Some interesting figures published today by the Centre for Economics and Business Research on the mismatch between taxation and spending across the ‘regions’ of the UK. The Centre has looked at the revenue raised in each ‘region’ and the money spent there to come to a series of conclusions about the extent to which poorer regions receive a ‘subsidy’ from the richer ones.
The most obvious headline from a nationalist perspective is the conclusion that Scotland receives no net subsidy from the rest of the UK. No doubt the SNP will be delighted with that conclusion; I certainly would be in their position. It’s further evidence that there is no hard economic argument against Scottish Independence.
There are caveats, of course. As I’ve noted before when discussing this sort of statistical analysis, the most important element is understanding what the underlying assumptions are; changing those could have a significant effect on the figures. In this case, one key assumption, from a Scottish viewpoint, is about the proportion of oil revenues which would accrue to Scotland. The authors have used the split suggested by Aberdeen University, which gives Scotland 83% of the total. I think that’s an entirely reasonable basis for calculation – but it’s clear that many of those arguing that an independent Scotland would be near-bankrupt are using a very different basis.
The other big caveats are that these are figures at a point in time – reflecting a single year – and that they assume that expenditure patterns for an independent Scotland would follow a similar pattern to those of the UK. Again, that’s an assumption which is open to challenge. Still, it’s good news overall for Scotland.
The figures for Wales make for much more gloomy reading, however. They emphasise yet again how poorly our economy is performing. Whilst the North East of England is not far behind Wales, only Northern Ireland is in a worse position. We have a lot of ground to make up.
What the figures also show is the extent to which the UK’s economy is skewed towards London and the South East, with the north and west of England uniformly failing to cover expenditure from taxes raised. I don’t like the word ‘subsidies’ in the way it’s used here to describe the way in which expenditure is redistributed to enable public services to be maintained outside the south and east of England, but it’s not an entirely unfair word.
The real question is how we stop redistributing the proceeds of uneven GDP and start redistributing the GDP more evenly. It’s not handouts or subsidies that we need; it’s a sound economy of our own.