Scottish taxes don’t subsidise English spending

16 September 2021
What was claimed

Scotland raises £25 billion a year in income tax.

Our verdict

False. It raised £13 billion from income tax in 2020/21.

What was claimed

Tax on Scottish whisky amounts to £20 billion a year.

Our verdict

False. A reliable figure for this isn’t available, but the economic output of the entire industry is far less than this.

What was claimed

Income tax and tax on whisky go to England to be spent on English priorities.

Our verdict

Most income tax is kept by the Scottish government. Tax on whisky and other taxes go to the UK Treasury but when money is spent on England-only policy areas, the Scottish government receives money back.

What was claimed

Scotland subsidises England.

Our verdict

False. Public spending per person is higher in Scotland than across the UK as a whole. Scotland receives more public spending than it raises in tax.

A post on Facebook claims that income tax and tax raised on whisky sales in Scotland go “straight to England” to be spent on its priorities, and that Scotland subsidises England. This is not true. 

Firsty, the figures given for tax revenue from Scotland are wrong. 

The post claims Scotland raises £25 billion a year in income tax. In truth, it was £13 billion last year and the year before that.

It also claims that tax on Scottish whisky amounts to £20 billion a year. We don’t know the exact figure for this, but it is certainly far lower. The Scotch Whisky Association estimates that the entire industry contributes £5.5 billion to the UK economy, and duty on all spirits across the UK raises £4 billion a year.  

The post also claims that this money goes to England.

Most income tax, which is mentioned in the post, doesn't. The rates on earnings are set by Scottish government, which keeps the revenues to spend as it sees fit. However, most tax raised in Scotland including spirits duty does go to the UK government which, via the Treasury, decides how to spend the money. 

If it decides to increase spending in England on an area that is devolved—such as healthcare, education, transport or housing—then the devolved nations receive money equivalent to their population size to spend on whatever they choose.

The Institute for Government says: “For example, if spending on healthcare [which is a devolved area] in England increases by £100m, the Scottish government’s budget would increase by £9.7m since Scotland’s population is 9.7% of England’s.”

This means that while a lot of tax raised in Scotland technically “goes straight to England”, it is misleading to claim that it is spent on English priorities without noting that, when this happens, the Scottish government receives money back. 

Because Scotland raises slightly less tax per person than across the UK as a whole, when this happens Scotland essentially receives more back than it originally put in.

The method used to calculate this is called the Barnett formula, and when it was put into place in the 1970s Scotland had a higher level of public spending per person than England. This essentially locked in this disparity. 

Honesty in public debate matters

You can help us take action – and get our regular free email

So does Scotland subsidise England?

In 2020/21, Scotland accounted for 7.9% of tax raised across the UK, but 9.1% of all public spending

And in 2019/20 (the last year for which full figures for all four nations are available), public sector revenue raised was £12,300 per person in Scotland and £12,600 in England.

Figures for public spending aren't directly comparable, as we only have full data broken down by nation for ‘identifiable expenditure’, which accounts for around 87% of total public spending (the remaining 13% is regarded as benefiting the UK as a whole because it is spent on areas such as defence, and so is not attributed to a particular nation).

If you look at identifiable expenditure only, then the figure was £11,600 in Scotland (17% above the UK average) and £9,600 in England—and once you factor in non-identifiable spending too, public spending in Scotland is higher than revenue raised. 

This means it is not correct to say that Scotland subsidises England.

Full Fact fights bad information

Bad information ruins lives. It promotes hate, damages people’s health, and hurts democracy. You deserve better.