Leaders: Myth of Scotland as subsidy junkie of the UK is scotched

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BY HOW much do the balances of public spending and tax revenues vary between the regions and nations of Britain?

The answer, according to Douglas McWilliams of the Centre for Economics and Business Research, is that they vary enormously. As a percentage of the wealth created within each component part of the UK, tax revenues vary from as large as 45 per cent of regional GDP in London to as low as 28 per cent of GDP in Northern Ireland. On the same measure, public spending is as high as 67 per cent of GDP in Ulster to as low as 35 per cent in London.

The figure that will excite most comment is the finding that if you remove the UK deficit from these calculations, and allocate the share of North Sea revenues that an independent Scotland might expect to receive to the Scottish calculation, then Scotland gets as much public money spent on it as it pays in taxes. Thus Mr McWilliams reckons that Scotland pays its way within the union and receives no subsidy from the English taxpayer. Economic game, set, and match to the SNP?

Not quite. Mr McWilliams has given the SNP some powerful material to serve a few aces. His figures purport to show not only that the public sector books balance in Scotland, but that Scotland, out of twelve nations and regions, has the fourth best set of public sector accounts in the UK.

These are, however, figures that are produced, not to present public sector accounts for an independent Scotland, but to show the intra-regional transfer of tax revenues within the UK and how these transfers support regional public spending. The figures cover the year 2010-11, for which there are as yet no official statistics on spending from either the Treasury or the Scottish Government.

For a depiction of an independent Scotland’s books, the deficit of spending over taxes that Scotland does have requires to be added back in. To judge how sustainable that deficit is, it is necessary to know what proportion is structural – financed from borrowing to pay for spending on public services rather than pay for capital investment.

It is also necessary to know the size of the debt Scotland would be shouldering after a post-independence division of the UK’s national debt. The SNP say this would be about £45 billion or about 35 per cent of Scottish GDP. Other commentators think it will be much larger, perhaps as much as between 60-80 per cent of GDP.

At the moment, no-one knows what the division would be. It matters, because the higher it is, the less a newly-independent Scotland could borrow. This matters, first, because there may be a need to borrow more to cover a structural deficit. Second, Alex Salmond believes more borrowing is necessary to stimulate recovery. Mr McWilliams figures give no comfort that Mr Salmond will be free to do that. The more important message is that the Scottish subsidy junkie myth beloved of southern Conservative right-wingers has been scotched.

Old Town deserves serious investment

The parting shots from Professor Charles McKean as he steps down from six years chairing Edinburgh World Heritage, the body intended to guide civic leaders on how to nurture the iconic Old Town, are a bit of a fusillade.

Prof McKean says the city has produced few new buildings of note during his tenure and rather more by way of roadworks, while rubbish awaiting collection continues to add a sour and displeasing note. On top of that, the “visitor experience” is one of the worst in Europe.

The city council can fairly respond that the past three years have been ones of recession and squeezed public budgets, while the tramworks have been a heavy additional burden. Nevertheless, Prof McKean’s point is still valid – if the city is to make the most of Unesco World Heritage Status, it is something which has to be worked on and invested in.

An example of what should be done and could be achieved, is the National Museum of Scotland. Here was a treasured building, where substantial refurbishment has done away with much-loved features such as the fishponds, but where the overall enhancement far outweighs any loss. The results, in terms of the big increase in visitor numbers, speak for themselves.

Edinburgh needs to do the same with its Old Town. Investment in it is not mere civic self-aggrandisement or a luxury at the expense of other more worthy projects. It is vital work which not only keeps the city centre functioning, but which ensures the visitors have that good experience they have a right to expect – and the important revenue they bring will keep coming.

Remember her star quality, not her fallen star

So another troubled singing star is no longer with us. Although we do not yet know the cause of Whitney Houston’s death, it has been well documented she suffered from the afflictions and addictions which seem to come to many with stardom.

In the final days before she died we know Houston embarked on what appeared to have been a raucous series of parties and social engagements in the run-up to the Grammy awards where she had been coaching some of the younger singers due to perform. She was said to look dishevelled and may have been drinking. She may have been drug-free but she evidently had not beaten her demons. Yet as we contemplate her passing, at the age of just 48, it would be wrong to remember Houston in this way.

We should instead celebrate her obvious talent – something which went way beyond her rendition of that song which made her famous and is sung in karaoke clubs across the world. Whitney Houston was a pop star but she was more than that. As you would expect from someone whose mother was the gospel singer Cissy Houston, whose cousin was Dionne Warwick, and who was the goddaughter of Aretha Franklin, she had something more. She had the qualities great singing stars have: presence, passion, poise. Quite simply, she had soul.