Budget: Kate Forbes under fire after insisting Scotland has no financial deficit

Finance secretary Kate Forbes has come under fire after insisting Scotland has no financial deficit.

On the day the SNP conference started, Ms Forbes said that as finance secretary, she only spends what she raises or receives every year due to Scotland’s inability to borrow as a separate country.

The annual Government Expenditure and Revenue Scotland (GERS) report, released in August, showed Scotland‘s notional deficit more than doubled to £36.3 billion in 2020/21 – the highest yearly figure since devolution.

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The report illustrates Scotland’s public spending and has been described by the Institute for Fiscal Studies (IFS) as “the most sensible starting point” for assessing the fiscal challenges that an independent Scotland would face.

Finance secretary Kate Forbes.Finance secretary Kate Forbes.
Finance secretary Kate Forbes.

Increased spending and falling revenues as a result of the Covid-19 pandemic, compounded by the continuing oil price slump, increased Scotland’s notional deficit for 2020/21 from 8.6 per cent of GDP in 2019/20, to 22.4 per cent – higher than the 14.2 per cent for the UK as a whole.

The figure was also more than twice the advanced economy average of 11.7 per cent estimated by the International Monetary Fund.

Speaking on BBC Radio Scotland’s Good Morning Scotland on Friday, Ms Forbes, who is due to deliver the Scottish Budget on December 9, said: “Scotland right now has great talent, great natural resources and great potential.

"I balance my budget every year, so I only spend on an annual basis what I raise or receive, which is totally at odds with nearly every other government around the world. You cannot have a deficit if you cannot borrow for day-to-day spending.

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“What you’re talking about is a notional deficit, where 72 per cent of the tax figures are UK Government tax figures. So if you've got a problem with the notional deficit, I would suggest the problem was with the status quo and not with the potential future that Scotland might have.”

She added: “I want Scotland to ensure it can thrive in the future. I want to ensure that our rich natural assets can be used to feed hungry children in Scotland.

"We believe that Scotland’s future is best served in Scotland’s hands and, ultimately, we believe that means that Scotland’s people should have a say over their future.”

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Scottish Labour finance spokesperson Daniel Johnson said: “The finance secretary’s interview this morning was a masterclass in SNP incompetence. Kate Forbes had no answers on the falling support for independence and no answers over the economic havoc that separation would cause.

“On the day that SNP conference opens, this shows a party out of ideas and focused only on spin and denial.”

Pamela Nash, chief executive of Scotland in Union, said: “Kate Forbes is in denial about the scale of the financial challenge which would face a separate Scotland. She needs to be honest with voters – what taxes would she increase and what public services would she cut?”

Scottish Conservative shadow constitution minister Donald Cameron said: “Kate Forbes also failed to answer how her party would deal with Scotland’s enormous budget deficit in the event of independence. It’s a total cop-out to talk of the deficit being ‘notional’.

“The Scottish people deserve to know how she’d make the sums add up.”

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