No! Westminster’s calculation of both revenue and expenditure for Scotland is artificial.  Our revenues are much higher.

Westminster loves to claim that the rest of the UK – and England in particular – does subsidise Scotland. And they use an annual bunch of estimates called GERS (Government Expenditure and Revenue Scotland) to “prove” this. But its not true!

Over the years Westminster has refined the way GERS estimates are collected and presented – and if all you do is read that report, you’ll probably believe this huge lie. So lets investigate why you shouldn’t.

To understand how Scotland’s public spending works you need to understand two things – how much public revenue its people and economy generate (mostly in taxes), and how much public money is spent for Scotland.

“Scottish” Revenues

When it comes to the public revenues raised from Scotland, only some are called “Scottish”: those taxes or chargeable public services devolved to the Scottish Government or our local Councils.

This means that anything raised from Scotland’s people or economy by Westminster – e.g. as part of Westminster-owned taxes such as taxes on Scottish people’s savings or dividends, or businesses operating in Scotland but with an HQ in England, are not called “Scottish”.

And since the Scottish Parliament was set up, this also means a large chunk of tax on revenues from our North Sea Oil & Gas is not considered “Scottish” either. How did that particular sleight of hand happen? As part of the Scotland Act 1998, which re-established the Scottish Parliament, Labour in Westminster quietly introduced the Scottish Adjacent Waters Boundaries Order 1999. This moved the historic border between Scotland and England both in the West and East much further north. The immediate effect of this was to re-classify many North Sea Oil & Gas areas as “English”.

Now consider how this develops in the future – all those power companies HQ’d in England, generating vast amounts of renewable energy in Scotland. Guess what? Westminster will (does) classify none of the public revenues generated as “Scottish”. This artificial construct will only get worse!

“Scottish” Expenditure

Scottish Expenditure is set by Westminster via the Scotland Block Grant using the Barnett Formula. But, as explained in this post, the Scottish Government’s budget is set from the priorities of voters in England by the Westminster government – the Scottish Government has no say, and never has.

So GERS uses “Scottish” revenue that is largley incomplete and “Scottish” expenditure set by Westminster and based on the priorities of voters in England. To say its an artificial construct is an understatement!

And of course, all these estimates mean its imprecise. In the 2023-2024 GERS estimates it admits that it is only precise to within about £1bn!

Take into account all of the above, and you can see why in reality Scotland subsidies the rest of the UK, and would be much better off than GERS reports, after regaining independence.