Why Scotland probably won't be a Third World country by 2030

Yesterday, Paul Togneri kindly forwarded me the details of John Swinney's rebuttal of the suggestion that Scotland is headed towards being a "third-world country" by 2030, along with a reminder of the Scottish government's rebuttal of a similar suggestion two years ago. I didn't get round to writing a blogpost on it, so instead here are the rebuttals in full -

“This is a deeply flawed report, which contains a series of basic mistakes. For example, the real figures show that public spending in Scotland is equivalent to 47.3 per cent of GDP in 2009/10 – actually LESS than the 47.6 per cent for the UK economy.

“Under an SNP Government, Scotland now has lower unemployment, higher employment and lower economic inactivity rates than the UK as a whole – and the latest figures show the remarkable situation that 24,000 of the 25,000 new jobs across the UK in the quarter April to June were created in Scotland – which means that Scotland accounts for 96 per cent of the aggregate increase in UK employment.

“The official Government Expenditure and Revenue Scotland (GERS) figures for 2009/10 show that Scotland has now been in a stronger financial position that the UK as a whole for each of the last five years. For example, Scotland generated 9.4 per cent of UK tax with 8.4 per cent of the population – the equivalent of £1,000 extra for every man, woman and child in Scotland.

“This flawed report is of course a commentary on the constitutional status quo – the key to lifting the Scottish economy onto a higher growth level is securing the powers of financial responsibility and independence so that we can, for example, boost economic activity and revenue by having lower Corporation Tax than England.”

Sunday 8 March 2009

The Scottish Government criticised two inaccurate reports by the Centre for Economics and Business Research in the Sunday Times – one calling for Scottish spending to be cut by £5 billion.

SCOTTISH SPENDING

A spokesperson for Finance Secretary John Swinney said:

“This is another deeply political and deeply flawed report from the CEBR, which contains a whole series of elementary errors.

“The real figures in the Government Expenditure & Revenue Scotland report proves exactly the opposite – that the flow of resources is from Scotland to the rest of the UK, not from London to Scotland. Spending per head is higher in London than it is in Scotland.

“The most recent GERS report for 2006/07 shows Scotland with a current budget surplus, and in a stronger financial position than the UK as a whole. The GERS figures put Scotland's current surplus at £837 million – compared with a UK deficit of £4.3 billion at that time.

“This ridiculous and hostile report – and the UK Labour Government’s plans to slash Scottish spending by £500 million a year – demonstrate exactly why Scotland needs to be responsible for all of our own resources, with an independent Parliament controlling revenue and spending in Scotland.”

NOTES:

* The last CEBR report falsely claimed that last year public spending in Scotland accounted for 56% of GDP. According to Government Expenditure and Revenue Scotland (GERS), in 2006-07 the ratio of public expenditure to GDP is 41.3% of Scottish GDP, including a geographical share of the North Sea, compared to 41.5% for the UK.

* The most recent Government Expenditure & Revenue Scotland report for 2006/07 shows Scotland with a current budget surplus, and in a stronger financial position than the UK as a whole. The GERS figures show that, with a geographical share of North Sea revenues, Scotland had a current budget surplus in 2005/06 and 2006/07. In 2006/07, Scotland's current surplus is estimated at £837 million, or 0.7% of GDP. This compares with a UK deficit of £4.3 billion, or 0.3% of GDP.

* GERS also estimates Scotland's fiscal balance - which factors in capital and infrastructure investment for the nation's long term benefit. This also shows Scotland in a substantially stronger position than the UK as a whole. Compared to a UK deficit in 2006/07 of 2.3% of GDP, the Scottish figure is 2.1% - which equates to the OECD average.

* The CEBR report falsely claimed that spending per head is now 22% higher in Scotland than England. However, the most recent GERS publication shows that in 2006-07 total public spending per capita is 13 per cent higher is Scotland than the UK, identifiable spending per capita 16 per cent higher in Scotland than the UK.

* The HM Treasury publication Public Expenditure Statistical Analyses (2008) shows that for 2006-07 Scotland received less (identifiable) public spending per capita than Northern Ireland and slightly less than London. Furthermore, such figures do not include so-called ‘non-identifiable’ expenditures which generate significant benefits for the location in which they are spent. For example, it is forecast that expenditure on the London Olympics will rise to approximately £1.5 billion a year for each year in 2008-09 to 2010-11.

* The CEBR report falsely claimed that expenditure on social protection accounts for 32% of Scottish GDP. In fact in accounts for 32% of public expenditure. As a share of GDP, excluding North Sea revenues, social protection accounted for approximately 16%

* The CEBR report falsely claimed that 381,000 of Glasgow’s population is “NEET”. That is nearly the entire working age population of Glasgow City. The correct figure for Scotland, under the standard definition (16-19 year olds) is 32,000.

* In Scotland between Q3 1999 and Q3 2008 public sector employment has increased by 9% (47,500), over the same period, private sector employment increased by 10.6% (190,100). Comparable figures for the UK indicate that public sector employment increased by 11.1% (574,000) and private sector employment increased by 7.7% (1,687,000).