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Scots finances worse than rest of UK after oil revenues blow

SCOTLAND plunged £12 billion into the red last year according to official figures which showed the country's finances were in a worse state than the rest of the UK.

The Scottish Government's annual balance sheet report, published yesterday, revealed the black hole in the country's finances equalled 8.3% of economic output in 2012/13, worse than the UK's deficit of 7.3%.

The reversal, after several years in which Scotland's net borrowing has been lower than the UK's, followed a dramatic 41.5% fall in North Sea revenues, which dropped from £11.3bn to £6.6bn last financial year.

Steven Camley's cartoon

The figures were described as a landmark moment in the referendum debate by Alistair Darling, the head of the pro-UK Better Together campaign, who said they undermined SNP claims based on previous years when Scotland was in a stronger financial position than the rest of the UK.

However, First Minister Alex Salmond said Scotland had been better off than the rest of the UK to the tune of £1600 per person if the past five years were taken into account.

The state of the country's finances were laid bare in the government's annual Government Expenditure and Revenue Scotland (GERS) report.

It showed Scotland, including a geographical share of oil, was deeper in the red than the rest of the UK to the tune of £283 per person.

The previous year's report suggested Scotland was £824 per person "better off" than the UK as a whole - a figure which has been repeatedly used by the SNP to press the case for independence.

In another blow to the Yes campaign, the latest GERS report also showed that Scotland received 9.3% of UK public spending while 9.1% of taxes were raised north of the Border.

The previous year's figures, showing Scotland contributed a higher proportion of tax than it received in public spending, had become a key part of the Yes campaign.

Mr Darling said: "If Scotland was independent today we would have no option but to cut spending on services like schools and hospitals or put up taxes - or probably both. Today as part of the UK we don't have to do that.

"Oil revenues are a major source of Scotland's income, but are a relatively small part of the UK economy. The drop in oil revenue is so big that it is the equivalent of the entire budget for Scottish schools."

Danny Alexander, the Chief Secretary to the Treasury, also claimed the case for independence had been undermined by the Scottish Government figures.

He said: "Whatever the Scottish Government says now, the government of an independent Scotland would be forced to raise taxes and cut public services."

The LibDem minister published a new Treasury analysis of the GERS report showing that public spending in Scotland last ­financial year equated to £1325 per person while the tax take was £845 per head.

It also said the picture in 2012/13 was "part of a trend".

The CPPR think tank based at Glasgow University agreed that Scotland was likely to remain in a weaker fiscal position than the rest of the UK in the current financial year, 2013/14, as oil revenues fell further.

However, Mr Salmond said: "Today's Gers report confirms what independent commentators and analysts have been making clear - Scotland is one of the wealthiest countries in the world.

"The figures show tax ­revenues generated in 2012-13 were £800 higher per head in Scotland compared with the UK, meaning that now, for every one of the last 33 years, tax receipts have been higher in Scotland than the UK.

"When looking at the difference between tax receipts and spending on everyday services for 2012-13, today's report shows Scotland and the UK were both in current budget deficit - by almost identical amounts as a percentage of GDP."

Blair Jenkins, chief executive of the Yes Scotland campaign, said: "The fact is that Scotland is one of the wealthiest countries in the world, ranked within the top 20 and well ahead of the UK."

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