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OUR pounds 4BN DEBT; Being in UK balances Scotland's books, say Labour.


SCOTLAND would have been pounds 4billion in debt last year if it wasn't for the Union, the Scottish Executive claimed yesterday.

That's about pounds 800 for every man, woman and child in the country.

Labour said an independent Scotland would have to raise income tax by 16p to balance its books. The SNP claimed the figures were fiddled.

Economists rejected claims, often made by English Tories, that Scotland is a "subsidy junkie" sponging off the wealthy south.

But one expert close to the Executive insisted we are better off in the UK than outside it.

He said: "Scotland has a tenth of the UK's population but a third of the land, so spending here has to be higher.

"But if Scotland were independent, we would be giving up that pounds 4billion which was transferred from the rest of the UK.

"It would take an income tax rise of 16p to cancel out that deficit."

Even Scotland's oil wealth would not close the gap, Labour claimed. They said we would still have been pounds 1.6billion in the red in 1999/2000 if all the tax revenue from North Sea oil had stayed north of the border.

According to the annual Government Expenditure and Revenue figures, released yesterday, Scotland's income for 1999/2000 was pounds 29.8billion.

But the nation spent pounds 33.8billion.

About pounds 6.5billion of income tax was paid, along with pounds 4.9billion in VAT and pounds 4.8billion in social security contributions.

But more money was going out than coming in, with pounds 9.5billion spent on social security alone.

Health was second on the spending list at pounds 6.5billion, followed by education on pounds 4.4billion.

Scotland's share of defence spending was pounds 1.9billion, compared to pounds 1.5billion spent on the police, courts and fire services combined.

And the nation spent pounds 1billion supporting its farmers and fishermen.

Across a range of services, pounds 1.18 is spent in Scotland for every pound spent on the UK as a whole.

Wales had pounds 1.13 spending, Northern Ireland pounds 1.33 and England 96p.

The figures also show how Scotland uses its money differently from other parts of Britain.

For every pound the UK spends on housing, Scotland spends pounds 1.75.

For every pound the UK spends on trade, industry and job creation, Scotland spends pounds 1.48.

And for every pound the UK spends on roads and transport, Scotland spends pounds 1.31.

Scotland also spends more than the UK average on schools and health, but less on law and order. For every pound the UK spends on the police and courts, Scotland invests 96p.

Labour used the figures to attack the Nationalists. A spokesman said: "It's time for the SNP to admit what we have known all along - there is no economic argument for independence.

"They are wedded to a policy which would be to the detriment of every family in Scotland."

But the SNP claimed there were serious errors in the way the figures were worked out.

Shadow finance minister Alasdair Morgan said: "The document admits a major failing with the analysis of income tax revenues, which have dropped inexplicably by pounds 1billion in one year.

"What we have is a line of discredited reports initiated by the Conservatives and embraced by New Labour.

"It is out of date politics using out of date figures and inaccurate analysis."

Former SNP leader Alex Salmond claimed an independent Scotland would be in surplus.

He said up-to-date Treasury figures show oil revenues for 2001/2 will be pounds 5.4billion - enough to put Scotland in the black.

Scots Tory leader David McLetchie struck a different tone to many of his English colleagues by defending the Barnett Formula, which guarantees Scotland's share of Treasury cash.

He said: "The figures demonstrate once again that the existing arrangements for financing Scotland serve us well.

"For all those who would rush to fix this system, which isn't broken, I say they should face the facts."

While Scotland was said to be pounds 4billion in the red, Britain as a whole was pounds 13.9billion in the black.

In 1995/96, the UK had a deficit of pounds 37.1billion and Scotland pounds 7.4billion.

Labour claim the improvement is down to prudent management of the economy by the Chancellor, Gordon Brown.
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Publication:Daily Record (Glasgow, Scotland)
Date:Dec 18, 2001
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