When I was interviewed by Newsnight’s Gavin Essler on BBC News Channel. I started off by pointing out that “Scotland is a wealthy nation but Scotland’s wealth is transferred to London and our economy is being held back. Scotland generates 9.9% of the UK total tax take but gets only 9.3% of the UK total spending”.
My opponent was the failed former Tory Westminster candidate Amanda Harvey. We got the usual tired old unionist scaremongering that “there will be barriers to trade and Scotland’s largest export market was England” etc. What they always fail to mention is that Scotland is the rest of the UK’s most important export market. The £4bn worth of goods a month that rUK sells to Scotland would be in danger if Westminster legislators imposed trade barriers on their own companies. That wouldn’t exactly be a wise political move for David Cameron and certainly not in rUK’s economic interests. It would be illegal under EU law anyway.
Amanda then repeated the most misleading and economically incompetent argument of the No Campaign. She said, “Scotland receives more from the Treasury than it raises in taxes” and she finished of with the statement “that is a FACT”. I have heard Scottish Labour Leader Johann Lamont claim the same thing, but it is a completely inaccurate argument. Let me explain why:
From the Data
We have established by looking at the 2011/12 independent Government Expenditure and Revenue Scotland report that Scotland generated 9.9% of UK tax revenue but received in return only 9.3% of UK spending. If we had received 9.9% of the spend we would have been £4.4bn better off last year alone. The London-focussed No Campaign’s argument is that when Scotland runs a financial deficit the 9.3% of spend is a larger absolute sum of money than the 9.9% of revenue.
Deficits don’t make you richer
However, when Scotland runs a deficit the UK treasury does not send the extra money we need wrapped up in a pink ribbon with a card saying ‘Dear Scotland, here is a gift.’ Its is a loan with interest that needs to be repaid by Scotland. What the Treasury does is borrow from the international money markets on behalf of the whole of the UK (which needs relatively more borrowing than Scotland) and then guess what – Scotland gets 9.3% of that borrowing but has to contribute 9.9% of the tax revenues to pay the debt back which now has roughly 3% compound interest! Scotland as part of the UK has to pay more to borrow, than the rest of the UK. So once again Scotland gets a raw deal.
Having someone borrow money in your name, spend more than their fair share of it and then force you to pay back a higher percentage of the loan than you were allowed to spend DOES NOT mean you are being subsidised! Applying the No Campaign’s logic in personal credit terms would mean a person who borrows £1,000.00 from Wonga is classed as £1,000.00 richer – end of story. Except the reality is of course quite different. That person would in fact have to pay back the £1,000.00 plus the interest on the loan which they have to pay back.
So in a year where Scotland is in deficit we have to pay back a higher percentage of the debt than we get to spend and plus approximately 3% interest. This means we subsidise the UK more generously in deficit years than in years when we operate a surplus and that is a FACT.
Scotland, despite years of underinvestment by Westminster governments of all colours, has a resilient economy with strengths across many sectors including food and drink, tourism, education, biotechnology, renewables, oil and gas, financial services and many others. We subsidise the rest of the UK, but shadowy creative accounting techniques have hidden Scotland’s true wealth and restricted our economic potential. If Scotland votes Yes our business will thrive, our economy will grow with billions more per year to invest in growing our economy and with all the appropriate economic powers and levers it is a mathematical certainty that we will do better than as part of the UK.
However, if voters fall for the No Campaign’s weapon of choice – misleading and disingenuous selectivity of facts and figures – then Scotland will miss the opportunity of a lifetime and be far poorer as a nation.
Fortunately, I believe Scots are much smarter than the No Campaign.
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