Psst! It's GERS Day.
As the latest finance figures underline the benefits of being part of a redistributive union, a former SNP MSP says British intelligence are behind the party's troubles.
Once a year the SNP Government’s economists lay out the key statistics on what Scotland spends and what we raise in taxes.
Over the course of the day others will offer additional analysis of the GERS public spending and revenue figures but here are my quick headlines:
Scotland’s deficit (the difference between what we raise and what we spend) is equivalent to 9% of our economy. By comparison, the UK as a whole has a deficit of 5.2% of GDP. That means that by sharing economic risks with the rest of the UK we have a smaller deficit.
To use Humza Yousaf’s own test - comparing our share of the UK’s population, tax and spending - we get a good deal out of the Union: with just over 8,2% of the population we pay 8.6% of tax but receive 9.2% of spending.
As Scots, we received £2,217 more per person in spending than the UK average - a difference mainly thanks to our share of UK funding - a share that the SNP are campaigning to give up.
Even in the middle of a global energy crisis increased oil revenues have not transformed Scotland’s fiscal position compared to being part of the UK.
Launching her economic prospectus for independence Nicola Sturgeon had rested on analysis that suggested Scotland might have had a better position than the UK:
After having based their entire economic case on the GERS figuresthe SNP Government have, over recent years, said that GERS does not reflect the starting point of a separate Scottish state. It is worth noting that the First Minister believes it does. He was very clear:
“GERS figures which reflect our position if we received our share -independent or otherwise”
The SNP response today was that the GERS figures show that the UK benefits from Scotland’s North Sea revenues. That is, of course, true but the same figures show that Scotland benefits more from being part of the UK than we would if gave up our share of UK funds and choose to swap that for oil and gas revenues. It is daft for them to pretend that money is flowing in one direction when their figures show it is flowing in the other.
For me, the big story of the day is that even in a year when oil revenues are the highest they have ever been, staying in the Union was *still* worth £1,521 for every Scot (the far higher spending we received minus the slightly higher revenues raised in Scotland).
If North Sea taxes can’t make the case for leaving the UK add up in this year of soaring energy prices, windfall taxes, and record oil revenues, they never will.
The SNP desperately need a new fiscal case for independence because as of this morning, they still don’t have one.
Yesterday, during an appearance before the Holyrood Sources podcast, Yousaf made it clear he was working with Gordon McIntyre Kempon the fiscal case. His involvement in this is the clearest sign that the SNP leader simply isn’t serious about addressing the issues GERS raises for the nationalist cause. In the same podcast, Yousaf returned to the old SNP position on currency, saying “we will keep the pound” despite the recently released official advice from his own civil servants making it clear that is incompatible with EU membership.
It is remarkable that with the vast resources of the Scottish Government at their disposal the SNP are still in such a weak position on the economics of their central policy. Disinformation rushes in to fill the vacuum left by the lack of credible leadership with claims of secret oil fields, imaginary whisky taxes, and tales of UK taxpayers funding Scottish debt or Scottish pensions after we leave the UK.
The SNP’s leadership had hoped today would do the heavy lifting of making a fiscal case for leaving the UK. It hasn’t and their laziness has left them with no argument.
UPDATE: David Phillips of the IFS has written an analysis of today’s figures. Sharing the projection below he notes:
“Scotland's notional deficit in 2022-23 was equivalent to £3,485 per person compared to £1,955 for UK as a whole. That gap of £1,500 per person is set to widen to £2,500 over the next 5 years based on current forecasts.”
UPDATE: The Frase of Allandar Institute has also carried out an analysis which includes this startling challenge:
“That said, GERS does provide an accurate picture of where Scotland is in 2023. In doing so it sets the starting point for a discussion about the immediate choices, opportunities and challenges that need to be addressed by those advocating new fiscal arrangements. And here the challenge is stark, with a likely deficit far in excess of the UK as a whole, other comparable countries or that which is deemed to be sustainable in the long-term. It is not enough to say ‘everything will be fine’ or ‘look at this country, they can run a sensible fiscal balance so why can’t Scotland?’. Concrete proposals and ideas are needed.”
Tradecraft or Daft?
The GERS publication always invites wild conspiracy theories about how the British state somehow fixes the SNP Government’s own statistics. Even by the standards of GERS day, however, today’s big conspiracy theory is an absolute belter. Former SNP MSP Campbell Martin has written:
“The SNP is completely compromised…It has been captured and controlled by the British state. The difference between those early days of the Scottish parliament and today, is that the British state assets in the SNP have, over the intervening years, risen through the ranks and now hold senior positions that have allowed them to influence party policies and direction, such as adopting a lack of urgency in delivering independence.”
There is something perfectly nationalist about this framing. The growing unpopularity of the SNP is a problem and all problems must be the fault of the British. Therefore British spies must now be in control of the SNP Government.
I’ll admit that it is hard to fathom why, after a decade of questions on how Scotland would fund our public services, operate a hard border with England, or run an economy without our own currency, the SNP leadership haven’t produced credible answers. I understand why frustrated nationalists are beginning to believe that their own leadership is working against them on behalf of British intelligence.
Here we should reach for Hanlon’s Razor, a heuristic which warns us not to attribute to malice what can be explained by stupidity. From a pro-Union perspective, Yousaf is an asset but he isn’t an asset.
No, the reason that, on another GERS day, the SNP are still not able to tell a convincing story about a separate Scottish economy is not because the First Minister is an MI5 sleeper, it is because leaving the UK, is a stupid idea.
YouGov Poll Shows Gap Closing
The other interesting numbers this morning are from the YouGov Poll in the Times. Labour has closed the gap with the SNP by a further 5 points over the summer and stands to win around 22 seats at the General Election. A year ago the SNP were 24 points ahead of Labour, today that is down to 4 points.
The National Conversation; Scotland’s Future, Outlook for Scotland’s Finances; Higher Education in an Independent Scotland; Scotland’s Balance Sheet; The Economic Case for Independence; Pensions in an Independent Scotland; and the Independence White Paper; all claimed credibility because they were based on GERS figures.
Kemp used to literally stand beside the word ‘GERS’ (rendered in what must be 1000-point font size) while giving his presentation on how GERS made the financial case for leaving the UK. He, who once commissioned pro-independence pop-up banners with the GERS figures splashed over them now writes, “there is no way that GERS can be said to be a statement of the financial starting point for an independent Scotland.”