THE release of the annual Government Expenditure and Revenue Scotland (GERS) figures has once again sparked a fierce debate on Scottish independence just over a year out from a planned second referendum.
Data shows Scotland’s deficit has decreased dramatically to £23.7 billion in 2021/22 – a fall of 10.3% compared to last year – as onshore revenues grew as the economy recovered from the pandemic.
This represents 12.3% of gross domestic product (GDP) and is a huge fall from the 2020/21 figure of 22.7% of GDP.
But the Scottish Conservatives have once again pounced on the opportunity to talk about Scotland’s "Union dividend" – the value of Scotland’s higher spending and lower revenue compared to the UK as a whole.
The latest GERS figures hammer home the huge benefits we all get as part of the United Kingdom. Every person in Scotland is £2,184 better off - that’s the highest Union dividend ever. These figures are a devastating blow to Nicola Sturgeon’s push for indyref2. pic.twitter.com/8FXoPPOHjT
— Douglas Ross MP MSP (@Douglas4Moray) August 24, 2022
The party has said it grew to the highest sum on record and claimed every person in Scotland is £2184 better off as part of the UK.
Douglas Ross called it a “devastating blow” to Sturgeon’s push for indyref2.
But Yessers have been quick off the mark to point out the figures do not show what an independent Scotland would look like, only what its fiscal position currently is as a devolved government of the UK.
Strathclyde University’s leading economic research institute Fraser of Allander said to a certain extent, the higher per head spending levels in Scotland are driven by the way the funding for devolved services is calculated through the Barnett Formula.
Acting finance secretary John Swinney highlighted the figures show Scotland's fiscal position is recovering faster than the UK as a whole – which saw a deficit drop of 8.4% – and pointed out three-quarters of revenue and more than a third of spending for Scotland is reserved to Westminster.
Swinney said: “Remember GERS describes Scotland’s current fiscal position under current constitutional arrangements, with 74% of revenue and 37% of spending reserved, and Scotland’s economy is already suffering as a result of disastrous Tory policy decisions such as austerity and Brexit.
“Independence is no silver bullet – but surely it would be better for the Scottish Parliament to have the full economic and fiscal levers to enable us to weather the current storms, rather than leaving them in the hands of Westminster and hope for the best.”
Highlighting the impact of Brexit, he said: “In the first full financial year since Brexit, the GERS figures show the economic harm of leaving the EU is driving up borrowing in the UK and contributing to the UK deficit being one of the largest in Europe.
“Even in the midst of an energy crisis, the UK as a whole is benefiting from Scotland’s natural wealth, which is why Scotland can expect its deficit to fall further in the future.”
All you need to know… pic.twitter.com/LicExLcmkP
— YesWestLothian (@YesWestLothian) August 24, 2022
SNP MSP Neil Gray added: “Remember GERS figures are a reflection of the current financial position. Independence gives us the opportunity to use our substantial resources differently.”
The UK’s deficit stood at 6.1% of GDP over 2021/22.
Public spending in Scotland remained higher per person than the UK average: in 2021/22, expenditure per person was £1963 higher in Scotland than the UK average.
This represented an increase on the previous year’s figure of £1530.
Karen Adam MSP said: “The GERS 21/22 figures show Scotland’s strong recovery in comparison to the UK collective, even before taking into account the revenues from oil and gas.
“This further evidences that whenever Scotland has the decision-making powers over our own affairs, the better off we are as a nation."
Scotland saw a 13.6% increase in its non-North Sea revenue to £70.3bn, the largest ever recorded by the GERS statistics.
GERS 21/22 is published this morning. It shows that Scotland’s fiscal position is recovering faster than the UK’s – a huge fall in the annual deficit thanks to the largest increase in revenues on record.🧵 [1/8]
— John Swinney (@JohnSwinney) August 24, 2022
The report noted growth was particularly strong in VAT, non-domestic rates and fuel duties.
When North Sea revenues are included, total Scottish revenue stood at £73.8bn.
This meant that revenue per person was £221 lower than the UK average.
Liz Smith, Scottish Conservative shadow cabinet secretary for finance and economy, said: “These new figures underline the huge benefits we all gain from being part of a strong United Kingdom.
“The strength and stability of the Union helped us to weather the pandemic, saving thousands of jobs, livelihoods and businesses that would otherwise have been lost – but we are not out of the woods.
“As we head into a global cost-of-living crisis, it is more important than ever that both of Scotland’s governments are 100% focused on our recovery.
“These figures demonstrate clearly that pushing for another referendum is the wrong priority."
Scottish LibDem leader Alex Cole-Hamilton added: "These figures confirm the importance of the UK economic partnership, especially at times of crisis.
"The gap between tax and spend was humongous. The broad shoulders of the UK economy and a powerful central bank with financial muscle helped make that possible."
