Why the GERS figures finish off nationalist economic case

Why the GERS figures finish off nationalist economic case

by Murdo Fraser
article from Friday 8, September, 2017

THE ANNUAL publication of the GERS figures (Government Expenditure and Revenue in Scotland) always sparks a lively political debate. This year, the SNP Government moved publication of the figures to Parliament’s summer recess, no doubt hoping there would be less public attention on the detail. If that was their intention, they were to be sadly disappointed.

What these figures show is that Scotland gets far more out of the United Kingdom than we put in. In the latest year, 2016-17, there was a “Union dividend” worth £1750 for every person in Scotland from being part of the UK. That is the equivalent of £7000, in one year, for a family of four.

SNP figures were quick to highlight that the overall notional deficit that Scotland carries is down on the previous year. The UK deficit is, however, down by a larger percentage, meaning that the gap between Scotland and the UK as a whole has actually grown, and is now the highest since GERS records began to be collected on the current basis in 1998.

What was particularly interesting about the latest figures is that they show what the position would have been if Scotland had voted for independence in 2014. Far from us being better off, as Alex Salmond and Nicola Sturgeon claimed at the time, we would have been looking at the largest deficit in Europe, more than twice that of Spain, a country with the next highest. 

Independence Day, set for March 2016, would really have been Insolvency Day.

Some in the SNP tried to argue that the GERS figures meant that the Scottish economy was being held back by Westminster. But this simply shows a lack of understanding of what the figures really tell us.

Of the £1750 per person gap between Scotland and the UK average, £312 relates to lower average tax receipts in Scotland compared to the UK average. But by far the larger portion, £1437, relates to higher public spending in Scotland.

So all the public services we depend on, such as health, education, police and transport, are much better funded in Scotland than the UK average. And, as these figures show, it is only because we are part of the United Kingdom that we are able to afford this higher spending.

That is the “pooling and sharing of resources”, within the United Kingdom, that was instrumental to the pro-UK campaign winning the arguments over Scottish independence in 2014. And it presents a significant challenge for the SNP continuing to pursue their independence agenda.

Even if Scotland’s economic performance could be brought up to UK average levels, that significant gap in public spending would still remain – and there's no one in the SNP who seems to have any clue how it should be filled.

This week at Holyrood we had an array of SNP Ministers presenting their ‘Programme for Government’ for the coming year. But these plans were woefully light on concrete proposals offering anything much new.

There was the announcement of a new Scottish Investment Bank, first proposed by Alex Salmond as far back as 2009 – so only eight years late. The much-vaunted ‘half-a-billion-pound’ Scottish Growth Fund, the centrepiece of last year’s Programme for Government, got another mention, despite it having paid out not a single penny to support Scottish businesses in the last 12 months.

Worse still, there were clear hints from Nicola Sturgeon that taxes in Scotland are set to go up. As a host of Scottish business organisations pointed out in response, nothing could be more damaging to Scottish economic recovery than making Scotland the highest taxed part of the United Kingdom.

We should all be working hard to help grow Scotland’s economy, to create stable, well-paid jobs, and to grow our tax revenues. But what these GERS figures show is that we can’t kid ourselves that, even if we achieve that objective, will it make independence a more attractive prospect any time soon.

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