For those in England, Wales and Northern Ireland, the acronym GERS is probably pretty meaningless. In Scotland, it is big enough that that annual publication of the Government Expenditure and Revenue Scotland statement is enough to give publication day its own name - GERSday.
I admit that this blog may have contributed to this phenomenon. I have written about how rubbish I think GERS is for some years.
I created the acronym 'CRAp', wanting for 'completely rubbish approximations' to the truth to describe it.
I expect to be no more enamoured today than I have been in previous years. That is because:
- GERS has always been politically motivated to show that Scotland can't afford to be an independent state.
- To achieve this, the data is rigged. Revenue recorded is that arising in Scotland: expenditure is that for Scotland, even if spent elsewhere. Of course, a big deficit s shown if the expenditure side of the equation is defined to be bigger than the revenue side can possibly be.
- Although less data is estimated now on the basis of the extrapolation of UK data than when I first commented on GERS, far too much still is. That is most especially true for data linked to GDP when that in Scotland is understated on the revenue side (as it is for all areas outside London and the southeast) because most rents, profits, interest and financial services income is recorded in London based on flows out of those regions when those flows would be taxed at source before remittance to London if these locations were independent of the south-east, meaning their revenues would rise significantly.
- The resulting claim in GERS that Scotland (and all regional parts of the UK) are massively dependent on the southeast to survive is just not true: it is very largely the data that is wrong by refusing to recognise the role of London in extracting value from the rest of the UK, Scotland included.
For my commentary on GERS today, see the columns and videos I will be creating for The National during the day. I am not expecting anything good to be in the announcement.
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You know very well you are just deliberately lying to people here ..why ? https://fraserofallander.org/gers-2020-socially-distance-yourself-from-the-myths-and-furore/ & https://fraserofallander.org/next-weeks-gers-numbers-part-1/
I think they are
The Fraser is deeply pro Labour and unionist (IMO) and their claims on this are deeply prejudiced and biased, again in my view.
Viktor
Having read both the 2017 commentary and the 2020 one (thanks for the links) I note the closing statement on the website:
QUOTE
GERS reflects the position under the current constitutional settlement. It is a backward-looking estimate of spending and revenues in the previous financial year. This means that if an independent Scotland would bring about structural changes to the economy and society, the figures in GERS say little about the long-term finances of an independent Scotland.
The possible financial costs and risks, or savings and opportunities, of implementing a new constitutional framework are, naturally, not considered in GERS. Similarly, it does not report on the effects of faster or slower economic growth in an independent Scotland.
An independent Scotland would also be subject to new macroeconomic risks and opportunities that would have to be managed. The role of GERS is not to estimate the impact on Scotland’s public finances of such changes.
END QUOTE
I would take from this that the writer makes **no claims** on the usefulness or otherwise of GERS when looking forward. Any discussion on the past, which GERS reflects, is just that, a comment on the past. Such discussion is important, in my view, to highlight what Scotland could do better in the field of collection for meaningful statistics, whether independent or not.
When citing it is important to have read the actual citation from beginning to end, isn’t it?
Thanks
Surely the Scottish Government can abolish GERS for something more independent? (Please excuse my non-existant handle on things!)
It is baffling that they do not
GERS is a National Statistic and my understanding is that it cannot be removed without the authorisation of the Chief Statistician of the Statistics branch of government.
The Chief Statistician for Scotland is ultimately selected by The Government Statistics Branch of Government which is headed by the Chief Statistician, a Westminster appointee.
All statisticians are bound by the Statistics Code of Practice and are part of The Government Statistics Branch and all their contracts say they can be appointed to any part of the UK.
Don’t mess with me in effect.
Every GERS day I despair of the commentary that will emanate from Unionists. In addition to your explanations of how poor GERS data is, I rely on the analysis done by Gordon MacIntyre-Kemp the CEO of Business for Scotland – a must read for anyone wishing to understand what GERS is and isn’t.
Richard, an excellent analysis (again) of a perennial source of argument and rage in Scotland. GERS is perhaps best described as a work of imaginative fiction and why the Scottish Government publishes it year after year is a mystery, especially when it is guaranteed to get them a good kicking from the Unionist media (about 95% of Scotland’s press, TV and radio).
In response to Andy Lippok’s post of 11:51am on 16 Aug, another reliable and excellent writer on (inter alia) GERS is Craig Dalzell of Common Weal. His piece on GERS 2023 in the National contains this revealing statement about the UK’s regional inequality: “It tells a story of a British state failing to deliver for all parts of its territory but blaming everyone but itself for that failure.” The whole article is well worth a read: GERS proves Scotland’s real economy is getting stronger | The National
John S Warren mentions being unable to open a link to the source data for Public Service Interest Expenditure. I couldn’t find any mention of a link to source data, but when I right-clicked on Public Service Interest Expenditure on Table 3.8 and selected ‘view selection source’ I got a link which led nowhere. Is that what you did too, John, or have I missed something? Either way neither of us could access their workings. Scotland’s share of Public Service Interest at £10.92m is 8.5% of the UK Total per Table 3.7, so it looks like population share (more or less). Whether that is equitable or not is another matter.
In another post John also discusses public sector investment in essential infrastructure and cites Crossrail 1 & 2, HS2 etc. All UK taxpayers contributed to these works via general taxation, but, for most of us living far from London and the southeast of England, we are unlikely to use these facilities very frequently if ever at all. A number of years ago Glasgow’s subway system was shut down for c3 years for extensive overhauls. I wonder whether that qualified as public sector investment in essential infrastructure too?
Thanks Ken.
Agreed re Craig.
Not 3.8; a highlighted link to the methodology that didn’t work. On population, incidentally the ONS Scottish population, census 2021 is 8.2%. The document seems designed to obfuscate, rather than inform. It is not designed for for greater public understanding.
Here is a simple question, late in the GERS day. Reserved public sector debt interest, 2021-22 apples to Scotland by GERS was £4.527Bn. What was total UK public sector debt interest, 2021-22? On what basis was Scotland charged? £4.5Bn? Population share (8.2%)? What was the calculation methodology? I Know from past years analyses, GERS methodology changes (historically, quite often). The current GERS papers offers a link to the methodology, but clicking on it today produced a ‘bad request’ error. My question stands.
I will not attempt to analyse the £9.6Bn ‘Accounting Adjustments’ supposedly explained in Annex A. It is simply a waste of time. It is a summary list of headline adjustments, without adequate explanation or breakdown. The breakdown and detailed explanatory information on this near £10Bn in Annex A is frankly totally inadequate and tells us nothing about how the adjustments are precisely calculated. No lay person seeking understanding could possible make sense of the broad summarised figures provided.
I could spend hours on this John, but as I argued in The National, this is make believe account8ng, IMO
I wonder where more detail can be found on How London and the SE extracts value from the UK economy? Is this to do with property values or the ratio of established companies, or maybe the extraction done by the finance industry or rents?
TIA, Brian
I do not have the data to hand, biut given the significance of rents, priofits, interest adn financial services in GDP the impact is big and I do not think properly countered in the regional data for any part of the UK.
Well, I can say this from past research conducted in England for purely English expenditure, in the case of public sector investment in infrastructure (think of Crossrail 1+2, HS2, Olympics etc., etc). It was found some years ago that in England alone, public investment in infrastructure (absolutely critical for economic sustainability) it was carried out on an 80/20 basis. 80% of public investment was spent on 20% of the population; those living in London and SE. Please note that over 50% of HS2 costs are just to take the trains out of London (mostly underground). Note also that HS2 is already being slashed across Britain; frankly because there is no value considered spending money outside London.
Here is the HS2 absurdity. It is doubted HS2 will ever reach Euston. Even if it does reach Euston, travellers to Europe will have to walk to St.Pancras to catch a Channel Tunnel train. The whole project is to drain all our effort and resources into Laond, and profligate cost. This is Government as comic farce. We would be better and far, far cheaper if the rest of Britain by-passed London, and connected straight to the Tunnel, and the London bound can connect to London from Birmingham, or Kent. Absurd? Not as absurd as the way London and central government rips-off the rest of Britain.
<>
As I and many othere here observe, colonialism indeed begins at home.
I see ‘The Bottom Line’ (probably principally written by the economist David Simpson), has produced a critical review of GERS, “GERS and the Mismanagement of the Economy”; concluding that it is primarily mismanagement of the British economy and the costs this creates, that produces the supposed problematic results for Scotland in GERS (whether you have oil or not); which have badly damaged Scotland’s finances.
The report focuses on first, the mismanagement of the cost of living crisis and the causes; and second, the cost and management of debt interest. On cost of living/inflation, the report concludes “Inflation will have numerous causes including increased costs of trade and shortages of employees in the labour market, both of which have been associated with Brexit. UK energy policy has also resulted in the UK being more exposed than other advanced economies to increases in global gas prices”. On debt interest it concludes: “The cost of servicing UK debt has increased substantially relative to other countries, due to UK policy decisions, which left the UK finances exposed to the risks of inflation …. …. Borrowing requirements are met by issuing government bonds or gilts. Interest is paid on these and there two main types: one has fixed interest rates and the other is index-linked, meaning that the interest paid increases with inflation. In the UK, index-linked gilts make up 25% of the total gilt portfolio, which is the highest among G7 countries and more than double that of Italy, the country with the next highest share. Index-linked gilts have their role in any financial system, protecting those on fixed incomes but the proportion of UK gilts that are index-linked is out of line with every other country …. The combined impact of the cost of living schemes and the increased debt interest costs in 2022-23 was £8.9 billion, accounting for two-thirds of the Scottish current account deficit. If the current account deficit were revised to remove these two examples of UK economic mismanagement, it would fall from 6.4% of GDP to 2.2%, well below the UK current account deficit and well within the 3% that is generally regarded as sustainable “.
I am reasonably confident that if the British Treasury ran Saudi Arabia, even its finances would be totally wrecked within a couple of years. By some inexplicable miracle London (alone) would thrive, and of course take the credit for its access to resources and generosity.
Thanks John