How YOUR cash is spent by the Scottish Government

THIS year, Scotland became the highest taxed part of the UK. But how does tax and spending in Scotland compare to the UK? The Government Expenditure and Revenue Scotland (GERS) report, written by Scottish Government officials, is the most reliable and detailed account of how much money is raised in Scotland and how it is spent. Scottish Political Editor MICHAEL BLACKLEY looks in detail at how much the SNP’s taxes bring in north of the Border and where the money is invested.

TAX

FROM April this year, Scotland became the highest taxed part of the UK after Finance Secretary Derek Mackay opted to freeze the threshold for paying the 40p higher rate at £43,000 despite it rising to £45,000 across the rest of the UK. That decision meant the income tax bill of every higher rate taxpayer is £400 a year more than those in England, Wales and Northern Ireland.

GERS shows that income tax revenues are growing at a slower rate in Scotland than the rest of the UK. In 201 -17, total income from the tax was £2,093 per head of population, which was 0.9 per cent higher than £2,074 a year earlier. However, income tax revenues in the rest of the UK grew by 1.5 per cent, from £2,418 to £2,454.

The SNP also made it much more expensive to buy homes worth more than £325,000 when it introduced the land and buildings transaction tax as a replacement for stamp duty in 2015. But the measure has been linked to a decline in the mid/top end of the market and yesterday’s report shows revenue per head, at £88, is still lower than £92 in 2014-15, the last year when stamp duty was reserved. Over the same period, stamp duty revenues have soared 8 per cent across the UK.

The figures appear to indicate raising taxes will not necessarily raise more revenue if it causes a change in the market. It is a lesson economics students learn from the ‘Laffer Curve’ – something Mr Mackay admitted he didn’t know about when questioned at Holyrood’s finance committee.

WELFARE

By far the largest area of public expenditure in Scotland is ‘social protection’, made up of benefits, pensions and social care for the elderly. It received £23.8billion of public funds in Scotland last year – which was nearly double the amount spent on healthcare.

And despite total spending finally falling across the UK last year after years of increases, there appears to be no sign of a similar slowdown in Scotland.

Total expenditure on social protection north of the Border rose by 1.7 per cent last year, from £23.3billion to £23.7billion. Over the past five years, spending has rocketed by £1.36billion a year, from £22.35billion in 2012-13.

A significant factor for the increase has been the rising cost of the state pension, from £6.8billion in 2012-13 to £7.7billion in 2016-17, largely as a result of Scotland’s ageing population. However, the UK Government is also spending more on social security benefits, child benefit, tax credits and universal credit. Under the latest phase of devolution, the Scottish Government is being handed control over 11 key welfare powers – and Nicola Sturgeon yesterday insisted she would not follow the ‘austerity agenda’ of the UK Government – meaning the total bill could continue to soar.

EDUCATION

THE Scottish Government has been widely criticised for its mismanagement of Scotland’s schools.Earlier this year, official figures showed rates of illiteracy among Scotland’s teenagers had soared since the controversial Curriculum for Excellence was introduced.

School spending per pupil across all ages since 2011 has gone down, in real terms, by £489 at primary level and by £152 at secondary level. Scotland is also sliding down the international rankings, according to the Programme for International Student

Assessment. In 2000, when Scotland first took part in the survey of 15-year-olds, its performances in maths, reading and science were all above average. In maths, only five countries had better scores than Scotland in 2000, and 21 countries had worse. By 2015, 14 countries recorded better results, while the number with worse scores was down to ten.

It may, therefore, come as something of a surprise to note that GERS shows that total spending on education and training has increased at a faster rate in Scotland than the rest of the UK.

In Scotland, spending increased by 4.1 per cent, from £ .84billion in 2015-16 to £8.16billion last year. Over the same period, there was a smaller 2.8 per cent increase across the UK, from £84. 9billion to £8 .1 billion.

HEALTH

SNP ministers have railed against the approach taken to the NHS by the UK Government for years, saying they will not allow the same level of private sector involvement north of the Border. However, the GERS figures show that total public expenditure on health has increased at a faster rate across the UK than in Scotland.

North of the Border, spending on health increased by 3.9 per cent from £12.18billion in 2015-16 to £12.66billion last year. Across the UK, there was a higher 4.2 per cent increase, from £138.5billion to £144.3billion.

Over the past five years, Scottish spending on health increased by 11.6 per cent, from £11.34billion to £12.66 billion.

Across the UK, it increased by 16.1 per cent, from £124.3billion to £144.3billion.