Scottish independence: Finance body warns on referendum information

Sterling currency The report estimated both an independent Scotland and the UK would face budget deficits

Voters in the Scottish independence referendum will not be able to make "a truly informed decision" according to a new report.

A public finance body has published an assessment of Scotland's future financial sustainability ahead of the referendum.

The report argued negotiations in the event of a "Yes" vote would affect Scotland's future financial situation.

Such negotiations could only take place after the referendum had concluded.

The Chartered Institute of Public Finance and Accountancy (CIPFA) is a professional body whose members work in public finance.

Its report attempted to estimate the current balance sheet for Scotland's devolved public sector as part of the UK, arguing that current UK financial reporting did not "enable the financial position of a devolved Scotland's public sector to be separately reported".

CIPFA concluded that Scotland had public sector assets of around £84bn and liabilities of £100bn - a liability of around £16bn.

The report estimated a shortfall in tax receipts to fund public spending if Scotland became independent in 2016, but added that this would be a similar situation to that faced by the UK.

"Scotland's share of the national debt could be up to £120bn, which could result in an annual cost of approximately £4bn each year," the report said.

"Public sector pensions make up around £75bn of the existing devolved liabilities in Scotland. In the event of independence, this would increase.

"The outcome of the negotiations on the division of assets and liabilities would significantly impact on the Scottish public sector's balance sheet, the future decisions of an independent Scottish government and its ability to borrow."

It continued: "CIPFA concludes that the outcomes of these negotiations are fundamental to the starting position of an independent Scotland, and the fact that the outcome will not be known until after a vote for independence means that a truly informed decision cannot be made in the referendum."

'Balance sheet'

While CIPFA predicted a shortfall of £4bn or 6% of total spending for an independent Scotland, it said the the UK could face an £82bn shortfall in 2016-17, or 11% of total spending.

Don Peebles, Head of CIPFA Scotland said: "A balance sheet for the Scottish public sector would provide a starting point that would help voters to understand clearly what we know about where Scotland's finances are now, but also where further information needs to be provided.

"Our hope is that this report helps to shed light on the debate so as to better inform voters on all sides of the argument."

Labour MSP Jackie Baillie, representing the pro-Union Better Together campaign, said: "Our public services are more affordable when spread across the shoulders of a population of 63m in the UK rather than just 5m in an independent Scotland.

"This report makes clear that the best way to protect our public services is to say 'No Thanks' in September."

Scotland's Deputy First Minister, Nicola Sturgeon, has argued that independence would enable the Scottish government to meet the shortfall between what it spends and what it earns by spending more money on public services.

"The best way to reduce the deficit in the long term is to invest in public spending, to grow the economy and reduce the deficit in a sustainable way, ensuring there is less need to borrow in the future by boosting revenues in the long term," she said.

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