GERS FIGURES DON'T LIE, DESPITE WHAT INDEPENDENCE SUPPORTERS SAY

In this paper last week I wrote about focus groups run by These Islands with Scots now leaning towards independence. One of the observations I made was that, when faced with economic facts, many of the participants’ reaction was to deny that those facts could be true.

The Letters pages in the days that followed provided further illustration of this phenomenon, with independence supporters writing in to denounce my description of the Scottish Government’s economic data as facts.

The annual Government Expenditure and Revenue Scotland (GERS) report is the publication which tells us how much tax Scotland’s economy raises and how much is spent both directly by the Scottish government (devolved spending) as well as on Scotland’s behalf by Westminster (reserved spending).  When North Sea oil revenues were booming, the Yes movement was keen on quoting these GERS figures, and in 2014 the SNP’s independence White Paper described the GERS report as “the authoritative publication on Scotland’s public finances”.

Now oil revenues have collapsed, we’re told “but they show how Scotland fares as part of the UK, not as an independent country”. This is a truism –historical actual figures by definition can only show us what happened in the past. The point, of course, is that they tell us where we start from: how much revenue our existing economy generates and what it costs to deliver the public services we are used to receiving (including a population share of the UK’s shared international affairs, defence, government administration and debt interest costs).

Anybody who wants to make an economic case for independence can then argue what would change relative to those figures and attempt to show how they’d make the books balance. The SNP’s Sustainable Growth Commission (SGC) tried this and concluded that separation from the UK would lead to, at best, a decade of spending restraint, more realistically, a decade of austerity.

Perhaps understandably, some independence supporters want to deny the starting point that leads to that conclusion, so claim the figures are “dubious”, “discredited” or “highly disputed”. Yet it is a point of fact that the figures are produced at the request of the Scottish Government (not Westminster), are compiled by Scottish Government economists in St Andrew’s House and pass the stringent tests required to qualify for National Statistics status.

The original GERS report may have been “Tory-created” 28 years ago, but after 20 years of devolution and 13 years of SNP control, the way the figures are compiled has changed out of all recognition. To claim the numbers are now “engineered to show a false deficit” is to accuse the SNP Government of talking down Scotland’s economy.

So the GERS data is good, the question is what does it tell us?

It tells us that in 2018/19 Scotland’s economy raised £65.4 billion in revenue and that if we subtract devolved spending of £46.2 billion, we would still be £19.2 billion in the black. So if Scotland doesn’t actually “get back” more than £19.2 billion in reserved spending, then the angry letter writers would have a point. But it does, so I’m afraid they don’t.

If you take the time to explore the detail of the reserved spending figures in GERS (and I have), you’ll find that reserved spending controlled by Westminster includes £22.2 billion of non-defence spending both for and in Scotland (mainly pensions and benefits, but also network rail costs, research & innovation investment, R&D tax credits, DWP and HMRC staff, etc.). It also includes £1.8 billion of international costs, mainly related to an 8.2% population share of Overseas Development Aid and Foreign & Commonwealth Office costs. All of these are costs which the SNP’s Growth Commission committed to an independent Scotland maintaining (while accepting a diminished international diplomatic presence as a result).

So even after we’ve carefully excluded from GERS other costs which are outside Scotland (e.g. Scotland’s share of HS2, the Houses of Commons and Lords, BBC, etc.), at this point Scotland has already “got back” £4.8 billion more than we’ve raised in taxes – and this is before charging a single penny for defence or debt interest.

For those still determined to believe the GERS report is skewed against Scotland, consider the following: 29% of the Scottish Government’s ferries costs and 57% of Creative and Historic Scotland costs are not charged to Scotland in GERS, but instead to the rest of the UK.  That’s £125m which doesn’t appear as a cost against Scotland’s deficit, but which an independent Scotland would clearly be responsible for.

The bottom line here is that no rational interpretation of the data could conclude that Scotland gets back less than it sends to Westminster today. To accept this is not to deny the possibility of independence, it is merely to heed the words of Robert Burns: “But fact are chiels that winna ding, An’ downa be disputed”.

This piece was first published by The Herald, on 4th December 2020.