A taxing Union, 1707-1800
This week, Professor Julian Hoppit (University College London) examines how taxation practices caused tension between England and Scotland after the Act of Union.
The partners to the Union of 1707 were differently motivated. South of the border, strategic considerations were critical. To the north, economic considerations were more important. After 1707 it was, Jacobitism aside, easy enough for Britain to pursue a common foreign policy. After all, it had often done so since the regnal Union in 1603. But uniting the economies of north and south Britain was harder to achieve. English standards of weights, measures, money, and taxes were to be applied. But negotiators to the Union of 1707 recognized that considerable differences existed between England and Scotland regarding economic life and its institutional framework. Consequently, some adjustments were made – most famously the payment to Scotland of the ‘Equivalent’ – while Scotland’s integration into England’s laws and taxes framing economic life was not expected to take place immediately.[i]
One of the big differences between England and Scotland on the eve of the Union of 1707 was the amount of taxes raised. Official figures compiled for the negotiators showed that on a per capita basis the English paid ten times as much tax annually as the Scots. That was a big gap – with important implications for understanding the nature of the two states just before 1707 – but an interesting question is what happened to it through the rest of the eighteenth century?
There’s no doubt that many Scots believed that the Union’s fiscal regime hit them hard. In 1716 Robert Fairbairn thought that key taxes had tripled and were ‘exacted by a Parcel of Strangers, sent down to us from England’.[ii] Violent riots against the malt tax took place in Glasgow and elsewhere in 1725, while in 1736 the Porteous riots in Edinburgh, the starting point of Walter Scott’s novel The Heart of Midlothian (1818), centred on the enforcement of the customs laws. Nor was hostility in Scotland towards the British fiscal state limited to popular action. A slew of Scottish writers – the earls of Eglinton and Stair, lord Elibank, Hume, Pulteney, and Smith – wrote passionately against the burdens of the national debt, which rose from £13m in 1706 to £78m in 1750 and £427m in 1799. Kames, Smith, and the little-known Andrew Hamilton were similarly anxious about the nature of the tax regime.
The three main revenue streams in eighteenth century Britain were the land tax, excise, and customs. The first of these was fixed at the Union meaning any fiscal convergence was expected to come from customs and excise. Unquestionably, their absolutely burden in Scotland rose after the Union, doubling by the middle of the eighteenth century and fourteen fold by its end. But those burdens were also rising in England and Wales. Consequently, having started from such a low base in 1707 the amounts of taxes collected were much less in Scotland in relative terms, even in 1800.
Tax receipts per head in Scotland as a % of those for England and Wales
1708 13 11
1755 14 15
1800 42 38
It was not just that amounts of taxes collected in Scotland were lower than in England – amounts collected in Wales were even lower – but that significant amounts of those taxes remained north of the border, to meet management charges, the costs of civil government, the central courts, the kirk, bounties, and the equivalent. Consequently, Scotland provided less than 2 per cent of total British customs and excise receipts in London from 1708 to 1800.
On the one hand, then, taxes rose significantly in Scotland after the Union. On the other, relatively little taxes were collected there and much less still was sent south. This was a recipe for disquiet on both sides. Some Scottish sentiments have already been noted, but in England concerns were also expressed about whether Scotland was paying its way. Out of the public gaze, Sir Robert Walpole worried about this in the 1720s and Henry Pelham in the 1740s. But sometimes English discontent boiled over. In 1752 Lord Chancellor Hardwicke complained of ‘the insufficient manner in which the taxes had been collected in that northern quarter of the kingdom: some method should be taken to make Scotland pay her taxes’.[iii] In 1790 Walter Stanhope, an English MP, having poured over official statistics, thought that ‘in England the Excise was the best collected system of taxes in the country, and in Scotland, from what he had read … he feared it was the worst’.[iv]
Some in England complained that the administration of the revenue laws was lax in Scotland, encouraging a culture of smuggling and fraud there. But the Scottish Excise Commissioners certainly didn’t accept Stanhope’s charges. They pointed to material differences between Scotland and England in terms of population, output, productivity, and the natural environment – they were well aware of the costly nature of collecting taxes north of the Great Glen – and of significant changes in the administration of tax collection in Scotland since the 1770s. But there were other factors at work too. As an anonymous Scottish merchant pointed out in 1790, ‘every tax is levied regularly, and full as strictly as in England’. In this view, the problem was that England had not tailored its funding system to Scotland’s distinctive environment and economy: English politicians ‘have not been good economists, nor lenient masters.’[v]
Perhaps the Scottish merchant in 1790 had in mind the taxing of tea. Imported under the East India Company’s monopoly, almost all of Britain’s tax on tea was collected in London, even though tea was increasingly being drunk across Britain and by an ever greater cross-section of society. This was an extreme example of a more general phenomenon. Tax collection in eighteenth-century Britain was structured to be higher not only in England, but in London particularly. London’s strong internal trading ties to other parts of the island meant many people beyond the capital could be taxed pretty indirectly.
Andrew Fletcher had warned in 1703 against London drawing ‘the riches and government of the three kingdoms to the south-east corner of this island … as unnatural’, something Hume reiterated in mid-century. Interestingly, however, comparable English anxieties were voiced, famously by Cobbett in the early nineteenth-century English context.[vi] The web of exactions spun by the Union state had profound implications both for how its burdens were felt and ideas of territorial equity, both in terms of nations but also of core and periphery.
[i] A good overview of recent historiography of the Union is Bob Harris, ‘The Anglo-Scottish Treaty of Union, 1707 in 2007: defending the revolution, defeating the Jacobites’, Journal of British Studies, 49.1 (2010), pp. 28-46. On some of its economic dimensions see Douglas Watt, The price of Scotland: Darien, Union and the wealth of the nations (Edinburgh, 2006).
[ii] Quoted in Christopher A. Whatley, Scottish society, 1707-1830: beyond Jacobitism, towards industrialisation (Manchester, 2000), p. 188.
[iii] Horace Walpole, Memoirs of King George II, ed. John Brooke (3 vols., New Haven, CT, 1985), vol. 1, p. 184.
[iv] Parliamentary Register (1790), pp. 466-7.
[v] Anon, Considerations on the Union between England and Scotland (1790), pp. 6, 66-7.
[vi] Andrew Fletcher, Political works, ed. John Robertson (Cambridge, 1997), p. 213.
Julian Hoppit is the Astor Professor of British History at UCL. He works at the intersection of economic and political history and will publish in 2017 Britain’s political economies: parliament and economic life, 1660-1800 (CUP).