Data Sources and Methodology:
- “Net Fiscal Balance: Figures from GERS 2011-12 “”Experimental Historic Fiscal Balance Calculations (Historic GERS – Geog NS)”
- “UK debt interest figures: “”Government borrowing, debt and debt interest payments: historical statistics and forecasts””, (SN/EP/5745), House of Commons Library, 13 March 2013, Dominic Webb and John Bardens”
Note 1: These calculations assume that Scotland continues to pay 1980/81 debt interest (to reflect population share of pre-1980 debt)] Population share: from ONS mid-year population estimates for UK and Scotland.
Note 2: These calculations do not look at UK debt or Scotland’s share of UK debt at all. They analyse Scotland’s public sector budget position and in particular what would have been the case in terms of a cumulative surplus or deficit had the Scottish public sector budget been managed independently.
Debt levels in 1980
The debt levels of an independent Scotland in 1980 would have depended on the outcome of negotiation just as they will in 2015. It is therefore not possible to add an accurate debt figure for pay back to these calculations. However, if you assume that Scotland would have inherited a population share of the UK’s debt in 1980, approximately £8 billion, then you also have to assume that the Scottish share of assets like the larger military facilities and resources of the time or far larger gold reserves held at the Bank of England would be higher.
Assets as well as liabilities
Some of those assets, particularly the expensive ones, such as the Polaris nuclear weapons system or Vulcan long-range bombers would not have been required for Scotland’s defence, even in a Cold War context, so the actual debt level could have been negotiated to at an educated guess of £6billion at most. Given the massive surpluses Scotland was generating at that time, that £6 could have been paid back in the first two to three years leaving Scotland with a £1.7 billion surplus upon which to begin accumulating interest.
Other relevant assumptions
Off course if you add in complex assumptions such as paying back a share of the UK debt at 1980 prices you also have to factor in the very likely possibility that Scotland would have followed Norway’s example and started a sovereign wealth fund that may have reached similar values to Norway’s £450 billion fund. It is also entirely possible that the value of assets That the UK Government wished to retain would have wiped out the debt all together.
The most important point in all of this is as follows:
There is no way to look at the historic Scottish balance sheet figures and to come to any conclusion other than Scotland subsidises the UK through paying for debt that was generated and required outside of Scotland’s borders.