I am supposedly on holiday this week. I use the term loosely. It's one of those weeks where there is a lot of stuff to 'catch up with'.
There is also a submission to the Scottish Parliament on GERS to write by Friday.
And an article for a medical journal on the future of the NHS to knock into shape.
Put that together and there may not be much blogging.
Today though it's bird watching. Long overdue, barring my regular Ely patch. Now is it Titchwell or a last look at ospreys for the year at Rutland Water?
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Ah, go and see the ospreys! The Dyfi youngsters have all left, and Monty hadn’t been seen this morning, so may already have followed them – Aeron, Menai and Eitha (who’d already caught two fish before she left), plus, of course, the Queen of the Dyfi – the great Glesni, who was born at Rutland.
And I saw them all. in June – and know where I need to be – back in hen wlad fy nghadau. But when? Ah, that’s the question. Because it can’t all be about me, and others need this house for at least another winter.
Eldest sion has chosen Titchwell – I was always open minded – and I know there will be stuff to see and the great North Sea there (goof sausage sandwiches too, won’t help the diet)
But I love your enthusiasm
My conclusion, based on your latest blog post on GERS, is that HM Treasury (HMT) is currently operating a kind of “offshore tax haven” – offshore as far as Scotland is concerned.
(perhaps not the best way to represent it to the Scottish Parliament, but …)
The GERS-believers are of course missing the point when they “joke” about discovering the difference between “in” and “for”. In GERS, it’s a fact that spend is made “for” Scotland, and revenue is only recouped “in” Scotland.
It’s there in clear terms in the Glossary at the end of the GERS document:
“Net Fiscal Balance: the difference between estimated total public sector spending for Scottish residents and estimated total public sector revenue raised in Scotland.”
“Who Benefits Principle: the approach used to estimate expenditure for Scotland. It
identifies the expenditure in a given year that was incurred for the full range of public
services that were consumed: that is, those services provided for the people of Scotland.”
“Who Pays Principle: the approach used to estimate public sector revenue in Scotland. It is
based upon the residential location of where the revenue is raised.”
This mirrors the basic principles that you already linked to at http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/Methodology, but the phrasing used in GERS is perhaps even clearer.
Taken together, those three statements make plain the concern – that some extra-national spend is charged to Scotland and the extra-national tax is not counted in Scotland’s public sector revenue.
If GERS added an additional amount for revenue collected on spend outside Scotland, it would be easy to find and nobody has found it.
So one might say that HMT is evading the payment of tax due to Scotland – HMRC are paying tax to HMT which should, at the very least, be counted in GERS. If it was included in GERS, it would be hard to argue against paying the extra-national tax to Revenue Scotland; otherwise the “national accounts” would not be reflected correctly in GERS. (one for the GERS enthusiasts 😉
Hence the conclusion that HMT is currently operating an “offshore (extra-national) tax haven”.
Were Scotland to be independent, this would stop. In addition, the extra-national spend would become Scotland’s responsibility. The Scottish Government could make different choices, and would likely reduce some elements of the spend – especially on defence for example. Nevertheless, the repatriated spend would provide jobs, and economic growth via the multiplier effect that you mention.
The UK Government has transferred the operation of various public services to the private sector, and this will include some of our extra-national spend. An independent Scotland will be able to make different choices and return this spend to the public sector.
On a related note – prior to the 2014 referendum, the UK Government was keen to highlight how much Scotland would need to take on after independence. One example of this was “UK Public bodies that operate in Scotland”, published at https://www.gov.uk/government/publications/uk-public-bodies-that-operate-in-scotland; this includes a handy list and a Technical Note. You may have spotted their use of the phrase “in Scotland”. However, this subterfuge quickly vanishes when we see this change to “for Scotland” in the Technical Note –
“Over 140 of these organisations perform functions for Scotland which are reserved to the UK Government (and in some cases also play a role in devolved matters).”
Now some of those may have part of their spend already in Scotland, and some will not be needed, but clearly the document recognises that some functions and their related spend and tax will move to Scotland on independence.
And enjoy your much deserved holiday!
All noted
Thanks
Happy & relaxing holiday 🙂 🙂
Richard,
I am pleased to see you are still taking an interest in Scottish tax etc, I watched you when you appeared as witness in the Scottish finance committee meeting and found your contributions quite fascinating (as well as others’ contributions). I understand very little about tax, economy, or finances, so will not embarrass myself here by making a comment on the issues, except:
A helpful poster on John Robertson’s blog brought our attention to some previous analyses of GERS (2005 and 2006) – I hadn’t known these existed, but is quite likely you already do – so, just on the off-chance these links may be useful to you for looking for sources or ideas for assumptions (I noted the ‘accrual method’ was mentioned) , you can find them here:
https://thoughtcontrolscotland.com/2017/08/28/the-great-obfuscation-thanks-to-b-le-panda/
Thanks
I am appearing again on 19 September
Richard
Excellent, I should be on holiday myself then, so should have time to watch 🙂 , all the best.
These articles should have been added to the page about GERS, but have you seen these?
http://www.electricscotland.com/business/THE_GREAT_DECEPTION_FINAL.pdf
http://www.oilofscotland.org/the_great_obfuscation_gers_2006.pdf
GERS was extensively changed in 2007 (or thereabouts: I think I have the date right)
I rather like the way the author makes sweeping assumptions – just as the GERS seems to do – about proportions and who is allocated what; eg oil and gas industry is 95%, because international law on where the fields are, states it is Scottish (unlike GERS), he also says the Scottish portion of the defence spending appears to include the WHOLE of trident spend, just because it is based here – is this still the case? If the author was still alive, I wonder what he would have thought of how energy is divvied up? We have a lot, an awful lot, of renewables energy production – are revenues for that allocated to the Scottish revenue? I can’t tell.
The Scottish government website only shows GERS methodology starting from 2007, and claims that there was much change – but is not clear in what ways. Certainly seems to still include creative accounting that was pre-2007, and why separate methodologies between revenue and expenditure? If you are being creative with the accounting, I would have thought a more holistic approach would be appropriate.
Besides the independence question, and that the population should be allowed to know we are not subsidised in every case, I worry that the Scottish government may be making economic decisions based on seriously flawed numbers.
Hope you have a great holiday, looking forward to seeing you in Norwich with George Lakey on 16th October
Indeed!
Thanks Lesley
Enjoy the holiday Richard! You seem to be in Scotland, Brussels or London so often from what you post that I hope you get some time with the wife and kids. The best way to unwind during a hectic year I have found.
I manage it sometimes – Norfolk coast this afternoon – until it decided to rain