If Scotland was a business it would now be heading for bust

It was unfortunate that Finance Secretary Shona Robison’s sudden awakening to an “emergency” overshadowed the release of this year’s GERS figures which reveal the gap between what Scotland contributes and what it spends.

Despite higher taxes and munificence of the Barnett Formula, we achieved a single year deficit of £26.3 billion. Income, £84.6 billion; expenditure £111.9 billion. Result, penury. One need not belong to the Micawber school of economics to conclude that this is crazy.

The figures are particularly piquant as we approach the 10th anniversary of the independence referendum on September 18 when church bells should ring out to celebrate our great escape. It’s interesting to recall warnings given at that time and how they were dismissed.

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The Office for Budget Responsibility calculated an independent Scotland would inherit a budget deficit of 5.5 per cent. This would now seem a blissful prognosis. The current deficit is 13.2 per cent compared to 4.2 for the UK; a gap which has grown to a chasm within the past decade.

Even on the OBR’s relatively benign projection, the Institute for Fiscal Studies concluded in June 2014: “This would not be sustainable for any prolonged period. Any upside surprise on oil revenues would help,for a while – but these revenues can also disappoint. In the longer term, the eventual decline of oil revenues would likely prove a much more acute problem for an independent Scotland than it would for the UK”.

And verily it has come to pass.

At that time, the SNP solved the problem by inventing a fantasy figure for the “average price of oil” at $113 a barrel. In fact it never reached that figure on a single day, fell by 35 per cent the following year and ten years on stands at $80.

It was the biggest attempted deception upon the Scottish people in history for which we would have paid in levels of austerity beyond anything the Tories came close to, even with help from Liz Truss. What should never be forgotten as the anniversary approaches is that the SNP knew exactly the dangers. Step forward in the hall of infamy, John Swinney.

In the run-up to the referendum, Swinney – then Finance Secretary – was brutally frank about the impact of falling oil revenues on the arithmetic of independence. Among much else, the “affordability of state pensions”, other benefits and public services were at risk.

The only problem with this paper was that it was intended only for the eyes of Mr Swinney’s Cabinet colleagues – and certainly not the Scottish public.

On the day it was revealed, the moniker “Honest John” became entirely satirical. As always, “the cause” took precedence over inconvenient truths, however damaging to fellow-Scots.

All this is essential background to understanding how the Scottish public finances have been mismanaged, to the extent that if Scotland was a business it would now be heading for administration.

Since 2014, devolved government has continued to be run on fantasy economics – with massive doses of incompetence thrown in. The SNP essentially hate the concept of devolution which involves acceptance of living within a relatively fixed budget, albeit with flexibility on taxation. Instead, their aspiration is to unlimited powers and the wealth which (they kid themselves on) would accompany them.

The collision between fiction and reality is inevitable.

For the past decade, they have gained political cover from the tried and trusted strategy of blaming “Westminster” for every fiscal shortcoming and impact upon policy delivery. In this way, they absolved themselves of blame and responsibility despite what, in truth, have always been pretty generous fiscal parameters.

The collision which the SNP have now encountered is not only with reality but with public tolerance of their pathetic blame-game. What they see is not a government of high principle but one of low competence. They see money being squandered in all directions while public services decline around them.

They see warnings being ignored until consequences become inevitable. They see a £26.3 billion deficit and yet so little to show for it in terms of basic services on which people depend. They see an “emergency” in public expenditure which has been a decade in the making. And soon, they will see even more damage done to the fabric of Scotland by a bunch of political chancers who overplayed their hand.

Let me give one example on the incompetence front. Much depends on making a success of the ScotWind programme, to compensate for the decline of oil and gas. High degrees of expertise were required to ensure the Scottish exchequer got the best possible deal.

What actually happened? The Scottish Government decided – on whose advice it would be extremely interesting to know – to cap the auction of leases at £10k per square kilometre. In England and Wales, the Crown Estate did not cap the auction and raised a vast sum.

By grace of God, this happened before the Scottish auction began. So even our mighty leaders realised they had been led up a doubtless lucrative garden path. They suspended the process and came back with £100k – ten times the original “cap”. In this way, £756 million was raised.

Many people believe this was still far too cheap – but what is indisputable is that the Scottish Government was saved from its own folly to the tune of £680 million, which would have put all other specific acts of fiscal calamity in the shade. How was such a monumental error even possible?

But then follow that story through. The £756 million is gone – a one-off bounty disappeared into the bottomless pit of general expenditure without a penny ringfenced for infrastructure required to maximise benefits from the ScotWind programme.

Examples like these have led us to the fiscal state we are in and nothing will change until the perpetrators are finally gone. Roll on, 2026.

-Brian Wilson is a former Labour MP who was UK trade minister and energy minister