The Outlook for Scotland’s Public Finances, published today, demonstrates that Scotland will start life as an independent country with strong and sustainable public finances – and by using the powers of independence to grow our economy, could be £5 billion per year better off by 2029-30. On all key fiscal measures forecast by the Scottish Government, Scotland’s finances in 2016-17 will be similar to, or stronger than, both the UK and the G7 industrialised countries as a whole. Scotland’s public finances show debt, under various assumptions, on a downward trajectory, enabling future Scottish Governments to start an oil savings fund. The detailed projections for public finances also show Scotland’s estimated debt to GDP ratio in 2016-17 is forecast to be lower than the UK’s under any potential outcome of negotiation with the UK over public sector assets and liabilities. The paper expands the analysis of Scotland’s public finances in 2016-17 provided in Scotland’s Future by demonstrating how Scotland’s fiscal position is likely to evolve as a result of Scotland’s future economic performance. The paper shows: Over the period 2008-09 to 2012-13 Scotland’s relatively stronger fiscal position is estimated to have been worth £8.3bn, equivalent to £1,600 per person; When compared to projections for the UK in 2016/17 – including projected spending by the official opposition – Scotland’s finances are similar to or stronger than the UK in all scenarios; Scotland’s net fiscal balance in 2016-17 – taking account of all revenues and all spending including this government’s immediate post-independence priorities such as childcare continues to be within the range set out in Scotland’s Future. The paper also illustrates the potential long-term benefits to Scotland’s public finances from using the powers of independence to grow Scotland’s economy and create a more successful country. For example, following independence: A 0.3 percentage point increase in our long run productivity growth rate, which will narrow some of the gap with our competitors, could see tax revenues increase by £2.4bn a year by 2029-30; Increasing our employment rate by 3.3 percentage points to move Scotland up to the level of the top five performing countries in the OECD could increase revenues by £1.3bn a year by 2029-30; And increasing our population, but still by less than the projected growth for the UK as a whole, could increase revenues by £1.5bn a year by 2029-30. Collectively such improvements amount to a boost to tax receipts of an additional £5 billion a year after 13 years. Commenting on the paper, First Minister Alex Salmond said: “Scotland is one of the wealthiest countries in the world, more prosperous per head than the UK, France and Japan, but we need the powers of independence to ensure that that wealth properly benefits everyone in our society. “That wealth means we will start life as an independent nation with strong finances and huge economic potential. “The latest figures show that by using the powers that only independence will bring we can deliver an independence bonus with increased revenues for Scotland. “The choice Scotland will make in September is between the opportunity to grow our economy, to boost revenues and to invest in public services or to continue with an economic policy set in Westminster that ignores Scotland’s needs. “This analysis shows that on all headline measures of the public finances, Scotland’s fiscal position is forecast to be stronger than or at the very least level with the UK position. “This paper gives a very clear picture of what independence could deliver in economic terms for the people of Scotland. By increasing productivity by 0.3 percentage points per annum, boosting the working age population by less than the predicted UK rate, and increasing the employment rate by just over 3 percentage points, bringing Scotland up to the same standard as the top countries in the OECD, we can generate over £5 billion a year of extra revenues within 15 years, without increasing tax by a penny. “People in Scotland are getting a raw deal under the current arrangement – paying more into Westminster than we get out. In the five years to 2012-13, Scotland has on average accounted for 9.5% of UK tax receipts with estimates showing we have received 9.3% of UK public spending. “Tax receipts in Scotland have averaged £10,000 per head over this period, £1,200 or 14% higher than in the UK as a whole. The 3rd Oil and Gas analytical bulletin has also been published today focusing on the outlook for the industry over the next five years. Initial estimates show that recent declines in production are starting to be reversed. Commenting on the bulletin, Finance Secretary John Swinney said: “North Sea oil and gas is a fantastic natural asset which has a great future for many decades to come. “And it is vital that we make sure future revenues are invested in the future of Scotland, unlike the way they have been squandered by successive Westminster administrations over the last 40 years. “Using the industry estimates of production and realistic oil prices it is clear that Scotland’s oil industry will continue to make a valuable contribution to our public finances for many years to come. “As the industry recovers from UK tax changes, invests in new fields and extends the life of existing fields, revenues will begin to rise again. Oil and Gas UK’s central forecast is for production to increase by approximately 14% between 2013 and 2018. “The figures published today show that Scotland’s finances in 2016/17 will be in a strong position and future Scottish Governments will have the opportunity to start an oil savings fund from the point of independence. “Scotland is rich in natural resources, with estimates showing that we are the largest oil producer and the second largest gas producer in the EU. Up to 24 billion barrels of oil and gas reserves remain under the North Sea – it is vital that Scotland benefits from that wealth to come.”
Posted on: Wed, 28 May 2014 09:56:37 +0000
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