For the last few years I have been involved in debate on the quality of the Government Expenditure and Revenue Scotland statement. It is how I first got involved in Scottish issues. I realised that the statement was simply wrong. So I said so, with reasons attached.
Today sees the publication of the latest statement. It will be wrong. I gave some reasons why in a Twitter thread this morning:
But it's worse than this. Because as I noted last year, what GERS claims is that Scotland is responsible for most of the UK's deficit:
Table 1 told me most of what you need to know. It shows the net fiscal balances of Scotland and the UK as a whole since 1999. As GERS defines it:
Let me plot this, using the more extended time series data in the supporting files that the GERS web site provides. I have simply compared the two figures for Scotland with the UK as a whole net fiscal balance for each year:
I'll be candid: that makes not one iota of sense. For the record this is the proportion of population of the UK as a whole living in Scotland according to official estimates:
What GERS is asking us to believe is that with 8.2% of the UK population Scotland created between 54% and 60% of the UK deficit last year, depending on the basis used.
Bluntly, this is politically engineered nonsense, and it still astonishes me that the SNP government permit its publication when they know of these criticisms.
But let's see what this morning brings.
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It may not astonish you if you considered the possibility that it suits the current SNP government just fine politically for people to think that Scotland isn’t financially viable, then it makes sense that they’d stick to and promote GERS – that leads to the conclusion that the current SNP government has no intention of pushing for independence for the foreseeable … Unfortunate, but I can’t think of another reason for their behaviour(s), on this and plenty of other things. We might be stuck with your shitty Westminster regime for quite a while yet,,, sigh.
That is my concern
Andrew Wilson is the evidence
It seems more likely that the SNP were happy to use GERS figures when oil receipts were higher and have essentially snookered themselves into a position where they would look ridiculous by changing their stance now that the figures appear negative.
With hindsight on their part, it was a huge tactical error to hold up the GERS figures as proof of Scotlands economy.
Maybe true
But when the facts change we need to change our minds
Kate Forbes walked as far from this as she could yesterday
Since GERS only shows the position of Scotland within the UK, there is a need and there was talk about the SNP producing an alternative GERS this year to show what an independent Scotland’s public finances would look like. Haven’t heard much about this lately though.
Given that of the £73.5 billion expenditure shown in last years GERS report, the largest category of spending (42%) is controlled by ‘Other UK Bodies’, I’m surprised that a detailed breakdown of this hasn’t been made rather than just making general comments about HS2, Crossrail etc. With the Scottish Government accounting for 36% and Local Government 20% of GERS expenditure (the balance of 2% being allocated to Public Corporations), the spending within the ‘Other UK Bodies’ section seems to be where the main issue is with respect to the expenditure side of GERS.
There is some breakdown – download the spreadsheets
Not very detailed
But some
I think the SNP initially allowed themselves to be sucked into a tacit acceptance of GERS, partly due to the minority nature of their first administration back in 2007. I suspect they believed that any attempt to scrap, or seriously reform, GERS would have prompted a backlash from the unionist parties at Holyrood, which were still in the majority at the time. As you note, they did make some refinements to GERS around then, albeit ones which only made it slightly less egrecious.
There is also always the possibility that if the SG stopped producing GERS it would just be taken up by the Treasury instead. Better to keep at least some control over the process, it could be argued. Personally, though, I think it would be far better to force the UK Government to be the author of its own propaganda.
Of course each year that SNP administrations continue to publish GERS just makes it more politically difficult for them to disown it.
Agree the last
So best to radically reform it
How would you suggest radically reforming GERS?
Genuine question, on a day when there will be
plenty of political point-scoring.
In haste as I am in a meeting for much of the afternoon
1) Make clear what the Scottish gov’t does not think needed
2) Make clear the scale of pure apportionment
3) Estimate income leakage and tax due
4) Estimate missing tax allocation on spend
5) Estimate multiplier effect is missing spend
6) Demand better data from ONS
7) Indicate sensitivity
And more……
I am puzzled by the figure of £23.533bn for the net fiscal deficit of the UK given in the table above.
According to the fiures published by ONS the UK net fiscal deficit in 2018/19 was £41.272bn. Incidentally if you add up the fiscal deficits of the regions of England (excluding London, East and South East England, which are in surplus) plus Scotland, Wales and Northern Ireland the total comes to about £106bn. This is 257% of the UK deficit which sounds ludicrous but is really just a consequence of the large surpluses in London and the South East.
Agreed
I am also dubious of it….
Sir,
When the bedroom tax debacle emerged, someone had succinctly said this in conjunction with the year’s GERS (or maybe the next one, I am not too sure): “What makes you think they are willing to subsidise a whole nation when they can’t even subsidise a bedroom” (I paraphrase). That statement has stuck with me till date.
ABU
I agree that GERS looks very dubious as it stands. I wonder if it would be worth proposing a scoping project to the Scottish Govt, which they could either do in-house or through an external consultant, as follows: examine each of the assumptions underlying the GERS figures, vary those assumptions within a reasonable range of parameters and show what the impact on the figures is. They would probably find that depending on the particular assumptions made, it’s possible to get just about any result they want (or don’t want)… the problem is that so often these figures are taken as gospel when they are highly contigent on specific fiscal assumptions.
Howard
Shall we discuss this?
It has to be worth a bid
Richard
Hi
What you have not answered is why with their blind drive towards so called independence would the SNP
compile these figures and publish them? What the people of Scotland and I dare say the rest of the UK want to know is who is subsidising who and to what extent? You do not put forward any constructive solutions that would inform this analysis, only critism?
There is no doubt that London and the South East prop up the rest of the UK regions including Scotland, Scotland enjoy this larges as part of the UK, where and how would Scotland replace this Cash Cow?
Hang on.
I’d put it to you that in fact the UK supported the City when it failed and that QE has been misused for exactly the same purpose
I’d suggest the subsidy is to the south east
Why else did we have such an enormous deficit? It was not made in Scotland
[…] reading: Richard Murphy, Tax Research UK, on GERSday, 26 August; Robin McAlpine of Common Weal on the Good news story; David Phillips, IFS, Scottish […]