UK Government doesn’t retain £50bn of Scottish taxes

1 November 2022
What was claimed

The UK Government retains at least £50 billion in revenue raised in Scotland.

Our verdict

False. In 2019/20 Scotland raised around £65 billion in public revenues. Spending in or on Scotland totalled £82 billion.

A Facebook post makes a number of claims about Scotland’s fiscal position, including that the UK Government retains at least £50 billion in revenue raised in the country.

The post claims Westminster “RETAINED AT LEAST £50.5 billion of revenues raised in Scotland and DID NOT SPEND A SINGLE PENNY OF IT in or on, Scotland nor Scots.”

This is false. In calculating how much Scotland raises, the post double counts tax revenues. In calculating the amount the UK Government “retains”, the post does not subtract all the money retained by Scotland or the money spent by the UK Government on Scotland’s behalf.

In reality, public spending for Scotland is higher than public revenues raised in Scotland. 

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What the post claims is generated in Scotland

The post tries to calculate the amount of money Westminster keeps from Scottish revenues. 

It does this by adding up revenues earned in Scotland in 2019 from five revenue streams, which it puts at £99 billion, then subtracting £48.5 billion, which it claims is the amount spent on Scotland.

The first of the five revenue streams is £64 billion from “general taxation”, which the post says means income tax and National Insurance. But this figure is not the amount from income tax and National Insurance (which together raised £25 billion in 2019/20).

In fact, the figure is close to Scotland’s total public sector revenue in 2019/20 of £65 billion (or £66 billion, if you count all revenues from North Sea oil and gas as being raised in Scotland). The main constituents of this are income tax, national insurance contributions, VAT, corporation tax and council tax.

The post then adds VAT of £10 billion. Scottish VAT in 2019/20 was actually worth around £11 billion, but this is already counted in that £64 billion.

Next, the post claims that £7.5 billion, £12 billion and £5.5 billion were raised in 2019 from the whisky, oil and seafood industries respectively. Full Fact has not been able to identify what these numbers refer to and they appear far too high to represent the amount of public revenues generated by these industries.

For example, the Scotch Whisky Association estimated in 2018 the industry contributed £5.5 billion directly and indirectly to the economy. The Office for National Statistics estimated that Scottish fisheries and aquaculture contributed £442 million to the economy in 2019. 

These are estimates of the value of these industries to the economy, not the public revenues they generated from these industries. 

Regardless, whatever public revenues are generated from these industries (income tax generated from workers in these industries, alcohol levies from whisky sales, corporation tax on businesses, to name a few), they are already captured in the original £64 billion public sector revenue figure.

Given that total public sector revenues in Scotland were around £65-66 billion, the estimate of £99 billion therefore overstates them by around £35 billion. 

What the post claims is spent on Scotland

The post then highlights three ways money is spent on Scotland by the UK Government, which it claims amounted to £48.5 billion in 2019.

The first two are the Scottish Government budget, put at £30 billion, and “Barnett consequentials” (which we’ll come to shortly) of around £3.5 billion. 

These figures are about right. 

The Scottish Government is given money by the UK Government to run devolved state business. For example, the Scottish Government is primarily responsible for funding healthcare in Scotland.

At the 2015 Spending Review, this was set at £31 billion for 2019/20 (though technically some of the £31 billion is made up of taxes devolved to Scotland, like income tax, so the amount which actually goes from the UK Government to the Scottish Government is less than £31 billion.)

When the UK Government decides to increase spending between spending reviews on things that don’t benefit the whole of the UK, it gives additional money to the devolved governments, in proportion to the populations of those countries.

These are called Barnett consequentials, and in 2019/20, as the post says, Scotland received an additional £3.5 billion due to “Barnett consequentials and other additions”. 

The post then adds £15 billion of spending on “reserved” matters by the UK Government. This refers to the fact that the UK Government reserves responsibility for areas of public spending that affect Scotland too. For example, responsibility for the armed forces and welfare are largely reserved, meaning the UK Government’s spending partially benefits Scotland. 

But £15 billion is far too low. Scottish Government statistics show that in 2019/20, UK Government departments spent £33 billion on Scotland. 

The balance

By subtracting the claimed £48.5 billion of Scottish spending from the claimed £99 billion of Scottish public revenues, the post claims the UK Government retains “at least £50.5 billion of revenues”.

This is false. 

As demonstrated, the £99 billion of revenues overestimates Scottish public revenues by around £35 billion, by double counting various revenue streams.

The £48.5 billion of spending undercounts the amount spent by the UK Government.

In reality, in 2019/20 Scotland raised around £65-£66 billion in public revenues. Spending in or on Scotland by the Scottish Government, UK Government, local government organisations and public corporations totalled £82 billion

In 2019/20, Scotland accounted for around 8% of public sector revenues raised across the UK, and 9.3% of total UK public sector spending.

It is fair to note that Scotland does not have complete control over how the UK Government spends money deemed to be for the benefit of Scotland.

There are also debates about whether all the spending deemed to benefit Scotland actually does. For example, in 2007, the Treasury decided that all spending on the Olympics would be deemed to be for the benefit of the whole of the UK, meaning Scotland didn’t receive Barnett consequentials as a result of spending on urban regeneration focused on East London.   

But even if you were to exclude all the UK Government’s spending for Scotland, the central claim in this post would still be way off the mark.

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