This research programme aims to clarify some of the fiscal choices that might face Scotland were it to become independent. This work is carried out under the auspices of the Centre for Microeconomic Analysis of Public Policy, an ESRC research centre hosted by the IFS. The project forms part of a wider ESRC programme of work addressing issues around the future of Scotland. The research will look at the following issues: A comparison of key income, labour market and other economic variables in Scotland and other countries and regions of the UK; A detailed description of Scotland’s current fiscal situation, starting with a detailed analysis of Government Expenditure and Revenues Scotland (GERS);

• Tax options open to an independent Scotland;
• A comparison of public spending, and changes in spending, between Scotland and other parts of the UK. This will illustrate different levels and patterns of spending and show where different choices have been made. It will look both at public service spending and spending on, and receipt of, particular welfare benefits;
• There is also uncertainty over how responsibility for some other obligations would be allocated. For example, how might the accrued liabilities, and in some cases the assets, of public service pension schemes be shared? We will explain the options and set out how important those choices are likely to be;
• Long term fiscal projections for Scotland. Building on the work of the Office for Budget Responsibility (OBR) and the European Commission we will use information on demographic trends, tax revenues and spending patterns to look at fiscal scenarios for Scotland over the next fifty years. This will provide a clear illustration of the choices available to an independent Scotland within the constraints of fiscal sustainability. This is to be the most substantial and important element of the work. We will also include an assessment of the appropriate fiscal framework for an independent Scotland, in particular given the role of revenues from North Sea oil and gas.

ESRC programme of work: The future of the UK and Scotland

The ESRC is supporting a programme of work addressing issues around the future of Scotland. The work will provide robust independent research based evidence. It will aim to both inform the debate in the run-up to the referendum and assist in planning across a wide range of areas which will be affected by the outcome of the vote, whether for independence or the Union. These include voting, culture and identity, business intelligence, fiscal and monetary policy, policy development, building of new constitutional arrangements, and defence and administrative practice - particularly in public service delivery. One of the strands focuses on supporting new work at current major ESRC investments before and potentially after the vote.

The first report from this project is being presented at a David Hume Institute seminar in Edinburgh on Monday 19 November.