GERS figures show Scotland can afford benefits better than the rest of the UK

Saturday, 17 March 2012 20:48

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By a Newsnet reporter

New figures from GERS (Government Expenditure & Revenue in Scotland) for 2010-11 show that an independent Scotland is financially better placed to fund pensions and welfare than the UK as a whole.  Benefits payments in Scotland represent a smaller proportion of total government revenues than they do elsewhere in the UK.

The analysis of the figures from GERS for social protection – which includes state pensions and welfare payments – show that the size of Scotland’s expenditure stands at 40% of Scottish revenues, less than the 42% for the UK.  This compares to 42% for Scotland in 2009-10 and 43% for the UK as a whole.  

The figures relate to sickness and disability pensions and benefits, old age pensions and war pensions, widow’s benefits, family benefits, unemployment related benefits and services, measures to tackle social exclusion and other forms of social protection spending, including local government social protection spending.

Although benefits expenditure already accounts for a smaller proportion of total government spending in Scotland, the true financial situation of an independent Scotland could be even healthier than the GERS figures suggest.  

The expenditure for Scotland also includes a notional share allocated to Scotland for expenditure which is deemed to be “UK national”, although much of this is not spent in Scotland.  “UK national” expenditure includes spending on the London Olympics, major transport infrastructure projects such as the London to Birmingham high speed railway, and defence spending.  The Scottish government believes that Scotland is short-changed by over £1.5 billion annually in defence expenditure.  If a proper reckoning were to be made of these expenditure items, Scotland’s financial situation would be even stronger.

The new GERS figures follow remarks by UK Government Work and Pensions Secretary Iain Duncan Smith who claimed, with no supporting evidence, that benefits would “cost more” in an independent Scotland.  The figures also contradict recent comments by Scottish Conservative leader Ruth Davidson who suggested that an independent Scotland would be unable to afford to maintain benefits payments.

Mr Duncan Smith was also exposed this week for claiming he didn’t recognise the fact that that the tax credit changes would push over 100,000 children into poverty, despite an official HMRC document outlining those figures.

On Thursday Mr Duncan Smith was challenged by Good Morning Scotland (GMS) host Gary Robertson to accept that the tax credit changes would push over 100,000 children into poverty, despite an official HMRC document outlining those figures.

Mr Duncan Smith said: “I do not recognise those figures.”

Yet an official document produced by HMRC in December shows that 84,900 households in Scotland will no longer be eligible for Tax Credits when the changes to the threshold kick-in in April.

This would mean that 118,700 children in Scotland will be affected.

These families represent those who are claiming at or below the family element of the CTC which is worth £545 per year per family and as of April they will fall above the new lower income threshold.

Commenting Jamie Hepburn, Deputy Convener of the Scottish Parliament’s Welfare Reform Committee and SNP MSP for Cumbernauld and Kilsyth, said:

“Yet again we see that no one can trust a word the anti-independence parties say and their unsupported claims boomerang back on them when the facts are presented.

“The official GERS figures show that social protection as a percentage of total revenues in Scotland is consistently lower than it is in the UK.

“Just like he refuses to accept the facts about his tax credit changes the facts show he completely wrong on Scotland’s welfare spend in comparison to the UK.

“Looking at both sides of the balance sheet, over the five-year period from 2006/7 to 2010/11, Scotland was in a stronger financial position relative to the UK as a whole by a total of £8.6 billion- over £1,600 for every man, woman and child in Scotland, or over £3,600 per household.  This underlines the opportunities of independence and financial responsibility.

“Scotland needs independence so that we can deliver a fair and effective welfare system – rather than be on the receiving end of unfair Tory policies – and the figures show that welfare spending in an independent Scotland will be more affordable because it is a smaller share of our tax revenue than is the case for the UK as a whole.”