‘In­de­pen­dence is not pos­si­ble with these fig­ures’

Sunday Herald - - COMMENT SPECIAL - BY PRO­FES­SOR GRAEME ROY

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.

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