It is important to remember that this data is now published by the Scottish government. It was not always. It began life in the early 1990s as a deliberate exercise to supposedly prove that Scotland was not a viable independent state. Now the Scottish government says of it:
The aim of GERS is to enhance public understanding of fiscal issues in Scotland. The primary objective is to estimate a set of public sector accounts for Scotland through detailed analysis of official UK and Scottish Government finance statistics. GERS estimates the contribution of revenue raised in Scotland toward the goods and services provided for the benefit of the people of Scotland. The report is designed to allow users to understand and analyse Scotland's fiscal position under different scenarios.
GERS captures the entire public sector in Scotland and includes activity by each of the constituent sub-sectors of the public sector: central government, local government and public corporations. In addition to providing an analysis of aggregate expenditure and revenue, the report contains a detailed breakdown according to individual expenditure and revenue components.
That, in my opinion, is a generous interpretation, and in some respects just wrong. I have not seen the data as yet, but I have no doubt that I was right to have created the term CRAp to describe it. That means ‘Completely Rubbish Approximations'. And that is what GERS is.
So, before we see anything let me remind those who will get excited by this (and I am sure some graphs will be coming our way) of just why I think this.
First, this was and to some extent remains a Unionist exercise. The short name says it all, and is not, I am sure coincidence. No one puts expenditure ahead of revenue in the name of an accounting document. It was done here for a reason, and it was to make a point that is still repeated. I will treat it with more respect when it is renamed.
Second, this is very largely UK based data. It is simply an extrapolation of that data to Scotland in most cases. And UK data is prepared for UK purposes. The result is that the inherent reporting bias in it, recently referred to by the Tax Justice Network, for example, is not removed. Large amounts of economic value created in Scotland is not reported there as a result.
Third, GERS is not intended to show how an independent Scotland would perform, and does not. For the sake of the independence debate it is almost irrelevant.
Fourth, GERS reflects a lot of spending Scotland would not incur. It would not have a nuclear deterrent, for example.
Fifth, as I have argued many times, the accounting is biased and theoretically utterly flawed. When accounting it is vital that all estimates are prepared consistently and on the same basis. GERS has not been. Income is estimated on the basis of that arising IN Scotland but spending is estimated on the basis of that arising FOR Scotland. So, only taxes paid in Scotland are included. But expenditure in England (mainly), Wales and Northern Ireland is also charged to Scotland when Scotland is deemed to benefit from it. But the tax paid to generate that expenditure is not taken into account. The system is, then, inherently designed to show a deficit. This is why the Scottish government claim about it is wrong.
Sixth, no one really has a clue about the level of Scottish imports and exports, including services, because as yet the data to check these does not exist. And since this data might significantly impact GERS, and any other debate on the Scottish economy, that leaves a gaping hole in the estimates that nothing can fill.
Seventh, even now Scotland has a tax authority we know it is having difficulty identifying Scottish resident people and their tax liabilities. And that is for easy taxes. On VAT, corporation tax and many other taxes the figures are stabs in the dark, especially as much Scottish added value is recorded elsewhere.
In other words, don't get too excited by GERS. I will not be. It's CRAp, however it is polished.
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Its less an economic report on Scotland but the bill Scotland has to pay to pretend its British
🙂
Government Expenditure and Revenue Scotland…..?
Is that what they are calling it ?
I suppose it better suits the Westminster PR machine than referring to it by its proper name: Government Estimates to Rubbish Scotland.
…and you are quite right in saying that various Unionist beancounters in Scotland will be wetting themselves in anticipation of the release of these figures. Thanks for the reminder that we are imminently due for another barrage of economic shite…… 🙁
My pleasure 🙂
Thanks for helping me understand shat GERS is
Glad to be of help!
Annette Duff says:
“Thanks for helping me understand shat GERS is”
A delightful Freudian keystroke slip 🙂
Many thanks Richard for taking the trouble over the years to defend Scotland’s interests against the spurious figures manufactured or invented for GERS. I can understand why, from their introduction in 1992, the fictional annual figures were happily published and promoted by Scottish Unionist Governments, but my problem is why has the practise continued under SNP Governments who are acutely aware of the situation. Are they under some form of duress or otherwise. Surely they are not publishing this Crap on a voluntary basis – any idea?
I wish I could answer that
[…] And because the GERS methodology is wrong when comparing income and expenditure, as I have already noted today. […]
In the face of relentless anti-Scottish propaganda in 2014, many soft No’s and undecided’s questioned whether Scotland could “afford it”… and if you believe GERS, they will have the same answer as back then.
Therefore, it is my belief that the wider Yes movement, including the SNP Govt, must drive home the inadequacies of GERS, by stressing that we will no longer fund wars (or potentially upcoming conflicts in Iran), and that more can be done to prevent the UK hobby of tax avoidance and evasion.
Ignore the dyed in the wool Brits who treat GERS like their bible, and let’s take an opportunity to present an indy Scotland’s potential finances in layman’s terms that can be understood by the masses.
Thanks again for your continued rubbishing of GERS. It must feel like you’re banging your head off of a piece of Elgin marble at times… but your message IS getting through.
The SNP needs to fund the alternatives now
Thank you for that information. Can you advise if N.I. use GERS, and if so what are their figures? If not, how do their figures look compared to ours in whatever format they are in? Many thanks.
Wales does – sort of, but via Cardiff University if I recall correctly
Try this instead – https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/articles/countryandregionalpublicsectorfinances/financialyearending2018
You point out that tax and the value of other economic activities incurred “for Scotland” are missing from GERS. Would it be possible to apply a typical economic multiplier to this expenditure, to make an estimate of the impact of its overall value to the economy. Application of an average tax value (including indirect taxes) to this total would give an estimate of the missing government revenue and give a nod to the basic accounting principle of matching.
Would such an approach be any less valid than using geography as an allocation base?
It has been claimed by University of Strathclyde that the difference would be small
I accept it would not change the view by itself
What would change the view is working out where the value is added, and not where it is received
All of the UK is fleeced by the London based financial system
A number of years ago, the DWP website had a tool that allowed registered users to find out how many benefits recipients there were in each part of the country. This was available by country, county, towns and cities. It also provided the cost of the benefits for each locality. When I interrogated the data, it transpired that the cost for each benefit for each locality was calculated by multiplying the number of claimants in the locality by the average cost per claimant for the whole of the UK. This is obviously CRAp. It grossly understates the cost of benefits for expensive parts of the country like London and grossly overstates them for less expensive parts of the country like Scotland.
Since every benefit recipient, and that includes pensioners, has a postcode, there is no reason why more accurate data is not made available. The CRAp data is therefore politically motivated misinformation.
I can’t prove it, because the necessary data is not included in GERS, but I strongly suspect that this is how pensions and other benefits costs are apportioned to Scotland. How many other costs are apportioned to Scotland using similarly CRAp methodologies? I suspect that any and all costs that can paint Scotland in a bad light will be calculated in such a manner.
This almost certainly includes the apportionment of public sector pension costs.
Good example
It seems probable to me that the Scottish government continues to publish this piece of CRAp because it knows that if it didn’t it would be crucified throughout the media and our people would be told the SNP obviously didn’t want us to know the truth; whereas it also knows that if it does publish it, the nonsense will immediately and continually be taken apart and the reality of it will be spread by the independence movement.
I actually think we should start sharing the GERS figures across rUK, especially in strongly Brexit and Tory supporting areas, and telling them in a shocked tone how scandalous it is that the bloody jocks, taffies and paddies are wiping out the surplus created by the hard working people of England and forcing austerity on them. It would be poetic for GERS to become a tool of the Scottish independence movement.