WIREDGOV

UK challenged to admit Scotland’s economic strength.

Scotland will benefit from a share of £1.3 trillion of UK assets following a vote for independence, said Finance Secretary John Swinney.

Publishing an extract from the Scottish Government’s latest assessment of the strength of Scotland’s economy and the opportunities to increase Scotland’s wealth with independence, Mr Swinney said that following a vote for independence Scotland would negotiate for a share of the estimated £1.3 trillion of UK assets - providing an even stronger base for Scotland to build on.

Negotiations would include offsetting assets that couldn’t physically be shared with Scotland such as overseas embassies or some defence equipment against a share of debt – a move which could potentially see Scotland’s share of UK debt reduced by several billions of pounds.

It is estimated that offsetting £10 billion of assets could save Scotland £400 million of payments on UK debt every year.

Recent claims from the Treasury on the costs of becoming independent have already been shown to be false. The Treasury must now ensure that any assessment of independence includes Scotland’s full share of UK assets.

Speaking ahead of the launch of a Scottish Government paper on Scotland’s public finances and the opportunities of independence, Mr Swinney said:

“Scotland is a wealthy country. Our GDP per person is higher than in France, Japan and the UK and would be the 14th highest in the OECD.

“The UK Government may not like those figures but the reality is we can not only afford to be independent but we can thrive with independence.

“With independence we can take control of our own resources, ensure everyone shares in Scotland’s wealth and use the tools of independence to create jobs and opportunities, and boost incomes across Scotland.

“Later this week we will be setting out the strengths of Scotland’s finances and the huge opportunity that exists for Scotland’s economy with independence.

“Scotland will start life as an independent nation with access to our own wealth and a key stake in the £1.3 trillion of assets built up by the UK and funded by Scottish taxpayers.

“Everyone in Scotland has contributed to this £1.3 trillion stockpile of UK assets and Scotland is entitled to a fair share, giving us an even stronger base to build on.

“These assets include buildings and property, but also payments due to the UK Government and a share of UK Government investments.

“And in the case of physical assets overseas or defence assets that cannot be transferred or shared with Scotland, then the result will be for Scotland to receive a cash share of their value or to see our share of UK debts reduced.

“The UK Government is very keen to talk about the debt we have built up or to invent costs but rarely talks about the assets that have been accumulated and for which Scotland has paid.

“An independent Scotland will start life with a healthy budget and a strong economy that can only be made stronger by putting the tools we need to create wealth in the hands of the people of Scotland.”

Notes To Editors

Background

EXTRACT - Public Sector Assets and Liabilities

Scotland’s share of UK public sector assets and liabilities will be subject to negotiation following independence.

A range of potential approaches could be taken to calculate Scotland’s share of public sector assets and liabilities. For example, assets related to land, property and equipment may be allocated on a geographical basis. In other situations assets and liabilities may be divided on a per capita basis, with reference to Scotland’s historic share of UK tax receipts and public spending, in relation to the original source of funding for the assets or as part of a negotiated political settlement.

In the case of UK public sector debt, the UK Government has confirmed that “in the event of Scottish independence from the United Kingdom (UK), the continuing UK Government would in all circumstances honour the contractual terms of the debt issued by the UK Government”[1]. However, as set out in Scotland’s Future, the Scottish Government envisages making a contribution to the cost of servicing this debt as part of the wider division of UK assets and liabilities.

UK public sector assets are substantial. The latest estimates for 2011-12 in the Whole of Government Accounts[2] suggest that total UK public sector assets stand at £1.3 trillion, as summarised in the table below. Following independence, the Scottish Government would expect Scotland to receive an equitable share of these assets.

In some cases, it may not be practical for an asset to be split between Scotland and the rest of the UK. This may be the case with land and buildings used for reserved functions out with Scotland. Scotland may also not require some of the assets, such as some of the UK’s defence equipment.

In such situations, assets could be retained by the rest of the UK. Scotland could instead receive either a larger share of other assets or a lower share of liabilities, such as UK public sector debt. This latter option will have implications for Scotland’s annual debt interest payments and in turn its overall fiscal position. As an illustrative example, if Scotland’s share of UK public sector net debt was reduced by £10 billion as part of a wider negotiation of UK assets and liabilities (just 9% of Scotland’s share of total UK assets to which it would be entitled), this would reduce annual debt interest payments by approximately £400 million, equivalent to 0.2% of GDP in 2016-17.