optimism as didn't want to be accused of doom-mongering!
For 2013/14 Prelim HMRC disaggregated tax revenues. As will all these numbers there are caveats.
Figures represent Scotland with geographical offshore revenues.
UK Scotland %age
Income Tax 156,898 11,516 7.3
Cap. Gains Tax 3,908 243 6.2
Nat. Insurance 107,690 8,865 8.2
VAT 104,718 8,654 8.3
C. Tax Onshore 35,718 2,607 7.3
C. Tax Offshore 3,556 2,918 8.3
PRT 1,118 799 8.3
Bank Levy 2,200 148 6.7
Fuel Duties 26,881 2,258 8.4
Inheritance Tax 3,402 231 6.8
Shaers Stamp Tax 3,108 176 5.7
Stamp Duty LT 9,273 389 4.2
En. Dwellings Tax 100 1 0.8
Tobacco Duty 9.531 1,117 11.7
Spirits Duty 3,056 403 13.2
Beer Duty 3,346 237 7.1
Wine Duty 3,713 337 9.1
Cider Duty 340 29 8.5
Betting Duty 2,098 190 9.1
APD 3.013 254 8.4
Insure P. Tax 3.014 207 6.9
Landfill 1,189 106 8.9
Climate Levy 1,068 98 9.2
Aggregates Levy 285 47 16.4
Customs Duty 2,901 227 7.8
Other Taxes 446 39 8.3
Totals 489,850 41,894 8.6
Sorry for length of post.
Last input re Oil
The oil price has reached spot price today of $61.35, no matter which side of the debate one is on, this is maybe a welcome sign of strengthening price.
Perhaps it isn't understood that offshore engineering, fabrication, supply chain operations etc, take place throughout UK.
It should also be recognised that many high value field development costs, e.g topsides units are fabricated overseas.
As we know, tax receipts are based on companies profits.
When the price/bbl increases remember it is priced in USD, and is therefore subject to exchange rate considerations.
July 2014 Oil was GBP 67.85/bbl.
Jan 2015 Oil was GBP 34.17/bbl
Today Oil is GBP 39.89/bbl
Production costs are being reduced by lay-offs, wage rate cuts, and no doubt supply chain cost cuts.
FYI, I have seen the weighted cost for US shale prodcution as between $61/62.
IMO, the tax structure has to be more flexible, it is a complex issue, and my take is to have a floating SC set against a fixed base price per barrel. Perhaps even reduce basic CT to normal UK industry rate. Easy said but probably hard to do.
Production forecasts can and do vary, i.e. present production levels to 2019 with a 5% annual reduction until 2030.
As I say my take on it, future events may dictate a re-appraisal.
You figures are interesting however they are based on rUK income and spending dictat. These figures would not apply to an Independent Scotland as the SNP has already made different spending proposals.
Oil is a resource which should be managed over a number of years not on one year figures.
Re you points re Tobacco.
From the TMA (Tobacco Manufacturers) for 2012.
Duty 9.7bn & VAT 2.6bn = 12.3bn
Estimated tax losses 1.9/3.4bn through smuggling, counterfeit, crosss border shopped, duty free.
Tax Gap,
HMRC publish the estimates and for 2012/13 it was 34bn. On a population basis can we assume Scotland underpays circa 2.85bn?
Can a case be made that as UK is running a deficit this 2.85bn, being a portion of the borrowing which has to be paid for invites a small interest cost?
The tax gap was estimated at 8.5% in 05/06 but has reduced to 6.8% in 12/13.
Even with the best of intentions and laws passed it will never reduce to 0% (same as unemployment), it will then come down to what %age is deemed acceptable, for want of a better word.
So tax avoidance still making the headlines.
Further to the 6.8% tax gap (34bn) as published by HMRC the theoretical tax liability for 12/13 was £504bn.
Breakdown for the uncollected as %age of 504bn.
Avoidance - 0.6
Criminal attacks -1.1
Error -0.6
Evasion- 0.8
Failure to take care - 0.8
Hidden economy - 1.2
Legal interpretation - 0.9
Non payment 0.9
So avoidance and evasion under collection are included.
Yet, there are those who publish that circa an extra £100bn is also not collected. I have never seen any evidence as "proof positive" this is true. Until it is I will view such claims as political posturing I.e ro******ks.
Douglas
My point is that when you say " the SNP has already made different spending proposals" - they haven't (at least none that add up).
Maybe if you have heard them you can enlighten us all: take the main cost and tax categories I have summarised here and tell me which will go up and which will go down and what the deficit effect will be.
Remember with oil where it is now you need £6.4bn just to be no worse off than the rest of the UK.
Whoo will pay more tax? Which services or benefits will be cut? Or if taxes don't go up and there are no cuts, roughly how big do you reckon the deficit would be? I'm genuinely curious to know
Come on Kevin we will cut strident that will save us £100 BILLION a day (according to latest Nat facts), that will allow for us to pay for everything including our own nuclear detterent if we want one.
Let's for this discussion accept that these figures are entirely correct and are borne out in reality. What I don't get from Unionists is why they believe this picture is acceptable. Scotland, for arguments sake, is a loss making business. What is the benefit to rUK in having us around? I mean really are we to sit back and just 'take' as many would argue to Scots that we should vote No and just keep picking up the giro. You think this is a way to conduct your affairs. Why not take control, that's truly what the Brit. East is afraid of, Scotland calling its own shots. Why would this be so bad. Given these controls we can then diversify our economy, invest in capital project, promote health and increase productivity. Are all these things only possible as part of the Glorious United Kingdom? I think not and we are far better taking things in hand here in Scotland. Not easy but far more sustainable long term given the inevitable backlash against 'scrounging Scots' that will build south of the border in coming years.
Let's for this discussion accept that these figures are entirely correct and are borne out in reality. What I don't get from Unionists is why they believe this picture is acceptable. Scotland, for arguments sake, is a loss making business. What is the benefit to rUK in having us around? I mean really are we to sit back and just 'take' as many would argue to Scots that we should vote No and just keep picking up the giro. You think this is a way to conduct your affairs. Why not take control, that's truly what the Brit. East is afraid of, Scotland calling its own shots. Why would this be so bad. Given these controls we can then diversify our economy, invest in capital project, promote health and increase productivity. Are all these things only possible as part of the Glorious United Kingdom? I think not and we are far better taking things in hand here in Scotland. Not easy but far more sustainable long term given the inevitable backlash against 'scrounging Scots' that will build south of the border in coming years.
It seems to me your argument is one that says Scotland is better within the UK because fiscally we cannot survive out with the protective umbrella of Uk and HMRC. That London politicians alone are best placed to steer oor leaky vessel through the troubled waters of international statehood. So from that starting point, what is your 'path to enlightenment'? You raise a suggestion for SOBEReports. I would agree but you can't honestly be saying you want Jackie Baillie and not Swinney in that seat. Give me strength. Come to think of it, is there a single soul in Scot Labour that you would want anywhere near power? Like a freight train these powers are coming, more the better in my view. Time to pick a side. Are you and your like minded folk gonna get on board with the rest of us and make sure they are fit for purpose? Where are the Tories in at least ensuring these powers are fit for purpose and not some mess designed to fail, simply to return a Scot Lab Gov in Edin. God help us, anyone but the f*#+#!' Labour Party! I think we need to agree that the SNP aren't doing too bad a job.
Kevin, 1st up I'll say you present a thorough analysis, portraying a reasonably bleak outlook for a fiscally autonomous Scotland but it's not exactly rosy for the rUK either.
My question to you is this... neither the UK or Scotland have permanently been running deficits and financial projections for both (perhaps before the oil crash) predicted a return to surplus within a few years. What then are the main drivers behind this i.e. what factors did the 2008 crash depress so badly and how much can reasonably be expected to be regained through realistic future growth in the economy?
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