§ Mr. SalmondTo ask the Chancellor of the Exchequer, pursuant to his answer of 13 January,Official Report, columns 25–26, if he will estimate the total surplus or deficit of Government expenditure and revenue in Scotland for each year from 1997–98 to 2001–02 assuming a constant relationship between the Scottish deficit, as published in "Government Expenditure and Revenue in Scotland 1994–95" and the United Kingdom general Government borrowing requirement excluding privatisation proceeds and North sea revenues for 1994–95 and including in the Scottish total for each year a 90 per cent. share of North sea revenue and an 8.8 per cent. share of privatisation proceeds using the projections for (a) the United Kingdom Government borrowing requirement (b) projections for privatisation proceeds and other financial transactions published in the "Financial Statement and Budget Report 1997–98" and (c) the projections for North sea revenues published in that report and produced by the Inland Revenue for later years. [13908]
§ Mr. Waldegrave[holding answer 31 January 1997]: The table provides the information necessary to make the calculations requested by the hon. Member. However, as the hon. Member should be fully aware, his proposed methodology is a ridiculous way of either projecting the Scottish deficit, or estimating the Scottish deficit in past years.
The Scottish contribution to the borrowing requirement depends on the proportion of total Government expenditure incurred, and the proportion of total Government revenues raised, in Scotland. Even if each of these proportions were to remain stable over time at their 1994–95 levels, there is no reason why the ratio of borrowing in Scotland to that in the UK should also be stable. This is a straightforward arithmetical truism. In practice, the ratio changes markedly between years. Moreover, in some recent years, Scotland has had a deficit when the UK has had a budget surplus.
It follows that estimates of the cumulative Scottish deficit since 1978–79 and-or projections of it, based on the assumption of a stable ratio between the Scottish and UK deficits, are rendered totally meaningless.
My answer of 13 January incorporated the same assumption, at the hon. Member's request. I am pleased to set the answer in its proper context by emphasising how far that assumption is from the reality of Scotland's expenditure and revenue flows.
682W
Budget forecasts and projections of the General Government borrowing requirement (GGBR). North Sea tax revenues and privatisation proceeds £ billion 1997–98 1998–99 1999–2000 2000–01 2001–02 GGBR 19.6 12 4 -7 -18 Privatisation proceeds (PPs) 2.0 1.5 1 1 1 North sea tax revenues 4.1 3.9 3.6 3.6 3.4 GGBR excluding PPs and North sea tax revenues 25.8 18 8 -3 -13 Note:
The Scottish GGBR excluding North sea tax revenues and privatisation proceeds was £8.2 billion in 1994–95 (source: "Government Expenditure and Revenue in Scotland", table 12). The comparable figure for the UK was £45.8 billion.
Sources:
Tables 4.1 and 4.6. "Financial Statement and Budget Report, 1996", and Inland Revenue Figures for 1997–98 are forecasts, figures for later years are projections. Figures for the GGBR in 1998–99 and beyond are rounded to the nearest £1 billion. Constituent items may not sum to totals because of rounding.