News story

Scotland Decides debate: 11 reality checks

A number of assertions continue to be made in the Scottish independence debate. Read the realities rather than the rhetoric.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Coins

Here are 11 myths that the UK Government’s Scotland analysis programme has refuted.

1. An independent Scotland would keep the pound

Reality: Staying in the UK is the only way Scotland can keep the strength of the pound and the Bank of England as we have now. HM Treasury and all three main UK political parties have ruled out a formal currency union.

Source: Scotland analysis: Assessment of a sterling currency union and United Kingdom, united future: Conclusions of the Scotland analysis programme

2. It’s Scotland’s pound as much as it is England’s, Wales’ and Northern Ireland’s

Reality: It’s the UK’s pound. If Scotland leaves the UK, it would be leaving the pound as its currency. The three main UK political parties have explicitly ruled out a currency union. It is not in anyone’s interest and people in the UK would not agree to it.

Source: Scotland analysis: Assessment of a sterling currency union and Scotland analysis: Currency and monetary policy

3. Scotland could continue to use the pound whether the UK agrees or not

Reality: Borrowing the pound without an agreement – like Panama borrows the dollar and Montenegro borrows the euro – would mean Scotland would not have a central bank to set interest rates or protect financial institutions and pensions. The only way Scotland can keep the strength of the pound we have now is to stay in the UK.

Source: Scotland analysis: Currency and monetary policy

4. Scotland subsidises the UK

Reality: As part of the UK, Scotland benefits from around 10% per head higher public spending than the UK average. The Scottish Government’s own figures show that Scotland paid in £53bn in taxes (including North Sea oil), but received £65bn in spending in 2012-13. And at 8.3% of Scottish GDP, Scotland’s deficit last year was nearly £500 per person higher than the UK’s deficit of 7.3% of GDP in 2012-13.

Source: Scotland analysis: Macroeconomic and fiscal performance and Government Expenditure and Revenue Scotland 2012-13, Scottish Government

5. Independence will save Scotland from austerity

Reality: The long term financial benefit of staying in the UK is worth £1400 per year to every person living in Scotland. As part of the UK, the costs of falling oil revenues and Scotland’s more rapidly ageing population is shared across the whole UK. An independent Scottish Government will have to significantly raise taxes and cut spending on public services to fill this gap.

Source: Scotland analysis: Fiscal policy and sustainability

6. Scotland will have an oil fund like Norway

Reality: You can’t spend money and save it at the same time. Revenue from North Sea oil is used to pay for public services in Scotland. So unless the Scottish Government dramatically increased other taxes or cut spending on public services, all of an independent Scotland’s tax revenues from oil and gas would continue to be spent each year, leaving none left to save in an oil fund.

Source: Scotland analysis: Macroeconomic and fiscal performance

7. Office for Budget Responsibility is part of Government and too pessimistic about oil and gas revenues

Reality: The Office for Budget Responsibility (OBR) is independent of government and produces all its forecasts independently. And even the OBR have a track record of over-predicting oil and gas revenues – receipts for the year ahead have been an average of 20% below OBR forecasts at successive Budgets. The Scottish Government are even more optimistic than the OBR, and in March 2013 forecast that oil and gas revenues would be £5bn (64%) more than were actually collected over the last two years.

Source: Charter for Budget Responsibility and Scotland analysis: Macroeconomic and fiscal performance

8. Only independence protects health spending in Scotland

Reality: As part of the UK, Scotland currently benefits from public spending per person that is around 10% higher than the UK average. This funds vital public services like health, schools and police in Scotland. If it became independent, a separate Scotland would have a larger deficit than the UK and the Scottish Government would have to raise taxes and cut spending.

Source: Scotland analysis: Fiscal policy and sustainability

9. Pensions are more affordable and sustainable in a separate Scotland

Reality: Spending on each pensioner is higher in Scotland than the UK average. This spending is more affordable and sustainable as part of the UK because the costs are shared by 31 million tax payers. In the future the proportion of Scotland’s population that are pensioners is forecast to grow more rapidly than the rest of the UK. If Scotland stays part of the UK, the broad shoulders of the UK will help to spread the risk and provide a crucial safety net against an ageing population in Scotland.

Source: Scotland analysis: Work and pensions

10. New EU Commission President has said that Scotland will become a member under independence

Reality: As a new state, Scotland would have to go through an application process to join the EU and negotiate its own membership terms, in the same way as any other new Member State would have to. All 28 Member States would need to agree the terms of Scotland’s membership and the whole process could be complex and lengthy.

Source: Scotland analysis: EU and international issues

11. In the event of a “no” vote more powers for the Scottish Parliament are not guaranteed

Reality: On 5 August, leaders of the UK Conservative, Labour and Liberal Democrats issued a joint declaration, committing to further powers for the Scottish Parliament after the 2015 general election, in particular for fiscal responsibility and social security. This shows that the powers of the Scottish Parliament will be enhanced whilst retaining the strength and stability of the UK.

Source: United Kingdom, united future: Conclusions of the Scotland analysis programme

Published 8 August 2014