Scotland and England’s contribution to taxes

The issue of who pays the tax is central to discussions on a new formula for Scotland’s finances within the Union. As Scotland takes over responsibility for income tax and others, so there needs to be a new grant formula to reflect the revenues she retains for herself.

Scotland’s share of overall revenues in 2014-15 was 7.8% (splitting oil revenues on a population basis). Within this Scotland collected a smaller share of capital and enterprise taxes like IHT, Stamp Duty and CGT, at around 5% of the total, but a higher proportion than her average of spending taxes like VAT, Spirits duty and tobacco tax. Scotland supplied 7.3% of the Income tax receipts, a little below her receipts average.

The SNP have argued in the past that most of the oil revenues should be attributed to Scotland as much of the oil is landed in Scotland. This is currently an irrelevance as the oil revenues have all disappeared thanks to the collapse of the oil price.

The Scottish government pointed out that in 2011-12 when more oil was being produced from the North Sea at much higher prices oil revenues ran as high as 16% of total attributed revenues, at a similar sum to Income tax or VAT. Unfortunately the natural decline of the North Sea reservoirs, alongside cancelled investment in exploration and new production at current oil prices, means those revenue sums are not going to be seen again anytime soon.

Worse still for the Scottish economy, we are now witnessing too many job cuts and pay cuts in the once lucrative North oil and oil service sectors. The Aberdeen area in particular is an area with many highly paid jobs generating substantial Income tax revenues for the UK state. Just at the point where this revenue passes to the Scottish government , it is in sharp decline.

I am asking questions to find out how the Scottish and UK government propose to handle this natural fluctuation or decline in Scottish income tax receipts. It is very relevant to how the Union’s finances will look in the new devolved model.

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68 Comments

  1. Lifelogic
    Posted January 19, 2016 at 5:46 am | Permalink

    Indeed let us rejoice that the prospect of an Ed Miliband’s Labour dog wagged by a Nicola Sturgeon tail was so frightening to the English that even Cameron and Osborne’s faux Tories were preferable. It would indeed have been a dreadful combination for England and for the UK in general were this SNP tail and Labour dog now in power. A fair deal for England is certainly needed and we certainly would not have got it with Labour/SNP, but will we get it from Cameron?

    I heard Jeremy Paxman the other day describe Cameron as being “authentic” and Osborne as the architect of the 2015 election victory. How can anyone describe the cast iron, no ifs no buts to the tens of thousands, IHT ratter, low tax Conservative at heart (but certainly not in practice), fake long grass EU non renegotiation, husky and hoody hugging, Heathrow ditherer, a treaty is not a treaty once ratified, token women etc. promoter, vote blue get greencrap, endless PR spinner Cameron as “authentic”?

    Perhaps all that involvement with interviewing politicians rather lowers ones standards of authenticity.

    Clearly it was Sturgeon and Miliband (aided by the anti UKIP first past the post system) who were the architects of Cameron’s scraped victory. It was not Osborne nor indeed Cameron.

    • Lifelogic
      Posted January 19, 2016 at 6:16 am | Permalink

      Clearly Scotland and the whole of the UK would benefit from more better paid jobs. Jobs that mean working families are not a net liability to the state sector, as the vast majority currently are.

      Both the Tories and Labour seem to think the way towards this is by passing daft laws to force companies to pay more. This is just a certain way of destroying UK jobs, wealth and competitiveness.

      The only way to better paid jobs is through fewer daft regulations, a far smaller state sector, lower and simpler taxes, easy hire and fire, selective immigration, far less EU, cheaper non greencrap energy, far more scientists, business people, mathematicians and engineers and far fewer lawyers, regulators & civil servants, HR experts, pointless degrees, tax planners.

      Surely all sensible and numerate people can see this so why not Cameron, Osborne and his fake Tory party?

      • A different Simon
        Posted January 19, 2016 at 11:10 am | Permalink

        Lifelogic ,

        Aren’t you are missing the point too ?

        It’s not that the pay is currently low , it is on a par with France and Germany and well ahead of Italy and Spain where merely having a job is an achievement .

        Italy was an industrial powerhouse until quite recently . Look at her now .

        Britain can never become Switzerland and not many of us would want it too .

        The problem with the UK is not wages but the cost of living , principally accommodation is so expensive as to render the UK uncompetitive .

        • Ben Kelly
          Posted January 19, 2016 at 6:16 pm | Permalink

          Accommodation costs are high as the money supply has been massively increased since the 70s to suit government, business, the very wealthy and banks to the detriment of the rest of us whose own money supply did not increase exponentially like theirs.

          Sound money would at least prevent accommodation costs being able to continue their inexorable rise. Reduction in demand and increased supply (together) might reduce them but this will not happen as the “recovery” is based on rising property prices.

          I see Mark Carney still refuses to advocate interest rate rises.

          • A different Simon
            Posted January 19, 2016 at 8:35 pm | Permalink

            Ben Kelly ,

            With mortgage lenders able to create money out of thin air , it is simple for them to exploit shortages .

            It is immoral how elected representatives have helped them enslave ordinary citizens .

            The demographics of the country are changing . Eventually politicians are going to have to stop favouring the land owning classes and ensure the under 40’s don’t feel so disenfranchised .

            Time to shift some of the burden of taxation from labour onto land . This would provide a negative feedback loop on land prices and ensure society benefits from increasing land values and not just the few .

            People must have access to decent pension , preferrably a decent state pension so they don’t feel BTL is the only way forward .

          • Ben Kelly
            Posted January 20, 2016 at 8:01 am | Permalink

            @ADS

            Any land value tax you advocate should be levied on price paid not on current value. Unfortunately this will protect legacy and hereditary land owners but it will prevent fiscal drag evicting owners whose lengthy ownership has resulted in higher prices with no corresponding income growth (eg old ladies)

        • Lifelogic
          Posted January 19, 2016 at 7:28 pm | Permalink

          Indeed we need more houses or fewer people. Relax planning and the green crap OTT building controls or reduce immigration.

          • A different Simon
            Posted January 20, 2016 at 12:40 pm | Permalink

            Ben Kelly ,

            A location value tax must be based on the rentable value of the land to provide a negative feedback to land speculation and regular income to society .

            An annual charge for exclusive use of the commons rather than a one off transaction tax like stamp duty .

            Levied on vacant lots at the same rate as adjacent developed lots .

            It can be phased in so the asset rich , income poor can make informed decisions .

      • Lifelogic
        Posted January 19, 2016 at 2:46 pm | Permalink

        So now they want to limit immigration from outside the EU to people earning £30K or more. So why is this a good idea for Australians, New Zealanders, Indian, Americans and the likes but not for EU migrants? Perhaps Cameron can explain but I rather doubt it.

        Even people on £30K are likely to be a net liability as a family overall on the state. Perhaps only paying about £10K in NI and tax on that salary. Schools, the NHS, roads, police, defence and all the rest of the rather inefficient state soon eats through that. So why are EU migrants on the minimum wage (or often even less if self employed) such a good thing to be encouraged and unregulated?

        Also yet another tax per certain employees of £1K PA on companies. It seem we get another tax or tax increase from pension robber George Osborne almost every single day.

    • Lifelogic
      Posted January 19, 2016 at 6:38 am | Permalink

      I read in the Times today that Ministers have promised to lobby the EU to abolish VAT on women’s sanitary products. What sort of sensible, proud, sovereign nation has to lobby the EU even to be allowed to do this? Is this a sensible use of Ministers time? Just get out please.

      Also the Times has.

      High street stores are charging women up to twice as much as men for practically identical products in sexist high street. Well if women are daft enough to pay twice as much for pink razors, “beauty” products the likes you can be sure the shops will offer these overpriced goods to them. It is what the women are prepared to pay that fixes these prices in the market. It is just another indication that women and men, contrary to government and BBC “think” are (on average) different. They make different choices and have different motivations. It is not the high street that is “sexist” it is the customers.

    • stred
      Posted January 20, 2016 at 7:21 am | Permalink

      I am reading Paxo’s book about the Englisg at the moment. I think he meant that Eural is a genuine vacillating and untrustworthy PR merchant.

      • stred
        Posted January 20, 2016 at 12:48 pm | Permalink

        Sorry. Authentic, non genuine.

  2. Mark B
    Posted January 19, 2016 at 6:58 am | Permalink

    Good morning.

    What they earn in revenue the Scottish government should keep. Not a penny more, not a penny less.

    Remember, it is a UK Government that is giving English tax payer money to Scotland, and not just Scotland. We must also figure into all this what the English taxpayer has to contribute to the coffers of both Wales and Northern Ireland, not to mention all the dominions of Her Majesties Realm. And this is not even taking into account on what we give as a Vassal State to the EU and to other countries through aid.

    There is a very heavy burden upon the English Taxpayer that the UK Government imposes upon us. If we could be free of all those burdens, just think of the Health Service we could have. Education, transport, defence and infrastructure could much improved. If Scotland and even the EU cannot go it alone, without our support or contributions, where it be through money or trade, why do we need either. England is both Scotland’s and the EU’s biggest trading partner, why do we, the English, have to pay them to sell their goods to us ?

    Whilst I do believe in a reconstituted UK along federal lines, if push ever came to shove, I would be in favour of leaving both Unions at once. Let the Scots, Welsh and Irish run to the arms of the EU. Let them face reality, Greek style. I’ve had enough and they have got more than enough !

    • DaveM
      Posted January 19, 2016 at 9:14 am | Permalink

      Excellent post.

    • Ben Kelly
      Posted January 19, 2016 at 12:59 pm | Permalink

      There is a very heavy burden upon the English Taxpayer that the UK Government imposes upon us. If we could be free of all those burdens, just think of the Health Service we could have. Education, transport, defence and infrastructure could much improved.

      Could we not just pay less tax and get more value out of what we spend in these areas?

    • Vanessa
      Posted January 19, 2016 at 3:35 pm | Permalink

      Mark B – How do you see the Scottish helping to pay for their own pensions and security? Just because ship building or Trident is in Scottish waters does that mean England is not entitled to any of it?

      • Mark B
        Posted January 20, 2016 at 7:01 am | Permalink

        Vanessa

        Sorry to get back to you so late.

        The Scots, just like everone else, would have to make reductions in spending and / or raise taxes.

        In a Federated UK, I believe that the UK Federal Government would be in charge of defence. It would charge each home nation based on population. So england would pay more overall but the same per head. As a lot of defence spending is made elsewhere in the UK and not just in England (eg Trident) I do not see a problem in this area. Defence spending is far smaller than spending on welfare (which the Scots will have to find the money on their own) I it gives England security and a means of holding the whip hand in the Union. A small price to pay for all I think.

  3. Mike Stallard
    Posted January 19, 2016 at 7:19 am | Permalink

    Very relevant indeed.
    You seem to be the only person facing up to Scottish independence and for this I offer my warmest congratulations.
    This may seem like banging on, but when the new Fundamental law comes into the EU hopefully by 2025, taxation will be centralised anyway under a Finance Minister appointed by the Commission. Throughout the EU (including eventually us), taxation will become standardised. The UK state budget, of course, will also be checked and approved in the annual Semester by the Finance Minister and the Commission.

  4. stred
    Posted January 19, 2016 at 7:24 am | Permalink

    Scotland will complete offshore wind generation soon, while closing remaining coal and nuclear. Gas will be minimal. Re. Euan Mearns. The ‘smart’ grid will distribute the fluctuating wind power to England and Wales, and even to Norway and Iceland. Scotland will depend on English gas and tree burning to keep her lights on, selling wind at a price subsidised by English bill payers and taxpayers, while buying back gas, made more expensive by carbon tax on English consumers. These higgen subbsidies should also be taken into account when the English, with no university and health freebies, are expected to send their taxes north.

    • Lifelogic
      Posted January 19, 2016 at 8:58 am | Permalink

      Indeed but best just to stop all the daft energy subsidy payments in all of the UK and kill the who damaging, artificial non industry. It made no sense even when oil and gas were expensive even less now. If the government cannot break the contracts then just tax the money back. After all they keep mugging pensions and landlords/tenants and they have a valid purpose.

      The beneficiaries must, after all, have know what a tax payer/bill player fleecing nonsense these subsidies and rules were when they took the benefit of them.

    • fedupsoutherner
      Posted January 19, 2016 at 9:58 am | Permalink

      Absolutely Stred. The lovely Amber Rudd is going to shut down all our gas plants so what is going to happen to all the shale we have if there is nowhere to burn it. I read yesterday that a fairly new gas powered station is to close in Cardigan with the loss of all that cheap energy and jobs to boot. All gas fires, cookers and boilers are going and so because we will be reducing our CO2 emissions (one can only assume because we have no power) the rest of the EU considers that they can have a reduction in the amount they have to cut back on emissions. Great!! While we sit in the dark, Germany and the likes are burning coal. Just what is Cameron and co thinking about? You are right when you state that it is mainly the English paying the heavy subsidies for Scottish wind farms which are still being applied for and built at a rapid rate. Scotland will have no power soon when the wind drops and the sun doesn’t shine as is the case most days where I live. As for the taxes John, it really is a nightmare. The SNP don’t give a jot about how Scotland will be financed as long as they get what they want and many of the public here just dont’ seem to understand the full implications of what they are voting for given that many youngsters are being brainwashed in schools into thinking Westminster is the big bad wolf. For those like myself, who desperately want out of the EU and to remain in the UK it is a nightmare waiting to happen.

      • Lifelogic
        Posted January 20, 2016 at 4:35 am | Permalink

        What do you expect if you put a rather dopey history graduate in charge of energy? She clearly has not got a clue about the economics, physics or engineering of power generation.

  5. JoeSoap
    Posted January 19, 2016 at 7:56 am | Permalink

    It sounds as though the Scots are shooting themselves in the foot by wanting to organise their own tax system. Most of the English would say-fine, get on with it. However one can envisage Cameron & Co happily letting them have the best of both worlds-raising less tax but having it made up from southern contributions.
    We await your further unbiased future diary entries on this one.

    • Lifelogic
      Posted January 19, 2016 at 8:59 am | Permalink

      The SNP will nearly always blame everything on lack of sufficient funding from the English, one can be sure of that.

    • fedupsoutherner
      Posted January 19, 2016 at 10:00 am | Permalink

      Quite right Joe. They do seem to get the best of everything at the moment so why they are always moaning is beyond me. Even those of us living in Scotland are fed up with hearing the SNP whining and whinging all the time. We hear more about poor old Scotland than any other part of the country. All this devolved power to Scotland in particular has been a waste of money and a disaster.

  6. Ben Kelly
    Posted January 19, 2016 at 8:07 am | Permalink

    Surely the Devo max settlement means that Scotland should only receive what she raises in tax. No cross country subsidies for those who feel they know best.

    If polling can be believed momentum swung back to the better together campaign once devo max was offered by the discredited Brown and all the party leaders.

    • Lifelogic
      Posted January 19, 2016 at 9:01 am | Permalink

      What legal right did Brown and the other leaders have to offer Devo Max without any authority from the English and other voters?

      • Yosarion
        Posted January 19, 2016 at 6:12 pm | Permalink

        You mean, NO Taxation! without equal Representation, anyone for Tea

        • Ben Kelly
          Posted January 19, 2016 at 6:24 pm | Permalink

          South East English taxpayers are taxed to pay for Scotland without any representation in the Scottish parliament.

          I don’t see you getting perturbed by that anomaly sir.

  7. Antisthenes
    Posted January 19, 2016 at 8:11 am | Permalink

    I suspect parts of England like the south east are subsidising the rest of the UK which tells me that England economically does not actually need the union as much as the other countries that are part of it. Without the union England would be financially better off. The SNP in their wisdom do not appear to recognise this fact and so do not realise how unreasonable many of their demands are. They want the penny and the bun.

    However if the desire is to keep the union intact and therefore to continue with the redistribution of wealth from the wealthier parts of the the union to the poorer parts. Then the formula has to be based on GDP. Each part contributing according to it’s means. To achieve that would require more devolution. All tax and spend abilities would become universally localised similar to how the EU budget arrangements work.

    The EU however is working in the opposite direction and wants to take more of the tax and spend abilities of it’s member away from them and centralise them. The SNP are fervent supporters of what the EU stands for and are happy to endorse it’s actions and policies. How incongruous is that. Do not the people of the UK not recognise that their own union is having problems because people now want to decentralise. So remaining a member of the EU would be a perverse act as it is working to do the very opposite.

  8. Richard1
    Posted January 19, 2016 at 8:18 am | Permalink

    Let’s have a flat rate of tax for everything – IT, CGT, IHT, VAT – at 20%, UK wide, and allow the four nations to set their own top up rates. In the case of England the body to decide should be English MPs sitting in a grand committee.

  9. turbo terrier
    Posted January 19, 2016 at 8:24 am | Permalink

    Very good piece John.

    You did not mention the elephant in the room. Scotland has a rapidly growing ageing population and these numbers will draw even more heavily on their resources added the numbers of the increasing unemployed it is a train smash waiting to happen.

    It is very noble to want to care for your elderly but in some areas of Scotland they are entering into fourth generation unemployed. Nearly all the major manufacturing bases have gone and the current proposals of the SNP regarding their forth coming tax change will I fear cause an exodus to the south which will only compound the problem as those that can afford to go will take their savings with them.

    This SNP parliament like any government will find very quickly there is a limit to how much you can keep giving away free because those who are expected to pay for it suddenly say enough is enough. The sticky and smelly will hit the fan very soon after the next elections in May. It is to a lot of us waiting for the drop it is the politics of envy no more no less. In some ways it is starting to happen with councils reintroducing community charges to try and help balance their books.

    What ever deal the SNP wish to support will rely heavily upon the rest of the UK underwriting it, as a lot of Scots here in dictatorship Scotland face their future with fear and trepidation.

  10. alan jutson
    Posted January 19, 2016 at 8:40 am | Permalink

    Your post today just shows how complicated devolved powers, can make a Union more difficult to manage.

    With fluctuating tax revenues based on fluctuating World market prices, nothing can be guaranteed.

    This just shows the folly of Scotlands wish for more so called independent control but still wanting the safety of the union when it all goes wrong, and they still want to be in the EU.

    How ironic that the EU seek complete control of all of its members, because then the whole is easier to manage, same currency for all, same tax system/rates for all, same budget control for all, same laws for all, same regulations for all, same trading agreements for all.

    Indeed the very model the EU is trying to adopt as a long-term aim, was that which was running in the UK before devolution, where income is shared, where some areas subsidise another.

    Scotland on the one hand seems to want to support such, as it still wants to stay in the EU, but also wants more independence at the same time, which is the current policy of renegotiation, which it is against..

    The fact is Scotland wants the best of both Worlds, which is completely unrealistic.

    This part devolution business is an absolute nonsense, and a complicated dogs dinner of an agreement, where no one will be satisfied for long.

    Just like the EU, our Union should mean totally in, or totally out.

    Its simple, its understandable and it makes politicians responsible to the people for their actions.

    • A different Simon
      Posted January 19, 2016 at 11:18 am | Permalink

      Quote “With fluctuating tax revenues based on fluctuating World market prices, nothing can be guaranteed.”

      Unless you are one of the chosen few with a defined benefit pension scheme .

      Then again the schemes I’m thinking of have no exposure to the market whatsoever .

      It is outrageous and distasteful that the chosen few are having guarantees provided to them by the masses who have been cut adrift to descend further into poverty .

    • Mark B
      Posted January 19, 2016 at 2:14 pm | Permalink

      The Scots did not vote for more power, they voted to either leave or remain. Cameron, with the help of the other two Stooges and egged on by, Gorden Brown went North and promised them more if they voted to stay.

      I do not ever seem to remember being asked, or the UK Parliament ever consulted. One man made 3 men sign a piece of paper committing them to the above action, and the UK Parliament and nation somehow had to go along with it. Disgusting !!!

      • Denis Cooper
        Posted January 20, 2016 at 11:35 am | Permalink

        Well, Salmond and Sturgeon signed that piece of paper:

        http://www.gov.scot/Resource/0040/00404789.pdf

        and I would argue that by doing so they have both implicitly acknowledged that it would be illegal for the devolved authorities in Scotland to hold any referendum on independence unless they had first obtained a special grant of power from the UK authorities through an order made under Section 30 of the UK Parliament’s Scotland Act 1998:

        http://www.gov.scot/Resource/0040/00404790.pdf

        So it would be interesting to see if the courts took the same view, that in part the Edinburgh Agreement was an instrument of surrender by the Scottish authorities over the long-running dispute whether they had the legal power to hold a referendum.

        That is, for example, if a majority of people across the UK voted to leave the EU but a majority in Scotland voted to stay in the EU, and then Sturgeon demanded a new referendum, and this time it actually went through the courts to decide whether the devolved Scottish authorities had the legal power to hold a referendum against the wishes of the UK Parliament.

        The precedent is there, that piece of paper signed by Sturgeon so that the 2014 referendum, but only that referendum, could take place; and so on that basis another referendum would require another piece of paper and another order made under Section 30 of the 1998 Act.

        So it would be open to the UK authorities to say that apart from any other considerations it would be unreasonable to hold another referendum on the separation of Scotland from the UK while the UK was still in the process of negotiating its separation from the EU.

  11. Bert Young
    Posted January 19, 2016 at 9:01 am | Permalink

    The Scots face a dilemma ; should they continue to support the SNP and face an economic wilderness or return to sanity and accept they cannot continue unless they provide the same conditions of welfare and education as the rest of the UK . They have long believed that they can survive by the give-aways from the English and the continuity of the Barnett formula . This head-in-the sand attitude has created the overall belief that the rest of the UK will always succumb to their selfishness and provide living standards for them that the North East of England would love to have .

    The insults that they throw at the English are unacceptable ; a student from the EU can attend their fine Universities without a financial contribution whereas a student from England would have to pay the full tuition cost . Someone who needs care and support in their old age in Scotland can receive total cost free maintenance whereas someone in England would be means tested and face support costs of something like £800 per week . Things like this cannot go on ; the Scots have to face reality and accept that a fairness to all is the only way to maintain union .

  12. acorn
    Posted January 19, 2016 at 9:50 am | Permalink

    If you do the sums on a geographic basis, you get a different story. If Scotland leaves the UK, it will do so on a geographic basis, not a population basis. The EU will welcome a sovereign Scotland with open arms, just to stick it up Camborne’s rectum. The EU will also insist, by convention, that the oil is taxed where it is landed. The currency to be used is another question. The detail is at:-
    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/464196/HMRC_disaggregated_receipts_-_Information___Analysis.pdf

    • Denis Cooper
      Posted January 20, 2016 at 10:46 am | Permalink

      Extracted, not landed; for example the gas extracted at Heimdal in the Norwegian sector of the North Sea and piped straight to the UK does not become UK gas just because it first touches land in the UK:

      https://en.wikipedia.org/wiki/Vesterled

      If you do the sums on a geographic rather than population basis you get a different answer, but not as different now as it was when the oil price was higher.

      • acorn
        Posted January 20, 2016 at 6:30 pm | Permalink

        Thanks Denis, my investment group will ask for our money back from HMRC then.

        • Denis Cooper
          Posted January 21, 2016 at 9:50 am | Permalink

          Bit too cryptic for me, I’m afraid.

  13. CHRISTOPHER HOUSTON
    Posted January 19, 2016 at 10:10 am | Permalink

    The Scottish Government and SNP are in We Are a Trade Union mode.

    Westminster is pictured as The Mean Boss. So whatever welcome progress is made in Scotland, the SNP portrays as a victory against the boss and a proof of why everyone should support the SNP.
    Conversely, every failure and economic retreat is the fault of the wicked boss who lives the life of an aristocrat whilst poor Scottish workers suffer.
    Meanwhile SNP MPs in the UK Parliament try putting a spanner in the works in just about everything. No doubt, some of their sound-bites and quoted statements in the Scottish media portray heroic militant red-raggers for the Scottish good.

    What is required is an English backlash outside Parliament. There is a massive electorate south of the Scottish border… who increasingly object to the SNP ignoring their democratic and constitutional rights. They do not see the SNP, even figuratively, as trades union shop stewards and Convenors but glassbacks, work-shirkers, idlers sneaking off to the toilet to have a fag leaving the rest of us to do their work. Still expecting a full pay packet on Friday and mardy, stamping their feet because they haven’t been paid a productivity bonus.
    Trouble is, the UK government continues to pay their productivity bonus when Scottish industry is becoming non-existent.
    I heard a very intelligent young man from the SNP yesterday in the UK Parliament putting the case why we should all , all tax-payers, pile money into the declining Aberdeen oil industry. It was a good try.
    But he had the integrity to make a double entendre if that was what it was by stating he would be “daft to predict future oil prices” . Yes, unlikely to really increase. I feel he knows it. Knows that only with the whole of the UK supporting Scottish industry as well as other UK industry can we all get though this. Together.

  14. Mockbeggar
    Posted January 19, 2016 at 10:33 am | Permalink

    I can well understand the comments suggesting that Scotland must be left to its own devices. The behaviour of the SNP in the Scottish Parliament is enough to get anyone’s hackles up.
    However, it should be remembered that a substantial majority (55% in a recent poll) of Scots – or, rather, people living in Scotland, are pretty sensible. They do not shout and scream to remain firmly in the United Kingdom – perhaps through fear of being vilified, or worse, by SNP supporters. They merely keep their heads down and go quietly to the polling booth without saying how they will vote.
    These are also, I suspect, likely to be the people who contribute most to the exchequer. For their sakes, that’s why I would not wish for a complete split with Scotland even at the cost of having to subsidise the follies of their current government.
    I do, of course, support the need for English votes for English concerns.

  15. Nig L
    Posted January 19, 2016 at 12:03 pm | Permalink

    Cameron campaigned to keep them in the Union. Where was his mandate? English voters should have referendum on the subject. That would legitimise and inform the debate.

  16. Denis Cooper
    Posted January 19, 2016 at 1:29 pm | Permalink

    Off-topic, I read in today’s Telegraph editorial:

    “Mr Cameron yesterday hinted at a law to make explicit British sovereignty in the EU”.

    Of course we have been here before, at times the so-called “referendum lock” law was also advertised as the “sovereignty” law, and indeed it does have a Section 18 headed:

    “Status of EU law dependent on continuing statutory basis”

    which runs as follows:

    “Directly applicable or directly effective EU law (that is, the rights, powers, liabilities, obligations, restrictions, remedies and procedures referred to in section 2(1) of the European Communities Act 1972) falls to be recognised and available in law in the United Kingdom only by virtue of that Act or where it is required to be recognised and available in law by virtue of any other Act.”

    But when it came to an amendment to that Bill to explicitly affirm the sovereignty of our Parliament in the EU, the government actually opposed that, and most Tory MPs did as they were told by the whips and voted against it:

    http://www.brugesgroup.com/mpwatch/index.live?mp=0&division=7

    The effect of the proposed amendment would have been to insert these words:

    ‘(1) The sovereignty of the United Kingdom Parliament in relation to EU law is hereby reaffirmed.’,

    but that explicit reaffirmation of the sovereignty of our Parliament was overwhelmingly rejected by the elected members of that Parliament, in Division No. 161 on January 11th 2011, here:

    http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110111/debtext/110111-0004.htm

    Ayes 39, Noes 314.

    Let me predict, the excuse will be that this was all down to the LibDems.

  17. A different Simon
    Posted January 19, 2016 at 1:43 pm | Permalink

    Donald Trump has a “special relationship” with Scotland .

    If the Americans choose him to be their next president , he might be able to instil some American ingenuity in them and rev them up a bit .

    • A different Simon
      Posted January 19, 2016 at 1:45 pm | Permalink

      Typo “instill some American ingenuity in THE SCOTS and rev them up a bit .

      • Qubus
        Posted January 21, 2016 at 1:34 pm | Permalink

        Sorry, you were correct first time: instil, not instill.

  18. Denis Cooper
    Posted January 19, 2016 at 1:46 pm | Permalink

    “The SNP have argued in the past that most of the oil revenues should be attributed to Scotland as much of the oil is landed in Scotland. This is currently an irrelevance as the oil revenues have all disappeared thanks to the collapse of the oil price.”

    Well, at present it’s an irrelevance in practical terms, but that has not always been the case in the past and may not be in the future; so I think it would be better to be clear that the SNP would not go by where the oil was landed but where it was extracted, which would mostly be from under the waters of a independent Scotland.

    At present none of the oil revenues are attributed to Scotland, or for that matter to England, but instead under the EU system accepted by the UK government they are attributed to the mythical land of Extra-Regio:

    http://www.stat.fi/meta/kas/ulkoalue_en.html

    The simple fact is that if Scotland reverted to being an independent sovereign state only a small part of the oil revenues would still end up in the UK Treasury, so they should really be apportioned on a geographical not a population basis.

  19. David Fraser
    Posted January 19, 2016 at 2:14 pm | Permalink

    Some international examples are worth looking at. For example, Canada has a system of equalisation transfers to the provinces which are based on the fiscal capacity of each province. Germany has something similar for transfers between the Lander. This would safeguard against fiscal shocks but still provide the necessary incentives for the Scottish Government.

  20. ian wragg
    Posted January 19, 2016 at 3:54 pm | Permalink

    Scotland should be given total autonomy on taxation with the ability to borrow but not underwritten by the UK government.
    Lets take Trident to Plymouth and sell them fossil fuel generated power at the same price as wind power.
    I don’t see why I should buy Scottish offshore wind power at £150 MWh and they can buy our generated power at circa £45 MWh.
    I was reading the paper by BSE about why we should stay in the EU. Every point is a downright lie and the authors should be prosecuted for misleading the public.
    Is anyone going to stand up in Parliament and expose these morons for what they are.

    • DaveM
      Posted January 19, 2016 at 7:40 pm | Permalink

      Why not just shift Trident to Cumbria? I’m sure they’d welcome the 6-8000 jobs the base would provide.

      Let the Scots go – they can run off to mutti Merkel. She’d see Scotland as an ideal place to house her new-found middle eastern friends.

      “Now then Nicola, you want us to underwrite your overspending with the Deutsch-Euro do you? Ok, here’s the deal………”

      Anyone around who’s good at building bloody big brick walls in Northumberland?

  21. MikeP
    Posted January 19, 2016 at 4:29 pm | Permalink

    Scotland plays a huge part in the UK’s well-being – on defence, energy generation, its beautiful scenery, our combined history and culture, oil, fishing, science and medicine. But Scots do need to open their eyes, have confidence in the UK’s intrinsic strengths and help get us out of the EU. Then we can settle the budget. I’ve got no problem with a bit of sharing along Barnett Formula lines, given Scotland’s remoteness, different geography and climate but they do need to be clear where their huge subsidy comes from, and it ain’t from Brussels. The English don’t much like being bossed around, especially when we’re paying into these various clubs like UK and the EU, and when many of our recent Government ministers have come from Scotland.
    The best outcome as far as I can see is for the EU Referendum to deliver a resounding “LEAVE” vote, for the SNP to get the hump and insist on another IndyRef as a result, and for them to then decide to leave the UK. They won’t of course now they’ve seen the plummeting oil price so we can look forward to prospering together.

    • DaveM
      Posted January 19, 2016 at 7:46 pm | Permalink

      Mike, you’re probably right, and I used to be quite passionate about Scotland being part of a (new, improved, federal) UK for the reasons you stated. But in all honesty, I don’t care that much any more.

      And if leaving the EU means the Scots having “Indyref 2: the Sequel”, and joining the EU instead of the UK, so be it. At least then we can look forwards and crack on without whingeing socialists who just want to spend my hard earned taxes.

  22. fedupsoutherner
    Posted January 19, 2016 at 7:10 pm | Permalink

    What nobody has mentioned on this site is the fact that everything in Scotland is cheaper. If someone is earning the minimum wage here it goes a lot further. Hairdressing, vets fees, bus fares and renting is much cheaper than it is in the south of England. I know as I have lived in both places. You can rent a 3 bedroomed house here in Scotland for around £450 a month. Try getting that kind of rent in England. Vets fees are a lot cheaper. It costs more to walk through the door of a vets in England than for treatment here. Hairdressing is the same – roughly half the price. It goes for many things. Yet still the moaning goes on. Get in the real world is what we should be saying.

  23. Margaret
    Posted January 19, 2016 at 7:25 pm | Permalink

    Global slow down and declining oil prices don’t make a good base for Scotland’s independence but we didn’t need a crystal ball to see this. Looking at Dennis’ extra regio contribution has muddied the waters even more though. It talks about air space , waters ‘continental shelves etc. This needs clarification.

    • Denis Cooper
      Posted January 20, 2016 at 10:20 am | Permalink

      Well, it is the EU system. There will be other cases where UK Treasury is receiving revenue which is not officially recognised as having originated from a certain part of the country but instead is attributed to Extra-Regio, Scotland and the oil revenues just happens to be the most important and notable and contentious case.

  24. Iain gill
    Posted January 19, 2016 at 10:02 pm | Permalink

    How does the tax work? Based on home address? Payroll address? Office address (what about mobile workers)?

    I know plenty of people who live in Scotland but work in London and are in hotels Monday to Friday and travel back at weekends.

    How will they be taxed? Scottish or English tax rates?

  25. Original Richard
    Posted January 19, 2016 at 11:17 pm | Permalink

    Mr. Redwood,

    You are absolutely right to be discussing this issue.

    What is the position if Scotland pays directly for all those areas where it has devolved powers ?

    Reply That is not the agreed plan, as there will be some UK underwriting

  26. Martin
    Posted January 20, 2016 at 1:25 am | Permalink

    Pity you have only commented on phase one of the asset price crash.

    The Pound has been losing value against the Dollar and Euro like crazy for the last month.

    I expect the hot money that has kept the London property market sky high is now running away. Ready for that crash?

    • Denis Cooper
      Posted January 20, 2016 at 10:08 am | Permalink

      As usual what is likely to be a minor short-term fluctuation in the external value of the pound is being exaggerated and prematurely cited as evidence for some major change which is happening or about to happen. Yesterday the sterling index was just over 87, which is 4% lower than a month ago when it was about 91, but only a shade lower than it was a year ago, having briefly gone over 94 in the summer. Whether this portends anything dramatic remains to be seen.

  27. Gina Dean
    Posted January 20, 2016 at 9:19 am | Permalink

    Please could I have some clarity on the oil sector in the north sea. I was under the impression that the waters around our island were Crown Estate. Therefore did not belong to anyone area of the UK. So how can Scotland say the oil is their’s. Surely it belongs to the companies that have a license to drill. Our government just taxes them.

    • Denis Cooper
      Posted January 21, 2016 at 9:58 am | Permalink

      If Scotland separated from the rest of the UK and reverted to being an independent sovereign state it could then say that the oil found under Scottish waters belonged to Scotland, not to any neighbouring foreign country whether that was the continuing United Kingdom or Norway. Until then it is a hypothetical division of resources to illustrate what the position would be once Scotland was independent, and whether or not we continued to share the same person as monarch and head of state.

  28. William Grant
    Posted January 21, 2016 at 1:29 am | Permalink

    I have no problem with oil being determined a UK asset, as long as Scotland gets treated as a region of the UK where there a regional variations, which mean some poorer areas get more spend. It seems the further north you go the higher the unemployment and the more the need for more spend. Unemployment rates are higher in Scotland, yesterday it was by 0.3% higher, in the previous month’s figures, 0.5% or 0.6% higher. With no Barnett formula this obviously means Scottish Unemployment would be higher still because there are no means of devaluing the Scottish pound against the English pound. Off topic – I do hope that the BBC publishes figures in future, indicating the average licence fee spend per licence fee-holding premises in different nations of the UK, instead of the per head of population totals which are different ,that the head of strategy at the BBC, ex-MP James Purnell, used at a meeting in Wales last Year. Those per head figures indicated that Wales, Northern Ireland and Scotland had much more licence-fee spend than England, but more people in England must live over the licence-fee cut- off age of 75.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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