Saturday, 23 November 2013

Hidden Wealth.

It gets you that way. You find yourself in a long Facebook natter and suddenly you realise there is a fact which doesn't often get highlighted in this “debate” about Scotland’s constitutional future. Oh yes, the Unionists aren't slow to drag the “oil is volatile and will cause you no end of confusion” card, and sadly many, many people pick this one up and run with it. It defines and confines the financial deliberation within heavily bordered limits. And this is precisely where Westminster wants this discussion to be kept.

Yet, there is not so much an elephant in the room but a small herd of elephants in the room. These are all of the companies currently manufacturing and exporting from Scotland and/or selling goods to the people in Scotland, but are head-quartered in England.

Currently, the majority of goods manufactured, grown, distilled or created in Scotland are exported via ports and airports in England. All taxation receipts from the following items such as airport fees, freight charges, fuel sales, VAT, applicable export levies and associated profits from these goods are then allocated as English income at the Treasury. The exact figures are hard to break down as they appear to be intentionally difficult to search or find in any of the Westminster governmental sites. For an example of a typically Scottish product regularly exported, in 2012 Whisky exports topped £4 billion. Approximately seventy-five percent of this is exported via English ports and allocated to the Treasury as English exports and income. This is also true of beef and other farm produce grown in Scotland, yet exported via ports down south. This can only be viewed as profits and tax receipts which should be credited to Scotland lost in a system set up to confuse and obfuscate.

Then we have the interesting situation of companies that sell goods and services in Scotland, but are head-quartered south of the border. With very few exceptions, it is only chains and stores with head offices in Scotland that record profits and VAT as being income from Scotland. The majority of companies which operate central offices in England pay their taxes and are shown as making profit in England – despite it being hard earned wages which gave them those profits and VAT receipts at tills in Aberdeen or Kilbirnie or Haddington.

We all need to eat, furnish our homes and wear clothes (well most folks do!). And many of us enjoy our electronic goods or buy home improvement items – you get the picture. We go to our local supermarket, DIY store, favourite clothes shops or electrical store and pay for all those things that make our lives viable and comfortable. Except, very few of these stores have a head office in Scotland.

As a way of explanation, allow me use one chain to give a small example.

Sainsbury: They have 1,016 stores throughout mainland UK, 60 of those are in Scotland – according to 2012 figures. This is roughly 6%. Until March of this year they took £2,329 Million in VAT. Roughly 6% of that or £140 Million was taken in Scottish stores. Under the current arrangement, ALL of that money is allocated as English income to reflect where Sainsbury have their HQ.

Now, imagine in an independent Scotland, that portion of VAT generated by us busily getting on with our daily lives, equipping our bellies, families and homes, going directly to Holyrood to be spent as needed on those things that we have deemed as important to us and our society – whether it’s infrastructure or social care. Sounds great doesn't it, but it’s “only” £140 Million, I hear someone mumble. However, you need to extrapolate this small amount over every company presently operating in Scotland under the current set-up.

What we have is a pile of money heading to Westminster and not really finding its way back to help those who spent it in the first place. Not only that, because it isn’t shown as being generated within Scotland, it helps to reinforce the “Too Poor” aspect of the Unionists argument. They can throw the volatility of North Sea Oil in our faces every other day, but they deliberately miss the point of other important, yet hidden aspects of the Scottish economy (e.g. £500 million in road taxes with associated fuel duties) which isn’t being allowed to show up for us in the “Books”.

How easily they can transform Scotland’s vibrant economy, created and supported by her hard working population, from energetic to appear poor and perhaps slightly quaint and backward.


  1. In spite of this, Scotland is still credited with paying more tax per head that the UK average!

    1. Except, no-one south of the border will:
      A) Notice this fact or
      B) Acknowledge it as a fact.

  2. Love it one question, we win Independence, for this money to stay in Scotland wont the companies head quarters have to be in Scotland?

    1. No, they would have to pay to the Scottish exchequer following independence. If you use this logic then Amazon (HQ in Luxembourg) would not have to pay tax to Westminster. The tax is paid to the country in which it is earned.

      As Scotland is currently prevented from raising her own taxes, then all earned monies go directly to the Treasury in London.

      Furthermore, Westminster have over the decades/centuries made it that the majority of manufactured goods HAVE to leave the UK mainland by an English port, and thereby redirecting earnings and taxes to London.

      Devious, yet you have to admire their abilities for taking credit for something they have no ownership over.

      Think about the Starbucks scandal on tax... HQd in Seattle, WA. And all the other companies accused of "tax-dodging" while earning in the UK, but have HQ's across the planet. It's just Westminster have made it financially attractive for many companies to set up in London and other places in England - so they can rake in their tax. Also, it's easier for them to tax dodge there, making it more attractive to set up HQs there.

    2. Thanku excellent info for me :)

  3. Be careful Hazel.
    There is no export tax on goods.
    Exports recorded as "Enlish" GDP because they are statistically apportioned to point of export rather than point of origin is a vey valid point especially for high value, low weight items air freighted out of the UK, such as electronics and medical stuff.

    1. Sorry, I've clarified the tax point.
      It's not export taxation I mean. It is the income which is generated by the goods manufactured in Scotland being sent south to be exported.

  4. Lost a part comment above so. Will finish it later

  5. Hazel
    Sorry about the quality of the post this morning, and on my iPad too.

    My only excuse is that it was 3am and I had just rolled in after a boozy party.

    Anyway, you are right the UK Treasury figures are all bollox. I think sales if VAT taxable are apportioned to where the HQ of the company is registered in the UK. Think M &S, Littlewoods, Argos, Amazon etc etc. So that is about 20% of sales receipts, non food ones, being part of the SE England GDP.

    The other one is alcohol tax, apart from the VAT on top. Next is fuel duty, not the N Sea tax as we know that already where that goes, at the pump. Figure out that tax on petrol and diesel, including VAT is about 60+% or the pump price.

    Exports are definitely marked as part of the regional GDP or the port where they are exported. Biggest ports in the UK are in the greater SE of England. Also high value low weight electronics and medical products are predominantly shipped from Gatwick / Heathrow / Stansted. This is why the SNP acted with speed to keep Prestwick alive for post 2014.

    Incidentally, and I didn't know about this before, a fair chunk of general blended minor marks of Scotch whisky are actually bottled in the NE of England, and obviously become part of their GDP! A lot of Scotch is exported in bulk for bottling in France, India soon China and Japan.That can be changed by changing the Definition of Scotch Whisky post 2014 to include that it must be bottled in Scotland. Big boost there to the folks in Kilmarnock. Shame it was closed 3 years ago.

    There is a slew of hidden accounting tricks that have been uncovered and more will be post 2014, I am sure.

    Sober now and I cannot imagine how I actually entered the verification code last night to post my slaverings.

    1. Not a problem. It did point to an part of the blog that was ambiguous, and I thank you for that!
      I was unaware about the whisky thing. Someone posed a question about Harris Tweed on FB last night. And try as I might, I couldn't track down the main port of exit for the finished garments. If you go to the Harris Tweed site, you'd think they were exporting directly from the island, however, they don't make all the clothing for export. I found one article in a Savile Row tailor's site that showed that at one point after one of the mills was bought over, about 70% of its output went to Yorkshire .... so no tax benefits for the islands for that batch.

      Glad you had a fun time.

  6. Hazel

    Harris Tweed is made in Harris, under specific manufacturing conditions.

    The clothes made from it can be made anywhere and London bespoke tailors make them of have them made, sometimes in Yorkshire; cf Crombie which used to be a n Aberdeen business unto flogged off

    1. Yes, I know about the very specific manufacturing and labelling prerequisites. However, if you were to look at this link: ... you would be under the misapprehension that every piece of Harris wear is exported from the islands. And this is all part of the propaganda which hides the true financial capabilities of Scotland.
      Yes, ALL the tweed is created there ..... but .. it goes elsewhere in the UK to be made into garments. Some of it then returns to the islands fr sale in specialist tweed shops - and going by the prices, I expect it would be tourists who are the main purchasers. But that's fine. However, a Yorkshire gentleman, Brian Haggas, bought one of the mills over - I take it that it is probably registered in Yorkshire, where he sends the material for manufacturing jackets ... see where I am going?
      I also wonder where the other two mills are registered?

  7. You'll have to ask Brian Wilson, of NuclearRUS or Ian Taylor of Vitol infamy.

    1. Yeah ... funny how many politicos are involved with that particular industry.

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  9. I showed your article to a 'No' friend of mine. He dismissed it as 'Just somebody's opinion' because it wasn't in the national press. I want to be able to convince him that we are not being told the whole truth about how rich Scotland really is - but it's hard to convince some people. Could you point me in the direction of some 'mainstream' sites where I could get more information on taxation receipts on exported goods.

    I am in no way questioning the veracity of your article. I would just like more ammunition that I can use in the future.

    BTW he had to accept the part about supermarket profits appearing as solely English profits for the purposes of GDP calculation. At least that part 'put his gas at a peep'.


      Check Pulling the Wool. There are a few links in there.
      Finding ANY concrete figures and numbers is very difficult as they don't separate them out all the time. It really can be a quagmire trying to find these facts out.

  10. Try googling the GERS reports, which attempt to break down the Gov Expenditure and Revenue figures from Scotland. They are produced annually from Treasury figures. Then there is John Jappy's blog. His figures were culled from insider info when he worked as a accountant inside the admin. The other stuff about export attribution is in the HM Customs and Excise Export / Import figures.


    They have a reference list of loads of stuff as has the website.