The 'Black Hole'

The Westminster government takes the tax revenue of Scotland and returns a portion of it to the Scottish government. 

It also claims to spend a sum of money 'on Scotland's behalf'.  

Much of this sum is clearly spent on items that only benefit England and much of the rest of it is not traceable. 

However this notional sum spent on Scotland's behalf, when added to the actual amount of money returned to the Scottish government, generally exceeds the amount of Scottish revenue. This is referred to in the Unionist media as Scotland's 'deficit' or 'black hole'. 

Basic Facts

1. For 2021-22, Scotland's Revenue was £73.8bn. 

2. Scotland's devolved "Total Scottish Government Funding" in 2021-22 was £44.1bn

3. In 2021-22 total expenditure “for the benefit of Scotland by the Scottish Government, UK Government, and all other parts of the public sector” was £97.5bn

4. Hence in 2021-22, Scotland had a notional deficit of £23.7bn

Underestimate of Revenue

The UK government treats Scottish Oil and Gas revenue as a UK resource, and allocates only 8.3% of it as Scottish revenue.

Last financial year this made little difference but in the past years this has resulted in the UK taking trillions of pounds of revenue that was generated Scotland. With comparable oil and gas revenues, Norway has become one of the world’s wealthiest nations.

Whisky consumed in the UK is subject to VAT and alcohol duty. The receipts are assigned to Scotland on the basis of how much whisky is consumed in Scotland. The rest is taken by the UK Government.

Other tax revenues generated in Scotland are often allocated to company headquarters in London, with the tax revenue consequently not being accounted as Scotland’s.

Tax revenues generated from land and property in Scotland but owned by landowners whose main residence is in England, are not accounted as Scotland’s.

Even if goods are produced in Scotland, if the port shipping the goods is in England, the tax revenues are not accounted as Scotland’s, under the accounting system used by the UK Government.

Overestimate of Spending

‘Spent for the benefit of Scotland'

We are informed through GERS that Scotland pays a 'population share' of various expenditures. These include, amongst other things, a London-based civil service, the Trident nuclear weapons system, HS2, Cross Rail and London sewers, Sums spent for the benefit of England but presented as a bill for services to Scotland which the London government generously writes off. Much of the rest of the 'population share' bill is not even traceable in the GERS accounts. It is on a 'take our word for it' basis.

Population Share of the ‘Debt’

The UK Government further apportions a ‘population share’ of its ‘debt’ to Scotland. This is added to the ‘deficit’. However, the UK never pays off this ‘debt’. The 'debt', is mostly savings such as gilt bonds, and past spending, which the government accounts for by stating that it owes money to itself.  This is accounting procedure dressed up as a burden to Scotland. 

Conclusion

Scrutiny of how Scotland’s 'deficit' is calculated shows it to be a result of taking money out of the Scottish economy and false claims about tax revenue and government spending. It is an entirely spurious picture created to make Scotland look like an impoverished region of the UK. A true picture of Scotland’s position post-independence, and how much has been lost by the lack of it, can be seen by comparing Scotland with the economic strength of Norway. 

There is an easy way to end all the arguments about GERS. Let Scotland keep all of its revenues and tax take, to spend as it sees fit. 

If the claims about Scottish overspending and subsidy were true, you would think the UK would be anxious to introduce this fiscal responsibility.