PINSTRIPE

The GERS figures are out again showing how much the Scottish Government received and spent in 2017/18.

These make difficult reading for Scotland. Even including a fair share of North Sea Oil we had a current account deficit of 5.5% of GDP which compares with a small surplus for the UK.

Scotland’s public sector revenue, including Oil, is £11,052, £306 per head less than the UK average and our total public sector spend per person was £13,530, £1,576 greater than the UK average. Our total deficit was £13.4 billion.

There are two quite distinct key points which we can learn from these numbers.

First, there is a large gap, which favours Scotland over the rest of the UK, in terms of public expenditure relative to income. This is nothing to be ashamed of. Parts of England are in exactly the same position. The figures are not available in enough detail but it is perfectly possible that , for example , Edinburgh or Aberdeen are in surplus. What matters, however, is that Scotland is drawing financially from the strength of the UK as a whole. No amount of SNP bluster can mask the fact that Scotland’s ability to spend what it currently does is only possible because we are part of the UK. The SNP’s Growth Commission acknowledges that our public expenditure position as a standalone nation would not be sustainable and that the austerity of recent years would need to continue - it’s not the Tories fault, it’s just a fact.

The other key issue is, cutting through the comparisons and percentages, the absolute £ number is horrific. Based on last year’s figures, each year the public sector in Scotland spends well over £2,000 on behalf of each of us which it doesn’t have.

Depressingly, having accepted the problem, the debate on the solution focuses on the same old two things, cutting expenditure even further or raising taxes. As I look around at our crumbling infrastructure and the lousy way we treat our elderly I do not see much scope for further cuts in spending on those areas. Raising tax rates is just lunacy, if you want to increase the tax take in Scotland the way to do it is to cut the rates of tax to encourage more high earners to base themselves here.

The Growth Commission’s answer, in addition to being fiscally responsible, is that by being smarter and more inclusive we can raise our economic growth rate - sounds good - but socialist Governments all round the world have tried this pain free solution and it is a proven failure.

There are, however, two real alternatives that we should be looking at but nobody wants to because they are hard. The first is efficiency, the public sector should set the standards but then the private sector should deliver the services. The second is to stop our obsession with so much being free at the point of use. If something is free it is abused. The roads are free so take the car when you should take a bus. A&E is free so let’s clog it up with trivial ailments which mean people with real need suffer. Prescription drugs are free so - even though many people can afford to pay for them - they want more and more. We should look at all these things. As an independent nation we would need to do it or risk ending up like the Greeks, as part of the UK we should do it because we can then spend more Social Care and Education.

Pinstripe is a senior member of Scotland's financial services community.