Scotland’s finances: what you need to know

Today the Scottish Government published Government Expenditure and Revenue Scotland – or ‘GERS’ for short – for the year 2014-15. GERS is produced annually and provides estimates of total public spending in Scotland, as well as tax receipts for the previous five years.

Here’s what you need to know.

Scotland’s onshore economy has grown by over £6 billion in the past five years.

GERS for 2014-15 shows that Scotland’s onshore economy continues to do well. Onshore tax receipts – excluding North Sea revenues – have grown at about the same rate as the UK as a whole – and are up by £6 billion since 2010-11.

The publication shows a decline in North Sea revenues in 2014-15. This reflects the fact that oil prices remain lower than virtually all forecasters – including the UK Government – previously predicted. This highlights the challenges that continue to face the global oil industry today, which Scotland is not immune to. While the Scottish Government is doing all it can to mitigate the impact on the North Sea, it is clear that immediate action is required from the UK Government. You can read more on this below.

When North Sea revenues are included, tax receipts per person in Scotland remain broadly in line with the UK as a whole – at around £10,000 per person. And, since devolution, Scotland has contributed an average of around £700 per person per year more in tax than the UK as a whole.

Scotland’s economy remains strong.

In challenging economic circumstances, Scotland’s economy remains strong.

• Our economy continues to grow – with three years of continuous growth up to the third quarter of 2015.
• Our employment rate – now at a record high – is higher than the UK as a whole.
• Typical pay in Scotland is now, for the first time ever, higher than in England.
• Of all the 12 nations and regions in the UK, Scotland’s output per head – even without North Sea revenues – is the third highest.
• Since 2006, the Ernst & Young Attractiveness Survey ranked Scotland in the top two locations in the UK outside of London for attracting inward investment.
• Scotland’s international exports increased by 36 per cent between 2007 and 2014 – from £20.3 billion to £27.5billion.
• Since 2007 Scotland’s growth in productivity – at 4.4 per cent – has outstripped that of the UK which is at 0.2 per cent.

We continue to invest more in our public services and economic growth.

In government the SNP is investing in Scotland’s public services. GERS shows that the Scottish Government is investing £93 more per head than the UK Government on health, and £133 more on education.

The SNP Scottish Government is also investing more in economic growth. Spending on economic development in Scotland is higher than the UK as a whole – to the tune of £110 per head. And, when it comes to capital investment, which accounts for spending on public infrastructure like hospitals and schools, spending is £310 higher per head in Scotland than in the UK as a whole.

The UK Government must act to support the North Sea oil and gas industry.

The oil and gas industry makes a huge contribution to the economy of both the UK and Scotland. Over the years the industry has generated over £300 billion for the Treasury.

In challenging times, the SNP Scottish Government is doing all that it can to support the industry – establishing the Energy Jobs Taskforce and investing £379 million in infrastructure. Earlier this year the Scottish Government also announced a £12 million to support individuals to retrain for specialist roles in the sector, and £12.5 million funding for innovation, research and development too.

This commitment needs to be matched by the UK Government. That’s why, ahead of the Chancellor’s budget next week, we’re calling for immediate action to support the industry, including:

• A substantial reduction in the headline rate of tax;
• Removal of barriers to exploration and enhanced oil recovery;
• Tax relief on decommissioning;
• And, other support such as government loan guarantees.

You can read more about our calls for the UK Government to take action here.

The biggest risk to public spending in Scotland is the UK Government.

The biggest risk we face to public spending in Scotland continues to be the UK Government. Since 2010, the UK Government has cut Scotland’s budget by £2.4 billion – and they plan to make a further £1.3 billion cuts by 2020.

The devastating impact of Tory austerity is clear. The Institute for Fiscal Studies estimates that the UK Government’s welfare reforms alone could push an extra 100,000 children into poverty by 2020.

The SNP – in Holyrood and Westminster – has consistently argued for an alternative to the UK’s approach to public expenditure and that’s what we’ll continue to do.

GERS tells us about the status quo and very little about the opportunities of independence.

Scotland is rich in human talent and natural resources. But what we lack are the economic levers to maximise growth in our economy, and invest according to our own priorities.

Even after the Smith Commission powers are fully implemented, 71 per cent of taxes raised in Scotland will be controlled in Westminster. And, our ability to grow our population – and our tax base – is limited by the UK Government too.

With independence, the Scottish Government could design policies that are tailored to Scotland’s – not the UK Government’s – circumstances.