GERS: Plunging oil price leaves Scotland £15bn in the red

Scotland has plunged almost £15 billion into the red and its deficit is now proportionately twice as big as the UK's, new figures revealed yesterday.

Nicola Sturgeon. Picture: PA

The falling oil price led to Scotland’s public spending exceeding its tax revenue by £14.9 billion in 2014-15, a balance sheet which saw Nicola Sturgeon’s opponents claiming that independence would have had a ­“devastating” impact on Scotland.

The annual Government Expenditure and Revenue Scotland (GERS) figures also revealed that public spending in Scotland exceeded the UK average by £1,400 per person.

The deficit compared unfavourably with that of the UK when expressed as a percentage of GDP. The UK deficit came in at £89.1 billion, tor 4.9 per cent of GDP, while Scotland’s deficit was 9.7 per cent.

Revenue generated per head of population in Scotland fell below that of the UK for the first time since records began. Scotland raised £9,986 per person in 2014-15, falling behind the UK average of £10,012 and dealing a blow to one of the SNP’s key economic arguments for independence. During the 2014 referendum campaign Alex Salmond repeatedly quoted figures suggesting Scotland raised more revenue per person than the UK to support his case.

Total revenue raised was estimated at £53.4bn, 8.2 per cent of UK public sector revenue and a fall of £607 million from the previous year.

The fall reflected the decline in North Sea revenue, down by 55 per cent on 2013-14.

North Sea revenue dropped from more than £10.9bn in 2011-12 to less than £4.8bn in 2013-14, before dropping to £2.25bn last year. 

The price of oil stood at $110 per barrel in June 2014, but began to fall to $58 a barrel in the first half of 2015.

The oil price is now languishing at about $40 a barrel (compared to the $113 predicted in the Scottish Government’s independence White Paper).

On the other side of the equation, total public expenditure in 2014-15 was £68.4bn, the equivalent of 9.3 per cent of the UK total. Public spending per person came to £12,800, or £1,400 per person more than the UK average.

Income tax was the largest contributor to revenue with £11.7bn raised in Scotland. Tobacco (£1.2bn) and alcohol duties (£0.96bn) made a significant contribution.

In the Commons, Prime Minister David Cameron claimed the figures proved Scottish independence would have resulted in taxes rising north of the Border. He said: “We can see that Scotland would face a £15bn gap if it were outside the United Kingdom. I dread to think what taxation would have to be levied not just on whisky, but on petrol, work, incomes and homes. That is the prospect of life outside the UK, and that is why I am so glad we voted to stay together. “

Announcing the figures alongside Finance Secretary John Swinney, First Minister Nicola Sturgeon said: “These figures demonstrate the impact of the fall in oil price.”

She said “growth in onshore revenues will significantly exceed the fall in oil revenues” in the next five years. She added that more powers would provide “more ability to grow and diversify our tax base”.