Monday, June 19, 2006

A load of bollocks in the letters page of The Herald

Perusing the letters page of The Herald brings this turd, blinking myopically, into the light.
It is London that gets the subsidies

It was interesting to note Ken Livingstone again wading into the debate on London apparently subsidising the rest of the UK, when the opposite is clearly the case (June 17). The capital is the UK's main beneficiary of so-called "national" spending and in the last 10 years alone has been awarded a jaw-dropping £26bn for a range of projects, including the £14.6bn Crossrail project and the £3.2bn Jubilee Line extension.

In addition, not only do public servants get paid more for working in the high-wage south-east, more of the highest paid roles are based in the capital. Government figures show that 63% of the senior Civil Service is based in London, bringing a further boost of £135m to that city's economy. In contrast Scotland is this year in relative surplus compared to the UK by some £4bn – equivalent to every Scot sending south £800 a year.

Mr Livingstone would be better off saying nothing, as the more he spins a yarn about London subsidising the rest of the UK, it becomes increasingly clear that Scotland's cash is heading south to fill his city coffers.
Alex Orr, 35 Bryson Road, Edinburgh.

With something as pig-ignorant as this it is very difficult to know where to start, really.

Perhaps we should start with the "jaw-dropping £26bn" over the last 10 years that London has been awarded (and, incidentally, is it just me, or has Crossrail not been finished yet?). Would anyone like to tell me what the budget for the Scottish Executive is every year? That's right, it's about £25 billion every single year. Scotland's GDP is around £80 billion, and it has a population of 5.1 million. This is a per capita spend of just under £5,000.

Now let's look at London; Britain's capital city has a population of 7.5 million (as of 2005) and a metropolitan area population of between 12 and 14 million. The city itself has an economy worth £181 billion (19% of Britain's GDP) or, including the metropolitan area, £280 billion (30% of UK GDP). Now, I cannot find the public spending figures for London, but to match the Scottish spend, the total centrally allocated budget would have to be between £37 billion and £69 billion. Is it?

Even were that the case, the budget would only be a fifth of the city's output, whereas Scotland's is a third. Taking the GDP figures, Scotland's per capita output is £16,000, whereas London's is £24,000 (£20,000 including the metropolitan area). I find it very unlikely that Scotland is, in any way, subsidising London.
In addition, not only do public servants get paid more for working in the high-wage south-east, more of the highest paid roles are based in the capital. Government figures show that 63% of the senior Civil Service is based in London, bringing a further boost of £135m to that city's economy.

Well, yes, but it is considerably more expensive to live in London than anywhere in Scotland, even Edinburgh. Plus, of course, higher pay means higher tax receipts and therefore more money put back to the government.
In contrast Scotland is this year in relative surplus compared to the UK by some £4bn – equivalent to every Scot sending south £800 a year.

Um, can I see those figures; or would you like to tell us where you got them? We can see from this report (a little out of date, but let's assume that the proportions are still correct) that Scotland contributed 8.2% of the UK revenue, but they have 12% of the population. I would say that Scotland wasn't really pulling its weight, frankly; especially as only Northern Ireland receives more public money per head. Over half of Scotland's economy is based on public sector spending (and a third of the working population are employed by the public sector, and that is not counting GPs, etc.), which is, in turn, fucking the private sector.

But, let's do some maths (although we must bear in mind that this report is from 2004); in the year in question, Scotland contributed £31.4 billion. Given the Scottish Executive's budget, I am assuming that this is what Mr Orr is using to maintain that Scotland is about £4 billion in credit; alas, he forgets that not all spending is done by the Scottish Executive. Because £31.4 billion divided by 5.1 million people gives a per capita contribution of £6,157. Per capita expenditure was £6, 579, which leaves a deficit of £422 per head; this makes the total donation to Scotland roughly £2.2 billion.

Actually, of course, the same page of that report shows a total Scottish expenditure of £35.7 billion, with a total UK contribution of £31.4 billion: this means, of course, that far from being £4 billion in credit, the Scottish economy was actually in deficit by £4.3 billion.

Given the output of London, and the relative spending per head in the South East (roughly £4,700) it seems—and, believe me, I never thought that I would say this—that Ken Livingston is right, and London does, indeed, subsidise Scotland.

So, with all due respect, Alex Orr, you can take your letter and shove it right up your arsehole.

6 comments:

Rory Maxwell said...

Crossrail hasn't been started, far less finished - nobody can agree on the exact combination of new property taxes that will be used to make us Londoners pay for it. Around £100million has been spent on various geological and economic studies over the past twenty years.

Furthermore, it's around £10billion to vastly increase the rail capacity in the South East, quite different from the SE's £500million Edinburgh Airport Rail Link that doesn't actually result in any overally capacity increase.

Anonymous said...

I'm not a Scot but do your figures take into account North Sea oil? It might be annoying that someone decided to gift Scotland oil to make up for a lack of income tax reciepts but it might well do.

Anonymous said...

Sorry for this long post.

Can we puncture this myth about the oil being all "Scotland's oil"?

Many years ago I worked for a bank financing development/production in the North Sea. One of our financing clients - a US based entity - wanted reassurance that should anything go wrong it would be able to sue in the English courts since the agreement would be written under English law. In the event the financing never happened but we went a long way down the road of getting counsel's opinion on the status of the reserves. Among other things the draft opinion took the view that the boundary between "English" and "Scottish" energy reserves would follow the slope of the England/Scotland land border into the North Sea. If you look at a map you will see that the land border is steeply sloped upwards from West to East. Anything South of that extended border "belongs" to England, everything North "belongs" to Scotland. http://www.rigzone.com/news/image_detail.asp?img_id=420 Unfortunately for Scotland a significant part "Scotland's oil" lies south of that notional border. Although much of the energy resources is landed in Scotland this doesn't mean it all "belongs" to Scotland.

Actually the real scandal is lost in the mists of time, back (I think) to the late 50s and early 60s. At this time our masters were negotiating the dividing up of the North Sea energy province. When you divi up subsea resources for these purposes the general practice is to follow the borders of the continental shelf. If this had been done the vast majority of what is now Norway's oil/gas reserves would have belonged to the UK. But oh no, we agreed to a midway split of the North Sea between UK, Norway, Denmark and Germany: much to their benefit and our disadvantage. In effect it was a practice run for the brilliant EEC negotiations ("what do you want? OK you've got it - now can we join?")

Devil's Kitchen said...

Umbongo,

Yup, quite right. As a matter of fact, I was just trying to research this when you comment came in.

Anon, no, I don't believe that those figures did include the oil. However, if we generously give Scotland half the oil revenue for that year, that still leaves the economy in deficit by roughly £1 billion.

DK

Anonymous said...

Deficit for what Iraq war trident.Sorry I have Norwegian friends who have a laugh every time I tell them this myth.You dont want to know what aussies say.

Ken W said...

As I recall, most of the Scottish Whiskey industry is registered in London. Do these figures include whiskey earnings? (exports over £1 billion) - and on what side?

O mi god brexit kills expats lol

Surely this is yet another of the evils of Brexit ? British expatriates who move to Portugal could lose their tax free status under new pla...