Much has been made today by ‘our’ media of Scotland’s supposed deficit based, in large part, on the GERS essentially estimated revenue and higher spending per capita on public services.
I’m no expert here but, at the very least, I’d like to start a discussion based on the thesis that Scottish public spending per capita should be higher for, at least again, these two reasons based on wealth production, geography and health.
- Scotland produces a proportionally great share of the UK’s wealth and its complex geography needs higher spending per capita
This cannot be proved definitively to everyone’s satisfaction but there are pieces of evidence breaking the surface, enough to think its true. Here are only some:
- 82% of oil production
- 50% of gas production
- 25% of coal production
- 29% of electricity exported to the rest of the UK
- England runs massive trade deficit. Only Scotland has a viable sustainable economy, exporting more than she imports thus requiring no national debt
- 8% of the population, nearly 9% of the exports but only 5.25% of the imports
- New technology start-ups in Scotland surge ahead of UK average by 18%Still 8% of the population but now 30% of UK food and drink exports?
- With only 8% of the population, Scotland’s maritime sector accounts for 25% of the UK maritime sector’s (GVA) contribution to the economy and is 17.5% more productive than the UK marine oil and gas sector. Once more, too wee, too poor?
- £290 billion of tax revenue still in the North Sea and much more to the west of Shetland
- Estimates of Scotland’s oil reserves West of Shetland now massively increased to around 8 billion barrels! ‘A super-resource now on the cards.’Scottish onshore economy grows by at least double the rate of UK
I take it the complex geography argument requires no debate.
- The people of urban Scotland deserve enhanced health-care as they continue to pay the price of the brutal exploitation faced by their ancestors in serving the Empire
I have no sources for this. All I remember is watching an edition of Newsnight Scotland or Panorama or some such more than ten years ago and being shocked by this thesis presented by a deeply impressive South Asian medical researcher from one of the University Hospitals in the West of Scotland. He was keen to defend the people of urban Scotland against the accusation that they were essentially to blame for their catalogue of health problems. He did not deny that tobacco, alcohol and poor diet were factors but something else was needed to explain why the people of urban Scotland had worse health outcomes than other similar places such as Newcastle or Sheffield.
He described how their ancestors had arrived, in huge numbers, in the area from the Scottish Highlands, Ireland and Lowland Scotland to work in the booming industries – coal, steel, shipbuilding – but no adequate infrastructure had been built to accommodate them. Poor quality housing, damp, cold and with inadequate, dirty, water supply and sewers was thrown up quickly.
In those conditions, infant mortality was very high and, crucially, only those with strong active immune systems survived. Later, in adulthood, these same immune systems were conducive to the development of inflammatory diseases and the consequent shortening of lifespans.
The current population of urban Scotland is predominantly based on those survivors with the active immune systems and so remains prone to the development of inflammatory diseases regardless of lifestyle choices.
So, this population is not entirely to blame for its problems and deserves expenditure on an advanced health system even if it does cost more.
I’ve written this quickly and welcome both criticism and support.
Talking-up Scotland 
Professor Robertson, have you seen Professor Richard Murphy’s blog. He sometimes attacks GERS as he has today http://www.taxresearch.org.uk/Blog/2018/08/22/gers-really-is-crap/
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I have. He’s very good on this. Thanks for the link and it’s only professor to BBC and unionist politicians.
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This may be of interest.
https://www.newscientist.com/article/mg22530050-200-social-failure-not-lifestyle-has-made-scots-sick/#.VMarkWIgGSP
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Thanks Anne. I’ll def read this.
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When I retired in 2009 and was looking for places to spend my pension pot, the independent financial adviser whom I engaged, was able to get an INCREASED pension to that normally given, BECAUSE I HAD BEEN BORN AND BROUGHT UP IN GLASGOW in the 1940s and 50s. The actuarial calculations indicated that people like me were more likely to die earlier by virtue of the fact of being born and raised in Glasgow. This applied to people who had become fairly affluent and had moved to leafier suburbs and locations and who had adopted ‘healthy lifestyles’ for much of their lives.
I think I can recall a BBC Scotland documentary (perhaps 10 years ago) on the issue which traced people who had been born in Glasgow in a particular year and found that many had either died or were in poor health.
I had a colleague, whose mother died aged 62 and she was told by the consultant who had been treating her mother – who had been born and raised in Partick – that ‘being born in Glasgow was a factor in low life expectancy.’
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Interesting, could explain a lot of my own and family history, but ——.
Any argument stemming from epigenetic research that would supply a reason for our poor life expectancy would run counter to the othering campaign of Westminster. If lòoking for the report/paper I’d start in the file box containing the Chillcot files, Ruth’s dark money files, same woman’s postal vote opening file, etc. etc. it’s a big box.
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Thanks Alan.
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The Alice in wonderland economics that is GERS, is merely there to fool the population into thinking its so poor we cant do without super generous neighbors Engerland. Honestly us Scottish subsidy junkies that we are, bleeding poor England dry. How lovely there are keeping us.
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GERS uses the word estimate 249 times in its report says it all.
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That is interesting.
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Hello, John,
There you go making my old brain stir again.
I’m not an economist – rather an old-time engineer from the days when the gas turbine jet engine was a novelty that might, or might not have a future. Still I feel that the world of economics sometimes seems to forget its basics.
Fundamental to a nation’s prosperity and wealth is its people and their outlook on life. Adam Smith and Henry Ford both made this point. All the resources of oil, gas, coal, wind, tides, arable land etc. have been where they are in the world for millions if not billions of years but without the application of human ingenuity and labour there they will stay forever.
Also, history abouds with examples of national success even in the absence of valuable natural resources. In the present, let’s take Iceland and its achievements over the past ten years. They have fish, aluminium and volcanic rock to live on but through sheer human ingenuity they have gone from neocon inspired ruin to a pretty fair level of comfort in that time. Three centuries ago Prussia was a small nation of north east Germans living in an area of poor land and in a state of comparative poverty. Then came along the Hohenzollerns who contrived to make the people feel good about themselves and marshalled what resource they had to form what is still, arguably, the beating heart of the mighty modern Germany. Farther back, how about the Mongols of the 13/1400s who came from the wild grasslands of Siberia to rule the biggest empire the world has seen. OK, it’s not all good, but my point is made – it’s people and how they see the world that matter in the building of a proud and prosperous country.
Now to Scotland. We have natural resources in an abundance that most countries can only dream of. We have people who are renowned the world over for invention, analysis, ingenuity and application. What’s to stop us being the envy of the world for well-being, happiness and prosperity?
What is needed is the popular will to make things happen to our advantage. Your headline question “Should Scotland’s public expenditure per capita be higher?” gets my answer: yes, if that’s what is needed to make life even better.
I’ve gone on much longer than I should, but I do feel that the most fundamental need in Scotland at the moment is for all of us to cheer up, be positive and look to how we can build a better future for the folk of this part of the world. The human and material resources are all in place.
Glad to join with you, John, in “Talking Up Scotland”.
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John – here are my thoughts on your questions and on the wider issues raised by the GERS figures. (I was a Government economist, but no longer have all the data at my finger-tips, and some of my views may be based on out-of-date theory or analysis.)
1. The case for Scottish independence is not primarily about economics – it is about ensuring Scotland gets the Government which properly reflects its (different) voting patterns and political priorities. However, the economy matters because many people would not support independence if it seems that this would lead to a fall in the standard of living.
2. Scotland’s public expenditure per head should be higher than that of the UK as a whole for two main reasons: (a) the severity of our problems are often greater – eg higher mortality rates; and (b) it generally costs more to deliver the same standard of services in Scotland because of our geography – a larger rural population and lots of populated islands.
3. However, most attempts at a comprehensive analysis of overall relative needs in Scotland and the rest of the UK in the past (there seems to have been a disappointing lack of these in recent years) have concluded that identifiable public expenditure per head in Scotland is higher not only than that of the UK but also higher than a needs-based assessment would suggest.
4. The Barnett formula based on relative population was designed – contrary to popular opinion – to bring public expenditure per head in Scotland more into line with that of the UK, that is to reduce Scotland’s relative advantage. Since devolution, this may actually be happening to the extent that the Scottish Government’s budget is determined by this formula (prior to devolution the intention of the formula was often offset by political pressure on the UK Government exercised by the Scottish Office and the Secretary of State for Scotland).
5. You and other commentators are correct that many of the GERS figures (for revenue as well as expenditure) are based on estimates (which could be wrong – in either direction – because accurate figures are not collected). Still others are based on a methodology which may be inappropriate for drawing comclusions about the economics of an independent Scotland (eg the apportionment of defence expenditure on a simple population share basis).
6. Nevertheless, for all the estimates and flaws in the GERS figures, I think it is wrong simply to dismiss them – as I realise it is tempting to do. If Scotland becomes independent, my judgement is that – unless oil revenues continue to increase very rapidly – we will probably begin with a public expenditure deficit position (ie public expenditure exceeds income from taxes) even if it is not as high as the GERS figures suggest, and a Scottish Government needs to be prepared to deal with this. That is why the Growth Commission report is relevant. If there is not a credible strategy to deal with this, an independent Scottish currency will come under pressure in the markets.
7. Unfortunately, it is irrelevant that Scotland deserves to have a higher public expenditure per head than the UK, and that some English regions have a higher public expenditure deficit in relation to GDP than Scotland. An independent Scotland will need to face up to the position we find ourselves in. In my view, it is perfectly possible to deal with the situation over a period of years, particularly if the Scottish economic growth rate can be significantly increased (as the Growth Commission report assumes), but it does no-one any good to shy away from reality.
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