Solidarity not subsidy underpins Union between Scotland and England - Brian Monteith

It is dangerous to justify participation in a country purely on economic terms, writes Brian Monteith
It is dangerous to justify participation in a country purely on economic terms, writes Brian Monteith
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Politicians should nurture ties among people that have more in common than drives them apart, writes Brian Monteith

Scottish unionists who bang on about a union dividend are playing a very dangerous game, one that risks playing directly into nationalist hands and leaving them without arguments for remaining in the United Kingdom.

Last week we had the annual announcement of the Government Expenditure and Revenue Scotland (GERS) figures and with it the usual claims and counter claims by unionists and nationalists seeking to gain partisan advantage from the data provided.

Please note before I go any further that the information is released by the Scottish Government; it is prepared by its own statisticians and carries with it the First Minister’s seal of approval, even though she could not be bothered to give this key publication the time of day. Over the years the methodology has been refined to take account of any possible gaps in the information presented, while politically motivated hoaxes, such as the whisky export tax, or “missing” allocations of public spending projects like Crossrail and HS2 have been debunked. Importantly, allowance is also made for looking at the figures with or without tax revenues from oil and gas production.

The essential finding was that for the period of 2018-19 Scotland had a public sector deficit of £12.6 billion, slightly down on the year before. Average tax revenue per head was demonstrated to be £307 lower in Scotland than in the rest of the UK, while spending per head has climbed to £1,661. Put together, these two figures define the fiscal transfer of £1,968 per man woman and child that takes place seamlessly between the UK Treasury and the Scottish Government, including apportioned UK spending for defence and other mutual services Scotland benefits from.

By themselves the GERS figures cannot and do not say if an independent Scotland could be economically sustainable. What they tell us is where the likely starting point would be were we to decide to leave the UK, before any changes could be made in Scottish government policy to alter the existing landscape. There would be notional Scottish spending of £75.3bn supported by an income of only £62.7bn – giving the estimated deficit of £12.6bn.

Against Scotland’s Gross Domestic Product (GDP) the deficit was 7 per cent, compared to a deficit of 1.1 per cent for the UK. To put this in context Scotland would have the largest deficit as a share of GDP in the developed world, certainly the worst in Europe and way beyond the EU’s guideline limit of 3 per cent for its members.

Taking account of the regional figures available via the UK’s Office of National Statistics there can be no doubt that Scotland, Wales and Northern Ireland provide a deficit against England’s surplus that leaves the whole UK in deficit, albeit reducing. Given the foregoing, Scotland’s receipt of this fiscal transfer is obviously not unique, indeed within England itself the tax revenues from the three regions of London, the South East and East notionally transfer to support all the other English regions, including the North West, North East, Yorkshire and West Midlands.

This is the nature of fiscal transfers, where economically prosperous nations or regions fund a pool that is used to support those parts of the UK that are enduring harder times. Contributions and withdrawals to and from this pool will vary over time, with some requiring help one year – or even decades – while at other times being the source of community munificence.

It is dangerous to justify participation in a country purely on economic terms while ignoring the greater historical, social and cultural bonds or strategic interests that make an entity greater than the sum of its parts. It is a good thing that when oil revenues collapsed the UK was able to ensure there was no catastrophic impact on Scottish public finances – as there would have been if Scotland had voted for independence in 2014. It is not a good thing for Scotland to run a large deficit and be reliant on the UK to make that forever possible.

To justify Scotland’s place in the UK because it receives a “union dividend” of nearly £2,000 per person is like accelerating towards a blind summit, unaware of the hard landing that awaits politically.

If unionists rely upon a figure to define the union dividend then they must accept that correspondingly there will in some years be a union premium – a time when Scotland’s allocated tax revenues are greater than the spending it makes. Personally, I think this is a good thing, for it is what the union dividend is really all about. It is a process, not a number; a process that is built upon British solidarity, a shared experience of helping each other in times of great need from our hardest endeavours, creative genius or even just fortunate bounty.

Indeed we can see from the official figures over the last 40 years that there have been times when Scotland has contributed to the maintenance of the UK and others when it has itself been supported. Since 1980 Scotland has contributed a net £9bn to the UK in real terms – a figure that shall undoubtedly be cancelled out by next year’s GERS figures.

I know it is hard to imagine at a time when the SNP Scottish Government demonstrates with impressive regularity its ability to miscalculate it own economic forecasts and deliver poorer results in too many sections of the pubic services year-on-year – but the deficit could eventually change were the politicians to alter their centralising and incompetent ways.

The private sector of the Scottish economy does relatively well despite the Scottish Government, rather than because of it. It could, with a change towards lower taxes and fewer regulations, achieve greater results and therefore contribute higher revenues while spending is restrained. When that day comes where stands the argument about the union dividend if it is measured by price alone?

How then will the argument fare that we should remain in the UK because of the Union Dividend when the GERS figures allow the SNP to complain about a similarly ridiculous “Union Premium”?

Unionist politicians should stop focussing on the number and start concentrating on the shared benefits of giving and receiving help amongst people that have more in common than drives them apart. They should instead talk about how the deficit is reduced and how Scotland can help the weaker parts of the Union just as we have been helped when we needed it.

Brian Monteith MEP is editor of