Sometimes I get the impression that there is the odd person out there in the wider world who does not agree with every word I write here. Sometimes the message is subtle. Other times it's blatant. Kevin Hague's comments, published in bith the Scottish Daily Record and the Spectator yesterday were very definitely in the second category. As he put it:
The SNP once proudly proclaimed that they had Nobel laureates championing their cause. Now they're reduced to relying on the increasingly embarrassing contributions of accountant and tax specialist Professor Richard Murphy, the man who suggested that John McDonnell was ‘all too willing to accept conventional neoliberal thinking'.
I feel sorry for Kevin, and I have never even met him. In March this year I was wholly unaware of his existence. And then, in the way I often do, I saw some data, it struck me as worthy of comment, and so I wrote a blog. I can't say the rest is history, but so began my 2017 Scottish adventure on this blog.
Poor Kevin thinks I did this to support the SNP. It's the first of his many mistakes because I don't do party politics. I have had ample opportunity to do so. But I pursue ideas. Kevin's just not got that.
Nor has he even understood that I am not pursuing an argument that is inherently nationalist. What I am saying is Scotland has appalling data on which to make decisions. If that is true (and anyone who can pretend that GERS is decision useful does not, I think, understand what that phrase means) then this should matter to anyone with an interest in Scottish politics. After all, Scotland does have its own parliament. It has significant spending powers. Now it has revenue raising powers. And parties of every hue seem to want to control this process. Kevin Hague has chosen to perpetuate the myth that Scottish economic management on the basis of data is an issue that only nationalists need worry about. The political reality is that he has seriously missed the point as to why this data matters because high quality data should matter to everyone in Scotland. And for the record, I would willingly discuss it with any party that is interested but it so happens that it seem to be the parties more inclined to independence who are taking an interest in this issue. I commend them for doing so. I seriously wonder what the rest think they are doing because the issue is of enormous significance whether there is independence or not. I do not see how devolved government can work with the data it has now.
Having addressed that issue, and having decided to ignore the ad hominems and Unionist comments with which Kevin laces his piece, let me address just one more of his serious misconceptions, which is this:
Murphy's argument is basically one of incredulity: he simply refuses to believe the GERS figures can be correct because he doesn't understand them. He casually advertises his ignorance of how the figures are compiled by admitting to being ‘continually bemused' because he thinks the numbers are somehow improbable.
Kevin's right. I do refuse to believe the GERS figures. But that's because they are wrong. There are three reason for saying that. First, as Graeme Roy of the Fraser of Allander has said, they treat Scotland as a mini part of the UK. That, however, is not true. Scotland is a country within the UK with its own devolved government. In that case the whole premise upon which the data is prepared, which may just have been appropriate in 1992 when this saga began, and possibly (given the state of devolved powers at the time) so in 2007 when GERS was last seriously revised, is now just utterly inappropriate.
Second, that's because the vast majority of the income data is estimated and in key areas (like some major taxes) could be seriously inaccurate, which no one can dispute.
Third, that's because as I have shown the data does not correctly apply the accruals principle. In that case the data as presented so misrepresents the truth that if an accountant was to present the data as true and fair I think they would be guilty of professional misconduct.
In that case of course I am bemused, but not because I do not understand the data, but precisely because I do. And because I do understand it I wonder why this situation has been tolerated for so long; why no one in Scotland has pointed out some of the flaws I have so easily noted before and why anyone thinks the data is still useful. If Kevin has not realised that is why I am bemused I worry for him.
In that case Kevin's rant that I do not understand that Scotland runs a deficit is wholly misplaced. I accept that it does. I would argue that it should. He wholly misses the point by suggesting that I do not understand this. But what I am saying is that the deficit is not recorded properly. I also argue that it includes costs that are not Scotland's to bear. And I argue that Scottish income is deliberately understated by GERS. I would also argue that the way GERS is presented makes it almost meaningless for decision making (I will have much more to say on this in the next week or so). And I would argue that the assumption that Scotland has liabilities for UK debt that clearly cannot be attributed to it either legally or on the basis of its actual economic performance also questions the capital maintenance concept that underpins GERS (i.e. how the Scottish balance sheet is valued, which is an issue that also needs to be addressed since as yet GERS has no balance sheet attached to it, making it almost meaningless).
Kevin is worried that nationalists may be relying on me. I leave nationalists to make their own decisions on that, although I will say that those I meet (and I do meet many of them) have the merit of taking this issue seriously. What worries me is that unionists might think that what Kevin has to say has merit when firstly it ignores the technical accounting and economic flaws of GERS and secondly places emphasis on dogma rather than anything to do with decision making on the future economic policy that any Scottish government, including a unionist led one if that were to happen, would have to make.
And that's what's really worrying about his position and the enthusiasm some show for publishing it. What it denies is the ability of Scottish people, of whatever their political persuasion, to decide. And here I will get off the fence. That's just wrong. They can decide. As a matter of fact they do decide. And in that case they are owed the data they need to make sure they can do so to the best of their ability, which is precisely what Kevin Hague and his like, wants to deny them.
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I do not know Mr Hague. I do not read Mr Hague. From the few references or quotes I have inadvertently happened upon, I can see no compelling reason to repair the omission. I have nothing more to say on Mr Hague.
I think you know where I stand on GERS. I can understand your perplexity about the state of Scottish opinion on GERS. You have seen that GERS in Scotland is political. That should not be wholly surprising because it was a Scottish Conservative minister, Ian Lang who introduced GERS; and it was introduced to ‘dish the Nats’. Then ‘Oil’ made it more difficult. Then it became really political. Now it is only political. The tragedy is, GERS now serves no other purpose in Scotland. There is a political ritual dance that is played out each year with its formal announcement. Then the usual suspects play the usual games.
I shall not attempt to speak for the SNP, although when the Party took office it embraced GERS with little protest, I think because the prime purpose of the SNP at the time was to demonstrate managerial competence; a new party in Government that could run the show competently: professional competence is highly regarded in Scotland. I think the SNP overplayed it, and did not do enough either to criticise, or to establish independent sources of data to challenge the status quo. That is merely my outsiders’ opinion.
Yesterday I mentioned Hume’s detestation of ‘factionalism’. If you are going to dabble in Scottish affairs, I can only say: welcome to the home of factionalism.
I know all about it now: my twitter timeline evidences it every day
Thanks for this continued work, Richard. To my mind it may be amongst the most important contributions to the debate around independence happening now. As for Kevin Hague, I tried once to comment on a post on his blog. I was pointing out a misconception. I did so unfailingly politely, ignoring the abuse that came my way, and stuck to my point, illustrating it with links to impeccable sources. KH’s response (to be fair, he wasn’t personally abusive that I recall) was to tell me that if I continued to post ‘this stuff’ he would ban me – at which point I figured like was too short and left them to it. What you’re dealing with here (and this is true of a great part of the fervently unionist camp) is simply not rational.
Life is too short to engage with Kevin
He did ban me, for the record
He is not committed to dialogue
Average isn’t open to being disagreed with, and if there’s one thing I learnt in my previous life’s activity, it’s that you can learn from anyone, even people almost completely ignorant of what might be your own area of expertise. Without fail those experts I was lucky enough to work with at times, all had ears and eyes which they used before opening mouth. They even used to listen to me.
The other thing any blog writer should do, same as those people like me who have written papers, business plans or parts of them, designs, is to write to the best of our ability, then sit back and accept criticism. Sometimes it’s justified, and corrections or even rewrites can produce a better product. Sometimes it’s not written very well and needs clarification. Few people, however, can take criticism, they just deny it: “Let me explain”. Why bother if it’s just plain wrong?
It’s a shame. What would be good is for there to be sensible blog articles from “either side”, and thence debate could ensue, It;s a reason I occasionally do venture o nto a unionist blog to make a point or two. Perhaps they can produce a better argument or correct an error, and hey, that adds to the “debate”. Sadly an article I did that for on average’s blog before being banned apparently, wasn’t it, nor its predecessors or later articles. They tend to “prove” themselves by using the article itself to prove the article is correct (or previous articles). I should point out I have no problem with “robust” debate, it can be neccessary to argue your point before realising you’re just plain wrong – or even right.
The target should be good data, the data to be agreed by both “sides”, and then interpretation can be argued back and forth to everyone’s heart’s content. This doesn’t happen. In that respect the thinktanks, and institutes, fail in their duty to provide an impartial basis to debate. I’d like to think that will change during Indy Ref 2, but sadly I think there’s no chance, not for Scotland based instititutes and bloggers.
Some of the England based papers are sound, LSE is one that produces good stuff. I hope they come out with more before their EU citizen authors are sent packing with Brexit. You also get good materail from outside the UK, sadly not often enough.
So what do you get? Recalcitrant pugnacious polarisation. Meanwhile the 99% of the electorate are fed mushrooms.
When you say that ‘income has been deliberately understated’ by GERS do you have any evidence as to who has done this?
Presumably the people who compile GERS must have figures which they have understated in GERS and I would assume that this issue has been raised with them & the Scottish Government who produce GERS?
I have al;ways made it clear that the refusal to collect data for Scotland is largely to blame
I have to say I am not sure who is responsible for the failure of the accruals concept in GERS. But most economists don’t understand accounting. I must be a rare professor with economics in my job title who is also a qualified accountant
Who ‘refuses’ to supply data to the GERS team? Presumably the UK government? So you’re implying that the UKG is deliberately supplying false data? The GERS report makes no suggestion that UKG is deliberately not supplying data.
Could you confirm that your concerns have been raised directly with the GERS team & the Scottish Government as I have seen no comment from them?
I am giving evidence on this in Holyrood on 19/9
“And in that case they are owed the data they need to make sure they can do so to the best of their ability, which is precisely what Kevin Hague and his like, wants to deny them.”
Indeed one of the most important points, for if people can get the whole information they could come to a different conclusion that Unionists, such as KH, want them to make.
The agenda that those such as Kevin follow is strange, why wouldn’t everyone in any party not want to have accurate information as it will affect any party in power in Holyrood.
The answer comes in what Holyrood is about and its relationship to Westminster and Westminster parties. They assumed their party would be in power in Westminster and in Holyrood, but to make sure there would be no difficulties if that wasn’t the case, they limited the information and voting system, so that no other circumstances would upset the applecart.
The SNP won against all the odds and upset the Westminster parties applecart. So now they spend every moment attacking the SNP hoping to get all the apples back.
But this ‘approach’ has been loaded with unintended consequences. Constantly attacking half the voting population is counterproductive, especially when the other half is not actually a half but made up of changing proportions from two parties that have, at least in the past, two totally different ideologies. Where can such an alliance go in the long term future?
Kevin Hague isn’t the only unionist who appears unable or unwilling to see the perfectly reasonable points you make. The unionist media are more than happy to give him a platform to rehash his “one trick pony” article, and Scottish Tory leader, Ruth Davidson gleefully retweets him with a “thank you Kevin”.
The Unionists support him because, well, the argument that “Scotland has a massive £15bn deficit, and would be poorer than Greece if it became independent” is, frankly, the only argument they have left. That’s why they wail so much if anyone tries to take it away from them. Since pretty much every single one of their arguments (and promises) made during the indyref campaign have been shot down since. They’ve been shown to be at best wrong, and at worst, outright lies. If you threaten the credibility of their “massive deficit” argument, they have next to nothing left.
I do threaten that argument
I don’t say remeasuring eliminates the deficit
But because it helps explain it they are also threatened
Richard- why does the Scottish Government, the FAI the UK Government, the First Minister, the Finance Secretary, Kevin, Neil, Fraser & I agree that GERS is accurate- extremely so on expenditure +/-2% on income (remove alcohol and it’s even more accurate)?
Your assertion that they are not is misleading to less than numerate Scottish nationalists who think your criticism of GERS means they can ignore the very real £13bn deficit, the one Nicola accepts requires reducing to -3% of GDP not the -8% it is.
Not one of the unionist commentators disagree with the fact that GERS outputs are not the picture that would be extant in an independent Scotland- indeed that is our whole point!
iScot could not continue to spend as it has for the last 10 years without a drastic increase in income and we just want to know how an iScot would fund spending when there is no prospect of a massive increase in income.
I would be interested to know what you think the accuracy levels are, bearing in mind they are published in GERS which is compiled & published by ScotGov.
Note methodology is also published & every year fine tuning and consultation improves accuracy which is then applied retrospectively to preceding GERS outputs.
Let’s have some common sense re these very useful & important figures.
I am not going over old ground
The 60% of spending vy the Scottish government is accurate
The rest is open to a lot of questions and apportionments cannot be accurate to the degree stated.
There is NO data on most tax paid in Scotland. I would suggest the claim confidence intervals are not reliable as a result.
I have also shown that the accounting basis is simply wrong. The Fraser of Allander have agreed.
I do not dispute there is a deficit. But the claims you make are unsupportable by facts
There is a pattern here. Defenders of the GERS data almost invariably do not respond to the actual debate about the facts. They do not address the problems actually raised by critics, the arguments that have been made. There is no close reasoning of the issues raised, no forensic analysis of the facts challenged, no rebuttal of the case; when (rarely) there is some acknowledgement of the case against – as in FAI’s recent response – there is a noticeable and inevtiable adjustment to the conventional position and a consequent weakening in the authority of GERS. Everywhere else, however, it is like Groundhog Day; the defenders spool back to the beginning, and regurgitate again the exploded ex-ante received wisdom, and endlessly lament that the critics do not understand their case. It is a sorry sight, and it will no longer do.
Precisely so
Purported accuracy levels (confidence intervals) are indeed published in GERS for some of the stated revenue streams. However, GERS does not give any reference to where those confidence intervals are calculated. So far, I have found no other publication that shows how they are calculated.
If you can point me at a document that calculates those confidence intervals, I’d be grateful.
That was in reply to Steve Sayers.
My guess here steve is that you’re one of those who see london as funding the rest of the UK.
I’m sure those regions associated with the financial sector in the SE are recording low deficits due to the high tax yield associated with over inflated salaries. It’s convenient to forget that these salaries were furnished by the public purse to the tune of £1 trillion
It’s going to come as a shock but spending precedes taxes. That’s cerainy the case in the aftermath of 2008 when the city was bailed out by the uk govt.
You’ve also fallen for the household analogy wrongly used to describe the aggregate economy as has kevin and of course politicians in the SNP. Going forward in iscot cutting expenditure will not reduce deficits. Withdrawing purchasing power from the economy will increase unemployment and the automatic stabiliser results in a bigger welfare cost and lower tax yield – larger deficits. It’s a paradox of thrift. By all means look it up.
Yes agreed, let’s have an informed debate based on how the fiat macro economy actually works. The household analogy is a throwback to the gold standard.
It’s seems when input these ideas out on social media I get cheap one liners rather than a reasoned debate.
This fellow academic agrees with your application of bemusement Richard. Just like as a Biologist I get bemused by Creationists and IDiots who flatly refuse to recognise ineluctable biological facts. Same with a lot of Greens who think swapping genes between species is ‘unnatural’. So unnatural you can fall over Lateral Gene Transfer (which is what we call it when nature does it) when you aren’t looking for it, which I have done in the lab. And as a Developmental Biologist and despite agreeing with their overall position I take issue with some statements by Pro Lifers. Mammalian embryos are not ‘part of a woman’s body’ the closest analogy is to a parasite and the biological behaviour of embryos and foetuses mirrors a lot of parasites.
It is, sadly, the lot of us who care about demonstrable reality and hate to see facts traduced for political reasons. It is Kevin Hague’s doing of this as well as his statistical and financial ignorance (his dog food supply business is failing unsurprisingly).
Thank you Richard for explaining so clearly what the flaws are with GERS. Please keep on questioning things that are wrong or badly executed. I’m an Environemntal Auditor by training and not just accepting things is Auditor rule no.1. A curious and open mind is always required when examining systems/operations etc. Its how things get better, and we should all embrace constructive (and yours are always constructive) criticism.
The political ramifications are a sideline as always, please ignore personal attacks as they are a sign of a person unwilling to address, or trying to deflect, legitimate questions.
Well said Richard. I am sorry that you are being plagued by the Unionist dogma, it isn’t pleasant.
You say: “I wonder why this situation has been tolerated for so long; why no one in Scotland has pointed out some of the flaws” – the flaws have been pointed out and eluded to in the past, but not only are they ignored but they are obscured and the people trying to point out issues ridiculed (and not just for GERS). I know you are just taking an academic interest in this issue, and that is good, and much appreciated, but the kind of unreasoning slurs that the likes of the above are heaping on you are just par for the course in Scotland. Think of an endless battle in trying to talk sense to unreasoning illogical people, to try and discuss issues sensibly and openly but only getting met with hysterical ranting. Our dedicated media ensure we only hear of all the negative things and aspects of events in Scotland – we barely even get to hear what the Scottish Government is actually doing, you need to read the website directly and watch events directly on the parliament webpage to find anything out – and ensure we only ever consider ourselves sub-standard.
The people that are taking an interest and trying to do something about it, and are keeping a positive outlook, are really doing this against all odds – the situation hasn’t been ‘tolerated’ for so long, it has been dumped on us and we are told to put up and shut up, by the politicians and by the media. (any time you hear that phrase or the ‘too wee, too poor…’ – it is not rhetoric, we are told this on a daily, hourly, basis, unrelentingly, constantly). What anyone should find remarkable is that anyone in Scotland has the heart to keep trying. The issue is social and political, so please don’t wonder about it. (Can of worms??)
After years of being abused by tax havens I am pretty thick skinned and fairly immune to the abuse, which comes thick and fast on this issue
I will keep at it despite that but i can see why many would be deterred. There is systemic bullying around these issues.
As Philip explains these kind of alternative facts, alternative interpretations, pseudo economics, innuendo, lies, slanders are the stock in trade of unionist journalists, politicians, bloggers and so on – all of it evidence-free. It reached an apogee during the IndyRef and has continued ever since. It is the only weapon in their armoury, for they have never produced a positive, evidence-based case for Scotland staying in the Union.
Richard, your attempts to shine light onto murky numbers is important and much appreciated.
Please don’t be deterred by those who would prefer Scotland’s decision-makers, including its voters, to remain in the dark.
First of all thank you for your contributions to the great GERS debate.
The thing about ultra British nationalists, like KH, is that the very idea that Scotland could, can and will make economic decisions in its own parliament is detestable as far as they are concerned. They dont want us to know the truth whether it be good or bad, they would rather we returned to being part of north Britain without a parliament.
These are the people who buy into the idea that we as a nation (Scotland) are too poor, too we and too stupid that we get repeated to us ad infinitum by the BBC and the rest of the MSM.
Rant over…….
Richard, your insights into GERS based on your academic and business training are most welcome. I support independence, yet I am quite prepared for a worse case, when we have the REAL numbers.
As someone who has worked on a number of business turn around, I knew it ALWAYS begins with getting the REAL Numbers before you get the numbers RIGHT.
again, thank you for your insights, patience and perseverance. SOME OF us get it.
Richard you say: “I leave nationalists to make their own decisions on that, although I will say that those I meet (and I do meet many of them) have the merit of taking this issue seriously”.
Have you ever considered that some nationalists take it seriously because it gives them a straw to clutch?
You also say “What worries me is that unionists might think that what Kevin has to say has merit when firstly it ignores the technical accounting and economic flaws of GERS and secondly places emphasis on dogma rather than anything to do with decision making on the future economic policy that any Scottish government”…..
But it’s not only “unionists” that think GERS has merit. Nicola Sturgeon says the deficit (as revealed by GERS) will have to be addressed. A lot of the SNP’s projections in their independence White Paper were based on, and justified by reference to, GERS. Jim and Margaret Cuthbert, two respected Nationalist economists, were involved in the updating of the GERS methodology to suit the SNP SG. They also acknowledged (years ago) that the deficit as revealed by GERS exists and must be addressed. The ONS has given the GERS methodology it stamp of approval. The methodology is approved and adopted by the Scottish Government’s statistical officers. There is no prominent economists or economic commentator in Scotland who questions (perhaps some detailed quibbles) the GERS methodology or annual findings.
If your message is that “GERS” doesn’t help the SG with day to day decisions, you may be right. But I would presume there are other statistics for that.
GERS was created because the SNP claimed the Scotland ran a big surplus and that Scottish revenues subsidised the UK. Part of their design was to show the financial position on day one of “independence”. They do that. They show that “Independence” would be an economic disaster for Scotland. That’s why the more unscrupulous Nat commentators and politicians like your commentary.
It allows them to spread a fog of war over the economic battlefield.
I think you’ll find Margaret Cuthbert is out of love with GERS now
Wise people are
And you reveal why: it’s purely political nonsense (and I believe it is dire stats that discredit the ONS as well) and there’s a job to do that leaves time wasters (yes, like you Alex) behind
Oh dear Richard.
How I almost always feel when I have to see what you have to say.
I just wish you would actually engage with the issues and stop being blinkered by your unionist views that seem to crush your judgement when the debate has nothing to do with nationalism, or not.
Mr Gallagher, you could try examining the data, rigorously reading the assumptions on which GERS is based and engaging closely with the detailed, specific criticisms that have been made. As far as I can see you are relying solely on an appeal to authority. It will not do, and as an argument it is lame. When you offer absolutely nothing else you come close to logical fallacy; it is called the Argumentum ad Verecundiam. Make an effort, try something more constructive.
“Part of their design was to show the financial position on day one of “independence”. They do that. They show that “Independence” would be an economic disaster for Scotland. That’s why the more unscrupulous Nat commentators and politicians like your commentary.”
What utter rubbish, GERS only shows Scotland as part of the UK under Westminsters overall control. GERS can not be used to show any financial position of an independent Scotland. Even if we were to have a GERS based on factual data not estimates this would still be true.
The whole point of independence is to not do the same as the UK has been doing.
I’m sure Alex you’d welcome figures that truly reflect the financial position of Scotland, and if there was a methodology error would want it corrected? Right at the top, the basic Principles:
http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/Methodology
“The Basic Principles Underpinning the Methodology
The headline estimates of Scottish public sector expenditure and revenue in GERS embrace two key principles:
1. Public sector revenue is estimated for taxes where a financial burden is imposed on residents and enterprises in Scotland
2. Public sector expenditure is estimated on the basis of spending incurred for the benefit of residents and enterprises in Scotland”
1. does not contain all revenue generated as a result of 2. That’s the problem, right there at the top, no need to read the detail.
So what are the rel figures?
Please tell us Alex
What all experts agree upon is we don’tt know
I can say all now, although I doubt I will blog why until tomorrow – I have a family life as well as a blogging one
Mr Gallacher, have you at last asked a “real” question? Good for you.
Steve Sayers said “iScot could not continue to spend as it has for the last 10 years without a drastic increase in income and we just want to know how an iScot would fund spending when there is no prospect of a massive increase in income.”
AND here again we see that deliberate bypassing of the fundamental point that THAT assumes an economy working to Westminsters low tax, punishing austerity view.
Look to highly succesful nations with higher taxation and thus better funded healthcare, education, transport thus removing the need for higher disposable income the UK demans of those who wish to ahve the same.
Steve is stuck with the “do as we do and it wont work” argument and we all agree with you Steve.
Just why WOULD an iScot follow something which is such an athema to generations of Scots over centuries ?
Personally the most insane consequence of UK economin thinking has a privatised ral service failing in the UK and on Scottish franchise operated by an offshoot the DUTCH NATIONAL RAILWAY, ensuring success by copying their methods and excess profits will go back to Holland to improve their railways and reduce their fares.
Insanity is repeateing the same again and again and expecting different results. Tax reduction hasnt worked.
GERS should’ve been challenged years ago. I’m surprised no one in the Scottish govt with some accounting skills has seriously questioned it. Perhaps too much deference has been paid to the Fraser of Allander Inst. However, GERS was never used for statutory reporting i.e. created by & audited by qualified accountants, but only as political tool to gain political advantage.
That long-winded comment of mine unfortunately relates to the FoAI and their defensive indirect replies to the points Richard Murphy makes, the FoAI being potentially of far more importance than our Kev, who is “just” an amateur. It;s up to them to be thorough and impartial, including with their own output. So far the signs are not good that they are doing so. They should look to bring rigorous QA into their paper production, with QA meetings involving outside contributors.
I would like to point out that “accruals” might be a good sound technical term, but “economic mulitplier” is more specific and understandable. My feeling is that economic mulitplier is going to be a hot potato during the Indy Ref 2 campaign.
“I do not see how devolved government can work with the data it has now.”
Yes, that’s the point.
When I was an apprentice accountant many decades ago, I had to present draft accounts for review by a partner after I had audited them. If I had presented accounts consisting largely of estimated numbers and for which little or no audit trail was available, I would have been, at best, on the receiving end of a Grade A bollocking and “my jaiket would have been hingin’ on a shoogly peg” (to use an old Scots expression) ever more.
Yet that is the reality of GERS: very little of its content is based on known, actual, Scotland-specific data or under-pinned by substantive audit trail. As I’ve stated in other related threads on this site, UK government accounting doesn’t reflect the reality of devolved government within the UK. In my view, the Scottish Government has been wrong to accept the GERS figures without, at the very least, attaching a health warning specifying its reasons for concern. With tongue only lightly in cheek, I’ve suggested that the Scottish Government should get GERS audited, as it’s inconceivable that any competent accountant is likely to certify that they represent a true and fair view of Scotland’s financial position.
I stress that I’m not a political animal, have never been a member of a political party, and always make my mind up after considering all the available, credible evidence for and against. In the case of GERS, it seems clear to me (and most people on this forum) that the data are not fit for purpose in determining Scotland’s financial position with any accuracy and, by extension (since the start point for GERS is mainly UK-total data) the financial position of other parts of the UK. It seems clear to me that a custom-designed data-gathering methodology and a fact-based set of accounts based on Scotland-specific data are urgently required (likewise for England, Wales and N Ireland). Then at least we’d all have the basis for sensible economic planning, regardless of whether the results are favourable or not. Just to continue blundering along with unreliable and contested data is unacceptable.
Thank you
You say calmly and rationally what the issues are, why they are unacceptable, how unprofessional the data is, and what needs to be done and why. I appreciate that.
Hear, hear! Ken. Well said. As a Business Consultant, when I get presented with future “forecasts” I am sceptical.
However, if I was presented with previous years’ accounts as “Estimates” and “Allocated Costs”, run through Statistical “Analysis” then it would turn to cynicism and suspicion!
I can think of no reason why Accurate & Timely, Data cannot be produced, indeed in a model that would have relevance to BOTH Scotland in Union, AND Independent Scotland.
Again, well said.
I find I am in good company amongst accountants on this one
Thanks
Professor, like Columbo, one thing puzzles me. If as you say “…….. that Scottish income is deliberately understated by GERS”, why then does ScotGov accept full responsibility for their publication? Why would they consider publishing a document which knowingly decreases our income and therefore increases our deficit and in doing so undermines the economic case for independence? Why on earth would they do that?
I do not know
Ask them
Maybe no one has pointed it out to them before now
Because THAY ARE REQUIRED TO or Westminster will cry foul.
Isnt it a Westminster law that the devolved governments must publish GER reports, the methodology is under their control also.
GERS dares from 1992
Would that not be an indication that:
a) ScotGov don’t know what they are doing,
or
b) You are wrong and Hague, Lovett, Whyte, et all are correct?
I certainly don’t accept b
Re a, maybe they are. Certainly they should be doing more on the issue
Re your “I think you’ll find Margaret Cuthbert is out of love with GERS now” comment indicates that you may feel that she is on your side of the argument. Are you aware she said this: “Despite the appalling and verging on ignorant comment by Richard Marsh in the Sunday Herald that “GERS data is what I technically describe as crap”, GERS data continues to improve. The original quality of the data was comprehensively examined line by line in 1977 and thereafter statisticians in the Scottish Government have made considerable efforts with UK departments to work with them and obtain reliable estimates for Scotland. However, it is time to assess what the Scottish Parliament needs as its powers continue to grow. This is particularly the case as the fiscal settlement holds many ill-advised conditions that will now face Scotland.
I was amused that she appears to get my name wrong
I also note she clearly the did not read what I actually meant. It was obvious from what I actually wrote that I was using the term with some care
And then I am amused that she goes on to comprehensively agree with me in all she recommends
I am afraid her comment rather backfires on her, and you, as a result
And I have no reputation to defend. She has
The Richard Marsh mentioned in the Sunday Herald isn’t a spelling error, Margaret Cuthbert is talking about Richard Marsh, Director of 4-consulting. (Richard Marsh is an economist, elected fellow of the Royal Statistical Society and member of a Scottish Government expert group advising on economic modelling and statistics.)
But I was the person who made the comment she referred to as far as I can see
I see the Scottish Government has now published the submissions to the “Economy, Jobs and Fair Work Committee” on Economic Data.
The FAI submission mentions the need for better data more than once, including –
“Some of the data that underpin core elements of Scottish economic statistics rely upon apportionment of UK figures rather than bottom-up Scottish-specific data. Whilst this is understandable given resource constraints, more be-spoke estimates would be beneficial.”
The Scottish Fiscal Commission says –
“QNAS provides statistics on the Scottish economy. GERS provides statistics on a different basis, covering public sector spending for the benefit of Scotland — for example foreign defence and diplomatic spending — though not necessarily in Scotland, and therefore not part of the domestic Scottish economy.”
I’m not entirely sure how we are meant to take that, but it seems to say GERS does not represent the Scottish economy.
Reform Scotland seems to think “the income local authorities receive from sales, rents, fees and charges as a result of providing a range of services”, which amounts to £2.4 billion, should have an effect in GERS since it represents money spent into the economy. Interesting?
After quoting both Graeme Roy of the FAI and Professor Richard Murphy, they also say “GERS is a good starting point and does provide a lot of useful information on the Scottish economy. But that doesn‟t mean we cannot do better. Scotland still needs more accurate data.”.
All of this seems to be somewhat supportive of the submission by Professor Murphy.
I will comment later, and my own evidence is there. But you’re right. Pretty much without exception these comments supper it my views, right across the board
Richard – your application to this issue is admirable. Truly. And its good to see many people supporting you.
Thanks
Although I note I have upset some
C’est la vie
In my view the only reason for anyone opposing getting real information on this issue are the opportunities and benefits that could be created for those who choose to keep people in the dark.
Sorry – but there you have it.
I just noticed this from Fallon’s speech at the naming of the Prince of Wales carrier:
“From the banks of the Clyde to the shores of the River Torridge this has been a truly national enterprise: six UK shipyards, 700 companies, 11,000 experts, and a vast supply chain spending millions of hours manufacturing millions of parts.”
This should be pointed out to David Comerford of the FoAI, who dismissed the economic miltiplier argument as far as defence is concerned, by mentioning the carriers as though the spending for them was all in Scotland. Fallon has proven that indeed, the spending wasn’t all in Scotland.
Of course it was not
As I am neither an accountant nor an economist, and I can only count up to ten because I am fairly confident that this is the number of fingers I have, I am a bit embarrassed to ask this question. but here goes. Scotland is ‘charged’ a theoretical amount to pay for its share of costs of the Ministry of Defence, the Foreign Office, etc. In GERS, is Scotland credited with any of the income accruing from these organisations – Income tax, National Insurance, any VAT etc? Please pardon my ignorance.
It is not credited with the tax paid on the sums charged not spent in Scotland
This is why I say GERS fails basic accounting matching principles tests
That’s the thing. People on the side against Independence for Scotland are so intent on claiming the benefits of the broad shoulders of the UK, they contradict each other and themselves even, by making opposing claims:
1). The carriers are built all across the UK, couldn’t be done without the broad shoulders of the UK, it’s a joint UK effort
2). Scotland as its share of defence spending has had £3 billion on the QE carrier spent in Scotland (and there’s the PoW also).
Happens time and time again – and they get away with it. Makes me SO mad 🙂
The way to Independence and for the YES movement is to tell the truth, the whole truth, and nothing but the truth. And that needs knowledge and facts, facts, facts.