Thursday, October 27, 2005

UK government spends less in Scotland than it claims?

The London government lied about Scotland's oil wealth. It seems that the London government's figures on government spending in Scotland are also wrong!

The Press Association, 26 Oct 2005, reported that, according to two economists, UK Treasury blunders have overstated the amount of public spending in Scotland.

The combined effect of a series of errors is to overstate public spending in Scotland by £500 million a year, the economists have claimed.

The allegation comes from husband-and-wife team Jim and Margaret Cuthbert, who said they uncovered the errors using data obtained under the Freedom of Information Act. Their findings are published in the latest Quarterly Economic Commentary of the Fraser of Allander Institute, a research body at Strathclyde University in Glasgow.

Authors of the commentary said the Cuthberts' calculations had implications for the Executive's annual estimates of Scotland's public spending, tax revenues, and the balance between the two - by slightly lowering the net borrowing estimate from 11.3% of gross domestic product in 2002-03 to 10.6%. The Cuthberts' argument is likely to be seized on by the SNP.

The annual figures for government spending and revenue for Scotland, largely based on Treasury figures, regularly provoke a political row, with the SNP claiming Scotland more than pays its way if oil revenues are taken into account, while Labour argues that Scotland has a structural deficit.

The Cuthberts argue that at least £4.4 billion of certain types of spending in areas like prisons, courts and nature conservation is excluded from a particular category of public spending in England, but not in Scotland.

Another anomaly relates to the way Scottish public spending covers national museums, galleries and libraries that will also be used by some people south of the border. Yet the fact that some Scots will use similar institutions in England is also brought into the Scottish spending equation, say the Cuthberts.

There are also several cases where spending in wrongly attributed, say the Cuthberts, citing one example where, it is claimed, the Department for Work and Pensions wrongly identified that it had spent £57 million of its European expenditure in Scotland - even though this function was devolved and the money had already been included under money spent by the Executive.
And export promotion and inward investment specifically for the benefit of England was recorded as being for the benefit of all parts of Britain, said the Cuthberts.

They argue the errors are all symptoms of a more general problem - the failure of the Treasury to cross-check the results of two separate sets of calculations. Rectifying the errors would produce "much more informative" analysis of the effects of devolution.

Press Association Ltd


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