New calculation slashes Scotland’s debt

SNP highlight historic share of oil revenues

THE SNP Government last night challenged Westminster’s view that an i ndependent Scotland would automatically be burdened with a £100 billion share of the UK’s national debt, and suggested a far lower figure of £56bn instead.

Rather than the debt being allocated on the basis of Scotland’s population, Deputy First Minister Nicola Sturgeon said it could be based on an historic share which took into account the contribution of North Sea oil.

Sturgeon said that meant hard talking on debt with Westminster if there is Yes vote.

According to a new SNP Government paper, Scotland’s Balance Sheet, Scotland’s share of the UK’s £1.1 trillion of national debt in 201112 was £92bn, or 62% of Scottish GDP, based on an 8.3% share of the UK population.

But calculated on a historic basis, to account for the money from North Sea oil going to the Exchequer since 1980, the figure was £ 56bn, or just 38% of the Scottish economy.

UK national debt, 90% of which has been accumulated since 1980, is 72% of UK GDP.

UK national debt is due to reach £1.4tn in the year of the referendum, meaning a per capita share for Scotland would be £116bn. In 2016, the first year of independence if the Yes camp wins, the respective figures would be £ 1.6tn for the UK and £132bn for Scotland.

The division of the UK’s debts and assets is regarded by the SNP Government as one of the “big four” areas of negotiation with Westminster if there is a Yes vote on September 18 next year. The others are the arrangements for sharing the pound, defence, and welfare and pensions.

The emphasis on the historic share of UK debt reflects the SNP Government’s starting position that UK debt belongs to the UK, not Scotland, and how much Scotland takes on must be negotiated, not taken for granted.

Sturgeon said: “Scotland’s share of UK public-sector debt will obviously be a crucial part of the negotiations following a vote for independence and this analysis shows Scotland will be in a strong position.

“Whatever way we look at it, Scotland is in a much better financial position than the UK, including on the issue of national debt.

“Both methodologies show Scotland’s estimated share of national debt takes up a smaller proportion of our economy than is the case for the UK – in all circumstances Scotland will be better off with independence.

“There will need to be some hard talking on the debt issue and it stands to reason that Scotland’s share of debt should take account of the substantial and disproportionately large contribution Scotland has made to the Westminster coffers over the past 30 years.”

In practice, an independent Scotland would not be handed a share of UK debt in one lump, but would agree to service the annual interest.

Based on a per capita share of UK debt, the annual interest payment for Scotland was equivalent to £4.1bn on £92bn in 2011-12.

But based on a historic share, as calculated by the SNP Government, the annual interest payment in 201112 was £2.5bn on £56bn.

The UK Government dismissed the figures. A Treasury spokesman said: “This is a partial analysis based on favourable assumptions and data from a year when North Sea receipts were particularly high.

“Scotland benefits from spending that is consistently 10% higher per person than the UK average. The independent Institute for Fiscal Studies has explained that Scotland would face a much tougher fiscal challenge over the long term than the rest of the UK.”