SUBSIDY JUNKY SCOTS
The Sunday Times July 23, 2006
Scots given £3bn 'too much'
Jason Allardyce
It's been known for years that England subsidises Scotland. But it's far worse than we imagined - England is giving Scotland £3 billion a year too much at the expense of England's poorer regions.
ENGLAND is subsidising Scotland by £3 billion a year more than it needs at the expense of less affluent English regions, according to an academic audit.
A year-long study by two economists into the structure of subsidies concludes that Scots receive 22% more per head in public spending than England and that this is not deserved because people north of the border are already WEALTHIER than people living in most English regions.
However, contrary to the claims of politicians such as Ken Livingstone, the London mayor, that inhabitants of the capital are losing out, the academics also find that Londoners receive 42% too much in public spending because they earn more than anywhere else in Britain.
The report by Professor David Bell of Stirling University and Professor Sir Donald MacKay, a former economics adviser to the Scottish secretaries for 25 years, was seized on by English politicians. Boris Johnson, the Tory shadow higher education minister, described the spending gap as “intolerable” and demanded that Gordon Brown, the chancellor, change the procedures for distributing money.
Johnson said the 30-year-old Barnett formula, under which the regional distribution of spending is calculated, should be scrapped.
The findings follow a recent poll which found that 70% of English voters believed Scotland’s share of public spending was too high. Since the Scottish parliament was created in 1999, the budget for devolved services, including education and health, has risen from £16 billion to almost £30 billion.
In the health service alone, spending is about £200 a head higher in Scotland than in England. Scots are able to use the extra money to fund free personal care for the elderly and to end upfront tuition fees and university top-up fees.
But Alex Salmond, the Scottish National party leader, dismissed calls for lower public spending. He said Scotland contributed more to the Treasury than it receives, mainly because of North Sea oil revenues.
Scots given £3bn 'too much'
________________________________________________________
Scottish Parliament 'squanders £4.5 billion'
MINISTERS are squandering £4.5 billion of taxpayers’ money every year, according to a ground-breaking audit of public spending in Scotland by two of the country’s most eminent economists.
The independent study, commissioned by The Sunday Times, reveals endemic waste in the public sector and sets out a programme of radical public service reform that would save billions, allowing ministers to slash taxes.
The landmark report, which scrutinises every part of the public sector in Scotland, also reveals that Gordon Brown is giving Scotland £3 billion a year more than it needs, at the expense of several poorer English regions.
The year-long investigation, by Professor David Bell of Stirling University and Professor Sir Donald MacKay, a former economic adviser to the Scottish secretary of state, has sparked a fierce political debate. Some leading English politicians said it was no longer acceptable for Scots to receive up to £2,000 per head a year more than their English counterparts.
In Scotland there were calls for reform to end over-reliance on the public sector and stimulate economic growth.
Bell and MacKay have identified £3.1 billion of waste on top of the Scottish executive’s own planned annual savings of £1.5 billion. The biggest misuse of funds, they say, is in health and education, where the operating costs of NHS boards and schools vary dramatically.
Their analysis proves that plans drawn up by the Scottish Tories and Lib Dems to cut income tax by up to 3p in the pound are affordable. They also called for ministers to abolish business rates to make Scotland’s economy more competitive.
More than £2 billion of windfalls from the privatisation of Scottish Water and the Forestry Commission could fund transport improvements, including a 300mph bullet train link between Edinburgh and Glasgow that would cut the journey time to 12 minutes.
Bell and MacKay argue that doubling Scotland’s budget to £29 billion since devolution in 1999 has failed to improve services. Instead, they claim, it has been used to fund pay rises for public servants.
“The most worrying feature is that we have dissipated a large part of a public spending bonanza without a commensurate increase in the quality of public services,” they conclude. “Most of what Scottish ministers term increased investment in the public sector is nothing more than increased wages and salaries without improvements in service provision.”
Murdo Fraser, the Scottish Tories’ deputy leader, described the scale of the potential savings as “startling”.
“There has been huge waste in public money and these figures throw that into stark contrast,” he said. “The frustration of the last seven years of devolution is that people have seen the amount of money going into the system double during a reduction in services available to them.”
The authors’ claim that the devolutionary settlement is “manifestly unfair to English taxpayers” was endorsed by English politicians last night. In the health service alone, about £200 per head more is spent in Scotland than in England.
If Scotland’s share were based largely on earnings, the funding gap would fall from 22% to £11% and Scots would receive less than people living in poorer English areas such as the Midlands, the northeast, northwest and Yorkshire.
Treasury funding for Scotland is calculated in part by the Barnett formula, which is based on the size of the population. The formula was intended to reduce the spending gap between England and Scotland over time but it has widened.
Boris Johnson, the Tory higher education spokesman and MP for Henley, said the funding gap was “intolerable”. “It is becoming clearer and clearer to people that they are being short-changed. The Barnett formula is producing deeply inequitable outcomes,” he said.
Alex Salmond, the Scottish National party leader, said reducing Scotland’s budget would be “nonsensical”, and that North Sea oil revenues mean Scotland pays £4 billion more into the Treasury than it gets back. “The only change to UK accounting that anyone in Scotland should support is a move towards full fiscal independence,” he said.
A spokesman for Brown said the Barnett formula was fair and there was no plan to drop it.
The Scottish executive said its own targets to save money were “ambitious” and warned that setting them too high could compromise frontline services.
________________________________________________________
Leading article: The £4.5bn question
If the Scottish government ever needs a new slogan it should consider “Easy come, easy go”. The country’s political leaders have been guilty of breathtaking complacency about the way they spend taxpayers’ money, as shown in our exclusive report today by two of Scotland’s most eminent economists. The Scots’ generous share of public spending – up to £2,000 per head more than in England – has long been taken for granted as a kind of manna from the heavens. This in spite of increasingly obvious signals that England’s largesse can no longer be relied upon. Labour’s failure to convince the English regions that they too need devolution has left the UK with some glaring constitutional and financial anomalies that are politically untenable. The Barnett formula’s days are numbered and a new assessment of the needs of all the nations and regions of the UK is only a matter of time. If a new allocation of cash is a fair reflection of Scotland’s needs in relation to other parts of the UK, it would be hard to argue against, even if it entails a less generous settlement for Scotland.
Jack McConnell, the first minister, needs urgently to put Scotland’s house in order before London does it for him. When the inevitable reckoning arrives, it should find Scotland’s finances lean and efficient, and ready to counter any accusation of profligacy. The levels of efficiency in public services fluctuate wildly across Scotland, as illustrated in today’s report. The scope is there to make £3 billion of savings in addition to the £1.5 billion already identified by Scottish ministers. But achieving such savings would require a degree of toughness in dealing with Scotland’s unions and local authorities that has not been shown by successive first ministers. This is a task that McConnell cannot shirk. Prudence with taxpayers’ money is one of the defining virtues of good government, and it is a standard that devolution has failed to meet. Exactly what should be done with £4.5 billion of savings is a tantalising question. Ultimately, a great deal of it might have to be surrendered to the most needy parts of England. In the meantime it is up for grabs, and this prospect is an exciting challenge for Scottish politics. How this cash could be saved, and how it could be used, is one of the weightiest issues facing Holyrood. There will be those, like professors Bell and MacKay, who advocate scrapping business rates in Scotland. The Conservatives and Liberal Democrats are toying with using tartan tax powers to reduce Scottish income tax. A case can be made for one-off improvements to Scotland’s transport infrastructure. All these options are worthy of debate and each would increase Scotland’s competitiveness. How the parties line up on these issues will reveal their true instincts as well as their vision, or lack or it, for Scotland’s future.
Of course, all of this underlines the case this newspaper has been making for a responsible culture of self-sufficiency in Scottish government. Today’s report illustrates perfectly why the status quo, constitutional and financial, is untenable.
englishdemocrats.org.uk
The Sunday Times July 23, 2006
Scots given £3bn 'too much'
Jason Allardyce
It's been known for years that England subsidises Scotland. But it's far worse than we imagined - England is giving Scotland £3 billion a year too much at the expense of England's poorer regions.
ENGLAND is subsidising Scotland by £3 billion a year more than it needs at the expense of less affluent English regions, according to an academic audit.
A year-long study by two economists into the structure of subsidies concludes that Scots receive 22% more per head in public spending than England and that this is not deserved because people north of the border are already WEALTHIER than people living in most English regions.
However, contrary to the claims of politicians such as Ken Livingstone, the London mayor, that inhabitants of the capital are losing out, the academics also find that Londoners receive 42% too much in public spending because they earn more than anywhere else in Britain.
The report by Professor David Bell of Stirling University and Professor Sir Donald MacKay, a former economics adviser to the Scottish secretaries for 25 years, was seized on by English politicians. Boris Johnson, the Tory shadow higher education minister, described the spending gap as “intolerable” and demanded that Gordon Brown, the chancellor, change the procedures for distributing money.
Johnson said the 30-year-old Barnett formula, under which the regional distribution of spending is calculated, should be scrapped.
The findings follow a recent poll which found that 70% of English voters believed Scotland’s share of public spending was too high. Since the Scottish parliament was created in 1999, the budget for devolved services, including education and health, has risen from £16 billion to almost £30 billion.
In the health service alone, spending is about £200 a head higher in Scotland than in England. Scots are able to use the extra money to fund free personal care for the elderly and to end upfront tuition fees and university top-up fees.
But Alex Salmond, the Scottish National party leader, dismissed calls for lower public spending. He said Scotland contributed more to the Treasury than it receives, mainly because of North Sea oil revenues.
Scots given £3bn 'too much'
________________________________________________________
Scottish Parliament 'squanders £4.5 billion'
MINISTERS are squandering £4.5 billion of taxpayers’ money every year, according to a ground-breaking audit of public spending in Scotland by two of the country’s most eminent economists.
The independent study, commissioned by The Sunday Times, reveals endemic waste in the public sector and sets out a programme of radical public service reform that would save billions, allowing ministers to slash taxes.
The landmark report, which scrutinises every part of the public sector in Scotland, also reveals that Gordon Brown is giving Scotland £3 billion a year more than it needs, at the expense of several poorer English regions.
The year-long investigation, by Professor David Bell of Stirling University and Professor Sir Donald MacKay, a former economic adviser to the Scottish secretary of state, has sparked a fierce political debate. Some leading English politicians said it was no longer acceptable for Scots to receive up to £2,000 per head a year more than their English counterparts.
In Scotland there were calls for reform to end over-reliance on the public sector and stimulate economic growth.
Bell and MacKay have identified £3.1 billion of waste on top of the Scottish executive’s own planned annual savings of £1.5 billion. The biggest misuse of funds, they say, is in health and education, where the operating costs of NHS boards and schools vary dramatically.
Their analysis proves that plans drawn up by the Scottish Tories and Lib Dems to cut income tax by up to 3p in the pound are affordable. They also called for ministers to abolish business rates to make Scotland’s economy more competitive.
More than £2 billion of windfalls from the privatisation of Scottish Water and the Forestry Commission could fund transport improvements, including a 300mph bullet train link between Edinburgh and Glasgow that would cut the journey time to 12 minutes.
Bell and MacKay argue that doubling Scotland’s budget to £29 billion since devolution in 1999 has failed to improve services. Instead, they claim, it has been used to fund pay rises for public servants.
“The most worrying feature is that we have dissipated a large part of a public spending bonanza without a commensurate increase in the quality of public services,” they conclude. “Most of what Scottish ministers term increased investment in the public sector is nothing more than increased wages and salaries without improvements in service provision.”
Murdo Fraser, the Scottish Tories’ deputy leader, described the scale of the potential savings as “startling”.
“There has been huge waste in public money and these figures throw that into stark contrast,” he said. “The frustration of the last seven years of devolution is that people have seen the amount of money going into the system double during a reduction in services available to them.”
The authors’ claim that the devolutionary settlement is “manifestly unfair to English taxpayers” was endorsed by English politicians last night. In the health service alone, about £200 per head more is spent in Scotland than in England.
If Scotland’s share were based largely on earnings, the funding gap would fall from 22% to £11% and Scots would receive less than people living in poorer English areas such as the Midlands, the northeast, northwest and Yorkshire.
Treasury funding for Scotland is calculated in part by the Barnett formula, which is based on the size of the population. The formula was intended to reduce the spending gap between England and Scotland over time but it has widened.
Boris Johnson, the Tory higher education spokesman and MP for Henley, said the funding gap was “intolerable”. “It is becoming clearer and clearer to people that they are being short-changed. The Barnett formula is producing deeply inequitable outcomes,” he said.
Alex Salmond, the Scottish National party leader, said reducing Scotland’s budget would be “nonsensical”, and that North Sea oil revenues mean Scotland pays £4 billion more into the Treasury than it gets back. “The only change to UK accounting that anyone in Scotland should support is a move towards full fiscal independence,” he said.
A spokesman for Brown said the Barnett formula was fair and there was no plan to drop it.
The Scottish executive said its own targets to save money were “ambitious” and warned that setting them too high could compromise frontline services.
________________________________________________________
Leading article: The £4.5bn question
If the Scottish government ever needs a new slogan it should consider “Easy come, easy go”. The country’s political leaders have been guilty of breathtaking complacency about the way they spend taxpayers’ money, as shown in our exclusive report today by two of Scotland’s most eminent economists. The Scots’ generous share of public spending – up to £2,000 per head more than in England – has long been taken for granted as a kind of manna from the heavens. This in spite of increasingly obvious signals that England’s largesse can no longer be relied upon. Labour’s failure to convince the English regions that they too need devolution has left the UK with some glaring constitutional and financial anomalies that are politically untenable. The Barnett formula’s days are numbered and a new assessment of the needs of all the nations and regions of the UK is only a matter of time. If a new allocation of cash is a fair reflection of Scotland’s needs in relation to other parts of the UK, it would be hard to argue against, even if it entails a less generous settlement for Scotland.
Jack McConnell, the first minister, needs urgently to put Scotland’s house in order before London does it for him. When the inevitable reckoning arrives, it should find Scotland’s finances lean and efficient, and ready to counter any accusation of profligacy. The levels of efficiency in public services fluctuate wildly across Scotland, as illustrated in today’s report. The scope is there to make £3 billion of savings in addition to the £1.5 billion already identified by Scottish ministers. But achieving such savings would require a degree of toughness in dealing with Scotland’s unions and local authorities that has not been shown by successive first ministers. This is a task that McConnell cannot shirk. Prudence with taxpayers’ money is one of the defining virtues of good government, and it is a standard that devolution has failed to meet. Exactly what should be done with £4.5 billion of savings is a tantalising question. Ultimately, a great deal of it might have to be surrendered to the most needy parts of England. In the meantime it is up for grabs, and this prospect is an exciting challenge for Scottish politics. How this cash could be saved, and how it could be used, is one of the weightiest issues facing Holyrood. There will be those, like professors Bell and MacKay, who advocate scrapping business rates in Scotland. The Conservatives and Liberal Democrats are toying with using tartan tax powers to reduce Scottish income tax. A case can be made for one-off improvements to Scotland’s transport infrastructure. All these options are worthy of debate and each would increase Scotland’s competitiveness. How the parties line up on these issues will reveal their true instincts as well as their vision, or lack or it, for Scotland’s future.
Of course, all of this underlines the case this newspaper has been making for a responsible culture of self-sufficiency in Scottish government. Today’s report illustrates perfectly why the status quo, constitutional and financial, is untenable.
englishdemocrats.org.uk
