Would England be richer without Scotland?

No, England would be significantly poorer without Scotland's economy. Scotland contributes substantially to the United Kingdom.

Perhaps another controversial article, but it is a popular question, would England be better off without Scotland? Political themes seem to gain a lot of interest on Live Breathe Scotland so let's dig some more into this and find out more.

Scotland and England are in a political union, along with Wales and Northern Ireland. Scotland is a country but is ruled directly by the United Kingdom parliament (Westminster) based in London, England.

Because England has a much bigger population than Scotland, it's assumed that Scots are a drain on the union and, therefore, on England as they are the biggest contributor to UK funds.

In Scotland, we have many benefits such as:

• Free medical prescriptions.

• Free education (plus free grants for some, such as nurses).

• No bedroom tax.

• Free school meals.

• Free care for the elderly.

• Council tax was frozen until recently.

Many English people believe they are paying for these benefits from their taxes which causes much anger amongst them, and calls for another Scottish independence referendum make Scots seem very ungrateful to the generous English taxpayer.

No additional funding is given to Scotland to pay for the items above; it is simply a result of a government that prioritises policies to help its population.

What is the Barnett formula?

This is a formula devised by Joel Barnett in 1978 to automatically adjust the public expenditure allocated to Scotland, Wales and Northern Ireland.

As each constituent country now has a devolved administration, the Barnett Formula makes up a good part of each government's budget every year.

All devolved administrations receive proportional funding based on population. For example, if extra money was given to the English health board, Northern Ireland, Scotland and Wales would also receive an increase in health funding based on population.

Offshore Oil & Gas

The discovery of North Sea oil in the late 1960s and early 1970s was an economic revelation. The tapping of the Brent, Forties and other oil fields in the northern North Sea led to a maximum production level of 128 million tonnes per year in 1999.

The UK government commissioned Professor Gavin McCrone to create an economic report on the value of North Sea oil in 1975. The British Government feared the prospect of Scottish independence, and the contents of the McCrone report did little to alleviate those fears.

One excerpt read: An independent Scotland would have a "chronic surplus to a quite embarrassing degree, and its currency would become the hardest in Europe".

The report was classified and only came to light in 2005 upon a freedom of information request. However, Scotland was not allowed to know that it would have been one of the wealthiest countries in the world if it had chosen independence in the late 1970s.

Although North Sea oil provided many high paying jobs for Scots in the following decades, many felt short-changed as the British Government took most oil profits. Aberdeen does not look like the "Oil Capital of Europe", with many areas suffering from severe poverty. Aberdeen has had many years of underinvestment.

It is estimated that between 1964 and 2016, over £300 billion was contributed to the UK Government. The Oil and gas industry is currently worth £35 billion per year to the UK economy.

If Scotland had not been part of the UK, this would have been a significant loss to England's wealth, and if Scotland became independent, these oil and gas revenues would be lost forevermore.

Norway's Sovereign Wealth Fund

Our neighbours in Norway wisely created a sovereign wealth fund in 1995 from their state-owned oil industry, which is now in excess of £1 trillion pounds. Scotland has no oil fund and has seen little of the huge profits extracted from its seas leading many to accuse the British Government of mismanaging and squandering this valuable resource.

Norway generated £650 billion between 1964 and 2016, whereas the UK around £300 billion, despite the UK producing 5% more oil than Norway. Shocking mismanagement.

Calls have been made for the same not to happen for the "green revolution" occurring in renewable energy, but lessons have not been learned, and it seems Scotland will miss out on its renewables future just as much as it did with oil and gas.

Renewable Energy

Scotland's growing renewables sector is on the cusp of exploding. The potential here is enormous, with wind and wave power being seen as the future of electricity generation in the world - Scotland could be the powerhouse of renewable energy in Europe and a significant exporter to the bloc.

Around 22,000 jobs in Scotland are currently attributed to renewable energy:

• Onshore wind - 8000

• Offshore wind - 4700

• Solar photovoltaic - 1000

• Hydroelectric - 3300

• Construction - 3000

• Manufacturing - 2200

There is a worry that Scotland will miss out on this renewables boom with contracts being held by foreign companies and the UK government in ultimate control of energy policy. The renewables industry should be state-owned for the benefit of the people, in a similar way that Norway managed its oil.

The renewables industry in Scotland's economy is worth at least £5-7 billion per year and could be the tip of the iceberg in terms of future value to the UK.

Whisky Distilling Industry

Possibly the export product Scotland is most well known for, Scottish whisky is an incredibly popular drink around the world. It contributes a significant amount to the UK economy - as much as £4-5 billion pounds per year which is a quarter of the entire UK food and drink revenue!

Thirty-five thousand jobs rely on the distilling industry, many of them based in my home county of Moray. This is a precious industry to Scotland's economy and would be a significant loss in funds to the UK exchequer.

UK National Debt

Scotland, even with its own parliament can not borrow money from lenders in the same way the UK Government does. Westminster borrows money for Scotland on our behalf and portions a share of that debt to us. This seems quite unfair that we have no say in how much money is borrowed and have to suffer the pain of repaying it through austerity measures.

As of March 2021, the national debt of the UK has been quoted as being around £2.1 trillion pounds, and Scotlands share around £106 billion pounds - none of which we have had any say in borrowing. Scotland did receive new powers in 2017 to borrow up to £600 million per year, but at least this is budgeted and controlled by the Scottish Government instead of money borrowed in our name.

Economist Richard Murphy believes Scotland may not even owe the UK any money if it split, given its contributions via North Sea oil... but no one really knows what Scotland would owe (if anything) upon leaving the United Kingdom.

If Scotland could leave with no debt, this would affect England as Scotland's contributions would no longer go towards paying off or slowing the ever-increasing national debt.

Arctic Circle

Although the UK is not considered an arctic nation as it does not have territory within the arctic circle, it is seen as a future area that may be exploited for resources. As a result, Scotland could become a major hub and shipping route for the arctic region.

Oil extraction from the arctic circle could have enormous implications for the UK's energy sector. England could lose out on this emerging market if Scotland were to become independent and perfectly poised to take on this lucrative future market.

Nuclear weapons in an independent Scotland

Both of the leading political parties in Scotland - The SNP and The Scottish Green Party - are dedicated to removing nuclear weapons from Scotland. Currently, the UK's largest stockpile of nuclear weapons is at Faslane Naval Base, the only base of this type in the British Isles.

To many Scots nuclear weapons are abhorrent. The risk of accident or pollution is a constant worry, especially to those in Scotland's largest Glasgow city, nearest to Faslane.

In an independent Scotland, these weapons would have to be removed entirely from Scotland. The remaining UK would have to find a new base to store both the submarines and nuclear weapons; the cost for this would be astronomical.

With the UK government's intention to renew the Trident missile program at a cost of £200 billion, the safe removal of these weapons from a "foreign" country will radically increase costs. It's even possible that this process will take years, and Scotland will charge the remaining UK "rent" for each year these weapons are not removed.

United Kingdom assets

As a member of the United Kingdom, Scotland could be due as much as 10% of the UK's worldwide assets. Be it military hardware or embassies in foreign countries, Scotland would have a legitimate claim to part of everything owned by the UK. No doubt there would be much discussion (arguing!) about said assets, but a 10% loss in total assets would make the rest of the UK poorer.

Brexit

It's possible that if Scotland broke away from the United Kingdom that it would then rejoin the European Union in the future. Of course, not all Scots are keen on this idea, and many would prefer a Norway style agreement.

Being part of the EU, Scotland could open many benefits such as free trade (single market and customs union) and free movement of people to Scotland. This will come with many benefits to the Scottish economy.

EU membership could attract many UK businesses and lead to headquarters moving to Edinburgh instead of London. Businesses in Scotland could have an advantage over English companies with less red tape and regulations to move goods to European countries. For example, English holiday makers could choose to fly from Scotland and save money on European destinations or less hassle via a dual citizenship passport.

This stark advantage could have adverse effects on the English economy and the rest of the UK. Scotland's income per capita is set to decrease by 2% due to Brexit according to the London School of Economics.

Are Scotland's true contributions hidden?

Many large corporations and retail businesses operating in Scotland have their headquarters in London. Because the UK is a group of nations, there are no borders to consider when it comes to business. This also means that revenue figures for businesses don't take into account Scottish sales separately.

So for example, there are multiple Tesco and Asda supermarkets around Scotland. Both of the headquarters for these vast businesses are based in England. If Tesco reports a profit of £2.75 billion, how much of this comes from Scotland? Because they are not headquartered in Scotland, it is marked under England only or UK wide profit.

With offshore oil, if it is taken via ship to ship transfer or pumped on shore to a refinery in England, this would also not be marked as part of Scotland's economic output.

Forcing large businesses to report income from Scotland alone could significantly boost the Scottish economy and paint a more accurate picture of Scotland's finances.

Scottish Independence

Ever since Scotland joined the United Kingdom in 1707, it has been instilled into the national psyche that we are too small and poor to run our own affairs. This is amazing considering the impact Scotland has had on the modern world, with many world-changing inventions developed right here, including the telephone, television, and antibiotics, to name a few.

Historically, Scotland also played its part within the British Empire and was brutally efficient with our highly educated population... so saying we can logistically manage half of the planet but not our own country is insulting.

Small countries of our size do exceptionally well on the world stage; we need only look across the sea to Denmark to see the possibilities on offer, ie a higher quality of life and happiness, even though they don't have the boon of North Sea oil, whisky and other economic resources we enjoy in Scotland.

New Zealand and Ireland have thrived after independence from the UK. Many commentators think that independence would leave Scotland considerably poorer, but I'm not sure Ireland and New Zealand are lining up to rejoin the UK. The Irish economy is near double that of Scotland's with a similar population level... does the UK hold back the Scottish economy? If the union is a boon to Scotland, shouldn't we be at least at the same level as independent Ireland?

There is no reason Scotland would be the only country to break away from the United Kingdom and ultimately fail. Unpopular British prime ministers such as David Cameron, Teresa May, and Boris Johnson, especially with the unpopular Brexit vote and wild parties during the Covid-19 lockdown, have only continued the drive towards independence.

Scotland sells much more products to the rest of the UK, and some analysts predict a shock four times greater than Brexit if Scotland were to leave the UK and may leave Scotland considerably poorer. Ireland has been a great example of moving to a more EU based market and has shown it is possible to reduce trade dependence from the UK market and prosper in the long term.

Conclusion

England would be significantly poorer without Scotland's economic contributions. Losing a third of the UK landmass, wind & wave renewable energy potential, farmland, fishing, whisky, tourism, North Sea oil and gas and decommissioning the nuclear submarine base would be a significant loss to the UK's finances and England would be worse off for it.

The Scottish economy has a nominal gross domestic product of nearly £200 billion per year. How could England (and the rest of the UK) not be poorer after losing such a figure upon Scottish independence? England's economic output is significantly higher than Scotland's, but the Scottish GDP of £200 billion per year is a lot by anyone's standards.

England would not be richer without Scotland.

Further reading:

• Is Scotland a country?

• Why are Scots called Jocks?

• Flag of Scotland

• The Motto of Scotland