‘Independence is not possible with these figures’
education and economic development – and has higher spending on some key welfare programmes.
Indeed, figures for the UK as a whole show that, of the 12 English regions or devolved nations, Scotland has the second-highest levels of spending per head behind Northern Ireland.
In some years – for example 2010-11 – this higher level of spending was accompanied by large revenues from oil and gas taxes so that Scotland ended up in a stronger relative fiscal position than the UK (albeit still in deficit).
But revenues from the North Sea have since fallen significantly. Scotland’s North Sea revenues amounted to just £208 million in 2016-17. Just a few years ago they were closer to £8bn.
So what does this all mean for the constitutional debate? It is important to remember that GERS takes the current constitutional settlement as given. If the very purpose of independence is to take different choices about the type of economy and society that we live in, then a set of accounts based upon today’s settlement and policy priorities will tell us little about the long-term finances of an independent Scotland. Similarly, independence will bring with it new macroeconomic risks and opportunities that will need to be managed. These, in turn, will have an important bearing on Scotland’s long-term public finances.
GERS also doesn’t tell us what the financial costs or savings of implementing a new framework might be, nor how faster (or slower) growth could impact on future results. But GERS does provide an accurate picture of where Scotland is in 2016-17. In doing so, it sets a useful starting point for a discussion about the immediate choices and challenges that need to be addressed by those advocating further constitutional change.
It also shows that with the sharp fall in oil revenues, the Scottish Government would have faced a much more challenging fiscal position in the first few years of independence than they envisaged back in 2014.
In this regard, there is no escaping the fact that the GERS numbers paint a difficult picture. It is simply not possible to operate under independence with budget numbers like this in the long-term.