John McLaren from CPPR has written a helpful and balanced piece in today’s Scotsman on the public finances of independence. He takes the various claims and explains how they are calculated.
We must start from the understanding that the claims of being £1200 p.a. or £500 p.a. better off, refer to what is spent on us through public expenditure, not individual incomes.
The £1,200 better off figure refers to 2009-10 and relates to the difference between government revenues and spending. It ignores whether or not this extra spending on public services could be funded by equally high Scottish revenues.
The £500 better off figure relates to the latest relative fiscal balance figure for 2010-11 – a year with buoyant North sea oil revenues. This tapers off by 2015-16.
As John McLaren puts it, “The bottom line is that Scotland has a relatively higher spend per head on public services than for the UK and that, post-independence, this could be afforded – but only so long as North Sea oil revenues remain strong.” Oil revenues going forward are subject to a wide range of variables.
Then we have the claim that Scotland would become the sixth most prosperous country in the world, in terms of gross domestic product per person. He is much more scathing about this claim describing it as a ‘red herring’ because it is based again on oil activity, the profits of which often end up overseas, not in our pockets.
“Overall, an important lesson to learn from this analysis is that – as the referendum is a decision on the long-term future of Scotland – it is not very insightful to dwell a single year’s figures. Furthermore, some of the options available, under both independence and some evolution of the status quo, will involve trade-offs rather than pure wins or losses, and this complexity needs to be acknowledged. Interviews with the public suggest that there is a desire for a more informed and nuanced debate than the one we are currently getting.”
Hard to disagree with that!