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For easy comparison, this visual builds on “Funding Scotland – How it Currently Works” by adding how it will be funded after independence. The EU funding programmes called out are described in more detail in the “Scotland’s future is back in the EU” visual.

The current funding arrangements

Currently most public spending for Scotland is controlled by Labour or the Tories – either directly from Westminster, or via the Local Councils they control. After independence all public spending for Scotland will be controlled by Scotland.

The UK Government collects most tax revenues from Scotland, and is also able to create money as Sovereign Debt to fund future investments. The Barnett Formula is the convention used to estimate how much of Scotland’s revenues should be returned to the Scottish Government.

For “retained” powers that the Scottish Government does not control, the UK Government has no obligation to listen to Scotland when deciding how to spend our revenues, or what services to deliver. In fact it regularly ignores our Government and often doesn’t even consult it!

Local Councils collect some taxes – e.g. Council Tax – locally. They also receive a portion of the money returned to the Scottish Government. They also collect money for local services that they charge for.

Funding arrangements after independence

After independence, Scotland will be a sovereign state and – like all other such states – will be able to create money for investment as “Sovereign debt”. This requires a state bank and a sovereign currency.

On being accepted to start the process of joining the EU Scotland will also start to become eligible for the many EU funding programmes available to members. The “Scotland’s future is back in the EU” visual describes these. In addition, Scotland will be able to set up a sovereign wealth fund for renewable energy revenues and negotiate new deals for supplying energy to other markets – including rUK.

Sources

Government Expenditure and Revenue Scotland 2022-23

Funding of local government in Scotland 2022-23: Scottish Government