The barmy formula, how Scotland’s getting ripped off

Syndicated from our partners at Forum Anglorum

The Scottish referendum was held in 2014 and Scotland voted to remain a part of the United Kingdom, however last year they voted to remain in the European union. This has prompted another question as to whether Scotland should leave the United Kingdom.
Now for a moment I’d just like to point out that it is the Scottish character that voted to stay in both unions, as both unions are a fiscal loss to the Scottish state and its people. Prior to the Brexit referendum Nigel Farage, the then leader of UKIP, said “Less English money needs to be sent over Hadrian’s wall.” suggested that the Scottish get an unfair allocation of spending from the United Kingdom’s pot – which Wales, Northern Ireland, England and Scotland all pay into.
I recalled the research I did for the referendum and have decided to use it to educate English alt righters who all seem to be under the same misconception, that being that Scotland doesn’t pay its way in the Union and gets English money to subsidize it. I shall prove that not only is this factually incorrect, but it is very much the reverse.
Firstly, I’d like to point out that Scotland does not get an unfair allocation of spending. The “Barnet Formula” is the formula used to determine how much funding gets allocated to the various parts of the United Kingdom. It should be pointed out that even Lord Barnett, the man who invented the formula, has pointed out that his calculations were based on incorrect population sizes and should be fixed. [1]

Extra funding
in Scotland, Wales
or Northern Ireland
=Extra funding
in England
×Population proportion
compared to England
×The extent to which the relevant English
departmental programme is comparable with the
services carried out by the devolved administration

For example, in 2000, the Northern Irish, Scottish and Welsh populations were taken to be 3.69%, 10.34% and 5.93% (respectively) of the UK population. For programmes in the Department of Health, the comparability factor for Scotland and Wales was 99.7%. Therefore, if £1 billion was to be added to planned health expenditure in England, then the extra amount added to the Scottish block, compared to the year before, would be £1bn x 10.34% x 99.7% = £103 million, and the amount added to the Welsh block would be £1bn x 5.93% x 99.7% = £59.1 million.[2]

The correct claim is that Scotland gets more money than it should for its share of the UK’s population. However, what Nigel Farage and others fail to recognize is that the Scottish are allocated more money on a per capita basis because they raise more on a per capita basis than the rest of the United Kingdom. Scotland’s income is £1,074,100 per capita and their expenditure is £905,400 per capita, compared to the UK as a whole, which has an income of £1,218,100 per capita and an expenditure of £1,096,600 per capita. Scots raise roughly £170,000 per capita than the UK as a whole does and only spends £120,000 per capita more than England, which means the Scots raise far more extra taxes for the UK than they receive in subsidies, paying an additional £50,000 per capita than the UK at large. The reason behind this increased spending is that, being sparsely populated and sporadically distributed as Scotland is, the very same services cost more per head than in overpopulated England, and Scotland also invests more in its citizens by offering free higher education. This clearly shows the more isolationist model of Scotland is more prosperous than the model accepted by most western countries today.
If you’re wondering how neglected little Scotland can afford such a cost, it’s because Scotland’s GDP per capita is 18% higher than the UK average, with an average GDP per capita of $42,124 vs the UK’s $35,607, making Scotland the sixth richest country per head in the world. [3] So what does this mean? Scotland makes up just 8.4% of the UK population, but generates 9.9% of its revenues and incurs just 9.3% of all UK spending. If Scotland got all the revenue it generated, it would be £80,000 better off per capita every year. This even ignores the fact that Scotland’s allocated spending is partly spent in England, the government putting English infrastructure costs down as “for” rather than “in” Scotland, for instance HS2, the high speed train being proposed in England, where 8.4% of the costs will go down as a “for” Scotland cost.
The result is that not only are the Scots paying more per head, but they receive less per head than they generate, and this is the reason English nationalists are annoyed at the Scots and want the Barnett formula scrapped? Either these people don’t understand basic economics or they are wholesale buying the mainstream narrative that was so prevalent during the Scottish referendum- a narrative which wanted the public to simultaneously believe that Scotland gets a great deal of free English money, whilst at the same time begging and offering the Scots the moon, from the bribed mouth of ex-Prime Minister Gordon Brown, if only they would remain in the UK.
For this reason the media came out with fanciful statements such as those seen above, including the claim that Scotland has a large deficit, caused by its public spending. The truth is that Scotland’s deficit is at roughly £7.6 billion, whereas the UK’s deficit is £121 billion. So for every £1 Scotland raises it spends £1.13, creating a deficit of £0.13 per pound. However, what these same pundits won’t tell you is the UK spends £1.21 for every £1 it spends, meaning it’s deficit on every £1 is £0.21, meaning again Scotland has been misrepresented and is actually better off than the UK as a whole with regards to its deficit. [4] So what? That’s Scotland’s deficit and I’m purposefully misleading the reader and obfuscating the real issue of the debt, right?
Well actually the UK’s debt is £1.3 trillion, the interest payments on which are £50 billion per year, of which Scotland pays £4.1 billion per year, the deficit before interest is £3.5 billion for Scotland and £72.2 billion for the UK. More than half of Scotland’s deficit is caused by interest payments on the rest of the UK’s debt. Scotland pays for 4.9% of that debt, but Scotland created only 2.9% of the debt or £2.1 billion, meaning yet again Scotland is paying the rest of the UK’s way and getting blamed for it in the media. Now for the kicker, although Scotland only gets 2.9% of the income from the debt and pays 4.9% back, but it’s also charged 8.4% of the total interest on the debt, in what universe is this fair? And in which universe must anti-Scottish nationalists be to suggest Scotland doesn’t pay its own way? Since as you can see here all too clearly, Scotland pays not only its own way but pays the way for much of the rest of the UK also.

I hope my fellow British alt righters will change their view with regards to Scotland’s plight, as in my experience the English tend to be interested and seemingly anti-Scottish when they think Scotland is stealing English money, but when they discover it is the reverse they lose all interest. This, in my mind, can only stem from them not considering the Scots as kinsmen, and if we can’t correct this notion, I can’t sustain my pro Union position. The United Kingdom is my home, a union of two sister nations which united and conquered the world, and then gave it back and invented the modern world, I cannot adequately describe my affection for these kingdoms. But if the English people for whatever reason don’t see Scots as their own people, the union is clearly unsustainable. This is a realization I have come to with much sorrow and a heavy heart, for if Scotland leaves the United Kingdom I won’t be comfortable living in a foreign land, and like some Game of Thrones plot will be forced to move back to my ancestral homeland, past a great wall, in the icy Kingdom to the north.

  – Ælle Sussex, Editor and Chief

[1] http://www.telegraph.co.uk/news/uknews/scotland/11108848/Scottish-Referendum-My-Barnett-Formula-needs-to-be-tackled-now-but-no-politician-will.html
[2] https://en.wikipedia.org/wiki/Barnett_formula#How_the_formula_works
[3] 2011 Organisation for Economic Co-operation and Development report on GDP per capita (paywalled)
[4] Government Expenditure and Revenue Scotland 2011-2012 report (paywalled)

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