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   Web Issue 3191 July 4 2008   
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Subsidy junkies jibe is a well-scotched myth
ALF YOUNGNovember 02 2007

Numbers - or, rather, our inability to agree precise numbers to set against the challenges facing all governments - have their own lethal way of blowing up in politicians' faces. In recent days, radical upward revisions to the number of migrants coming to Britain and the number of new jobs they have managed to fill in our economy have left squirming London cabinet ministers issuing clarifications and grovelling apologies. And the escalating billions being shelled out by the Bank of England to underwrite the ailing mortgage bank, Northern Rock, raises the spectre of what was once the pride of Newcastle becoming the first (forced) nationalisation in Britain for decades.

In Scotland, the latest population projections raise profound questions about how robust policy- making can ever be if we don't know, with any kind of clarity, how many of us will be around in future. Five years ago we were being told Scotland's population would fall below five million by 2009. Now it is projected to grow to a new all-time high of 5.37 million by 2031, before shrinking. It won't dip back below five million, government demographers now opine, until 2076. But, hey, what's a variation of 67 years - more than average male life expectancy in some parts of Glasgow - between friends?

If we are to believe a welter of overwrought heartsearching which has erupted across all sections of the media down south, one particularly contentious set of numbers even has the megatonne potential to blow the existing British constitution to smithereens. It is the balance sheet of who puts what into - and who gets what out of - the existing Union. Yet again we Scots are being fingered as unreformed "subsidy junkies", taking much more out of the British state than we put in.

From "Jocks Away" in southern editions of the Daily Mail last Saturday, suggesting Scotland's entire political class has been "infantilised" by not having to raise the public money it is allocated by the Treasury before it spends it, to a leader in this weekend's Economist suggesting it would be no bad thing if Scotland - "a country already over-administered, over-represented and over-financed" - was allowed to tax itself, we are back in the midst of what the writer George Rosie once called "an extraordinary sneerfest about our shiny new Scotland".

Rosie's original riposte, in his Scotching the Myth film for Scottish Television in 1990, was to point out that the most feather-bedded and tax-cosseted part of the UK at that time was actually London and the south-east, vacuuming up most of the principal institutions of the British state, enjoying the lion's share of the 15% of annual public expenditure in the UK which cannot be identified as being spent in any particular constituent region or nation, and commanding infrastucture projects with price-tags that dwarfed what was being built elsewhere across Britain.

He revisited his myth in 1995 and again in 2000, whenever sections of the metropolitan commentariat convulsed anew over Scotland's "pork-barrel preference" or a Gaelic culture dominated by "besandalled and bearded former polytechnic lecturers". Now, with a minority SNP government actually in power at Holyrood, it appears to be open season yet again on one part of a devolving United Kingdom where, we are told, the politicians' sole skill is "extorting money from Whitehall and justifying outrageous budgets".

Elsewhere in The Herald today, my colleague David Leask has updated aspects of George Rosie's riposte by setting out, with some help from analysis done by consultants Oxford Economics, five of the more enduring myths about where Scotland really stands in relation to the other nations and regions that make up the United Kingdom in terms of who gets what and who provides what within our present constitutional settlement.

The picture that emerges is much more nuanced than the black-and-white certainties of some London-based tabloids. Scotland is not some subsidy-obsessed outrider of the British state, offering little in return by way of tax revenues. There are other parts of the UK which receive higher per capita allocations of public expenditure than Scotland.

Most English regions contribute less, per capita, in tax revenues. If all revenues from North Sea oil and gas production are allocated to Scotland's account (an assumption even most Nationalists might judge unjustifiable) it is possible, in a good year, to come close to balancing the Scottish budget. Arguably only London does better.

But when George Rosie first tried to Scotch his Myth, London was seeing inordinate amounts of public money poured into the regeneration of Docklands. The new British Library in St Pancras was bursting its construction budget in ways Edinburgh's parliament building would, later, come no where near matching. Then there was the Dome. Now there is Crossrail and the 2012 Olympics.

That's what happens in capital cities with the kind of global clout London undoubtedly enjoys. And the unequal ebbs and flows of public expenditure and tax revenue streams across the rest of these islands is also what happens all over the world. It is the inevitable consequence of every government's efforts to raise more money from those who can afford it and spend more on where the need is greatest.

It's an imperfect art. But when these imperfections become characterised as some parts of the polity playing by completely different rules, misunderstandings can quickly fester into something much more serious. I've no doubt Alex Salmond will be delighted with the Economist's call for Scotland to be allowed to tax itself. And right at the top of his shopping list will be his desire to control the tax take from the oil and gas fields off Scotland's shoreline.

Our First Minister makes no secret of his desire to see Scotland independent of the present Union. But he knows better than anyone just how big a challenge he still faces turning a wafer-thin hold on devolved power at Holyrood into a clear mandate to negotiate Scotland's departure from the UK. The findings of this week's Scottish Social Attitudes Survey will not have surprised him. Many of those who embraced the invitation to vote for Alex Salmond as First Minister in May were doing exactly that.

They wanted to see whether he would fight for Scotland's interests more effectively than his predecessors. They'll need clear evidence that he can before they'll agree to join him on later stages of the constitutional journey he has in mind for them. But he might yet be helped in the business of persuading them, if some of our friends in the south persist in painting a picture of the Scots that wilfully distorts tax and spend reality.


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Posted by: Am Balach, Skye on 12:24am Fri 2 Nov 07
If all revenues from North Sea oil and gas production are allocated to Scotland's account (an assumption even most Nationalists might judge unjustifiable) it is possible, in a good year, to come close to balancing the Scottish budget
.

This statement is demonstrably untrue. During the 80s Scotland ran a huge surplus with North Sea oil. A quarter of the entire UK tax take came from Scotland some years. I’ll leave it to others to give the figures but Alf Young ruins a good article by slipping in some of his own distortions and myths.
Posted by: rob4i, Scottish Borders on 2:44am Fri 2 Nov 07
It is now well documented that if Scotland was Independent we would be much,much better off as a result. END OF STORY!!!!!!!
Posted by: wow, over here on 6:43am Fri 2 Nov 07
Am Balach, Skye...product of a scottish education

The SNP December 2006 Budget Document stated that with 95% of north sea revenue being claimed by scotland, a subsidy of 600 million was sent to the rest of the UK.. That works out at about 3p per day per head of population.

Posted by: The Voice of Reason, A93 on 8:52am Fri 2 Nov 07
Alf,

As a frequent "yer a bawbag Woodrow Wyatt clone" critic, I must doff the auld bunnet to your worthy talents this time out: That's a very well constructed, well written, and well thought out bit of work.

Did Mr Trotter ghost it for you? (Sorry, that's just a joke in poor taste.)

A balanced Scottish budget would put us one-up on most of our business-competitor nations, like England.

VoR
Posted by: Hugh V McLachlan, Elderslie on 10:20am Fri 2 Nov 07
'They wanted to see whether he would fight for Scotland's interests more effectively than his predecessors.'

I do not think this is what we should expect from Holyrood. It is not its job to fight for 'Scotland's interests', whatever they might be thought to be. It and the first minister have particular devolved issues to deal with. MInd your own business is good advice for politicians.
Posted by: ratzo on 10:27am Fri 2 Nov 07
Alf the naked cyclops.

He only has one position - the Union, right or wrong, and no surrender.

Bye Alf.
Posted by: torry, lumphie on 11:33am Fri 2 Nov 07
Aye Ratzo i also am a wee bit sceptical with Alf whom i suspect has been given a grilling by the newspaper owner to get circulation numbers up. His long tirade at telling us on th pages of the herald how good it was to be in the union are not forgotten in my mind. As i read somewhere else there is money in this honesty lark and independence supporters are much more inclined to buy sympathetic newspapers. It is business not ideology that is driving this 'new crusade' Aye Ratzo no surrender sums it up perfectly
Posted by: Alex Cox, Bearsden on 11:37am Fri 2 Nov 07
As someone who has long banged the drum about Alf Young's views on the SNP (especially Jim Mather), and also on Scotland's viability as an independent state, can I just say congratulations on a well-balanced, articulate piece?

I would by and large agree with your assessment that Scotland - presently - runs at either a small deficit or a small surplus of a few hundred million either way. In contrast, the UK's entire deficit to the debt markets in 2006-07 was £34 billion. Scotland's percentile deficit is therefore an annual £2.9 billion, just for staying part of the UK. If we initially factor OUT oil revenues for 2006-07 (£9.1 billion, according to Hansard)and 'share' this deficit it works out thus

England/Wales/Northe


rn Ireland: deficit £39.5 billion
Scotland : deficit £ 3.6 billion

I know that we in Scotland are continually told that oil revenues don't count, but they really, really do. Factor them in on the conservative assumption that 90% were accorded to Scotland post-UK, and we can see that the deficit/surplus situation is thus:

England/Wales/NI : deficit £38.6 billion
Scotland : surplus £ 4.6 billion

This in itself is not the end of the whole story. The idea that an independent Scotland would continue to spend UK levels on the armed forces (2.5% of GDP, as opposed to Norway's 0.7%) is just silly, not to mention the 15% of 'unidentifiable' UK spending (which totalled £520 billion in 2006-07, £78 billion 'unidentifiable'), for which Scotland's 'share' last year was £6.5 billion.

Of that £6.5 billion in spending 'for' Scotland - most of it spent in Whitehall, I am sure that a small independent state without ambitions of being a world power, could achieve similar value for one third of the expenditure.

As such, the rump-UK's deficit, should it continue to want to play a prominent global role, would increase by perhaps as much as 25% when this 'unidentifiable' and defence spending is taken into account. Scotland's surplus meanwhile would be headed towards £10billion.

I have, believe it or not, tried to be fairly impartial in my reading of these figures. I am not a Capital-N Nationalist, but a methodical believer in self-government for Scotland. If I thought that Scotland's immediate fiscal benefit lay in the continuance of the union, I would say so. In fact, it may even move me to argue in favour of a federal UK as opposed to full independence (though in all honesty, a soundly effective small country's government should always trump a monolithic, large and ambitious one).

However, with 18% of our children presently being raised in poverty (Denmark has 1%, Norway 2%) and with the shrill, uninformed, borderline racist bleatings of Wapping hacks and White City jockeys, the belief in the continuance of the Union is, I feel untenable.

Once it was nats who spoke in romantic terms of Wallace, Bruce and all that. Now we have die-hard Unionists talking of the past glories of empire. The argument for self-government has already been won. Getting that message to the people may take time, but that time will elapse.
Posted by: Hugh V McLachlan, Elderslie on 11:54am Fri 2 Nov 07
'However, with 18% of our children presently being raised in poverty (Denmark has 1%, Norway 2%)..'

This is meaningless. 'Poverty' figures nowadays have nothing to do with what people normally mean by lack of resources. They relate to households with incomes that are less than some arbitrarily decided proportion of the average household incomes for that particular society. So-called 'poverty' is now about social inequality. In terms of such a measure, 'child poverty' can increase if a society gets wealthier, depending on how the increased wealth is distributed.

Posted by: Graeme on 3:27pm Fri 2 Nov 07
Good afternoon, fellow countrymen. As an exile of some 5 years I thought it my duty to pass on the contents of this report and story to our dear deluded friends at the Torygraph and Daily Wail. Shows what they have been spouting is TRULY a myth to justify perceived grievances and petty nationalism... something these right-wing rags ironically accuse Scots of!

These finding also back up the point:

http://www.scottishe

nterpriseparty.org/t

he-great-deception.h

tm

William Waldegrave of the CONSERVATIVE party (are you watching Boris?) agreed with this take on the partisan fudge of the GERS Report. Add the McGlone findings and you have a lot of hard evidence to counter the ill-conceived bluster coming from some South East quarters.

Can I suggest we all make copies of these and force-feed them en masse down Kelvin McKenzie's fat bigoted throat?

Eh thengaw!
Posted by: Scotsgait, www.scotsgait.co.uk on 4:01pm Fri 2 Nov 07
Oxford Economics also produced an analysis of regional fiscal positions a couple of weeks ago. The results are summarised at

http :// www .scotsgait.co.uk/ind
ex.php?option=com_wr
apper&Itemid=153

(remove all blanks)
Posted by: fifer on 3:32pm Tue 6 Nov 07
just read about the upgrading St Pancras at £800m to accomodate the fast rail link. What about the £3bn on the new Jubilee line or the mlliona on the Olympics etc etc etc. So who are subsidy junkies.
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